Health Insurance

  1. Total Disability
    Injury or illness that prevents the insured from performing the duties of any occupation for remuneration or profit.
  2. Partial Disability
    A condition in which, as a result of injury or sickness, the insured cannot perform all of the duties of his or her occupation but can perform some. Exact definitions vary from policy to policy.
  3. Residual Disability
    That form of disability which becomes defined as partial disability when an insured has returned to work immediately following a period of total disability.
  4. Medical Expense Insurance
    Basic hospital expense

    Surgical expense

    Miscellaneous coverage provided by basic medical

    • Major medical policy
    • High maximum limits
    • Blanket coverage
    • Percentage participation
    • eductibles

    Comprehensive major medical policies




    • Service organizations (Blue Plans)
    • Blue Cross
    • Blue Shields
    • Service vs. indemnity
  5. Individual Disability Income Policy (Disability Income
    • Insured NET income
    • If your job doesn’t have work compensation, you are covered by DI
    • Income replacement policy
    • Designed to payout a monthly benefit
    • Pass physical
    • Benefit is never taxable
    • Premium is paid with after tax dollars
    • Premium you pay for disability income are not tax deductable
    • You can collect if you cannot perform your job the first 2 years
    • When quality (or collect) you’re required to go to their
    • doctors for six months (to prove you’re not faking)
    • Must pay benefits at minimum monthly
  6. Group Disability Income Policy (Disability Income Insurance)
    • Group DI insures your GROSS income
    • Can't have workers compensation and Group DI on the job
    • Group DI is designed to cover you off the job
    • Tied to salary level
    • 2 ways premiums can be paid:

    • Noncontributory Premium
    • 100% of premium is paid by employer
    • 100% of your benefit is taxable
    • Contributor Premium
    • Paid by ER/EE (ie. 80/20)
    • What percentage your ER contributes, your benefit is taxable
  7. Business Overhead Expense Policy (Disability Income Insurance)
    • A disability income policy which indemnifies the business (not the businessowner) for certain overhead expenses incurred when the businessowner is totally disabled. Often has an elimination period of 30 to 90 days and a benefit period of one or two years.
    • Sold to small business owners
    • Designed to pay overhead (ie. rent, utilities)
    • Effective if owners became disabled
    • Does not use to pay salary
    • Premium are tax deductable
    • Procceds are taxable
  8. Major Medical Policies
    • Medical Expense Insurance
    • Health insurance that provides benefits up to a high limit for most medical expenses incurred, subject to a large deductible. Such contracts may contain limits on specific types of charges, like room and board, and a percentage participation clause sometimes called a coinsurance clause. These policies usually pay covered expenses whether an individual is in or out of the hospital.
    • Covers in and out of hospital cost
  9. Health Maintenance Organization (HMO)
    • Medical Expense Insurance
    • A prepaid medical service plan that provides services to plan members. Medical providers contract with the HMO to provide medical services to plan members. Members must use contracted providers. The emphasis is on preventive medicine, and it is an alternative to employeebenefit plans. Employers of more than 25 persons are required to offer the alternative of HMO to employees, but not if the cost exceeds that of present employee benefit plans.
    • Started by doctors, owned by doctors
    • Must stress prevention because doctors get federal loans
    • Can't go to a specialist without referral, created by PCP (the gatekeepers)
    • Must go to their doctor at their facility
  10. Business Health Insurance (Disability Income Insurance)
    Various forms of business disability insurance are closely related to the business uses of life insurance. Some of the more common types include:

    Key-employee disability insurance When a key employee of a business becomes totally disabled, the business may suffer serious economic losses. This type of contract protects the business against the inability of the key employee to perform his regular duties and ease any economic burden that by exist if the disabled employee’s salary and other benefits continue during a period of disability

    Group credit health insurance It is primarily used in debtor/creditor relationships where large amounts of funds are borrowed. These health contracts will protect a lender in the event that borrowers become disabled and cannot meet their monthly payments. 

    Business disability buyout policy These policies provide funds for a business to purchase the interest of a totally disabled partner or stockholder. Policies are arranged so that benefits are payable after 12, 18, or 24 months of a disability. That duration is selected to correspond to a trigger point, which is the date designated in the form buy-sell agreement at which the nondisabled person must buy out the totally disabled individual.
  11. Preferred Provider Organization (PPO)
    • Medical Expense Insurance
    • An organization of hospitals and physicians who provide, for a set fee, services to insurance company clients. Providers are listed as preferred and the insured may select from any number of hospitals and physicians. Coverage is 100 percent, with a minimal co-payment for each office visit or hospital stay. Contrast with Health Maintenance Organization.
    • Owned by insurance companies
    • May stree prevention
    • Excellent coverage in network
    • May elect to go out of network, coverage is reduced
  12. Multiple Employer Trust (MET)
    • Medical Expense Insurance
    • A trust consisting of multiple small employers in the same industry, that is formed for the purpose of purchasing group health insurance or establishing a self-funded plan at a lower cost than any available to the employers individually.
    • When you are in a vocation
    • Offer alternative to group insurance
    • Based on occupation
    • Must pass physical
  13. Multiple Employer Welfare Arrangements (MEWA)
    • Medical Expense Insurance
    • Employer funds and trusts providing health care benefits to individuals.
    • Uninsured, self-funded
  14. Service Organizations (Blue Plan)
    • Medical Expense Insurance
    • A generic designation for those companies, usually writing a service rather than a reimbursement contract, who are authorized to use the designation Blue Cross or Blue Shield and the insignia of either.
    • Insures are called subscribers
    • Doctors are called service providers
  15. Blue Cross
    Blue Cross plans are hospital expense prepayment plans designed primarily to provide benefits for hospitalization coverage, with certain restrictions on the type of accommodations.
  16. Blue Shields
    Blue Shield plans are prepayment plans offered by service organizations covering medical and surgical expenses.
  17. Comprehensive Major Medical Policies
    • Medical Expense Insurance
    • A plan of insurance with a low deductible, high maximum benefits and a coinsurance feature. It is a combination of basic coverage and major medical coverage which has virtually replaced separate hospital, surgical and medical policies with each having its own deductible requirements.
    • ie. You have a $40,000 medical bill. You were in the hospital for 20 days. Your inside limit is $1,000/day, totaling $20,000. Minus $40k to $20k equals $20k. Use $20k minus your deductible (ie. $1,000/yr) and you're left with $19k. You pay the co-insurance of 20% which is $3,800. Altogether you pay $4,800 ($3800 plus $1000)
  18. Group Health Insurance
    • Life insurance provided for members of a group. It is most often issued to a group of employees but may be issued to any group provided it is not formed for the purpose of buying insurance. The cost is lower than for individual policies because administrative expenses per life are decreased, there are certain tax advantages and measures taken against adverse selection are effective
    • This is a plan of insurance coverage that protects a group of individuals (employees) under one contract. This insurance is usually based on an employer-employee relationship but may be offered to groups who join together out of a common interest such as trade associations or union
    • Employer own policy
    • There is a waiting period til you can enroll in health program

