UNIT II

HEALTH INSURANCE
FUNDAMENTALS

Presented by
Sanjeeta Shrestha
Sujal Shrestha
Kusum Thapa
Ichhya Gurung
 HEALTH INSURANCE
Health insurance or medical insurance is the
coverage of medical and surgical expenses of the
insured person.
It includes insurance for losses from accident,
medical expense, disability, or accidental death
and dismemberment.
Health insurance delivers the right of citizens to
proper healthcare.
 OBJECTIVES
 To ensure the well-being of each and every
citizen of the country.
 To financially guard individuals against
catastrophic health events.
 To ensure that each and every person in the
country are not deprived of basic health
insurance services. 
 To improve the effectiveness, efficiency,
accountability and quality of care in the delivery
of health care services.
 Types of Health Insurance
Individual health insurance plan
The Individual Health Insurance Policy offers
coverage on an individual basis. Under this type
of health insurance plan, the person is entitled to
receive the incurred hospitalization expenses.
Family floater health insurance
The Family Floater Health Plan is for the entire
family. Under this type of health insurance policy,
the sum insured is equally shared by the
beneficiaries of the plan.
 Critical illness insurance
The Critical Illness plan is designed to provide
financial protection if you are diagnosed with a
critical illness or condition. It offers coverage
against critical diseases such as heart attacks,
kidney failure, paralysis, stroke, cancer, etc.
 Group Health Insurance
The Group Health Insurance Plan is designed for
coverage of a group of people. Typically, an
employer or a company offers the type of plan to
its employees. 
 Personal Accident Insurance
PA insurance offers benefits against events such
as partial/total disability and death due to an
accident. It covers accidental death and
permanent/partial disability caused by accident
and offers lump-sum payments in case of death
or permanent disability.
 ECONOMIC SECURITY OF HEALTH
INSURANCE

 Economic security can be defined as the ability of people

to meet their basic needs on a regular basis.

 Health insurance is a form of economic security because it

helps protect individuals and families from the financial
burden of high medical costs. Without it, the cost of
medical treatment can be financially devastating,
especially if an individual or family must pay for expensive
procedures or treatments out of pocket.
Health insurance can help individuals and families
access preventive care, such as regular check-
ups and screenings, which can help to identify and
address potential health issues before they become
more serious and costly to treat.
When there aren't enough resources to pay for
food, housing, medical care, and other necessities,
"economic insecurity" tends to happen.
 Types of Economic security

1. Labour market security:

 Increases in the cost of providing health insurance
must have some effect on labor markets, either in
lower wages, changes in the composition of
employment, or both.
 When there are numerous opportunities for
adequate income-earning activities, the labor
market becomes secure. It has a structural
component in that it represents the different types
and quantities of opportunities available. 
2. Income security:
  Income security refers to having enough actual,
perceived, and expected income, which can be earned
or obtained through social security and other benefits. 
 It includes the level of income (both absolute and
relative to needs), the assurance of receipt, and the
expectation of current and future income, both during
and after working life and after disability retirement.
 Traditional income security protection mechanisms
include minimum wage machinery, wage indexation,
comprehensive social security, and progressive taxation.
3. Skill reproduction security:
 Skill reproduction security refers to workers' access to
basic education and vocational training to develop
capacities and acquire the qualifications required for
socially and economically valuable occupations. 
 Skills reproduction security can be improved by policies
that promote widespread opportunities to gain and
retain skills through education, apprenticeships, and on-
the-job training.
4. Employment security:
 Employment security refers to safeguarding against the loss of a
source of income. In organizations and countries that provide
strong protection against unfair or arbitrary dismissal and allow
workers to redress unfair dismissal, wage and salary workers have
employment security. 
 It refers to self-employed people's protection against the loss of
independent work and/or business failure. Protection against
arbitrary dismissal, hiring and firing regulations, and the imposition
of penalties on employers who break the rules have all been used
to improve job security.
5. Job security:
 Job security refers to the existence of niches
in organizations and labor markets that
provide employees with some control over
the content of their jobs as well as
opportunities to advance their careers.
 Rather than referring to a worker's ability to
continue working for a company, job security
refers to a worker's ability to pursue a line of
work that matches his or her interests,
training, and skills.  
6. Representation security:
 Individual and collective representation are both
covered by representation security. Individual
representation refers to both legalized individual
rights and individuals' access to institutions. 
 Collective representation is the right of any individual
or group to be represented by a body that can bargain
on their behalf and is sufficiently large, independent,
and competent to do so. 
 Independent trade unions with the right to
collectively bargain over wages, benefits, and working
conditions, as well as monitor and strike, have been
common forms of granting representation security.
 Economic basis of Health Insurance

The economic basis of health insurance is the

concept of pooling risk, in which a group of people
share the risk of incurring medical expenses. By
pooling their resources, individuals and families can
better afford the high costs of medical treatment
and protect
themselves from financial
hardship in the event of an
unexpected illness or injury.
Health insurance works by requiring individuals
or families to pay premiums to a health
insurance company. The insurance company
then uses the premiums to cover the medical
expenses of its policyholders when they need
medical care.
 In this way, the burden of paying for medical
treatment is spread out over a large group of
people, rather than being shouldered by a
single individual or family.
There are various economic factors that influence
the cost of health insurance, including the overall
cost of medical care, the prevalence of certain
medical conditions within a population, and the
level of coverage offered by the insurance plan.
Some health insurance plans may have higher
premiums due to the inclusion of additional
benefits or services, such as coverage for
prescription drugs or mental health care.
 HEALTH INSURANCE POLICIES

The 2013 National Health Insurance Policy aims

to increase everyone's access to and use of
high-quality healthcare services without putting
them through financial hardship.
Health insurance plans cover the costs incurred
during the treatment of illness or
hospitalization.
A health insurance policy
provides protection for the
customer’s potential future
medical costs.

