Question

Health Insurance Topical Analyses?

Medical Expense Insurance: What is it? How does it work? Basic, major medical? Individual / Group? Managed care? HIPPA? COBRA? Taxation?

Answer 1

What is Medical Expense Insurance?

Medical expenses insurance is a type of health insurance where medical, surgical and hospital expenses are being covered by an insurance company upto pre-determined limit decided. It acts as cover during emergency for all kinds of medical services.

How does it work?

It is a contract of reimbursement between insurer and insured. There are cashless insurance services where except few $ everything will be paid by insurance company to doctor or hospital directly, member will be paying only for few items which are not covered under policy. Sometimes insured pays the entire amount and can ask insurance company for reimbursement.

There can also be upper cap on the reimbursement amount so in that situation if bill goes beyond the amount, insured will bear the additional expenses. There can also be certain restriction on the coverage of illness which are considered into insurance plan.

Basic and Major Medical Insurance –

Basic Medical Insurance – has limited coverage and limited types of medical care mostly for to cover the basic medical need on an individual like flu and fever.

Major Medical Insurance – has complete coverage and consider many critical illnesses where the treatments are expensive.

Individual and Group Plan –

In Individual plan one person is covered for medical expense insurance but in group plans more than one person is covered in the plan. Group plan is mostly like family plan where entire family will be covered for basic and major illness. For a family group plan will be best as it would cost less, and every member of family would be covered in the plan. Only risk in group plan is if every member will fall sick on same year.

Managed Care Plan

Managed care plan is a network-based plan which is more economical and cost effective. It’s a contract between health care providers and medical facilities to provide care for members at lesser costs. Plan network has some predefined rules and pay for care depends on the rules. Managed care plan can be with restricted choices and with flexibilities. Cost will be depended on the selection of plan.

HIPPA

HIPAA stands for Health Insurance Portability and Accountability. HIPAA is US legislation that provides data security and privacy of medical information. Cyber threat to health data has made this law the need of hour. This law protects data again cyberattack and ransomware attack on health insurance companies.

COBRA

COBRA is also known as Consolidated Omnibus Budget Reconciliation Act of 1985. This law makes an insurance program mandatory under which an employee continues to get health insurance coverage after leaving employment. To elaborate further, when an employee loses her job or has to reduce her working hours, she and her dependents continue to get the benefits of insurance coverage. The coverage that they will get will be at pre decided group rates but the employee will have to pay more for coverage under COBRA than she would have as an employee. But still the COBRA coverage would cost less than an individual health insurance plan.

Taxation?

Taxation is medical expense or medical premium expenses which is tax deductible and can be considered for tax deduction. Deduction is limited to overall costs that exceed 7.5% of gross income.