Health Insurance Information
What kinds of
health insurance are there?
There are essentially two kinds of
heath insurance: Fee-for-Service and Managed Care. Although these plans
differ, they both cover an array of medical, surgical and hospital expenses.
Most cover prescription drugs and some also offer dental coverage.
These plans generally assume that the medical professional will be paid
a fee for each service provided to the patient. Patients are seen by a
doctor of their choice and the claim is filed by either the medical
provider or the patient.
- Managed Care
More than half of all Americans have some kind of managed-care plan.
Various plans work differently and can include: health maintenance
organizations (HM0s), preferred provider organizations (PPOs) and
point-of-service (POS) plans. These plans provide comprehensive health
services to their members and offer financial incentives to patients who
use the providers in the plan.
Because of old
age, mental or physical illness, or injury, some people find themselves in
need of help with eating, bathing, dressing, toileting or continence, and/or
transferring (e.g., getting out of a chair or out of bed). These six actions
are called Activities of Daily Living–sometimes referred to as ADLs. In
general, if you can’t do two or more of these activities, or if you have a
cognitive impairment, you are said to need “long-term care.”
Long-term care isn’t a very helpful name for this type of situation because,
for one thing, it might not last for a long time. Some people who need ADL
services might need them only for a few months or less.
Many people think that long-term care is provided exclusively in a nursing
home. It can be, but it can also be provided in an adult day care center, an
assisted living facility, or at home.
Assistance with ADLs, called “custodial care,” may be provided in the same
place as (and therefore is sometimes confused with) “skilled care.” Skilled
care means medical, nursing, or rehabilitative services, including help
taking medicine, undergoing testing (e.g. blood pressure), or other similar
services. This distinction is important because Medicare and most private
health insurance pays only for skilled care–not custodial care.
What are the
types of disability insurance?
There are two
types of disability policies: Short-Term Disability (STD) and Long-Term
Disability policies have two different protection features
that are important to understand.
- Short-Term Disability policies (STD) have a
waiting period of 0 to 14 days with a maximum benefit period of no
longer than two years.
- Long-Term Disability policies (LTD) have a
waiting period of several weeks to several months with a maximum benefit
period ranging from a few years to the rest of your life.
- Noncancelable means the policy cannot be
canceled by the insurance company, except for nonpayment of premiums.
This gives you the right to renew the policy every year without an
increase in the premium or a reduction in benefits.
- Guaranteed renewable gives you the right to
renew the policy with the same benefits and not have the policy canceled
by the company. However, your insurer has the right to increase your
premiums as long as it does so for all other policyholders in the same
rating class as you.
In addition to the traditional disability policies, there
are several options you should consider when purchasing a policy:
- Additional purchase options
Your insurance company gives you the right to buy additional insurance
at a later time.
- Coordination of benefits
The amount of benefits you receive from your insurance company is
dependent on other benefits you receive because of your disability. Your
policy specifies a target amount you will receive from all the policies
combined, so this policy will make up the difference not paid by other
- Cost of living adjustment (COLA)
The COLA increases your disability benefits over time based on the
increased cost of living measured by the Consumer Price Index. You will
pay a higher premium if you select the COLA.
- Residual or partial disability rider
This provision allows you to return to work part-time, collect part of
your salary and receive a partial disability payment if you are still
- Return of premium
This provision requires the insurance company to refund part of your
premium if no claims are made for a specific period of time declared in
- Waiver of premium provision
This clause means that you do not have to pay premiums on the policy
after you’re disabled for 90 days.