HLI - Health Insurance Lesson

Health Insurance

Introduction

There is so much debate in our country over the staggering cost of healthcare. Have you ever wondered what all the fuss was about? Do you know what types of insurance policies are actually required? Do you know how to evaluate which health insurance policy is best for you? This unit will walk you through the daunting task of evaluating and selecting the best policies for you. 

In Your Notebook: Please take down important notes, such as formulas, and attempt the practice examples on your own before viewing the solutions!

Health Insurance Premiums

Health insurance protects a person against overwhelming medical expenses. Health insurance can be purchased by joining a group plan through your employer. Employers typically pay a portion or, in some cases, all of the premium. This contribution from your employer helps a LOT with the cost of health care. An employee can choose an individual plan or a family plan. 

Health Insurance Benefits

A comprehensive health insurance plan includes three kinds of insurance.

Hospital insurance pays most of the cost of hospitalization, room and laboratory tests.

Surgical-medical insurance pays your doctor's fee for surgery, up to a certain amount.

Major medical insurance is to protect you against the other costs of a serious and expensive illness.

Most major medical policies have a deductible clause and a coinsurance clause. A coinsurance clause tells the insured the percent of the expenses that they are responsible for paying after they have paid the deductible. A deductible is an amount of the bill that you have to pay first and then the insurance company will pay the percentage for which they are responsible.

Amount Paid by Patient = Deductible + Coinsurance Amount

Example:

William has a comprehensive health insurance policy that has a $500.00 deductible and a 15% coinsurance clause. He has just returned home from the hospital after having surgery. His bills totaled $38,600.00. His hospital and surgical-medical insurance covered $31,760.00 of the bill. What amount does William have to pay?

Find the amount that is not paid by his hospital and surgical-medical insurance.

Amount not paid = $38,600.00 - $31,760.00

Amount not paid = $6,840.00

Find the amount subject to coinsurance.

Amount subject to coinsurance = $6,840.00 - $500.00 ($500.00 deductible)

Amount subject to coinsurance = $6,340.00

Find the coinsurance amount paid by William.

Coinsurance amount paid by William = $6,340.00 x 0.15

Coinsurance amount paid by William = $951.00

Find the total amount paid by William.

Total amount paid by William = $951.00 + $500.00

Total amount paid by William = $1,451.00

Practice

Attempt the following examples. Flip the card to check your answer.

If you found any of these problems challenging, here is a video that will go over the answers.

First Chart

Second Chart

Uninsured vs. Insured Costs

Take a look at the following graph which shows the cost of care of an uninsured person (orange) and the cost for an insured person (blue).

 

IMAGES CREATED BY GAVS and OER