9.8 Basic Health Insurance Policy
Basic medical expense policies traditionally provide coverage for several categories of hospital and physician-related expenses. These policies typically cover physician visits while the insured is hospitalized (medical expense) and hospital room and board charges (hospital expense). Coverage may also be expanded to include additional services such as physician office visits, diagnostic X-rays, laboratory services, ambulance transportation, operating room charges (miscellaneous expenses), and surgeons' fees for surgical procedures (surgical expense). In some cases, maternity benefits may be added for an additional premium. Basic medical expense policies generally do not include coverage for routine vision or dental care.
Under this type of policy, the insured has the freedom to select any physician, surgeon, hospital, or health care provider, and referrals to specialists are not required. Benefits are typically defined by the policy using either a fixed dollar amount or a scheduled list of benefits for specific services. As a result, the amount payable may be less than the actual medical expenses incurred.
Basic medical expense plans usually do not require a deductible, meaning benefits may be paid from the first dollar of covered expenses. For this reason, these policies are often referred to as providing "first-dollar coverage.”
Basic medical expense insurance policies are often divided into several categories based on the type of medical expenses they cover. Each policy focuses on a specific set of health care services.
Basic Medical Expense Coverage: This type of policy provides benefits for physician office visits, nonsurgical doctor services, diagnostic X-rays, laboratory testing, ambulance services, and nursing care provided outside of a hospital setting. Some policies may also include limited coverage for prescription medications.
Basic Hospital Expense Coverage: A basic hospital expense policy covers the cost of hospital room and board, typically limited to a semi-private room with a specified daily benefit amount. These policies may also cover miscellaneous hospital expenses up to a daily maximum. Covered services may include inpatient X-rays, laboratory services, operating room charges, medications administered during hospitalization, and anesthesia costs.
Basic Surgical Expense Coverage: Basic surgical expense policies provide benefits for surgeon and anesthesiologist fees associated with surgical procedures. These policies usually determine benefits according to a surgical schedule, which lists the maximum amount payable for specific procedures. If a particular surgery is not listed in the schedule, the insurer will typically determine payment based on the benefit assigned to a comparable surgical procedure.
Another method used to calculate surgical benefits is the relative value scale. Under this approach, each surgical procedure is assigned a specific number of points based on the complexity and difficulty of the procedure. The insurer then multiplies the number of points by a set dollar value per point to determine the amount of the benefit payable.
Quiz
1. What is meant by "first-dollar coverage” in a basic medical expense policy?
A. The policy pays only after the insured pays the first deductible.
B. The policy begins paying benefits without requiring a deductible.
C. The policy only pays the first claim of the year.
D. The insured must pay the first medical bill before coverage begins.
Correct Answer: B
Rationale: Basic medical expense policies typically do not require a deductible, meaning the insurer may begin paying benefits from the first dollar of covered expenses. This is why they are commonly referred to as providing first-dollar coverage.
2. Which type of coverage pays for physician office visits, diagnostic X-rays, laboratory services, and ambulance services outside the hospital?
A. Basic Hospital Expense Coverage
B. Basic Medical Expense Coverage
C. Basic Surgical Expense Coverage
D. Major Medical Coverage
Correct Answer: B
Rationale: Basic medical expense coverage includes benefits for physician services outside the hospital, diagnostic testing, ambulance services, and other nonhospital medical expenses.
3. What type of expense is primarily covered by a Basic Hospital Expense Policy?
A. Surgeon and anesthesiologist fees
B. Prescription drug coverage
C. Hospital room and board and related inpatient services
D. Chiropractic and dental care
Correct Answer: C
Rationale: A basic hospital expense policy covers hospital room and board (usually a semi-private room) and may also include miscellaneous inpatient services, such as laboratory work, X-rays, medications, anesthesia, and operating room charges.
4. How are benefits typically determined under a Basic Surgical Expense Policy?
A. Based on the insured's income level
B. Based on the actual hospital bill
C. Based on a surgical schedule or relative value scale
D. Based on a monthly capitation payment
Correct Answer: C
Rationale: Basic surgical expense policies usually determine benefits through a surgical schedule, which specifies the maximum benefit for each procedure. Another method is the relative value scale, which assigns points to procedures based on complexity and multiplies them by a set dollar value.
5. Which statement accurately describes provider choice under a basic medical expense policy?
A. The insured must use only network providers.
B. The insured must obtain a referral before seeing a specialist.
C. The insured may choose any physician, surgeon, or hospital.
D. The insured may only receive treatment from contracted providers.
Correct Answer: C
Rationale: Basic medical expense policies generally do not restrict provider choice, allowing the insured to select any doctor, hospital, or health care provider without requiring referrals to specialists.