Insurer Financial Structure Flashcards
Policy dividends
sum returned to a policy owner by an insurer under a “participating” policy. (Mutual Insurance Company)
Earned Surplus
Retained earnings
Net profit of an insurer,
less dividends paid out to policyholders
Extension of Benefits
When a Group Med policy is terminated, a totally disabled person must provide a reasonable extension.
Deductible
Form of risk retention
Higher the deductible, lower the premium
normally per-person, per-calendar year
Disability income policy deductible is also known as the “waiting” period
Probationary Period
Starts at the effective (inception) date of the policy
no coverage for a pre-existing condition for the time of the probation
Managed Care
contrasted to a “reimbursement” plan (or indemnify) you for cost (“Insured” vs. “subscriber”)
Managed Care is a pre-paid service plan (stress prevention)
Service plans
Co-pays
Stress prevention
Gatekeeper - Primary care physician authorizes all care
Pre-existing Conditions
Prevent Adverse Selection
Exclusion for pre-existing condition, known as the “probationary period”
No coverage for pre-existing conditions that were treated during the look-back period (usually a 12 month period)
Stop-Loss Prevention
Limits the amount of co-insurance that an insured may have to pay on a major medical expense policy.
e.g. Stop-loss of $5,000
$1,000 Deductible
80/20 Co-insurance
Bill of $101,000
I pay $1,000 deductible
I pay 20% of the remaining $100,000=$20,000
Stop-loss would pay anything over $5,000 co-insurance
Gatekeeper
HMOs use a Primary Care Physician to authorize all care.
Accident vs. Sickness
Most Health Insurance policies cover both, some cover accidents only and others cover sicknesses only.
Medical Expense Policy covers both A & S
Accidental Death and Dismemberment Policy - accidents only
Dread Disease Type Policy covers sickness or illnesses
Policies covering accidents only or sickness only are known as “limited” policies
Waiting Period
Disability Income policies have waiting periods before the insured is eligible for coverage.
Like a deductible, only in time rather than dollars
Group Medical Expense Insurance - Waiting period is the time that a new employee must wait before they can enroll in the group health insurance coverage
Elimination Period
Waiting period = period of time before the benefits start
Elimination Period = benefits are eliminated until the time has ended (usually 30 days)
Co-Payment
HMOs and PPOs use an amount the subscriber pays the provider of medical services for each visit (small amount $25-$250). Avoids frivolous visits, while not discouraging them like a deductible does.
Waiver of Premium
Rider added to health insurance for a small premium. Waives the premium during the disability until recovery.
Type of Disability Income Insurance
Co-Insurance
Major Medical Expense Insurance policies carry a deductible and co-insurance. Insured pays a deductible followed by a percentage of the remaining (usually 80/20)
Designed to prevent over-utilization
