Lesson 18 Review
Insurance companies look at small groups more closely. If there is one "very risky" person among the group, that group as a whole may be required to make higher premium payments to compensate the insurer for the risk. Therefore, insurance companies reserve the right to have individual underwriting within group policies.
The three most important factors in classifying risks are physical condition, moral hazards and occupation.
- Preferred Rate - Lower premium (better than average risk)
- Standard Rate - Normal premium (standard terms and rates)
- Substandard Rate - Higher premium (higher than average risk)
- Uninsurable - Decline coverage altogether
The three primary factors involved in establishing premiums rates are morbidity, interest, and expenses.
In individual plans, premiums paid for personal disability income insurance by an individual are taxed. Disability benefits are tax free to recipients. In group plans, premiums paid for disability income insurance by employers are considered tax deductible. The recipients of disability benefits are taxed. If a person is self-employed, all medical care (including premiums) is fully tax deductible. Premiums for employees who are also family members are fully deductible as well.
Treatments that can be considered deductible medical expenses include:
- prescription drugs,
- insulin,
- hospital expenses,
- physician and surgeon fees,
- nursing care,
- dental care,
- rehabilitative treatments, and
- medical insurance premiums.
Medical cost management utilizes four general approaches: Mandatory second opinions, precertification review, ambulatory surgery, and case management.
The information contained in Unit 23 of the Florida study manual has been presented in Lesson 18 of the online course.
