9. Medical Expense Plans and Concepts

📄️ 9.0 Medical Expense Plans and Concepts

Learning Objectives

📄️ 9.1 General Definitions

| Term | Definition |

📄️ 9.2 Classification of Healthcare Plans

Indemnity (Reimbursement) Plan: An indemnity plan allows the insured to select any physician or hospital without the need for referrals or a designated primary care provider. Under this type of plan, the insured typically pays for medical services at the time they are received and then submits a claim to the insurer for reimbursement. The insurer reimburses the insured according to the policy's benefit provisions, up to the amount of covered expenses incurred. Indemnity plans are most commonly offered through commercial insurance companies.

📄️ 9.3 Payment and Benefit Structure

Payment Structure Comparisons

📄️ 9.4 Blue Cross and Blue Shield Associations (BCBS)

Blue Cross and Blue Shield plans are commonly structured as prepaid health care plans. Under these arrangements, subscribers pay a fixed premium—typically on a monthly basis—in exchange for access to health care services at predetermined, negotiated rates. These negotiated fees are established through contractual agreements between the plan and participating health care providers.

📄️ 9.5 Health Maintenance Organizations (HMOs)

A Health Maintenance Organization (HMO) is a type of managed health care system that provides a comprehensive range of medical services on a prepaid basis. Under this arrangement, members pay a fixed premium, and most covered services are provided with little or no out-of-pocket expense beyond required copayments. Individuals enrolled in HMO plans are referred to as subscribers, rather than insureds.

📄️ 9.6 Preferred Provider Organizations (PPOs)

A Preferred Provider Organization (PPO) is a health care arrangement in which a network of independent hospitals, physicians, and other medical providers agree to offer services to plan members at negotiated, discounted rates. Unlike Health Maintenance Organizations (HMOs), PPO providers typically operate on a discounted fee-for-service basis, meaning providers perform services and are paid directly after treatment is rendered according to a negotiated fee schedule.

📄️ 9.7 Point of Service (POS)

A Point-of-Service (POS) plan combines features of both Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Under this arrangement, members may decide at the time services are needed (the point of service) which type of coverage they wish to use.

📄️ 9.8 Basic Health Insurance Policy

Basic medical expense policies traditionally provide coverage for several categories of hospital and physician-related expenses. These policies typically cover physician visits while the insured is hospitalized (medical expense) and hospital room and board charges (hospital expense). Coverage may also be expanded to include additional services such as physician office visits, diagnostic X-rays, laboratory services, ambulance transportation, operating room charges (miscellaneous expenses), and surgeons' fees for surgical procedures (surgical expense). In some cases, maternity benefits may be added for an additional premium. Basic medical expense policies generally do not include coverage for routine vision or dental care.

📄️ 9.9 Major Medical Expense Insurance and Terminology

Medical expense policies that cover both sickness and accidental injury generally require that an illness be diagnosed and treated while the policy is in force in order for benefits to be payable.

📄️ 9.10 Medical Expense Benefits and Provisions

Medical expense plans include specific benefits and policy provisions that are established in accordance with federal and state regulations. These regulations may impose requirements, limitations, or standards that affect how coverage is structured and administered.

📄️ 9.11 Medical Expense Insurance Optional Benefits

Vision Care

📄️ 9.12 Limited Policies

Limited health insurance policies are designed to address specific, defined health exposures rather than providing broad medical coverage. Each policy clearly identifies the particular exposure it covers — such as prescription drugs or vision care — along with the corresponding benefit amount payable under that coverage.