FIN 200: Personal Finance

1. FIN 200: Personal Finance Topic 13-Health and Disability Insurance Lawrence Schrenk, Instructor

2. 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.▪

3. Health Insurance

4. Issues • Medical Costs Rising • Health Insurance Premiums Rising • Greater Longevity • More Sophisticated (and Expensive) Procedures • Political Issues

5. Health Insurance Coverage • Medical • Mental Health • Prescription Plan • Dental • Vision

6. Terminology • Indemnity versus Managed Care • Co-Payment versus Co-Insurance • Premium • Deductible • Out-of-Pocket Expenses • In-versus Out-of-Network • Referrals

7. Medical • Physician • Surgery • Hospitalization • Major Medical

8. 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

9. 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

10. Delivery Styles • Government • Medicare • Medicaid • Indemnity Plans • Managed Care • Health Maintained Organization (HMO) • Preferred Provider Organization (PPO) • Individual versus Group

11. Key Trade-Off • Costs versus Flexibility/Coverage

12. Selection Guidelines • High Coverage Limit • Reasonable Out-of-Pocket Cap • No Dollar Limits on Individual Expenses • No Referral Requirement • Global Coverage

13. Dollar Limits and Referrals • Dollar Maximum • Per Claim • Per Lifetime • Per Procedure/Expense • Referrals • In-Network List • Referrals/Pre-Authorization

14. Other • HIPAA–Health Insurance Portability and Accountability Act of 1996 • ‘Preexisting Conditions’ • Continuous Enrollment • COBRA–Consolidated Omnibus Budget Reduction Act of 1985 • 18 Months

15. Long Term Care and Disability Insurance

16. Disability Insurance • Substitutes payments for income if disabled. • Sources • Individual • Employer • Social Security • Worker’s Compensation • Payments are typically percentage of current salary.

17. 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

18. Project Notes I

19. Project Notes II

20. 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?