NAVOTAS POLYTECHNIC COLLEGE

Bangus St., Corner Apahap St., NBBS, City of Navotas

NPC ONLINE COURSE GUIDE FOR AY 2021-2022

Course Title: Personal Finance

Course Book Title: Personal Finance 13th edition, E.T. Garman and [Link] (2018)
Name of Faculty: Jerosalem Bagaforo, Joan Jimenez, and Maricar Artuz
Module Number: 7 of 10

Lesson Title/Topic: Managing Health Care Expenses

Intended Learning Outcomes:

After this chapter you should be able to:

1. Identify ways that people can manage the financial burdens resulting from illness or injury.
2. Distinguish among the types of protection for direct medical expenses.
3. Describe the general benefits and limitations of medical care plans.
4. Explain how to protect yourself from the expenses for long-term care.
5. Develop a plan for protecting your income when you cannot work due to disability

Learning and Teaching Support Materials

1. Document (PPT)
2. Book references: German, E.T., and Forgue R.E, T. (2018). Personal Finance, Cengage
Learning.

MODULE 7

ADDRESSING THE FINANCIAL BURDENS OF ILLNESS OR INJURY

A group health plan is sold collectively to an entire group of people rather than to in dividuals. The
medical care plan offered by many companies is an example of a group plan.

Each of the three types of losses resulting from illness or injury can be addressed in multiple ways. Of
course, you can pay all of your own expenses.

1. Covering Your Direct Medical Care Costs

2. Covering Your Rehabilitative and Custodial Care Costs
3. Covering Your Lost Income

Make the following your money habits in managing health expenses:

1. Always maintain coverage for direct health care expenses.

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2. When changing employers, consider continuing your medical care plan coverage using rights
established through the COBRA law.
3. Working people should sign up for an employersponsored premium conversion plan and a flexible
spending account for health care spending, when available, to save money on taxes.
4. If you are a frequent user of health care, reduce spending on deductibles and coinsurance by choosing
an HMO or PPO.
5. Take advantage of employer-sponsored long-term disability income insurance or consider purchasing
protection individually.
6. Regularly reevaluate your need for long-term care insurance against your resources for providing
such care on your own.

SOURCES OF PROTECTION FROM DIRECT MEDICAL CARE COSTS

A medical care plan is a generic name for any program that pays or provides reimbursement for direct
medical care expenditures. When a medical plan is available as an employee benefit, the employer
typically pays the cost for the worker (and possibly other members of the worker’s immediate family) for
the lowest-cost plan the employer offers. Employees can choose a higher-priced option or add family
members to the coverage by paying an additional charge. New employees generally must make a choice
among the available plans within the first few days of being hired.

Health Maintenance Organizations

 Health maintenance organizations (HMOs) provide a broad range of health care services for a
set monthly fee on a prepaid basis. For the specific monthly fee,
 Health insurance provides protection against financial losses resulting from illness and injury. It
may cover hospital, surgical, and other medical expenditures.

Consumer-Driven Health Care

Consumer-driven health care is a term describing an approach to medical care that is different than that
of typical HMOs and traditional health insurance. With these two latter approaches, consumers pay very
little out of their own pocket for their medical care and, thus, have little incentive to minimize health
care spending. The principle behind consumer-driven health care is that knowledgeable and informed
patients/employees will spend their own money more carefully than they would spend an employer’s or
health plan’s funds. Therefore, consumer-driven plans require higher out-of-pocket spending by
consumers so that they will shop around, compare prices, pick and choose among options, and all the
other things consumers normally do when making expensive purchases.

MAKING SENSE OF YOUR MEDICAL PLAN BENEFITS

You can save yourself considerable confusion, delay, and money if you understand your health plan
benefits before illness or injury strikes. If you have group plan, you will receive a certificate of insurance
that outlines your benefits. If you have purchased a plan on your own, you should become familiar with
your health insurance policy or your HMO contract. Here are some questions to ask yourself and
background information to understand what you find in these documents.

What Types of Care Are Covered?

The typical medical care plan covers hospital room and board expenses, surgical procedures both as an
inpatient and outpatient, prescription drugs, diagnostic tests, visits to the doctor’s office, and many other
aspects of health care. Dental and vision care are generally not covered. You can buy separate dental
expense insurance

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What Types of Care Are Covered?

The typical medical care plan covers hospital room and board expenses, surgical procedures
both as an inpatient and outpatient, prescription drugs, diagnostic tests, visits to the doctor’s
office, and many other aspects of health care. Dental and vision care are generally not covered.
You can buy separate dental expense insurance period.

Who Is Covered?

Medical care plans can be written to cover an individual, a family, or a group. Few
misunderstandings arise when an individual is the focus of the coverage, but family policies can
be more complex. Generally, a family consists of a parent or parents and dependent children.
Are children who are born while the plan is in effect automatically covered from the moment of
birth? What about stepchildren? At what age are children no longer covered? These questions
must be answered to ensure that all family members receive adequate protection.

When Does Coverage Begin and End?

Individual and group medical care plans are usually written on an annual basis. An annual plan
beginning on January 1 will start at 12:00 a.m. that day and end at 11:59 p.m. on December 31.
Any illness that begins during the year will be covered. But will coverage continue if the plan
expires while you are in the hospital? The answer is usually yes. Similarly, a surgical procedure
performed after a plan expires but for an illness or injury for which treatment was originally
begun during the plan period may be covered.

PLANNING FOR LONG-TERM CARE

Many health care episodes include a period of time when the patient no longer needs skilled
medical care but does need assistance to a degree that requires confinement in a nursing home
or special help at home. This need is especially prevalent with the extremely elderly and patients
with certain conditions such as Alzheimer’s disease. Such costs are not covered by HMOs, health
insurance, or Medicare because the care is usually considered “not medically necessary” by these
providers.

Factors to assess when considering a long-term care policy include the following:

• The degree of impairment required for benefits to begin.

• The level of care covered.
• The person’s age.
• The benefit amount.
• The benefit period.
• The waiting period.
• Inflation protection.

PROTECTING YOUR INCOME DURING DISABILITY

A number of resources are available for income protection during a period of disability.
Disability income insurance replaces a portion of the income lost when you cannot work because
of illness or injury. Although it is probably the most overlooked type of insurance, it is vitally
important for all workers.