Medical Expense Insurance Exam Questions and Answers Solved Correctly

Medical Expense Insurance Exam Questions and Answers Solved Correctly

Medical expense insurance - Answers provides benefits for medical care. Contracts may provide for
payment of medical expenses incurred on a reimbursement basis (by paying benefits to the
policyowner), payment on a service basis (by paying those who provide the services directly), or
payment of an indemnity (by paying a set amount regardless of the amount charged for medical
expenses). Medical expense or hospitalization insurance may be written on an individual or group basis.
Benefits provided cover the individual and eligible dependents. Although there are many types of
benefits available, medical expense insurance can generally be categorized as basic medical expense
insurance, major medical insurance, comprehensive medical insurance, and special policies. Note that
these products have largely been replaced by managed care alternatives and are no longer sold as
stand-alone coverages. These types of plans have been modified and replaced in response to changes in
the health care field relative to cost containment and market competition. However, an understanding
of basic medical, hospital, and surgical plans can serve as a foundation for understanding the hybrid
plans currently being marketed. Basic coverages provided by an individual medical expense policy
include hospital expense, surgical expense, and medical expense. These three basic coverages may be
sold together or separately. Frequently this is written as "first dollar" coverage, which means it does not
have a deductible.

Hospital Expense Benefits - Answers provides benefits for expenses incurred during hospitalization. In
some cases, surgical benefits may be included for certain types of surgery and associated costs.

Hospital indemnities are usually classified into two broad groups: - Answers Room and board, including
nursing care and special diets; Miscellaneous medical expenses, including x-rays, laboratory fees,
medications, medical supplies, and operating and treatment rooms

Room and Board Benefit - Answers Hospital expense coverage provides benefits for daily hospital room
and board and miscellaneous hospital expenses (not including telephone and television) while the
insured person is confined to the hospital. The policy may provide for a certain dollar amount for the
daily hospital room and board benefit, although the trend is toward coverage of not more than the
semiprivate room rate unless a private room is medically necessary. The room and board benefit may be
paid on either an indemnity basis or a reimbursement basis, depending on the particular policy. When
room and board are covered on an indemnity basis, the insurer pays a specified, preestablished amount
per day, as shown in a schedule in the policy, for a stated maximum number of days. Indemnity policies
are sometimes called dollar amount plans. Room and board rates vary by geographic location, but it is
not unusual to find room and board rates ranging from $300 to $500 per day or more. Typically, the
maximum number of days is from 90 to 365. More commonly, room and board expenses are paid on a
reimbursement basis. This is also referred to as an expenses-incurred basis. Some room and board
benefits include intensive care, which may be paid in full or in part. Hospital plans with this provision
generally provide for a maximum intensive care benefit of some multiple of the room and board
maximum—usually two or three times. For example, if the room and board maximum is $400 per day,
the plan might pay twice that amount, or $800 per day, for intensive care. A limit might also be placed
on the number of days for which this benefit will be paid.

, Under a reimbursement arrangement, the policy will pay in one of two ways. - Answers 1) The actual
charges for a semiprivate room are covered. 2) A percentage of the actual charges is paid, with no
specific dollar limit. Under the first reimbursement option—actual charges—the insurer will pay the full
actual semiprivate room rate, regardless of what it is, as indicated in the illustration that follows. Under
this same arrangement, however, the insurer still pays only the semiprivate room rate if the insured
must be in a private room, as indicated in the following chart. Under the second reimbursement option
—payment of a percentage of the actual charges—the insurance company pays a specified percentage,
regardless of what the actual charges are. A common percentage is 80%.

Miscellaneous Medical Expenses Benefit - Answers Benefits for miscellaneous medical expenses are
generally stated as a limit separate from the room and board benefits. Usually, the limit is expressed as
some multiple of the per-day limit for room and board—such as 10 or 20 times—for each period of
hospital confinement. For example, a policy might state that it will pay 10 times the semiprivate room
rate. If the semiprivate rate is $500 per day, a total of $5,000 (10 × $500) is available for miscellaneous
expenses during this single stay in the hospital. If, a year later, the rate has increased to $550 per day,
$5,500 will be available.

Surgical Expense Benefits Scheduled Plan - Answers Surgical expense policies pay surgeons' fees and
related costs incurred when the insured has an operation. Related costs might include fees for an
assistant surgeon, an anesthesiologist, and even the operating room, when it is not covered as a
miscellaneous medical item. Basic surgical coverage is often included in the same policy as basic hospital
and medical expense. Benefit amounts are included in a schedule that lists major commonly performed
operations and benefits payable for each. The fact that a particular type of surgery is not listed in the
schedule does not mean that no benefit is available to cover it. Instead, insurers indemnify on the basis
of the absolute value and the relative value of each surgical procedure. In some cases, the schedule
itself may be referred to in terms of the maximum benefit paid for the most costly procedure, with all
other surgical benefits paid as a percentage of that maximum. For example, under a $10,000 schedule,
that amount might be paid for open-heart surgery. A less complex procedure, such as a tonsillectomy,
might trigger a benefit equal to 10% of that, or $1,000.

Surgical Expense Benefits Nonscheduled Plan - Answers When surgical benefits (and sometimes other
benefits) are not listed by a specific dollar amount in a schedule, a policy will pay on the basis of what is
considered usual, customary, and reasonable (UCR) in a certain geographic area. This type of indemnity
is found more often in the major medical and comprehensive policies discussed later in this unit. Under
this type of arrangement, the definition of UCR is based on the amount physicians in the area usually
charge for the same or similar procedures. These nonscheduled plans allow policies to stay apace of
inflation and to avoid policy restructuring every time medical costs increase. The insurer still reserves
the right to agree or disagree that a particular charge is usual, customary, and reasonable.

Regular Medical Expense Benefits sometimes called physicians' nonsurgical expense - Answers
Remember that some states refer to this particular category as basic medical expense. Coverage is for
nonsurgical services a physician provides. For example, this type of limited benefit might pay for up to
three visits per day at $10 per visit for no more than 30 days. In other policies, the benefit might be for