Chapter 26 - Medical Expense Policies

Question 1

Basic Plans vs Major Medical Policies vs Comprehensive Major Medical Plan

Answer 1

Basic Plans - Started in the 1930s. No deductible, low annual limit. Provide only fundamental exactly what the tenor of the times require. Medical (physician treatment), hospital, and surgical.

Major Medical Policy - came around in the 1950s. Provide what the base plans did not, catastrophic (heart problem, cancer) coverage. With deductible, copays and coinsurance now in play.

Comprehensive Major Medical Plans - is a combination of base and Major Medical plans. The base plan pays for routine medical needs and the major plan kicks in against catastrophic problems.

Integrated Deductible or Corridor Deductible - a deductible that shows up in the middle of the coverage after the basic plan benefits are exhausted and before the major plan kicks in.

Newborns - covered for the first 31 days with no limiting factors. You have to add them within the 31 days and any additional premiums must be paid. Same for adopted kids. They are generally covered tell 18 (23 if they are in school full time). NOW 26 years old. Physically or mentally handicap dependent children are covered always.

Question 2

Key Terms

Answer 2

Custodial Care - assisted living, rest homes, covered by Long Term Care policies

Acute Care - or Ambulatory Care or intermittent care - treatment for severe symptoms for a short durations. Outpatient.

Hospice Care - end of life treatment. Most Medical Expense policies cover hospice care if a physician certifies that the patient wont live longer than 6 months.
Palliative Care - controlling pain and symptoms while providing emotional and spiritual support.

Prescriptions - covered by most medical expense policies. May have copays and deductibles. The policy will have a FORMULARY which is a list of covered medicines.

DBR - daily benefit rate. How much per day the plan will pay for a hospital stay.

EOB - explanation of benefits. Will explain the claim, the deductible, the copy and coinsurance charge.

Question 3

Affordable Care Act (ACA)

Answer 3

Health insurance in now mandatory. Having more healthy people insured will help drive costs down. Failure to purchase health insurance can result in a fine. 2% of income or $695 per adults, $347.50 per child’s or total maximum of $2,085 since 2016, this gets adjusted with inflation.

You had to grandfather existing plans into a ACA plan.

Key changes were:
- no longer have annual limits, now out of pocket max
- children now age 26
- policies must be guaranteed renewable
- no preexisting conditions. Only write the policy based on age, geographic location, and tobacco use. NO GENDER.

ACA Metal levels
- Bronze policy = 60% of medical care costs
- Silver =70%
-Gold =80%
-Platinum = 90%

Businesses with over 50 full time equivalent employees must provide health insurance to at least 95% of employee and their dependents or pay a penalty.