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SolveYourProblem
eLearning Series:
Health Insurance: Your Questions Answered
What does everything mean & how
to choose the right policy
( 18 pages )
MEDICAL
INSURANCE COVERAGE
Let’s
explore individual versus group coverage.
No matter how
a policy is written, narrowly or broadly, medical expense
insurance is designed to reimburse for the cost of care whether
it results from injury or illness.
Both individual
and group policies are available to consumers. Normally individual
policies are more costly along with having limited benefits
but generally speaking, both types cover the same medical
services.
Hospital
expense benefits provide for expenses incurred
during hospitalization. Indemnities usually fall under
two broad groups:
- Room
and board – including
nursing care and special dietary requirements
- Miscellaneous
medical expenses – including
x-rays, lab work, medications, medical supplies and operating
and special treatment rooms
In some cases,
benefits might be included for certain surgeries and related
costs like pain killers given during a hospital stay.
Room and
board benefits may be paid based on indemnity
or reimbursement depending upon the particular policy.
When paid on an indemnity basis, the insurer pays a specified
rate per day that has been pre-determined and is laid out
in a schedule within the policy.
The schedule will
spell out the details of the benefit coverage as it pertains
to length of stay. Once the length of stay has been exhausted,
no more benefits are available. These are sometimes called
dollar amount plans and typically the number of days is from
90 up to 365.
More commonly
used is a reimbursement basis, also known as an expenses-incurred
basis. With this type of coverage the policy will pay in
one of two ways – the actual charges for a semi-private room
or a percentage of the actual charges. There are no specific
dollar amounts but a maximum number of days will still be
specified.
Surgical
Expense Benefits fall under two plans, scheduled
and non-scheduled.
In the scheduled
plan, surgical expense policies pay the fees incurred
from the surgeons services and related costs incurred when
the insured has an operation. Typical related costs include
fees for an assistant surgeon, anesthesiologist and can
even include the operating room when it is not covered
as a miscellaneous item.
Basic surgical
coverage can be included in the same policy as basic hospital
and medical expense and are normally included in a schedule
listing major commonly performed operations and the benefits
payable for each.
This gets a bit
tricky and you need to be aware of how the insurance company
determines the benefit. Just because a specific surgery is
not listed in the schedule does not necessarily mean that
there is no benefit for it available. It might mean that
the insurer indemnifies that surgery based on absolute value
and the relative value of each procedure.
In other words,
let’s say that the insurer determines that a certain surgical
procedure has a prevailing value of $1500 and indicates that
in the schedule included in your policy. That is considered
the absolute value. Now, let’s say that there is another
procedure not listed in the schedule that is say 50% less
complicated as the $1500 procedure. In this case, the relative
value would be $750 and that is the benefit amount that will
be paid for the less complicated procedure.
Using a non-scheduled scenario,
when surgical benefits are not listed by a specific dollar
amount in a schedule, the policy will pay based on what is
considered usual, customary and reasonable in a certain geographical
area and is also known as UCR.
This non-scheduled
type of indemnity is found most often in major medical and
comprehensive policies which we will discuss further along.
As you might imagine,
under this type of arrangement the UCR is determined by the
amount that physicians in the local area usually charge for
the same procedure.
Regular medical
expense benefit is another category that is sometimes known
as physician’s non-surgical expense. This coverage is for
non-surgical services a physician provides and can sometimes
be narrowly applied to physician visits while the patient
is in the hospital.
If this is the
case the benefit will most likely pay for a specified maximum
number of visits per day, a specified maximum dollar amount
per visit and a specified number of days coverage applies.
In other policies
this benefit could be for non-surgical services performed
by a physician whether the patient is in or out of the hospital.
Once again there are limits such as $100 per visit up to
50 visits per year depending on the policy.
 
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