CR Board

If you recall, we explained that there are two broad categories of health insurance policies: disability and medical expense. Thus far we have covered disability. Now we’ll take a look at basic medical expense insurance.

Basic medical expense policies provide for medical expenses that result from accidents and sickness. This is a loose term that refers to various medical, hospital and surgical benefits.

The broad category of medical expense coverage provides a wide range of benefits for hospital, surgical and medical care. Other benefits may apply as well, such as private nurses, convalescent care, and more.

Policies may be written as such that they may be limited to only one or two types of coverage like hospital or miscellaneous medical costs or surgical expenses. These are known as basic plans.

Other, more broadly written, policies may cover all expenses resulting from accident or illness using some specific exceptions.

Medical plans include fee-for-service wherein doctors and other providers receive a payment that does not exceed their billed charge for service provided.

Prepaid plans provide medical or hospital benefits in the form of service rather than dollars. Many things need to be considered when selecting a medical expense plan such as:

Specified coverage versus comprehensive care. In other words does the plan feature only specific benefits or is the coverage comprehensive?

Any provider versus a limited number of providers. Are you required to choose from a specific list of providers?

National versus regional operation. Is the plan limited to a specific geographical region or operate nationwide?

Insured versus subscribers. Are participants considered insureds (the person who receives the benefit) or subscribers (the person who is paying the premium)?

We are going to take a look at the limited coverage for hospital, medical and surgical expenses. Discussing this separately first, will help you to understand how the components are combined in major medical and comprehensive policies.

The broad definition of basic medical expense insurance in most states includes hospital, medical and surgical expenses. The purpose of this type of insurance is to cover a broad range of medical, hospital and surgical expenses as well as separate categories of medical expenses.

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.