    • Noncontributory Premium
    • 100% of premium is paid by employer
    • 100% must enroll
    • Contributor Premium
    • Paid by ER/EE (ie. 80/20)
    • 75% must participate
  19. Consolidated Omnibus Budget Reconciliation Act (COBRA)
    • Legislation providing for a continuation of group health benefits under the group plan for a period of time when benefits would otherwise terminate. Continuation rights apply to enrolled persons and their dependents in companies with 20 or more employees. Coverage may be continued for up to 18 months if the insured terminates employment or is no longer eligible. Coverage may be continued for up to 36 months in nearly all other cases, such as loss of dependent eligibility because of death of the enrolled person, divorce or attainment of the limiting age.
    • COBRA was created in 1985 and stipulated that employers must offer continuation of group health coverage for a specified period of time to qualify employees and their beneficiaries who would not otherwise be eligible for continued coverage because of a particular qualifying involving the covered employee
  20. Long-term Care (LTC)
    • A policy that reimburses daily health and social service expenses incurred when an insured is confined to a convalescent or nursing home facility. Often marketed as a rider to a life insurance policy, this coverage pays for the care of persons with chronic diseases or disabilities, and may include a wide range of health and social services provided under the supervision of medical professionals.
    • Activities of Daily Living (ADL) Standards Standards used to assess the ability of a person to live independently, measured by the ability to perform unaided such activities as eating, bathing, toiletry, dressing and walking. Sometimes used to measure or define eligibility for long-term care. Everyday living functions and activities performed by individuals without assistance, including moving about, dressing, attending to personal hygiene and eating.
  21. Medicare
    • The federal government plan for paying certain hospital and medical expenses for persons qualifying under the plan, usually those over 65. The hospital benefits are Part A, and the medical expense portion is Part B. Part A is compulsory social insurance; Part B is voluntary government-subsidized, government-operated insurance.
    • Part of Social Security
    • Designed to revive (renew) for old people

    • 4 Parts to Medicare:
    • Part A - Hospital Insurance
    • Part B - Supplementary medical insurance (SMI)
    • Part C - Medicare Advantage plans
    • Part D - Prescription Drugs
  22. Medicare Supplement (Medigap) Policies
    • Insurance coverage sold on an individual or group basis that helps to fill the gaps in the protection provided by the Medicare program. Medicare supplements cannot duplicate any benefits provided by Medicare, but may pay part or all of Medicare's deductibles and co-payments , and may cover some services and expenses not covered by Medicare.
    • Health insurance for old people
    • Plan A - J (most basic to most comprehensive in coverage)
    • Can't sell more than one supplement
    • Freelook of 30 days
    • No dental care and nursing homes are covered
    • Guarantee renewable policy if keep paying premium
  23. Medicaid
    • Medicaid is a form of welfare that provides assistance to the needy.
    • Have to deal with financial need
    • Health insurance for poor people
    • Child can be covered
    • Financed with state and federal money
    • Does not cover nursing home
    • Has nothing to do with Medicare
    • Deals with needing health insurance and can't afford it
    • It provides supplemental medical care for low income and needy individuals who are aged, blind, disabled, or under 21 years of age
  24. Social Security Disability Benefits
    • Eligibility for disability benefits under Social Security requires that a person be both fully insured and disability insured. In addition, the person must be under age 65, the disability must be expected to last for at least 12 months or end in death, and the disability must be a total disability.
    • It is hard to get benefit because you must be unable to perform any job
    • Must be expected to last 12 months or result in death
    • There is a 5 month waiting period
    • Eligible to get benefit after the 5 month waiting period
    • To be eligible for full disability benefit, you must have contributed to SS for atleast 10 years to be fully insured
    • Disability benefits ends at 65 because it switches over to your retirement benefits
    • Pay in increasing amount because SS benefit are tied to CPI
  25. If quit/fired, regardless of physical, you can do these following with your health insurance plan
    • Conversion
    • To individual policy standard or basic plan
    • Deductable and calcuate

    • Continuation
    • COBRA (expensive) - Gives you the right to stay in group for 18 months or 36 months (due to death or divorce)
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Health Insurance