Chapter 23 - Health Insurance Basics Flashcards
Health Insurance Basics (Can be called Health and Accident, Health and Sickness. This also includes Disability policies.
The Affordable Care Act - or ACA or Patient Protection ACA. Policies rated by metal levels (tell us how good/cheap the policy is) bronze (cheapest), silver, gold platinum.
Limiting age for children is 26, unless they have a disability.
Underwriting are part of ACA, but they are much more limited. Basically no pre-existing conditions apply, and they can adjust the premium on age, geography and if you are a smoker.
Medical Expense Insurance - includes policies that are designed to help cover the medical expenses that happen for sickness or accidents and long term care, Medicare supplement, dental, hospital indemnity, just to name a few.
Disability Income - designed to replace part of the insureds lost income for total disability or illness.
Business’s can deduct premiums paid for an employee. Individuals cannot deduct their premiums unless the total eligible unreimbursed medical and dental expenses (your copays, deductibles, out of pocket max) exceed 10% of your AGI.
Key Terms
Probationary period - also called waiting period - can help guard against adverse selection. The period starts with the date the policy became effective, during which no benefits are payable. Most common is a period for sicknesses or accidents. He gave the example of 17 days.
Pre-Existing Condition - any medical problem from accident or illness prior to the policy being issued. In extreme conditions, any claim from the pre existing condition is not paid. In some cases it will trigger a waiting period for that condition if you have been treated within the last 6 months. And in that case, the waiting period could be 12 months forward. Dental policies, or policies outside of health can exclude paying pre existing condition claims.
Deductible - dollar portion of costs that the insured must absorb before the insurance company begins to pay claims. The higher the deductible the lower the premium. Some companies has a deductible carryover from the last 3 months of the year.
Copayment - Copays - flat dollar amount the insured pays out of pocket each time services are rendered. The idea is that if the insured has to pay every time they go, it will reduce the times the insured goes unnecessarily.
Coinsurance - the insurer and insured share the payment after the deductible has been paid 80/20.
Annual Stop Loss Limit - out of pocket max. The insurer will pay as much as it has to until it hits a total lifetime limit, the OUTSIDE LIMIT (say 10 million dollars). The ACA prohibits traditional health policies to include an annual stop loss but require an out of pocket max.
Inside Limit - maximums for specific kinds of products or services. You may have a 5K limit for chiropractic care or towards specific medical devices.
Assignment of benefits - a form the insured signs that allows the provider to bill the insurer first.
Rights of Renewability
Reasons an insurer doesn’t have to renew. Can be illegal in some states…
- Cancelable - insurer can cancel for any reason. They have to refund the unearned portions of the premium, say right before the surgery.
-Optionally Renewable - permits the insurer to not renew the policy at the end of the year or on the premium due date or policy anniversary date. Not at any point like with cancelation.
-Conditionally Renewable - gives the insurer the right to terminate the policy if a “trigger event” happens. Like a switch to a hazardous job, unusual early retirement, sale of a business. Not legal in most states.
Reasons an insurer cant cancel a policy.
- Guaranteed renewable - premiums may be raised but as long as they pay, the insurer cant cancel. Most states enforce this until the person is 65 (when Medicare takes over)
- Non Cancelable - only available with Disability Income policies. policy remains in effect as long you pay the premium and the premium stays the same. Extends to age 65 where social security takes over. The insured can renew the policy without proof of insurability.
Term - expires at some point. These don’t really exist.