In the contract, the insurance provider and the

client both agree to guarantee reimbursement or
compensation for medical expenses in the event
that this individual sustains an injury or illness
that necessitates hospitalization in the future.
 Types of health insurance policies
Types of Health Insurance Plans Suitable For
Individual Health Insurance Individual
Entire Family- Self, Spouse,
Family Health Insurance Children, and Parents
Critical Illness Insurance Used for funding expensive
treatments
Senior Citizen Health Insurance Citizens of age 65 and above
Suitable for those who are
Disease-Specific (like Corona etc.) suffering from pandemic-
manifested conditions
Hospital Daily Cash Daily hospital expenses
It can be used in case of any loss or
Personal Accident Insurance damage to the owner or driver.
Mediclaim In-patient expenses
Group Health Insurance For a group of employees
 Individual Medical Expense
Insurance
An Individual Health Insurance plan is meant for a
single person. The person who enrolls in this plan for
insurance is compensated for the costs associated
with illness and medical bills.
Its types
 Comprehensive Benefit Package
 Primary Care Package
 Limited Compulsory Package Plus Voluntary
Supplemental Package
 Coverage of Inpatient Hospital Services
 Catastrophic Benefit Package
 Comprehensive Benefit Package
Typically, a comprehensive benefits package comprises
at least the following three elements:
 Benefits to our health and wellbeing (e.g., medical,
dental, vision, etc.)
 Benefits of time off (e.g., vacation, sick leave, etc.)
 Benefits for financial stability (such as a student loan
aid, life insurance, etc.)
This package focuses on mainly in and out patients
services which includes:
 Prescription drugs
 Medical, Dental and Vision
 Primary Care Package

This package covers outpatient services both

primary and preventive care services.
It focuses on to promote the health of the
citizen through prevention activities and early
diagnosis and treatment of disease and other
medical conditions.
 Limited Compulsory Package Plus
Voluntary Supplemental Package

Basically, this package covers the compulsory

insurance package does not covers the services so
it goes for voluntary supplementary package.
Such packages includes:
 Cosmetic surgery services,
 Dental services,
 Mental health services, etc
 Coverage of Inpatient Package Hospital
This insurance package covers the expenses of inpatient
services only.
Basically, it covers the expenses which are high cost, injuries
that requires hospitalization and are unpredictably high in
cost.

Catastrophic Benefit Package

Catastrophic health insurance is a kind of health plan that
provides coverage for both emergency situations and
preventive care.
It is a comprehensive benefit package but limited which are
responsible for payment of health expenses but in specified
amount.
 Long term Care Insurance(LTC)

LTC insurance covers nursing homes, home health

care, personal care, and adult daycare for people
65 and older or with chronic or disabling
conditions that require continual monitoring.
LTC is designed to cover long term services and
supports, including personal and custodial care in
a variety of settings such as in our home, a
community organization, or other facility.
Such policy are sold in United States, United
Kingdom and Canada.
 Disability Income Insurance

Disability-income insurance offers compensation

when the insured is unable to work due to illness
or injury.
There are two types of disability policies
 Short-term Policies- It may pay for up to two
years. It mostly last for a few months to a year.
 Long-term Policies- It may pay benefits for a
few years or until the disability ends.
 Annuities
An annuity is a financial product that pays out a fixed
stream of payments to an individual, typically on a
monthly basis. Annuities are often used as a way to save
for retirement or to provide a steady source of income in
retirement.
There are several types of annuities, including:
Immediate annuities
These annuities begin paying out income immediately
after they are purchased, often with a single payment.
Deferred annuities
These annuities allow the individual to make payments
over time, and the income payments do not begin until a
later date, typically in retirement.
Fixed annuities
These annuities pay a fixed amount of income
each month.
Variable annuities
These annuities allow the individual to choose
how their money is invested, and the income
payments may vary based on the
performance of the investments.
Indexed annuities
These annuities offer returns that are linked to
the performance of a financial index, such as the
S&P 500.
 Hybrid annuities
These annuities combine elements of different
types of annuities, such as fixed and variable
annuities.
 Equity-indexed annuities
These annuities offer returns that are linked to
the performance of a financial index, but the
returns are capped at a certain level.
 Optional Benefits
Annuities may offer a variety of optional benefits,
also known as riders, which can be added to the
annuity contract for an additional cost which can
provide additional protection or benefits to the
annuity holder.
 Riders in Insurance
There are many different types of riders that can be
added to an insurance policy, including
 Accidental death and dismemberment rider: This
rider provides additional coverage in the event that
the policyholder dies or is seriously injured in an
accident.
 Long-term care rider: This rider provides coverage for
long-term care expenses, such as those related to
nursing homes or in-home care.
 Disability income rider: This rider provides income
payments if the policyholder becomes disabled and is
unable to work.
 Critical illness rider: This rider provides a
payment if the policyholder is diagnosed with a
specified critical illness, such as cancer or heart
attack.
 Waiver of premium rider: This rider waives the
premium payments on the policy if the
policyholder becomes disabled and is unable to
work.