11.2 Purchasing Health Insurance
Terms and coverages under group health policies are generally more liberal than individual health policies. Health insurance is available through state and federal government programs as well. The federal government supplies benefits for Americans through Medicare, Medicaid, and Social Security.
Group health plans that are issued by mutual companies usually provide for dividends, while stock companies frequently issue experience-rated plans. Experience-rated plans can make premium reductions retroactive for 12 months; premium increases are not retroactive. Refunds may be contingent upon renewal of the master policy, but the payment of dividends usually is not contingent upon renewal.
Claims costs and expenses are the major factors that influence whether dividends or experience-rated refunds are applied. If expenses and costs are less than predicted, group policy benefits are paid through dividends or refund credits. If expenses and costs are higher, the group policyowners may not qualify for either.
The claims examiner for health insurance differs somewhat than for life insurance. With life insurance, there are few factors to consider. First, the insured must have died; second, the policy already has a fixed death benefit; and third, the beneficiary is named. If no individual is named, the proceeds go directly to the estate.
Medical expense insurance is typically based on a contract of reimbursement. Therefore, several variable factors must be considered. First, the payable amount must be determined because the benefit is not fixed; second, it must be determined that a loss actually occurred; and third, if the diagnosis is "disabled," the extent and definition of the disability must be determined.
