WHAT YOU SHUOLD KNOW ABOUT ACCIDENT INSURANCE

Important Information and Caveats for the Layman

Things you should know to assure you have the best coverage possible.

What is an accidental injury? Time for treatment to commence
Usual/reasonable/customary Expanded medical benefit
Hospital expenses Excess coverage
Surgery Maximum medical benefit
Maximum medical benefit Dental benefits
Deductibles Physical therapy
Benefit period   Exclusions

 

Accident insurance is a unique and special type of insurance coverage, with its own definitions, coverage's, terms, definitions, and exclusions, and hence, built in perils in hidden and misunderstood coverage weaknesses.

The average person involved with amateur and youth sports, or non-profit organizations, are there because they want to help; they want to be involved in the chosen activity. The last thing in the world they want is a problem involving insurance. The way to avoid these problems is to procure the best coverage possible, with the fewest exclusions, and the best service. If you go from year-to-year without ever thinking about the insurance, then you have the right plan(s).

How many times have you heard a youth sports volunteer ask an associate “what do you pay for your insurance?” They do not ask “what kind of coverage do you have”? Two organizations can pay the same amount for accident insurance, and one, in fact, have a plan that might pay double on the same claim. Value for your dollar and peace of mind-—these are the things you  want in your accident insurance plan.

The following are definitions and descriptions of terms, coverages and “buzz words” you will find in these plans, and the things you should avoid and the things you should demand, in the plan you buy.

WHAT IS AN ACCIDENTAL INJURY?

An  injury means a bodily injury caused by an accident. An accident is an unexpected, external, and SUDDEN event. Time sensitive injuries such as tendinitis, shin splints and the like are injuries, but not accidental injuries and are not covered by standard accident policies.

USUAL; USUAL AND REASONABLE (U & R); USUAL AND CUSTOMARY (U & C); USUAL, CUSTOMARY & REASONABLE (UCR):

  • On  all of these accident plans we will see coverage (benefit(s)) defined as “Usual Expenses”; “Usual and Reasonable Expenses”; “Usual and Customary Expenses”; or any other similar terminology. How does the company determine what the “Usual” expense is for a particular treatment or procedure? Most companies will use an outside service (HIAA, MDR, or other similar organizations). The company will subscribe to these services for an annual fee. They, in turn, receive data on what the average charge is in the area (ZIP Code) where the service was performed. Using this type service assures the person being treated that the amount chosen as the “Usual” fee is not an arbitrary one, and represents a figure developed by thorough research of the area
  • On the other hand, some companies will define the “Usual and Customary Fee” as that amount, which ” in the experience of the company” is the average in the area. This, of course, contains a real conflict of interest, where the lower the payment, the better off the insurance company is; an obviously arbitrary payment method. You are within your right to ask how the “Usual” fee is determined. If it is not determined through the use of an outside source "BEWARE".
  • The two areas of coverages where the majority of claims dollars go, are Hospital Expenses and Surgery.

HOSPITAL EXPENSES

      a)      In Patient
There are sometimes specific benefit amounts for hospital daily room and board. The odds are that these limits will not allow for full payment of the hospital bill, and there will be balances. Who will be responsible for the balances? The organization or the injured and treated person. You really don’t want to have to answer that question! Make sure that the plan pays for the semi-private room rate on any in-patient hospital expense.

      b)   Out Patient (Emergency Room)
Emergency room fees should be payable on a “Usual” basis. If there are specific limits [i.e. $100 (or other amount) limit for outpatient services] you will have many problems.

SURGERY

  • What you want for a Surgical Benefit is one with no specific limit, either in dollar amount, or one tied to some fee schedule, such as the California Relative Value Study (RVS)*. The surgery should be covered on a “Usual” basis. Keep in mind, that surgery includes stitching, casting or cutting.

  • *The California RVS is a roughly 200 page document that used to be updated every 5 years, the last update being in 1974. The document lists every surgical procedure possible, with a “relative” value of that procedure, based on a base of 1. For example, a simple stitch may have a value of ½ unit, while some surgery may have a value of 20 units. In defining this benefit, the company will say it is paying so much per unit, say “$100 per unit, based on the 1974 California RVS”. With a $100 per unit benefit, the maximum payable for the ½ unit stitching is $50; the maximum for the 20 unit surgery is $2,000.
  • If you want to compare the possible payment allowable on a given procedure (by procedure code) you can ask how many RVS units the procedure is, of the company using the Cal RVS; and ask for the “Usual” expense for the same procedure code for your ZIP code. You may be surprised to find that the “Usual” expense might be 200-400% higher!

  • If  you want to know the value of your coverage, you have to know the value of your Surgical Benefit; whether it’s based on some “RVS”, or on “Usual Expense”

MAXIMUM MEDICAL BENEFIT

      a)   Youth  Sports, Camps and Organizations:
Accident plans are sold with benefits as low as $5,000. In no event should your plan have less than a $25,000 benefit, but $100,000 is what you really need.

      b)   Pre K-12
In many areas, schools insure their students and athletes with a maximum medical benefit of $25,000. This is really inadequate. Plans are available with medical benefit of $1,000,000, and other excess medical (catastrophic) plans are available with limits up to $10,000,000, and deductibles down to $25,000 (to fit the maximum benefit on the base plan). To be properly protected schools should have at least $1,000,000 coverage.

      c)   Intercollegiate Sports
All NCAA member schools get a $50,000 deductible, $5,000,000 Catastrophic medical plan as part of their membership. Therefore, they need a $50,000 maximum medical benefit on the base plan.

