Health Insurance Flashcards
Types of Limited Health Policies
Accident-only Specified (Dread) Disease/Critical Illness Hospital Income (Indemnity) Insurance - pays flat dollar amount Prescription Drugs Vision Care Hearing Insurance Short-term Medical Expense Plans Dental
Health Insurance Common Exclusions
Intentional War Elective Cosmetic Surgery Workers compensation Felony
Uniform Health Insurance Policy Provision
12 standard provisions
Mandatory
Entire Contract and Changes
Application
Insurance Policy
Riders
Time Limit on Certain Defenses (Incontestability Clause)
2 years after application
Fraud can be contest indefinitely
Grace Period
Following due date of premium 7 days if premium paid weekly 10 days if premium paid monthly 31 days semi-annually or quarterly Insurance in force during grace period Unpaid premium deducted from claim
Reinstatement
May require reinstatement application and conditional receipt
Must be denied within 45 days after app or policy is in force
Accident claims covered immediately
10 day waiting period for sickness claims
Disability and Long-term Care reinstatement can be denied
Notice of Claim
Written notice of claim must be submitted 20 days after loss
If continuing disability, must provide proof ever 6 months
Claim Forms
Must be furnished to insured within 15 days of notice of loss
Proof of Loss
Written proof of loss must be submitted within 90 days
Time of Payment of Claims
Immediately
Made monthly if a periodic claim such as long term disability
Payment of Claims
Paid in name of insured
Direct payment instructions for example direct payment to doctor
Death benefits will be paid to any named beneficiary or insured’s estate
Optional benefit of $1000 to family member
Physical Examination and Autopsy
At the expense of insurance company
If company requires and state law allows
Legal Actions
Earliest can happen is 60 days after proof of loss
Must be within 3 years after proof of loss
Change of Beneficiary
Any time by owner if revocable
Permission of beneficiary needed if irrevocable
Optional Policy Provisions
Change of occupancy - more hazardous = reduction of benefits; less hazardous = refund of excess premium.
Misstatement of age - younger = benefits increase; older = benefits reduced.
Illegal Occupation - no benefits if committing felony or engaged in illegal occupation.
Free Look
10 days from receipt
30 days for senior products - Medicare Supplemental, Long Term Care
Begins date received by policy holder
Complete refund of money if policy returned
Insurance Clause
First provision
Promise to pay
Conditional of payment - type of loss covered
Consideration Clause
Company promises to pay
Applicant to provide information and pays premiums
Renewability Provision
5 types
Cancelable - insurer can cancel at any time with 5 days notice
Optionally - insurer has option to renew or not on premium due date or anniversary date, usually 30 days
Conditionally - can terminate only for reasons not based on insured’s health such as reaching certain age, premiums can increase on policy anniversary for a class of insured
Guaranteed renewable - cannot be cancelled except for non-payment, premium can increase only if increases for all insureds in that coverage classification
Non-cancelable - cannot cancel coverage (except for non-payment) or raise premiums
Own Occupation
Inability to perform any or all of the duties of insured’s normal occupation
Any Occupation
Any occupation for which the insured is qualified by training eduction and experience.
More difficult to qualify.
Split Definition
Start with using own occupation.
After a period of time, switch to using any occupation.
Income Replacement Contract
Payment is triggered if illness or accident reduces income.
Presumptive Disability
Automatically qualifies insureds for disability benefits whether or not they can work.
Loss of or loss of use of any two limbs.
Total and permanent blindness in both eyes.
Loss of speech.
Total and permanent loss of hearing in both ears.
Basic Total Disability Plans
Indemnity benefit.
Elimination Period - must be disabled for this length of time before benefits begin; 30, 60, 90, 120, 180, 1 year.
Benefit Period - length of time benefits will be paid; 1, 2, 3, 5, 10 years until 65.
Waiver of Premium
Waives further premium payments after initial waiting period.
Refunds any premiums paid during the waiting period usually 90 days.
Partial Disability
Returns to work in a reduced capacity.
Usually pays 50% of total benefit.
Usually no longer than 3-6 months.
Recurrent Disability
Conditional recurs after returning to work.
No wait to start receiving benefits.
Conditions must recur within a certain time frame after returning to work.
