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.

1. Tim had routine surgery performed at His local hospital. All charges were within the reasonable and customary costs in His area.

Deductible

Internal limits

Coordination of benefits

Participation (co-insurance)

2. Andrew has had an illness and an accident during the year. His combined out-of-pocket expense for both incidents was $1,000. The insurance company will now start to pay some of his medical expenses. What does the $1,000 represent?

Internal limits

Deductible

Participation (co-insurance)

Coordination of benefits

3. Beth had a horrible accident that required a year of treatments and rehabilitation. Fortunately, Beths policy has a stop-loss provision that limits how much out-of-pocket expense she has to pay.

Deductible

Internal limits

Coordination of benefits

Participation (co-insurance)

4. Darnell has standard, personal medical insurance. After a recent accident, he visited the emergency room. One of the questions on the admission form asked if the accident occurred at work.

Deductible

Coordination of benefits

Participation (co-insurance)

Internal limits

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

	a $1,000,000 lifetime limit
	a $1,000 deductible and 80% coinsurance clause
	internal limits of $300 per day for a semi-private room and board, $3,000 per occurrence for x-rays, prescription drugs, and other medical expenses, and a $30,000 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, Eleanor was injured in an automobile accident. She spent 4 days in the hospital in a room that cost $450 per day, incurred $2,000 for other medical expenses, and $18,000 in surgical expenses.

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

	Policy Limit	Total Claim
Hospital charges	$300 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 Eleanor is____ .How much did Eleanor save by having her medical insurance policy?____

1.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 ($450 per day versus $300 per day). By how much would Eleanors out-of-pocket cost for her hospital room change due in hospital billing ?

Eleanors costs would decrease by $600.

Eleanors costs would increase by $240.

Eleanors costs would increase by $600.