Health Insurance Basics and Medical Expense Coverage
Cost sharing
Premium, deductible (individual with an embedded family deductible), copayment (flat dollar), coinsurance (percentage), and out-of-pocket maximum, after which the plan pays 100% of covered in-network care. Deductibles usually reset each calendar year; carry-over provisions may credit late-year expenses toward the next year.
Delivery systems
Indemnity/fee-for-service plans reimburse usual, customary, and reasonable charges with no network. Managed care: HMO (closed panel, gatekeeper primary care physician, no non-emergency out-of-network coverage), PPO (network discounts, out-of-network allowed at higher cost, no referrals), POS (hybrid with a gatekeeper), and EPO. Utilization review includes precertification, concurrent review, and case management. Self-funded (ERISA) plans pay claims from employer funds and often buy stop-loss coverage; third-party administrators process claims.
ACA market rules
Guaranteed issue and renewability, no preexisting-condition exclusions, no annual or lifetime dollar limits on essential health benefits, preventive services with no cost sharing, dependent coverage to age 26, medical loss ratio rebates, and metal tiers (bronze 60%, silver 70%, gold 80%, platinum 90% actuarial value) plus catastrophic plans. Premium tax credits and cost-sharing reductions are based on income. Short-term and limited-benefit plans are not major medical.
Worked example: $3,000 deductible, 20% coinsurance, $7,000 out-of-pocket maximum. A $23,000 covered claim: the member owes $3,000 plus 20% of $20,000 = $7,000, which hits the maximum, so the plan pays the balance. Trap: out-of-pocket maximums generally count only in-network covered services.