Cost of Living Rider (COLA)
Optional.
Increases benefit while receiving disability.
Based on Consumer Price Index.
Adjustments usually made every 12 months.
Future Increase Option (FIO)
Allows insured to increase policy benefits.
No evidence of insurability required.
The insured’s income must have increased.
Accidental Death & Dismemberment (AD&D)
Principal sum = 100% if death or loss of both limbs or sight in both eyes.
Capital sum= 50% if dismembered (loss of 1 limb or sight in 1 eye).
Paid if accidental death and is a multiple of the monthly disability benefit.
Exclusions for Disability Income Policies
War or military service Suicide and other self-inflicted injury Non-commercial aviation Commission of a felony Living overseas
Group Disability
Usually a percentage of pay instead of a stated benefit.
Short Term Disability
6-24 months.
Short elimination period if any
Coordinated with other benefits such as sick days.
Always uses own occupation.
Long Term Disability
2-65 years.
Elimination period is STD period.
Offset by other benefits such as social security disability.
Uses split definition of disability.
Business Use of Disability Insurance
Key person.
Business overhead expense - cover necessary business expenses that continue when business owner is disabled.
Disability buy sell.
Social Security Disability
Person must have at least 6 credits in last 13 quarters.
Number of credits required increases with age up to age 62.
Fully insured is 40 credits.
5 month waiting period for benefits.
Disability must last 12 months.
Benefit based upon person’s Primary Insurance Amount - not designed to replace worker’s total earnings.
Spouse and children may receive benefits.
Stops when reaches full retirement age.
PPO
Fee for service
Provider is paid as services are provided
Customer = insured
HMO
Prepaid
Provider is paid a set fee in advance
Customers = subscribers or participants
Specified Coverage
Covers only specific services
Comprehensive Care
Covers broad range of services
Benefit Schedule
Pays only a specified amount regardless of actual charge.
Usual, Customary, Reasonable (UCR)
Pays full charge if reasonable and customary in the same geographical area
Any Provider
Any provider the insured chooses
Limited Choice
Limited to contracted provider
Basic Hospital, Medical, and Surgical Policies
Low coverage amounts
No deductibles = 1st $ coverage
After limits reach, rest is out of pocket
Major Medical
Broader coverage.
Supplemental major medical - insured has basic policy and major medical pays when basic ends.
Comprehensive major medical - stand alone policy where benefits begin after the deductible is satisfied
Major Medical Deductible
Insured pay deductible each calendar year before coverage begins.
Coinsurance
Insured pays certain percentage of expenses after the deductible is met.
Stop-Loss Limits
Insured is no longer required to pay coinsurance when expense exceed this amount.
Maximum Out of Pocket
Deductible + Coinsurance X Stop Loss Limit
Major Medical Limitations & Exclusions
Self-inflicted injury. War or acts of war. Military duty. Air travel if not passenger. Felony. Experimental procedures. Care covered by WC. Care received in government facilities. Elective cosmetic surgery. Hearing aids. Custodial care.
Health Maintenance Organizations
Prepaid plan for subscribers.
Co-payments - flat dollar amount subscribers pay for each doctor visit.
Gatekeeper Concept (Primary Care Physician.
Limited choice of provider.
Limited service area.
HMO Services
Preventative care
Emergency care
PPO
Open panel AKA open network or open access - not limited to plan providers. Managed care. Fee for service. Pre-negotiated rates. Pay less in network of PPO providers
Point of Service
PPO + HMO
Open access.
HMO allows subscribers to use providers outside of HMO.
No gate keeper for out of network services.
Subscriber pay more of the cost.
Called open-ended HMO.
Cost Containment - Managed Care
Preventive care offered by insurer Reducing hospital care costs Well checks Annual Visits Routine Visits Wellness programs Smoking cessation programs Weight loss programs
Outpatient Benefits
Second surgical opinion
Preauthorization/Precertification - know what will be covered
Limits on length of stay
Characteristics of Group Health
Many ppl in one contract.
Usually less expensive than individual insurance.
Sponsor receives the master contract.
Participants receive a certificate of insurance.
Premium is experience rated which is based on claims history of individual group and underwriting is waived.
