There has been a great deal of misinformation in the past 3 years. I want to clear up some definitions. This post may be a bit more technical than others but I think it is important to define exactly what people are talking about.
The term, “general,” is typically used in Casualty insurance. A Commercial “General” Liability, also known as a CGL, is a type of insurance policy that is usually purchased by a small business owner to pay for any financial liability the business may incur because of an accident to someone else’s person or property.
CGL policies used to be called, “Slip and Fall” policies because they protected a business owner in the event a customer had an accident in their shop and then sued. Actually, the term, “Slip and Fall” is a bit of a misnomer. CGL policies cover more than just accidental injury to customers. They also cover losses caused by damage to customer’s property from accident or human error while it is in the “care, custody or control” of the policy owner’s business. If you leave your expensive camera to be repaired at a photo shop and it falls off the shelf and breaks so that it is irreparable, the chances are that your new camera will be purchased with funds from a CGL plan.
Many years ago I used to deal with this type of insurance but when I founded The Insurance Barn I let that license expire. I am not convinced that one person can be a good source of information for both Property and Casualty insurance and Life and Health insurance. A choice had to be made and I chose to specialize in Life and Health insurance.
In the last few years politicians and the press have given the impression that all health insurance is the same. Rarely has it been pointed out that there are several different types of health insurance.
Health insurance is any type of insurance where the event that triggers benefit payment is a bill from someone in the medical field. It includes several insurance plans.
The most comprehensive type and the one that the politicians and press are referring to, is called Major Medical. Major Medical insurance typically reimburses or pays providers directly for all types of medical coverage both in and out of the hospital.
Even within the set of plans known as Major Medical insurance there are many subsets. Major Medical plans have many policies. The list below includes only some of the more popular ones.
- HDHP – High Deductible Health Plans
- PPO – Preferred Provider Organizations
- HMO – Health Maintenance Organization
- Indemnity Insurance
- Limited Benefit Insurance
- Short Term Insurance
While sections of the PPACA do address the fringes of other element of health insurance, most of it is directed at standardizing Major Medical health insurance. The new law will eliminate some plans and standardize the others. In theory, it will eventually make understanding Major Medical insurance less confusing.
Adding to the confusion is the fact that Major Medical insurance is just one segment of what technically can be called “Health Insurance.” In addition to Major Medical insurance are the following types of insurance.
In every state, before an insurance agent is allowed to talk to the public about any of these types of insurance he/she must be licensed to sell health insurance in that state.
Major Medical insurance is typically, the most comprehensive and most expensive type of health insurance but it is not the only one. The other types are available to help pay for things that Major Medical does not. I tend to think of them as corks I can use to plug holes in the Major Medical bucket.
For example, Major Medical insurance will pay most, but not all, medical bills if you have to be admitted in the hospital. It will not pay your mortgage or buy groceries for you or your family while you are out of work. That is what Disability Income insurance is for.
Another example; Many Major Medical policies have a limit on what they will pay for prescription drugs. People are often left on a financial island if they contract a disease, like cancer, where the drugs used to treat that disease are more expensive than what their Major Medical policy will allow. In situations like that, especially when there is a family history of cancer, heart disease or stroke, I tend to use either a Critical Illness or Named Disease insurance policy. They pay cash directly to the insured to allow them to pay for their needs.
DON’T BE AN ANECDOTE
Over the last 3 years countless horror stories have been told by politicians about people who had to file bankruptcy because of medical bills even when they had health insurance. When you hear those stories it is important to remember that not all the different types of health insurance policies pay for the same thing. Without knowing exactly what type of plan a person had, it is easy to correctly say, “I had health insurance but they would not pay for …” When I hear a politician relating a sad story, the first thought I have is “What type of health insurance did they have?”
Another explanation for this type of tragedy is that their health insurance portfolio may have been set up incorrectly. They may have had the proper type of Major Medical insurance but failed to recognize the holes in it and plugged them with other types of health insurance.
The only way to know for certain that you will not be the subject of a politician’s anecdote is to read your policy and know what type of health insurance you have. If you only have an Accident policy you can rightly say that you have health insurance. Just don’t expect it to pay anything if you are diagnosed with cancer.
If you are concerned about having holes in your health insurance portfolio, contact The Insurance Barn for a consultation. Just click on the icon below.