HS 311 cheat sheet

Risk pooling: an insurer combines many independent exposure units so actual losses approach expected losses; the larger and more homogeneous the pool, the more predictable the loss ratio.

Insurable risk elements: loss must be accidental, measurable, definite, and of sufficient frequency/severity; speculative and catastrophic-only risks are generally uninsurable.

Adverse selection occurs when those with higher expected claims buy more coverage; insurers counter with underwriting, waiting periods, preexisting-condition limits, and experience rating.

Moral hazard is behavior change after coverage; controlled by deductibles, coinsurance, and policy limits.

Law of large numbers: as the number of similar exposure units increases, the relative variance of actual-to-expected losses decreases.

Premium components: expected claims (pure premium) + operating expenses + taxes/licenses + risk/contingency margin + profit; the loss ratio is incurred claims divided by earned premium.

Indemnity principle: health benefits restore actual loss, not profit; benefits may not exceed the actual expense incurred unless the policy specifies a fixed benefit.

Reinsurance transfers part of an insurer's risk (e.g., stop-loss or quota share); it does not change the insured's contract with the primary insurer.

Provider models: HMO (closed panel, gatekeeper, capitation common), PPO (network with out-of-network benefits, no referrals), POS (hybrid with gatekeeper but out-of-network option), EPO (network only, no out-of-network coverage).

HMO capitation pays a fixed per-member-per-month amount regardless of services used; fee-for-service pays per service; the incentive structures differ accordingly.

ACA Marketplace plans are metal-tiered by actuarial value: Bronze ~60%, Silver ~70%, Gold ~80%, Platinum ~90%; only Silver plans carry cost-sharing reductions for eligible enrollees.

Guaranteed issue and community rating apply to ACA individual/small-group markets; rating may vary only by age (3:1), geography, family size, and tobacco use.

Open enrollment for the federal Marketplace generally runs November 1 through January 15, with coverage starting the following month; special enrollment periods follow qualifying life events.

Premium tax credits cap the household's required contribution as a percentage of income and are based on the benchmark Silver plan; they are advanceable.

Risk adjustment transfers funds among insurers based on enrollee health; reinsurance and risk corridors were separate ACA stabilization programs.

Medicare Advantage, Medicaid managed care organizations, and FEHB plans are separate distribution channels from the individual Marketplace.

Basic medical expense coverages: hospital, surgical, and medical (physicians' visits); they pay scheduled or actual charges up to stated limits.

Major medical features a high maximum benefit, a deductible, and coinsurance; comprehensive major medical combines basic and major coverage in one policy.

Coinsurance splits covered costs between insurer and insured (e.g., 80/20 means the insurer pays 80%); an out-of-pocket maximum caps the insured's share.

Deductible types: calendar-year, per-cause, and family (embedded or aggregate); once the family deductible is met, remaining members' costs are covered.

Internal limits cap specific services (e.g., $X per day for room and board); external limits cap the total policy benefit.

Stop-loss limits the insured's coinsurance outlay; a common individual stop-loss is $3,000-$5,000 with a lifetime or annual aggregate.

Coordination of benefits: the primary plan pays first, the secondary pays the lesser of remaining allowable expense or its own benefit; the birthday rule determines primary coverage for dependent children of parents with overlapping plans.

Usual, customary, and reasonable (UCR) reimbursement limits payment to the prevailing charge in the geographic area.

Own-occupation definition pays if the insured cannot perform the duties of their own occupation, usually for a stated period; any-occupation is more restrictive and pays for inability to perform any job for which reasonably fitted.

Benefit period options commonly run 2 years, 5 years, to age 65, or lifetime; the longer the benefit period, the higher the premium.

Elimination (waiting) period is the time between disability onset and benefit payment; common choices are 30, 60, 90, 180, or 365 days; longer elimination periods lower premium.

Residual (partial) disability benefits pay a proportional benefit when income loss is partial, often tied to a percentage of prior earnings.

Benefit amount is typically 60-70% of pre-disability income; insurers limit benefits to reduce malingering and preserve work incentives.

Presumptive disability pays full benefits for specified losses (e.g., loss of sight in both eyes, loss of two limbs) without requiring the elimination period.

Noncancelable policies guarantee renewal and fixed premium; guaranteed renewable guarantees renewal but allows premium increases by class; conditionally renewable permits insurer nonrenewal under stated conditions.

Social Security disability requires total disability expected to last at least 12 months or result in death; DI benefits are offset against many individual policies.

Accidental death and dismemberment (AD&D) pays a principal sum for accidental death and a capital sum (often 50%) for loss of a limb or sight.

Accident policies typically pay for accidental bodily injury within a specified time (e.g., 90 or 180 days) of the accident; sickness policies cover illness with a waiting period.

Business travel accident policies cover only while on employer business; blanket accident policies cover groups such as students or volunteers.