Premium is community rated which is based on pooling groups.
Eligible Groups
Cannot exist only for purpose of buying insurance.
Employer sponsored.
Multiple employers combined - Multimedia Employer Trust (MET) and Multiple Employer Welfare Arrangement (MEWA).
Labor Unions.
Trade and Professional Association.
Lender group - lender sponsors plan for its group of debtors.
Group Health Eligibility
Employee - full time, actively at work, completed probationary period.
Dependents - spouse, children under 26, disabled children no age limit.
- Enrollment - follows probationary period, no medical questions.
- Open Enrollment - offer once a year for individuals who initially decline coverage, no medical questions.
- Qualifying Event
In which state are group plans regulated?
Regulated in state of employer’s home office.
Continuation of Benefits - COBRA
Federal law that requires employers of 20 or more employees to allow former employees and their dependents to continue the benefits.
18-36 months = 18 months for terminated employees or reduction in hours; 36 if dependents no longer qualify due to divorce, too old, or death.
Notification period = 14 days.
Decision period = 60 days from date of termination, must pay premium from date of termination.
Conversion option with guarantee issuance.
Health Insurance Portability and Accountability Act (HIPPA)
Federal law that mandated benefits for small employers, self-employed, pregnant women, and mentally ill.
Restrictions on preexisting conditions.
Includes most health coverage.
Small employers cannot be denied.
Types of Dental Treatments
Diagnostic and prevention. Restorative. Oral Surgery. Endodontics. Periodontics. Prosthodontics. Orthodontics.
Features of Dental Insurance
Choice of provider.
Plans are either scheduled or nonscheduled.
Diagnostic and preventative = 100%
Basic services = 80/20 coinsurance
Major services = 50/50
Predetermination of benefits often required.
Medicare Coverage Parts
Part A = hospital, skilled nursing facility, hospice, home health care.
Part B = medical care provided by physician and other medical services.
Part C = health care delivered by managed care plans.
Part D = prescription drugs.
Medicare Eligibility
Age 65 or older.
Kidney failure.
Received Social Security for at least 24 months.
Medicare Part A
1st day of the month a person turns 65.
Automatic for person age 65 and eligible for Social Security.
Supported by payroll taxes.
Premium charge for those not fully qualified for Social Security.
Medicare Part A Inpatient Hospital Coverage
Patient pays deductible which changes annually.
Days 1 - 60 = fully paid.
Days 61-90 = pays most of cost with patient paying daily co-pay.
New benefits period starts 60 days.
Additional 60 lifetime days.
Medicare Part A Skilled Nursing Facility
Provides 24/7 care.
Medical treatment.
Following hospital stay of at least 3 days.
100 days of coverage which are lifetime days.
Day 1-20 = 100%
Day 21-100 = daily co-pay
Medicare Part A
Home Health Care
20 days that can be recaptured. Skilled care provided in the home. Not sitting service. 100% paid. Pays 80% of durable medical equipment in home.
Medicare Part A
Hospice
Comfort care for terminally ill.
Provided in home or at approved facility.
Medicare Part A
Exclusions
First 3 pints of blood. Private duty nursing. Non-medical services. Intermediate care. Custodial care.
Medicare Part B
Monthly premium that increases with income level.
Not required.
Initial enrollment period = 3 months before 65, month of age 65, 3 months after age 65.
Annual open enrollment = Jan 1-Mar 31.
Coverage effective July 1.
Medicare Part B
Coverage
Doctor Outpatient services - tests, etc. Home health not covered by Part A Calendar year deductible 80/20 coinsurance after deductible No stop loss
Medicare Part B
Exclusions
Routine physical exams beyond initial one.
Routine foot, vision, dental, or hearing care.
Most immunizations.
Most outpatient prescription drugs.
Physician charges above Medicare’s approved amount.
Private-duty nursing.
Cosmetic surgery.
Outside U.S.
War or act of war.
Medicare Part C
Advantage Plans
Medicare contracts with private companies to manage Part A & B.
Medical expenses paid by private plan.
Must be enrolled in Part A & B.
Private company may charge the enrollee a fee.
May provide outpatient drug coverage.
Cannot sell enrollee Medicare supplemental.
