Health Insurance Products, Provisions, and Riders
Delivery models and cost sharing
Indemnity plans reimburse; HMO plans use a network, a primary care gatekeeper, and capitation; PPO plans allow in- and out-of-network care at different cost-sharing levels; POS blends HMO and PPO features; EPO covers network only. Know the sequence: deductible first, then coinsurance (a percentage of the remaining balance) or a copay (flat dollar), until the out-of-pocket maximum stops cost sharing. Premiums are never part of the out-of-pocket maximum. Coordination of benefits prevents duplication: the primary plan pays first, the secondary plan pays the remainder up to its allowed amount.
Disability income and long-term care
Disability income replaces a portion of earned income - never 100%, because that would remove the incentive to return to work. Master own occupation (more favorable, often limited to two years) vs. any occupation; elimination period (time before benefits start); benefit period; residual and partial disability; and the renewability ladder: noncancellable (premium and renewability guaranteed), guaranteed renewable (renewable, premium may rise by class), conditionally renewable, optionally renewable. Long-term care covers custodial care for chronic illness and disability and may be triggered by inability to perform two of six activities of daily living.
Regulation-shaped provisions
ACA-era rules: no preexisting-condition exclusions in individual and small-group major medical, no annual or lifetime dollar limits on essential health benefits, preventive services without cost sharing, dependent coverage to age 26. Traditional provisions you still must know: time limit on certain defenses (two years), grace period, reinstatement, probationary/waiting period, and pre-existing condition clauses where still permitted.
Traps and a worked example
A copay is not coinsurance, and coinsurance applies after the deductible. "Noncancellable" is stronger than "guaranteed renewable." Worked example: $2,000 deductible, 80/20 coinsurance, $6,000 out-of-pocket maximum. A $12,000 covered claim: insured pays $2,000 deductible plus 20% of $10,000 ($2,000) = $4,000; the insurer pays $8,000.