Chapter 11: Planning for Health Care Expenses

Flashcards about health care planning topics.

What are the three finance related health care issues?

Direct medical care costs, Long-term rehabilitative and custodial care costs, Lost Income when you cannot work due to illness or injury.

How does the Affordable Care Act (ACA) work?

It requires that all persons have a health care plan, primarily impacting the 15 percent of Americans who had no health insurance protection.

What is required for all health care plans under the ACA to ensure quality?

All plans must provide 10 essential benefits of adequate coverage.

How does the ACA make health insurance affordable?

Because the ACA mandates that people have a health care plan and plans can be expensive, the ACA provides for subsidies to make plans affordable and established health insurance exchanges.

According to the ACA, which aspects of health care plans are no longer allowed?

Charging men and women different rates, payout maximums, and denial of coverage for preexisting conditions.

What is a health care plan?

A program that pays for or provides reimbursement for health care expenses, often obtained through a group health plan.

What is a Traditional Health Insurance Plan?

Provides protection against direct medical expenses resulting from illness and injury based on the concept of payment after an expense occurs.

What are Health Maintenance Organizations (HMOs)?

Prepaid managed care insurance plans where individuals or employers pay a fixed monthly fee for services.

What is a Preferred Provider Organization (PPO)?

A managed care organization of medical doctors, hospitals, and other health care providers who have agreed to provide health care at reduced rates to the insurers clients.

What is a High-Deductible Plan?

A high deductible that must be met before the insurance starts paying for medical expenses.

What is a Health Savings Account (HSA)?

A tax advantage medical savings account where funds are 100% tax deductible from gross income if used for health care expenses.

What are some government health care related plans?

Includes Worker’s Compensation, Medicare, and Medicaid.

What is Worker’s Compensation?

State workers compensation plans are a form of insurance providing medical benefits and wage replacement to employee’s injured in the course of employment.

What is Medicare?

A federal health care program for people age 65 or over.

What is Medicaid?

A health care program funded jointly by the federal government and state governments for low-income individuals and families.

What are COBRA rights?

May allow continuation of a previous employer-based plan when between jobs for 18 months for the employee and 36 months for dependents; rights must be exercised within 60 days after termination of employment, and the worker pays the premium plus a 2 percent administrative fee.

What is a certificate of insurance?

The document or booklet that outlines group health insurance benefits.

What does a coordination of benefits clause do?

Prevents collecting more than 100 percent of a health care loss.

What types of care are typically covered by health care plans?

Hospital, surgical and outpatient care, prescription drugs, dental expense insurance, and vision care insurance.

Who is typically covered by a health care plan?

Spouse and children of the insured person, domestic partners, stepchildren, and noncustodial children.

What are the main out-of-pocket costs for the insured in health insurance plans?

Deductibles, copayments, and coinsurance.

What is the initial portion of medical expenses you pay called?

Deductible

What is the specified amount of money you pay every time you visit the doctor's office or pick up a prescription called?

Copayment

What is the proportion of any loss you pay called?

Coinsurance

What is an out-of-pocket maximum?

Specifies how much must be spent by the insured party each year before the plan will pay 100 percent.

What often requires a long period of custodial care?

Injuries, severe illnesses and certain conditions such as Alzheimer’s disease often require a long period of custodial care in a nursing home or at home.

What does long-term care insurance provide?

Reimbursement for costs associated with custodial care in a nursing facility or at home.

What factors should you consider when selecting long-term care insurance?

The degree of impairment required for benefits to begin, the level of care covered, the person’s age, the benefit amount, the benefit duration, the waiting period and inflation protection.

What are the levels of care covered by long-term care insurance?

Skilled nursing care, intermediate care, and custodial care.

What does disability income insurance do?

Replaces a portion of the income lost when you cannot work because of illness or injury.

What does Social Security disability insurance do?

Replace a portion of the lost income of eligible disabled workers; benefits begin after a five-month waiting period and the disability must be total.

How is the level of need for disability income insurance calculated?

Calculation of needs starts with current after- tax income and then subtracts Social Security disability benefits, employer-based disability benefits, and any other existing disability insurance.

What is the waiting period (or elimination period) in a disability income insurance policy?

The time period between the onset of the disability and the date that disability benefits begin.

What is the benefit period in a disability income policy?

The maximum period of time for which benefits will be paid.

What are the degrees of disability to consider in a disability income policy?

Own-occupation policy, any-occupation policy and a residual clause.

What is an advance medical directive?

A medical guideline that pertains to treatment preferences and the designation of a surrogate decision maker if you are unable to make your own medical decisions.

What is a living will?

Instructs health care providers of your health care wishes should you become terminally ill with no hope of survival and unable to express your wishes.

What is a health care proxy?

A legal document in which individuals designate another person to make health care decisions if they are rendered incapable of making his or her wishes known.