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Common Health Insurance Policy Inclusions

Hospital expense benefits provide for expenses incurred during hospitalization and usually fall into two main categories: 

Room and board - including nursing care and special dietary requirements

Miscellaneous medical expenses - including x-rays, lab work, medications, medical supplies and operating and special treatment rooms

In some cases, benefits might be included for certain surgeries and related costs like pain killers given during a hospital stay.   Room and board benefits may be paid based on indemnity or reimbursement depending upon the particular policy.  When paid on an indemnity basis, the insurer pays a specified rate per day that has been pre-determined and is detailed in a schedule within the policy.

The schedule will give the details of the benefit coverage as it pertains to length of stay.  Once the length of stay has been exhausted, no more benefits are available.  These indemnity policies are sometimes called dollar amount plans and typically the number of days is from 90 up to 365.

The more commonly used insurance plan is on a reimbursement basis, also called an expense-incurred basis.  With this coverage the policy will pay in one of two ways - the actual charges for a semi-private room or a percentage of the actual charges.  There are no specific dollar amounts but a maximum number of days will still be specified.

Surgical Expense Benefits fall into two plans, scheduled and non-scheduled. 

Scheduled plan - surgical expense policies pay the fees incurred from the surgeons services and related costs incurred when the insured has an operation.  Typical related costs include fees for an assistant surgeon, anaesthesiologist and can even include the operating room when it is not covered as a miscellaneous item.

Basic surgical coverage can be included in the same policy as basic hospital and medical expense and is normally included in a schedule listing major commonly performed operations and the benefits payable for each.  Important, you need to be aware of how the insurance company determines the benefit.   Just because a specific surgery is not listed in the schedule does not necessarily mean that there is no benefit for it available.  It might mean that the insurer indemnifies that surgery based on absolute value and the relative value of each procedure.

For example, the insurer determines that a certain surgical procedure has a prevailing value of $1500 and indicates that in the schedule included in your policy.  That is considered the absolute value.  Now, let’s say that there is another procedure not listed in the schedule that is for instance, 50% less complicated than the $1500 procedure.  In this case, the relative value would be $750 and that is the benefit amount that will be paid for the less complicated procedure.

Using a non-scheduled scenario, when surgical benefits are not listed by a specific dollar amount in a schedule, the policy will pay based on what is considered usual, customary and reasonable in a certain geographical area and is also known as UCR.

As you might imagine, under this type of arrangement the UCR is determined by the amount that physicians in the local area usually charge for the same procedure. 

Regular medical expense benefits are another category that is sometimes known as physician’s non-surgical expense.  This coverage is for non-surgical services a physician provides and can sometimes be narrowly applied to physician visits while the patient is in the hospital.  If this is the case the benefit will usually pay for a specified maximum number of visits per day, a specified maximum dollar amount per visit and a specified number of days. 

Additional Policy Coverages

Additional medical expense benefits fall into a supplemental category to hospital, surgical and medical benefits previously discussed.  Optional benefits vary from insurer to insurer and may or may not be included as part of their standard policies.  Separate policies can sometimes be written to include these benefits.  Some of them are:

The most commonly used are: 

Maternity benefits are sometimes included in policies subject to certain conditions and limitations.  A usual limitation is a 10 month waiting period designed to prevent the purchase of health insurance just to cover pregnancy and childbirth expenses.  Increasingly, group policies for employee groups of 15 or more are required by law to provide maternity benefits on the same basis as non-maternity benefits.  Thus, the waiting period would not apply unless non-maternity benefits also required a 10 month waiting period.

Other benefits that are sometimes available under the same maternity coverage might include caesarean deliveries, natural abortions and elective abortions.