Non-NCAA colleges (Jr. Colleges and NAIA) schools try to duplicate this coverage by having a $25,000 or $50,000 deductible base plan, with a $5,000,000 excess medical plan on top of it.

      d)   College Student Accident and Sickness plans
These programs are designed to offer college students some semblance of health insurance, where they are no longer covered by any family insurance. These plans are divided into accident and sickness benefits, and usually have a lot of internal limits. The maximum medical on the base here can be as low as $2,500, and can go up to $10,000. On top of this, the plans will usually include a “major medical” portion, with 80-20 co-pay, and a maximum benefit of $50-100,000

DEDUCTIBLES

  • The use of deductibles is a way to reduce premium costs. There are seldom deductibles on the PreK-12 plans, although they are used in some schools. They are more common in the amateur sports and activities plans, and are used in almost every intercollegiate sports plan.

  • Payment of the deductible amount is usually made by the school or organization. One of the advantages of the use of a deductible is the “patnership” that exists between the group or school and the insurance plan. The Insured now has a financial stake in the elimination of unnecessary medical treatment.

  • Because these are mostly excess plans, there are two kinds of deductibles; a Corridor deductible or a Vanishing (disappearing) deductible.

  • With a vanishing deductible, any amounts paid toward the satisfaction of bills generated as a result of a covered accident will count toward satisfying the deductible. If the student or parent’s insurance makes any  payment, it does count toward the deductible, and amounts paid in excess of the deductible will cause the deductible to “vanish”.

  • With a corridor deductible, the deductible amount is ALWAYS applied against the first bills which must be paid by the accident plan, no matter what has been paid by the student/parents’ insurance. A corridor deductible is, of course, the least desirable of the two.

BENEFIT PERIOD

  • This is the amount of time (from the date of the accidental injury) that the plan will pay benefits on the claim. Keep in mind that these plans have a finite benefit period, beyond which there is no medical coverage. Most plans have a 1 year benefit period, but 2 year plans are available.

TIME FOR TREATMENT TO COMMENCE

  • An accident is defined as a “sudden and fortuitous” event. It is therefore expected that in the event of an accidental injury, some medical treatment will be sought very quickly. These policies will allow a certain time limit (30 days is standard) for the first treatment of the injury. If no medical treatment is sought within the stated time limit, coverage can be denied.

EXPANDED MEDICAL BENEFIT

  • These are accident policies. As such and by definition, the injury must happen suddenly. There are a number of injuries which are time and use sensitive, such as tendinitis, shin splints, and the like, which occur over a period of time and are not considered accidental injuries. In order to have these time sensitive injuries covered, you must select a plan which offers optional “Expanded Medical” coverage.

EXCESS COVERAGE

  • The medical benefits on almost all of these plans are payable on an excess basis; that is, the parent’s (or adult insureds) must submit all bills first through their family health plan. If the insured is not covered by any other insurance, the accident plan will become primary. If the family insurance does not pay all the bills, or if they have deductibles, the accident plan should pay the balances 

  • The major caveat here has to do with balances on bills where the “Usual” fee has been paid by the family insurance, and there are still balances. Will the accident plan pay these balances? Most will not. They take the stance that the covered expense is up to the “Usual” expense, and that has already been paid. We will pay those balances. Again, it is something to find out in advance. The answer to this question represents part of the value of the plan.

  • An extremely important factor to determine is the method of payment of claims where the family insurance is through an HMO. Since this is excess insurance, the bills must first be submitted through the family health insurance plan. What if the injured party goes to a specialist, not a participating provider in their HMO? The HMO, of course, will deny the claim. What will the accident insurer do? Most take the stance that valid insurance was available to the insured and they will not pay. Some others will pay half; while some will pay the claim as if there were no insurance in force (obviously, this is what you are looking for). THESE ARE MAJOR DIFFERENCES! The coverage offered through your plan can make the difference between the individual and/or the sponsoring organization having very large medical bills to pay; or having no balances and peace of mind.

DENTAL BENEFITS

  • These plans will cover dental treatment for accidental injuries to teeth. However, many of them have internal limits. That is, the benefit may be defined as so many dollars per Sound and Natural tooth injured. This can be as low as $50-$100 per tooth. Other plans may limit the dental benefit to a fixed amount per injury i.e. $200-$500 per injury.

  • Ideally, you do not want any limits on the dental benefit. It should be covered to the maximum medical benefit.

PHYSICAL THERAPY

  • Many times the physical therapy benefit will be very limited. There may be a limit on the number of visits, the amount per visit, and the total payable per accident. Ideally, physical therapy should be paid on a U & C basis, but it is the source of many claims dollars expended (and many abuses of the plan) and can cause the premiums to rise dramatically. If you do have a plan which has a liberal physical therapy benefit, it is wise to monitor the physical therapy claims dollars in order to control premium costs.

EXCLUSIONS

  • Most plans have a number of common exclusions, such as Acts of War; accidents covered by Workers Compensation or Automobile No-Fault; Treatment by family members; Fighting or brawling; participating in a crime; self inflicted injuries; injuries while intoxicated; pre existing conditions; and several other exclusions common to almost all these policies.

  • The exclusions you must be most careful of are those involving recreational injuries. Does the plan exclude injuries from bicycles? From  two or three wheeled motor vehicles? Does it exclude injuries from participation in any sports activities?

  • Read the exclusions CAREFULLY and make sure there are none in the policy that can adversely effect your school or membership; exclusions which are not common to all accident plans; exclusions that should not be in your policy.

 

 

 

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