Chapter 11, Health and Disability Insurance.pptx (1)
Health Care Costs (LO11-1)
Health insurance protects against economic loss due to illness, accident, or disability.
Key legislation: Patient Protection and Affordable Care Act (2010) continues health care reform debates.
High Medical Costs
Estimated health care costs: $4.2 trillion (18.2% of GDP) in 2021; projected to reach $6.2 trillion by 2028.
Approximately 26.1 million people lack health insurance.
Notable cost increase (1965: $41.6 billion to over $4 trillion by 2020).
Administrative costs: 11% of the health care dollar compared with 1% in Canada.
Reasons for High Health Care Costs
Contributing Factors
Sophisticated and costly medical technologies.
Duplication of tests and procedures.
Increased treatment frequency and variety.
Growing elderly population.
Regulations causing cost shifts.
Rising accidents and emergency services needs.
Further Contributing Issues
Limited competition and restrictive healthcare system rules.
High earnings growth for healthcare professionals.
Inefficient use of medical care.
Built-in system inflation, malpractice insurance, and fraud.
Addressing High Health Care Costs
Review fees and charges; Prior authorization and appeal processes.
Incentives for preventive care and community health education.
Encourage pre-paid group practices and cash payments for routine care.
Personal Health Care Cost Reduction Strategies
Effective Actions
Consider flexible spending accounts and high-deductible health plans.
Opt for generic drugs and mail-order pharmacies.
Review state options for low-cost coverage (e.g., uninsured children).
Additional Measures
Explore state prescription drug assistance and follow-up with doctors via phone.
Scrutinize billing for errors and appeal unfair health plan decisions.
Emphasize preventive care.
Health Insurance and Financial Planning (LO11-2)
Health insurance diminishes financial burdens due to illness/injury, critical for family economic security.
Includes medical expense and disability income insurance.
Group Health Insurance
Comprises about 90% of health insurance; primarily employer-sponsored.
Large employers (50+ employees) mandated to provide coverage (Tax Cuts and Jobs Act, 2017).
Individual Health Insurance
Tailored policies from chosen companies; supplemented by group insurance through Coordination of Benefits (COB).
Medical Coverage During Divorce
COBRA allows continuation of coverage post-divorce for up to 36 months.
Types of Health Insurance Coverage (LO11-3)
Essential Plan Features
Basic hospital and doctor coverage.
Minimum lifetime maximum: $1 million per family member.
Out-of-pocket expense limits of $4,000 to $6,000.
Types of Coverage
Hospital Expense Insurance: Covers room, board, and charges.
Surgical Expense Insurance: Pays for surgeon fees.
Physician Expense Insurance: Covers doctor visits, tests (not surgery).
Major Medical Insurance: Protection for serious/long-term illnesses.
Comprehensive Major Medical Insurance: Covers extensive hospital, surgical, and additional bills.
Additional Coverage Options
Hospital Indemnity Policies: Cash benefits during hospitalization.
Dental and Vision Insurance: Specific coverage for dental/vision care.
Major Provisions in a Health Insurance Policy
Eligibility: Based on age, marital status, etc.
Copayment: Fixed fee per visit/service.
Benefit Limits: Maximum amounts permitted for treatments.
Cost Sharing Example
Example: Ariana’s policy includes an $800 deductible. For a total of $3,800 in expenses, she pays $1,400 total.
Health Insurance Trade-Offs
Evaluating reimbursement vs indemnity, internal limits, and out-of-pocket costs.
Choosing Coverage
Options: Basic, Major Medical, or a combination of both.
Private Sources of Health Insurance (LO11-4)
Private Insurance Companies: Individual/group policies.
Service Plans: Blue Cross for hospital benefits, Blue Shield for medical services.
Managed Care Organizations: HMO and PPO models emphasize preventive care.
Government Health Care Programs (LO11-5)
Medicare Overview
Federal program primarily for those 65+ or certain disabilities.
Part A: Hospital insurance; Part B: Voluntary doctor services coverage.
Continued Medicare Coverage
Part C: Medicare Advantage; Part D: Prescription drug plans.
Medicaid: Covers low-income individuals and families under federal and state guidelines.
Medicare Limitations
Not covered: acupuncture, non-approved skilled nursing care, and many screenings.
Affordable Care Act (2010)
Provides tax credits to small businesses and prohibits coverage denial for pre-existing conditions.
Noteworthy provisions: Coverage extension for dependents until age 26, elimination of annual limits, and access to appeal processes.
Long-Term Care Insurance
Rising necessity; substantial costs in nursing home care.
Average one-year stay >$105,000; premiums vary widely.
Disability Income Insurance (LO11-6)
Protects against income loss due to disability; crucial as disability often occurs more than death.
Benefits can cover lost income from accidents or illness.
Understanding Disability
Policies define disabilities differently; strong plans consider inability to perform regular work.
Disability Insurance Trade-Offs
Considerations: waiting periods, benefit durations, amount, and coverage types.
Sources of Disability Income
Employer plans (short/long term), Social Security, Worker’s Compensation for job-related disabilities.