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What Do You Mean It's Not Covered: The Mechanics of Major Medical Coverage

INSURED EXPENSES -- Confinement in a Hospital. Insured expenses for confinement in a hospital are the regular and customary charges for room (other than a private room), board and general nursing care, and miscellaneous hospital services. When an insured person is confined to a private room, we will pay up to the average semi-private room charge of the hospital, or of the community if the hospital does not have semi-private rooms.

Coverage for hospital confinement applies to the regular and customary charges a hospital makes on its own behalf for such things as room and board, general nursing care, and miscellaneous services. Benefits for room and board are limited to the semi-private room rate. Again, your insurance agent should be able to tell you how a particular company defines things like "regular and customary." An example: You submit a claim for benefits for $1,200 of miscellaneous hospital services. The insurance company determines that this amount is excessive, because it exceeds the regular and customary charges for those same services, which would be $900. It will probably disallow the $300 excess charge and only recognize $900 as "insured expenses" (this amount is still subject to deductible and copayment provisions). This is a common point of dispute because it give the insurance company pretty wide discretion in defining "regular and customary charges." However, most insurance companies know that if they take this advantage too far, they're inviting charges of bad faith -- for which juries love to award big punitive damages. In May 1992, Claudette Wyant passed out in her Omaha, Nebraska, home because of heavy vaginal bleeding. She was rushed to nearby St. Joseph's Hospital and admitted. The medical staff there conducted a battery of tests to check for cancer -- a common cause of Wyant's symptoms. The doctors at St. Joseph's found no cancer and, with a few basic surgical procedures, corrected Wyant's problem. In all, she had to stay in the hospital about two weeks. A short time later, the hospital sent its bill -- for more than $7,200. Wyant was surprised by the amount. She hadn't inquired about costs during her hospital stay. Her insurance paid $2,430, and Wyant paid $30, leaving an unpaid balance of $4,740.

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