Managed Health Care
Managed Care is defined as any healthcare system that is established to manage the costs of medical care through a network of physicians, hospitals urgent care centers and home health care providers that are contracted with an insurer, or the government, to provide medical services to members within the network.
Managed care is provided through various companies and associations in the form of health insurance. While some companies provide members with limited health insurance coverage, most insurance companies provide comprehensive health insurance coverage to members, as well as offer financial incentives for members who utilize the providers attached to the network. Health care is also managed through various programs provided to qualified U.S. citizens by state governments, as well as the federal government. Examples of managed care include:
Commercial Insurers (Stock and Mutual companies)
- Blue Cross and Blue Shield companies
- Health maintenance organizations (HMOs)
- Preferred provider organizations (PPOs)
- Exclusive provider organizations (EPOs)
- Multiple Employer Trusts (METs)
- Multiple Employer Welfare associations (MEWAs)
Quite simply, both Health and Disability Insurance provide financial protection against loss resulting from illness or bodily injury. It is designed to indemnify an insured for medical treatment or financial loss in the event of an accident, illness, or disease. The indemnity is the amount of coverage payable, based on the policy’s schedule of benefits, to the health care facility and doctors to help cover medical expenses incurred by the insured.
Whether referred to as ‘accident and sickness’ insurance, ‘accident and health’ insurance, or simply, ‘health’ insurance, our nation’s medical needs and costs are managed through a complex relationship between medical care providers and the financial entities that fund such services.
Several types of health insurance coverage exist and are marketed by insurers throughout the country to individuals as well as employers. Health insurance can be purchased through a commercial insurer, such as a stock, mutual, or multi-line company. It can also be purchased by a service provider, such as a Blue Cross Blue Shield company, an HMO or a PPO insurer. Health care coverage can also be self-funded through a business, or provided by state or federal programs such as Medicaid, Medicare, OASDI and other state or federal programs.
Essentially, though, all health care can be categorized into three broad areas: ‘medical expense’ insurance, ‘disability income’ insurance and ‘accidental death and dismemberment’ insurance.
Categories of Health Insurance
Medical Expense InsuranceConsidered to be an ‘indemnity’ type of contract, medical expense insurance, simply known as ‘health insurance,’ provides financial coverage for medical expenses resulting from injury and illnesses. Typical expenses covered under a medical expense insurance plan include hospitalization and surgical fees, doctors’ fees, prescription costs, nursing care, and any other rehabilitative costs associated with one’s health. Purchased individually or as part of a group, through an employer, medical expense insurance is a necessity!
Disability Income (DI) Insurance
Considered to be a ‘valued’ contract, the primary purpose of disability income insurance is to replace a certain percentage of an insured’s income that would otherwise be lost due to a debilitating event that prevents a normal wage-earner from earning normal wages. In other words, if an insured individual becomes disabled and cannot work to earn his or her normal wages as a result of the disability, this type of insurance will pay a guaranteed amount of benefit on a regular basis to help maintain the insured’s standard of living during the disability period.
Accidental Death and Dismemberment Insurance (AD&D)
As with disability income insurance, AD&D is also considered to be a ‘valued’ contract. If death or bodily dismemberment were to occur as a result of an accident to the insured, an AD&D insurance policy would pay the insured, or the designated beneficiary, a lump-sum benefit. The Principal Sum (face amount) pays out if death occurs, and the Capital Sum (a percentage of the principal sum) pays out if dismemberment or loss of vision occurs.
The Changing Economy and Insurance
Health insurance has long been associated as a benefit of one’s employment, providing health coverage for employees and their families. Signing up for a health insurance plan was as simple as filling out employment papers during company orientation. Less attention was focused on medical expenses as they occurred because insurance covered them for the most part.
Unfortunately, today’s society of benefit cutbacks and high unemployment has led many people to have to find health insurance for the first time. Due to its high cost, many employers no longer provide health insurance coverage, leaving employees to find it in the open market. As many people have already experienced, getting health insurance outside of one’s employer is completely different than as a benefit through the employer.
Though the economic outlook for many companies looks bleak in a bad economy, the insurance industry remains a vibrant and growing industry, both in profit and employment. The insurance industry can be looked at as ‘recession proof’ because, no matter how bad the economy gets, people still need insurance. The demand for insurance is actually higher in a bad economy due in part to the need to change plans because of rising insurance premiums, or the loss of group insurance, or worse, the loss of a job.
In any event, insurance is still needed – even more so – to provide financial protection against medical expenses and healthcare costs. Again, many people have already lost, or soon will lose their health coverage and will be looking for a replacement policy. As such, the employment outlook for health and life insurance agents, according the U.S. Bureau of Labor Statistics, is projected to increase 12% over the next 7 years and will be in demand as the population continues to increase in size, as well as age.
Determining Health Insurance Needs
Health insurance coverage can vary greatly between insurers and the plans they market. For example, some health plans provide members with coverage for doctor’s visits through a co-payment, while other plans require the member to pay all expenses until the policy’s deductible is fulfilled before benefits are paid.
One of the benefits of the individual insurance market, as opposed to an employer’s group insurance plan, is the wide variety of products available to consumers from which to choose in order to find the correct plan based on plan benefits and associated premium costs.
The responsibility of an insurance agent is to listen to and understand the needs of the client and to help choose the policy that best fits those needs. A family with children will have different insurance needs than an older couple looking towards retirement. While many questions arise when choosing a health insurance policy, a few general questions should be reviewed including:
Which insurance company should be chosen?
Everyone has their own unique needs, so choosing an insurance policy to fit those needs is important to ensure proper coverage is provided. Insurance can be purchased through one’s life insurer, a Blue Cross and Blue Shield company, an HMO, or a PPO. Or if qualified, health insurance can be provided through government-sponsored programs, such as Medicare, Tricare, Medicaid, or Social Security Disability.
How much coverage is adequate and affordable?
In addition to selecting the provider, it is important to understand the depth of coverage provided by each health plan. Some plans cover much more expense than others, and some plans require the insured to cover a larger amount of cost, while other plans cover more cost with less out-of-pocket expense for the insured. It is also important to realize that a policy’s cost to the insured increases with its level of benefits; therefore, it is wise to choose a policy that is within one’s budget and can be maintained throughout the calendar year.
What are the policy’s Limits and Exclusions?
It is also important to understand the limits on what a policy insures against, as well as the potential exclusions. Understanding the policy’s limits and exclusions is one of the most important aspect of choosing the correct health insurance policy. As an insurance agent, it is of the utmost importance to collect and review an applicant’s medical conditions and history in order to properly promote an insurance policy for what it can and cannot do for the insured.
Additional Sources of Coverage to Consider
In addition to the private health and disability insurance policies available for individuals to purchase, employers and other qualified groups often provide health and disability insurance coverage for their employees or members of the group.
Federal and state health and disability programs are also available to individuals who qualify for coverage based on age, health, financial status or military involvement. The following sources of coverage should be considered when determining a family’s health or disability insurance needs:
Employment related benefits
- Workers’ Compensation
- Social Security
- Medicare
- Medicaid
- Tricare
With the variety of health and disability insurance policies to consider, it is important to understand the types of benefits, associated costs and potential qualifications required when choosing the correct health insurance policy to fit the needs of the client, be it an individual, family, group of employees, retirees or individuals with special medical needs.
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