Health Care Insurance and Cost Management - Introduction to Health Care Insurance
HOSPITAL, SURGICAL, AND PHYSICIANS EXPENSE INSURANCE
It is essential for people/client's to protect themselves from the risk associated with health care costs. There are several different types of health insurance coverage. The most basic form is hospital, surgical, and physician expense insurance.
Hospital expense insurance- This insurance helps a person pay hospital bills left uncovered by a comprehensive medical plan. Typically the policy will pay a fixed or specified amount. There are some polices that will pay a percentage of actual costs.
Surgical expense insurance - This insurance helps pay the surgeon's, surgeon's assistant, anesthesiologist's, and other related surgical fees left uncovered by a comprehensive medical plan. These fees are paid according to a schedule that lists the procedure and the presumed cost.
Physicians expense insurance - This insurance helps pay the fees associated with doctor's visits left uncovered by a comprehensive medical plan. The insurance excludes any costs associated with surgery. Much like the hospital expense insurance the policy will pay a fixed amount per visit.
Joe recently injured his back playing golf with a group of friends. He visited the doctor and was told he needed surgery to repair his back. He is trying to estimate his cost associated with the surgery. He is told the surgery will cost around $5,000 and he should expect to spend 3 days in the hospital. Staying overnight in the hospital will cost $200 a day.
He owns a hospital expense insurance policy that pays $75/day and a surgical expense policy. According to the schedule given to him by his insurance company his back surgery should cost around $2,200. He does not own or is not covered by a comprehensive or major medical policy. How much will Joe spend out-of-pocket for his surgery?
It will cost Joe $5,600 for the surgery ($5,000 for the operation and $600 for the hospital stay). Of the $5,000, the insurance company will pay $2,200. This leaves Joe with $2,800 that he will have to pay. Of the $600 for the hospital stay, the insurance company will pay 225 ($75*3 days). This leaves Joe with $375 out-of-pocket. In total Joe will have to pay $3,175