Kids and Health Care: Other Medical Expenses
Basic medical expense policies usually provide benefits for inpatient services such as hospital room and board costs, surgical expenses and miscellaneous charges. Outpatient (out of the hospital) expenses are usually not covered.
Basic group plans have limitations. Usually, benefits are limited to a specified amount. Room and board charges may be limited to $300 or $400 per day for example. Surgical benefits are usually factors of a surgical schedule, which specifies the maximum surgical benefit to be paid. Miscellaneous benefits (private duty nurses, bandages, medication, in-hospital x-rays, lab work, etc.) are usually limited by an amount equal to 10 or 20 times the daily room and board rate.
Basic plans are also limited in terms of time. Most plans will specify that policy benefits will be paid for 30 days or possibly up to 365 days.
Because of these limitations, basic medical expense plans usually do not cover your medical expenses in full. As a result, you will be responsible for certain out-of-pocket expenses.
In contrast to basic group medical plans, group major medical policies provide more comprehensive benefits. Group major medical will "limit" benefits normally to what is reasonable and customary as opposed to a specific dollar amount. In essence, you are provided with a sum of money to cover medical expenses. Most insurers require 75 percent or more of the eligible members to participate. Under a non-contributory plan, the employer pays the entire premium. The insurance companies in this case require 100 percent participation.
The minimum participation requirement is to help guard against adverse selection. If a free choice were given, many people in good health might not choose the insurance, whereas many in poor health would.
Group medical coverage may cost less than individual policies depending on the ages and dependent status of the participants. If you are single, you can usually purchase individual coverage for less premium than if comparable coverage was obtained under a group policy.
When a group policy is rated, the premium may be higher or lower than individual coverage because everyone in the group is paying for every other group member. If the ages of the participants are relatively high, the premiums will be high. A single person, age 21, will consequently pay a relatively higher premium (due to the age of the group) than he or she might pay on an individual policy basis. An individual policy is rated on the age and insurability of the applicant, not an entire group.
On the other hand, a married person with several children would probably find that the group premium would be less than an individual family premium. On an individual basis, this person must "pay by the head" -- a separate premium for each covered family member. Usually, a group policy will charge a family rate regardless of the number of dependents the participant may have. This is a good deal if you have kids.
