Basic Medical Expense Plans
- Basic Hospital Expense
- Basic Surgical Expense
- Basic Physicians (Non-Surgical) Expense
MR. WATSON: Basic medical expense insurance is often called
- "first dollar." (always pays first)
- no deductibles and
- no coinsurance.
We're talking about individual or group plans.
MR. WATSON: First dollar coverage. These policies used to be, in the past, very, very popular. When you went in the hospital, they started paying from day one. No deductibles, no co-insurance. When you would go in the hospital, they paid a daily amount. The insurance company keeps the premiums down by limiting benefits. That's why they call them first dollar. If it says "Basic" there are no deductibles, no coinsurance. They pay first dollar.
Basic Hospital Expense
MR. WATSON: Basic Hospital Expense. Basic hospital expense insurance reimburses only for the period of the hospital confinement. Always remember this: many policies today will provide benefits on an outpatient basis if they would have covered those benefits as an inpatient. That just makes sense, doesn't it? If the policy will cover it as an inpatient, then it will automatically cover it as an outpatient. Why? Because outpatient would be cheaper than inpatient. Does that make sense?
STUDENTS: Yes.
MR. WATSON: Now, the Basic Hospital policy covers two categories:
- Room and board and
- Miscellaneous expenses. Covered miscellaneous expenses include
- drugs, $150
- X-rays,
- use of the operating room,
- anesthesia, (NOT the anesthesiologist, covered under the Basic Surgical policy)
- supplies,
- dressings, things like that. (Know these)
MR. WATSON: How does it pay the benefits? We know what it covers. It covers room and board and miscellaneous expenses. Agreed?
ALL: Yes.
MR. WATSON: How does it pay the benefits? You buy a policy with a daily amount for the room and board, say $500 a day. If you are in there for ten days, then the policy is going to pay no more than $5,000 for room and board.
MR. WATSON: How does it pay for miscellaneous expenses? They are expressed as a multiple of the daily room and board. Not a percentage. A multiple. Maybe 10 times or 20 times the daily room and board. So if it was 20 times the daily room and board, it would be $500 multiplied by 20. It would be $10,000 maximum for miscellaneous items.
MR. WATSON: But the miscellaneous expense benefit is going to have maximums within it. In other words, let's say drugs are assigned a maximum of $150. Maybe for use of the operating room it's going to pay $350 max. I have no idea. I'm just making up numbers. X-rays, maybe it will pay $200 max. Now, does it cover the anesthesia? Yes. Does it cover the anesthesiologist? No. That's covered under a different section of the policy. So the maximum it pays for drugs in this example would be $150, even though the hospital charged $175. The insured is out $25 in this example. But when you add everything up, the policy would not pay more than 20 times the $500. Does that make sense?
STUDENT: What if the hospital charges for all the miscellaneous stuff was less than $10,000, but the drugs alone exceeded the $150? Would it cover the portion of the drugs that exceeded $150, or would that be up to the policy holder?
MR. WATSON: It would not pay more than the maximum stated for drugs, in this case no more than $150. In other words, if the hospital charged $175 for drugs during your stay the policy would only pay $150, the limit. If the hospital charged $125 for the drugs, your policy would pay $125. It will pay the cost up to a specific dollar amount, no more.
MR. WATSON: So we know what it covers. It covers room and board, miscellaneous expenses. We know what's covered under miscellaneous: X-rays, drugs, use of the operating room, supplies, anesthesia, dressings. Make sure you understand this before you move on.
STUDENTS: Yep.
MR. WATSON: We know how it's paid.
