8. Terms of payment for medical expense plans

But I Paid My Premiums!

Besides possibly paying the premiums for a medical insurance plan, the insured is almost always responsible for making other, out-of-pocket payments. This practice helps keep overall costs down for both insureds and the insurance companies and ensures that insureds are informed about the costs of health care.

For each of the following scenarios, select which type of other cost or provision is illustrated.

Valerie has been hospitalized for an illness. Her insurance company has started paying 80% of covered medical expenses.

Deductible

Internal limits

Participation (co-insurance)

Coordination of benefits

Antonio is covered under his medical insurance policy at work and also covered under his spouses work plan. Antonio has some large medical bills and since both Antonio and his spouse contribute to their plans at work, Antonio is trying to figure out a way to collect benefits for some of the same charges under both plans.

Deductible

Participation (co-insurance)

Coordination of benefits

Internal limits

Caroline had routine surgery performed at her local hospital. All charges were within the reasonable and customary costs in she area.

Internal limits

Deductible

Participation (co-insurance)

Coordination of benefits

Dmitri had a run of bad luck. He sprained his arm, had a staph infection, and needed surgery to remove his appendix. Out-of-pocket, Dmitri has paid $300 for the sprain, $500 for the infection, and $1,200 for the operation. He still has medical expenses for all three incidents. his insurance company is now paying part of the expenses related to the surgery but not the other two incidents. What does Dmitris responsibility for still paying all expenses for the sprain and infection represent?

Participation (co-insurance)

Coordination of benefits

Internal limits

Deductible

Frances, a veterinarian, is 24 years old and has owned a major medical insurance policy for three years. The policy, which she purchased through her trade association, provides the following coverage:

	a $3,000,000 lifetime limit
	a $1,500 deductible and 80% coinsurance clause
	internal limits of $400 per day for a semi-private room and board, $7,500 per occurrence for x-rays, prescription drugs, and other medical expenses, and a $40,000 maximum limit per occurrence on surgical procedures
	a $25,000 limit per occurrence on rehabilitation and physical therapy
	if a hospital charges a room rate that is greater than the policys stated internal limit, the hospital agrees to reduce the room rate to the policys internal limit.

Last month, Frances was injured was injured by lightening while delivering a calf in a farmers field. She spent 5 days in the hospital in a room that cost $600 per day, incurred $5,500 for other medical expenses, and $20,000 in surgical expenses.

Given these claim costs, complete the following table and answer the related questions

	Policy Limit	Total Claim
Hospital charges	$400 per day
Surgery costs
Other medical costs
Rehabilitation and therapy costs
Deductible
Co-insurance percentage	%
Total cost of claim

Based on this data, the total cost to the insurance company is

, while the out-of-pocket cost to Frances is

.How much did Frances save by having her medical insurance policy?

Assume that the hospital changed its payment policy to make the patient responsible for the difference between the hospitals room rate and the insurance companys responsibility ($600 per day versus $400 per day). By how much would Francess out-of-pocket cost for her hospital room change due in hospital billing ?

Francess costs would decrease by $1,000.

Francess costs would increase by $1,000.

Francess costs would increase by $600.