Lecture 11 Medical Benefits: Traditional Plans (Indemnity Plans)

1. Lecture 11Medical Benefits:Traditional Plans(Indemnity Plans) • Providers of Traditional Coverage • Blue Cross-Blue Shield • Insurance Companies • Basic Medical Expense Coverage • Major Medical Coverage • Managed Care Provisions in Traditional Plans • Medical Savings Accounts

2. Providers of Traditional Coverage Blue Cross-Blue Shield vs. Insurance Companies • Regulation • Taxation • Form of benefits • Types of benefits • Reimbursement of providers • National coverage • Flexibility • Rating • Marketing

3. Basic Medical Expense Coverage • Traditional • Hospital expense benefits • In-patient • Room and board • Other charges • Outpatient • Surgery • Preadmission testing • Emergency room treatment • Exclusions • Surgical expense benefits • Fee schedule • Relative value schedule • Reasonable and customary charges • Physicians’ visits expense benefits • In-hospital coverage • Out-of-hospital coverage

4. Basic Medical Expense Coverage - (cont.) • Newer • Extended care facilities • Home health care • Hospice care • Ambulatory care • Birthing centers • Diagnostic x-ray and laboratory services • Radiation therapy • Prescription drug expense benefits • Vision care • Supplemental accident benefits

5. Major Medical Coverage • Types • Supplemental • Comprehensive • Characteristics • Covered expenses • Exclusions • Occupational injuries or diseases • Cosmetic surgery • Convalescent, custodial or rest care • Limitations

6. Major Medical CoverageCharacteristics - (cont.) • Treatment of Mental Illness, Alcoholism and Drug Addiction • Deductibles • Coinsurance • Maximum Benefits • Annual • Lifetime • Per cause

7. Managed Care Provisions in Traditional Plans • Hospital certification • Second surgical opinions • Carve-outs for mental illness and substance abuse treatment • Maternity management • Pre-approval of visits to specialists

8. Medical Savings Accounts • Pilot program under Health Insurance Portability and Accountability Act • Personal savings account for unreimbursed medical expenses • Tax-exempt trust or custodial account • Contributions are tax deductible • Distributions for eligible expenses not taxable • Other distributions taxed and penalized (15%) if account holder is not 65, dead or disabled • Strict regulations on contributions and eligible plans