Transcript Chapter 27 Health and Life Insurance

Chapter
27
Health and
Life Insurance
27.1 Health Insurance
27.2 Disability and Life Insurance
© 2010 South-Western, Cengage Learning
Lesson 27.1
Health Insurance
GOALS
 Describe group and individual health insurance
choices.
 Discuss common types of health insurance
coverage.
 Discuss common types of health insurance
plans.
 Explain Medicare and Medicaid coverage.
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Group and Individual Health
Insurance
 Health insurance is a plan for sharing the risk
of high medical costs resulting from injury or
illness.
 Like other forms of insurance, health insurance
reduces individual risk by spreading it among
many people.
 In exchange for regular premiums, the insurer
promises to pay medical expenses for the
treatments covered by the policy.
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Group Policies
Group insurance
The most common type of health insurance
is group insurance, in which all those
insured have the same coverage and pay a
set premium.
Some employers pay the premiums as a
benefit to their employees.
More commonly, however, the two share the
premium costs.
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(continued)
Group Policies
COBRA
The Consolidated Omnibus Budget
Reconciliation Act, or COBRA, is a law that
allows people who leave employment to
continue their health insurance under the
company plan for a limited period of time
(usually 18 months).
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(continued)
Group Policies
Pre-existing conditions
The Health Insurance Portability and
Accountability Act of 1996 (HIPAA) limits the
pre-existing conditions that group plans may
exclude.
It also makes it illegal for an insurer to deny
coverage based on health status, though it
does not limit the amount the insurer may
charge for coverage.
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(continued)
Group Policies
Double coverage
Coordination of benefits is a group health
insurance provision that specifies how the
insurers will share the cost when more than
one policy covers a claim.
This provision assures that reimbursement
will not exceed 100 percent of allowable
expenses.
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(continued)
Group Policies
Flex plans
A Section 125 Flex Plan, or Flex 125 Plan,
is an employee benefit program that allows
employees to set aside money, pretax, to
help pay deductibles, copayments, and other
health expenses during the year that are not
covered by insurance.
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Individual Policies
High premiums
Physical exam
High-risk health insurance pools
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Types of Coverage
 Basic health insurance
 Basic health coverage includes medical, hospital,
and surgical costs.
 Major medical insurance
 Major medical coverage provides protection
against the catastrophic expenses of a serious
injury or illness.
 A stop-loss provision is an insurance clause that
caps or sets a maximum that the insured has to pay
during any calendar year.
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(continued)
Types of Coverage
 Dental and vision insurance
 Dental insurance covers basic dental services, such
as exams, cleanings, Xrays and fillings.
 Vision insurance often pays for exams for eye
disease as well as for prescription adjustments and
lenses.
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Types of Health Plans
Unmanaged care
Managed care
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Unmanaged Care
Unmanaged care plans allow participants
to choose any doctor and to be
reimbursed for a portion of the expenses
incurred after a deductible is met.
Deductibles often range from $100 to
$1,000 per patient, or $500 or more per
family.
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Health Savings Accounts
A health savings account, commonly
known as an HSA, is used in association
with a medical plan that carries a high
deductible.
Money is set aside to pay medical expenses
not paid by insurance.
Contributions are tax-deductible.
Employer may contribute to account.
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Managed Care
 A health maintenance organization, commonly
called an HMO, is a group plan offering prepaid
medical care to its members.
 A preferred provider organization, commonly
called a PPO, is a group of health care
providers (doctors and hospitals, for example)
who band together to provide health services
for set fees.
 Point of service (POS) plans give people more
choice and control over medical services by
combining the features of HMOs and PPOs.
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Medicare and Medicaid
Medicare is government-sponsored
health insurance for people age 65 or
older.
Medicaid is government-sponsored
health insurance for people with low
incomes and limited resources.
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Lesson 27.2
Disability and Life Insurance
GOALS
Discuss different types of disability
insurance.
Describe the characteristics of different
life insurance plans.
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Disability Insurance
 Disability insurance is an insurance plan that
makes regular payments (usually monthly) to
replace income lost when illness or injury
prevents the insured from working.
 Common types of disability insurance include:
 Group disability insurance
 Social Security disability insurance
 Workers’ compensation insurance
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Life Insurance
 Life insurance provides funds to the
beneficiaries when the insured dies.
 A group life insurance plan insures a large
number of people under the terms of a single
policy without a medical examination.
 Portability means that when you leave your
employer, you are able to continue paying the
premiums and convert your group policy into
an individual policy.
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Provisions of Life Insurance
Policies
 You have the right to name your beneficiary.
 An incontestable clause is a provision of a life
(or health) insurance policy that once the policy
has been in effect for a stated period of time
(usually two years), the insurer may no longer
question items on the application in order to
deny coverage.
 Double indemnity means that the beneficiary
is paid double the face amount of the
insurance policy.
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Types of Life Insurance
There are two main types of life
insurance:
Temporary life insurance
Permanent life insurance
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Temporary Life Insurance
Temporary life insurance lasts for a
specified period, such as 20 years.
The most common form of temporary life
insurance is term insurance.
Term life insurance is a life insurance
policy that remains in effect for a
specified period of time.
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Permanent Life Insurance
 Permanent life insurance remains in effect for
the insured’s lifetime and builds a cash value.
 Cash value is the savings accumulated in a
permanent life insurance policy that you would
receive if you canceled your policy.
 Four common types of permanent life policies:
 Whole life
 Limited-pay life
 Universal life
 Variable life
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