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FIN 200: Personal Finance. Topic 13-Health and Disability Insurance Lawrence Schrenk, Instructor. Learning Objectives. Describe the features of health insurance. ▪ Explain how to buy health insurance effectively. Describe the features of disability insurance.
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FIN 200: Personal Finance Topic 13-Health and Disability Insurance Lawrence Schrenk, Instructor
Learning Objectives • Describe the features of health insurance. ▪ • Explain how to buy health insurance effectively. • Describe the features of disability insurance. • Describe the features of long term care insurance.▪
Issues • Medical Costs Rising • Health Insurance Premiums Rising • Greater Longevity • More Sophisticated (and Expensive) Procedures • Political Issues
Health Insurance Coverage • Medical • Mental Health • Prescription Plan • Dental • Vision
Terminology • Indemnity versus Managed Care • Co-Payment versus Co-Insurance • Premium • Deductible • Out-of-Pocket Expenses • In-versus Out-of-Network • Referrals
Medical • Physician • Surgery • Hospitalization • Major Medical
Mental Health, Prescription Plan • Mental Health • May be in Medical • Coverage varies by Plan • Prescription Plan • May be in Medical • Formulary • Generic versus Name-Brand • Levels of Co-Payments
Dental, Vision • Dental • Check Ups Predominately Covered • Typical Levels of Payment • Higher–Fillings • Some–Crowns • None–Implants • Vision • Check Ups Predominately Covered • Partial Payment for Glasses, Contacts
Delivery Styles • Government • Medicare • Medicaid • Indemnity Plans • Managed Care • Health Maintained Organization (HMO) • Preferred Provider Organization (PPO) • Individual versus Group
Key Trade-Off • Costs versus Flexibility/Coverage
Selection Guidelines • High Coverage Limit • Reasonable Out-of-Pocket Cap • No Dollar Limits on Individual Expenses • No Referral Requirement • Global Coverage
Dollar Limits and Referrals • Dollar Maximum • Per Claim • Per Lifetime • Per Procedure/Expense • Referrals • In-Network List • Referrals/Pre-Authorization
Other • HIPAA–Health Insurance Portability and Accountability Act of 1996 • ‘Preexisting Conditions’ • Continuous Enrollment • COBRA–Consolidated Omnibus Budget Reduction Act of 1985 • 18 Months
Disability Insurance • Substitutes payments for income if disabled. • Sources • Individual • Employer • Social Security • Worker’s Compensation • Payments are typically percentage of current salary.
Long Term Care • Nursing Home, Assisted Living, At Home • High Cost • Average Nursing Home Costs (2008) • $70,000-$90,000/year • Specialized: $20,000+ per month • Premiums $2,000-3,000+ • Points to Consider • Coverage • Daily or Monthly Benefit and Benefit Period • Elimination or Waiting Period • Inflation Protection
Ethical Dilemma Vera is an 85-year-old widow and retiree from a large corporation. Her former employer recently changed the health care coverage for retirees to an HMO. Vera is having difficulty with her knees and has requested a referral to an orthopedist. After ordering x-rays, her primary care physician informs her that her knees are not serious enough to warrant knee replacement and he gives her a prescription to alleviate the pain. Several weeks later Vera reads an article that doctors in her HMO are rewarded for keeping utilization costs down. a. Discuss the ethics of HMOs rewarding physicians for keeping utilization costs down. b. Does Vera have any options?
