Health Insurance Principles, Policy Provisions, and Government Programs
Cost-sharing vocabulary
A deductible is paid first, then coinsurance (a percentage) or a copay (flat amount) applies until the out-of-pocket maximum caps the member's share. Coordination of benefits prevents duplicate payment when two plans cover a person, and preexisting condition limits are largely prohibited for major medical under current federal rules.
Renewability and disability income
Renewability clauses rank from most to least favorable to the insured: noncancellable (premium and renewability guaranteed), guaranteed renewable, conditionally renewable, optionally renewable, and cancellable. Disability income policies define own occupation vs. any occupation, an elimination period (waiting time), a benefit period, and often a residual/partial benefit; benefits are typically 50–70% of income and are tax-free when the insured paid the premiums.
Delivery systems
Indemnity (fee-for-service), HMO (in-network, gatekeeper, prepaid), PPO (network discounts, out-of-network allowed), and POS hybrids. Group coverage features master policy, eligibility, and conversion/continuation rights (COBRA: 18 months generally, 36 for certain dependents/events).
Government programs
Medicare Part A (hospital, usually premium-free with 40 quarters), Part B (medical, premium), Part C (Medicare Advantage), Part D (drugs). Medigap supplements Original Medicare and cannot include drug coverage. Medicaid is income-based; Arizona's long-term-care program is ALTCS. ACA plans use metal tiers (bronze–platinum) and must cover essential health benefits with guaranteed issue.
Worked example
A member with a $2,000 deductible and 20% coinsurance incurs $12,000 in charges: pay $2,000, then 20% of $10,000 = $2,000, total $4,000 - capped if the out-of-pocket maximum is lower.
Traps
Medicare A vs. B funding; Medigap vs. Part D; COBRA duration; and own-occupation vs. any-occupation definitions.