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Personal Finance
, Eighth Edition
E. Thomas Garman, Virginia Polytech Institute and State University
Raymond E. Forgue, University of Kentucky
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Summaries
Chapter 11: Health Care Planning
- Health-related losses include the cost of direct medical care, the cost of recuperative care, and the lost income when one is ill or injured. HMOs, traditional health insurance, and the government-sponsored Medicare and Medicaid programs address the need for direct medical care. Long-term care insurance and disability income insurance focus on recuperative care costs and lost income, respectively. All of these plans can be obtained on an individual or group basis.
- Health care policies contain language that outlines coverage in general and, more importantly, describes the limitations and conditions that determine the level of protection afforded under the plan. Some of the more important plan provisions include definitions of terms used in the plan, identification of who is covered under the plan, and the time period for the coverage. Important limitations include deductibles and copayments, coinsurance requirements, and restrictions on the types of losses covered.
- The major benefits provided by health care plans are hospital, surgical, medical expense, major medical expense, comprehensive coverage, dental expense benefits, and vision care benefits.
- Long-term care insurance provides a per-day dollar reimbursement when the insured person must stay in a nursing home or other long-term care facility. It is not designed to provide medical care protection, as that coverage is available through other plans such as an HMO, private insurance, or Medicare/Medicaid.
- Disability income insurance replaces a portion of the income lost when you cannot work as a result of illness or injury. The amount you need is equal to your monthly after-tax income less any benefits to which you are entitled (for example, Social Security). By selecting among various policy provisions, you can tailor a policy that fills any gaps in your existing disability protection.
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