Medicare Part D
Drug Plan
Purchased from a private company. Medicare pays the private company. Private company pays the drug store. Premium reduced by income level. 25% co-pay until gap.
Coordination between Group Health and Medicare
Employer < 20 employees = Medicare is primary.
> 20 employees = group plan is primary.
Medicare primary for retirees.
Medicare Supplement Plans
10 standard plans.
Can help pay co-payments, coinsurance, deductibles.
Private insurance.
Not subsidized by Medicare.
Covers copays for days 61-90 and lifetime hospital and adds 365 days at 100%.
Does not cover deductible.
Covers Part B coinsurance.
Medicare’s Long-Term Care
Skilled care in nursing home Requires prior 3-day hospital stay Pays 100% for first 20 days Insured pays daily co-pay days 21-100 No coverage after 100 days
Medicaid’s Long-Term Care
Only for the poor
Insured’s income paid to Medicaid
May take assets from the person’s estate upon death
Long-Term Care Insurance
Bought from insurance company
Insured chooses type and amounts of coverage
Protects assets upon death
Activities of Daily Living
Used to determine eligibility for long-term care benefits
Qualify if you cannot do 2 out of 6
Bathing Dressing Toileting Transferring Continence Eating
Cognitive Impairment
Eligible for long-term care if cognitively impaired
Ability to perceive, reason, or remember
Safety concerns
3 Levels of Long-Term Care
Facility Based Care
Skilled nursing care - 24/7
Intermediate - only 7
Custodial Care - ADL
Other Types of Care under Long-Term Care
Home health care
Adult day care
Respite care
Assisted living facilities
Long-Term Care Insurance Benefit Period
Similar to disability policy Most common is 3 years At least 12 months Usually can choose from 2-5 years May choose lifetime Subject to lifetime maximum amount Longer the benefit period = higher the premium
Long-Term Care Benefit Amount
Indemnity = stated dollar amount per day
Reimbursement = lesser of actual expense or daily benefit
Home care coverage - if covered usually 50% of facility amount
Policy may have a lifetime maximum
Higher the benefit = higher the premium
Long-Term Care Elimination Period
Insured must receive care for a stated number of days before qualifies for benefits
Time deductible
Longer the elimination period = lower the premium
Long-Term Care Optional Benefits
Guaranteed Insurability
Allows insured to raise daily benefit at specified future times
Uses attained age
Not currently receiving benefits
Cutoff at age 50
Long-Term Care Optional Benefits
Nonforfeiture
Growing cash value or return of percentage of premium
Minus claims paid
Policy has to be surrendered or has lapsed for non-payment
Long-Term Care Optional Benefits
Inflation Protection
Yearly increase in benefit by a stated percentage and Cost of Living Adjustment (COLA)
Simple or Compound
Long-Term Care Exclusions
War
Alcohol or drug abuse
Self-inflicted injuries
Treatment provided without cost to insured
Mental illness and nervous disorders without a demonstrable organic cause - dementia or Alzheimer’s is covered
Qualified Long-Term Care Insurance
Rules for a policy to be considered “qualified”
Favorable tax treatment = benefits tax free and premiums maybe tax deductible
Benefits triggers = unable to perform 2 of 6 ADLs for at least 90 days or cognitive impairment certified by physician
Guaranteed renewability
Coverage of only long-term care expenses
No benefits for expenses reimbursable under Medicare
No cash surrender value
Any dividends or refunds of premium must be used to offset future premiums or increase benefits
Conforms to specified consumer protection marketing and benefits standards
Health Savings Accounts
Individually owned medical expense savings account
Contributions are pre-tax
Withdrawals are tax-free if used to pay for qualified medical expenses
Must have a high deductible health plan
Account values accumulate from year to year
High Deductible Health Plans
Low premiums
High deductible
Health Reimbursement Accounts
HRA
Established by the employer Employer contributions are pre-tax HDHP not required Employees can use money to pay deductibles, coinsurance, and co-payments Money rolls over from year to year
Flexible Spending Arranagement
FSA
Employee authorizes employer to reduce employee’s salary Employer puts the money into FSA account Withdrawals by employee are not taxed Only certain approved benefits If not spent, money is lost
