Personal Medical Insurance and Prescription Assistance Programs
Personal medical insurance provides benefits for medical care. Some policies may provide for payment of medical expenses incurred on a reimbursement basis by paying benefits to the policy owner, payment on a service basis by paying those who provide the services directly, or payment of an indemnity by paying a set amount regardless of the amount charged for medical expenses. Medical expense or hospitalization insurance may be written on an individual or group basis.
Although there are many types of benefits available, personal medical expense insurance can generally be categorized as basic medical expense insurance, major medical insurance, comprehensive medical insurance, and special policies. Most of these plans have largely been replaced by managed care alternatives and are no longer sold as stand-alone plans. These types of plans have been modified and replaced in response to changes in the health care field relative to cost containment and market competition.
Basic coverage provided by a personal medical expense policy includes hospital expense, surgical expense and medical expense. These three basics may be sold together or separately. Frequently this is written as “first dollar” coverage, which means it does not have a deductible.
As the name implies, hospital expense coverage provides benefits for expenses incurred during hospitalization. Hospital indemnities are usually classified into two broad groups:
• Room and board, including nursing care and special diets
• Miscellaneous medical expenses, including x-rays, laboratory fees, medications, medical supplies, and operating and treatment rooms
In some cases, surgical benefits may be included for certain types of surgery and associated costs. Hospital expense coverage provides benefits for daily hospital room and board and miscellaneous hospital expenses while the insured person is confined to the hospital. The policy may provide for a certain dollar amount for the daily hospital room and board benefit, although the trend is toward coverage of not more than the semiprivate room rate unless a private room is medically necessary. The room and board benefit may be paid on either an indemnity basis or a reimbursement basis, depending on the particular policy.
Indemnity policies are sometimes called dollar amount plans. Room and board rates vary by geographic location, but it is not unusual to find room and board rates ranging from $300 to $500 per day or more.
Typically, the maximum number of days is from 90 to 365. More commonly, room and board expenses are paid on a reimbursement basis. This is also referred to as an expenses-incurred basis. Under this arrangement, the policy will pay in one of two ways.
• The actual charges for a semiprivate room are covered.
• A percentage of the actual charge is paid, with no specific dollar limit.
Under the first reimbursement option, the insurance company will pay the full actual semiprivate room rate, regardless of what it is. Under the second reimbursement option, the insurance company pays a specified percentage, regardless of what the actual charges are. A common percentage is 80%.
To summarize, under the actual charges type of reimbursement plan, the policy will pay the actual amount charged for a semiprivate room without regard to a specific dollar limit. Under the percentage type of reimbursement plan, the policy will pay a specified percentage of the actual charges.
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