Critical illness policies pay a lump sum on diagnosis of a covered condition (e.g., cancer, heart attack, stroke) and are not indemnity-based.

Hospital indemnity policies pay a fixed daily or per-admission benefit regardless of actual expenses; benefits may exceed charges and are taxable if employer-paid.

Accident and sickness policies commonly exclude self-inflicted injury, war, and injuries sustained while committing a felony.

Disability income is often sold alongside accident and sickness coverage to replace income when injury or illness prevents work.

Coordination with major medical: fixed indemnity benefits are paid directly to the insured and may be used for any purpose.

Benefit triggers: inability to perform at least 2 of 6 activities of daily living (bathing, dressing, eating, toileting, transferring, continence) or cognitive impairment requiring substantial supervision.

Benefit amount is a daily or monthly maximum; the pool of money equals benefit amount times benefit period (e.g., $150/day x 3 years).

Elimination period is stated in days of service (e.g., 0, 30, 90) and functions like a deductible; longer elimination periods reduce premium.

Inflation protection riders compound or simple-increase the benefit over time; compound is more expensive and more valuable over long durations.

Tax-qualified LTC policies receive favorable tax treatment; premiums may be deductible as medical expense above age-based limits.

Nonforfeiture provisions (contingent or shortened benefit period) protect against lapse after premiums have been paid for a specified period.

HIPAA restricts rescission of LTC coverage for misrepresentation after 2 years and prohibits certain practices; states also regulate LTC under the NAIC model.

Home care, adult day care, assisted living, and nursing home benefits may be covered; some policies restrict to skilled nursing only.

Medicare Part A covers inpatient hospital, skilled nursing facility (after a qualifying stay), hospice, and some home health; funded by payroll taxes and no premium for most.

Part B covers physician services, outpatient care, and durable medical equipment; premium is income-related and enrollment is generally automatic at 65 if receiving Social Security.

Part C (Medicare Advantage) is private plan alternative to Original Medicare; Part D covers outpatient prescription drugs.

Medicare eligibility: age 65 with 40 quarters of payroll contributions, or under 65 with 24 months of Social Security disability, or ESRD.

Medigap policies supplement Original Medicare and are standardized by letter (A, B, C, D, F, G, K, L, M, N); Plans C and F are not available to those newly eligible after January 1, 2020.

Medicaid is a joint federal-state program with income and categorical eligibility; it is the largest payer of long-term care services.

Medicare does not cover custodial long-term care; Medicaid covers nursing home care for those who meet state income and asset tests.

Dual-eligible beneficiaries qualify for both Medicare and Medicaid; Medicaid may pay Medicare premiums and cost sharing.

Group underwriting evaluates the group as a whole, not individuals; characteristics include group size, industry, age/gender mix, and prior claims experience.

Eligibility rules: employees must meet actively-at-work and waiting-period requirements; dependents are defined in the plan document.

COBRA requires continuation coverage for 18 months (longer in disability or second qualifying event cases) for groups of 20+ employees; the qualified beneficiary pays up to 102% of premium.

Coordination of benefits and nonduplication provisions prevent overinsurance when an employee is covered under two group plans.

Group life and health premiums: employer-paid premiums are generally tax-deductible to the employer and not taxable to the employee; employee-paid portions may be paid with pre-tax dollars under a cafeteria plan.

Experience rating uses the group's own claims history; community rating uses the experience of the entire pool.

Fully insured vs. self-funded: self-funded (ASO) plans are governed by ERISA and generally exempt from state insurance mandates.

Conversion privilege allows a terminated employee to convert group coverage to an individual policy without evidence of insurability, usually within 31 days.

Entire contract clause: the policy plus attached application and endorsements constitute the entire agreement; only authorized officers may modify it.

Incontestability: after 2 years, the insurer cannot contest the policy for misstatements (except fraudulent ones in some states); reinstated policies restart the period.

Grace period: 7 days for weekly premium, 10 days for monthly, 31 days for other modes; coverage continues during the grace period.

Reinstatement provision allows restoration of a lapsed policy upon evidence of insurability and payment of overdue premiums; a new contestable period may apply.

Notice of claim and proof of loss provisions set time limits for the insured to notify the insurer and submit documentation.

Legal actions provision limits the time to sue the insurer, typically 3 years from the date proof of loss is filed.

Change of occupation and misstatement of age provisions adjust benefits to what the premium would have purchased at the correct age or occupation.

State regulation: insurance departments license insurers and producers, approve policy forms and rates, and enforce unfair trade practice and marketing rules.

NAIC model laws and regulations provide uniformity among states but are not themselves law until adopted by a state.

Risk pooling: an insurer combines many independent exposure units so actual losses approach expected losses; the larger and more homogeneous the pool, the more predictable the loss ratio.

Insurable risk elements: loss must be accidental, measurable, definite, and of sufficient frequency/severity; speculative and catastrophic-only risks are generally uninsurable.

Adverse selection occurs when those with higher expected claims buy more coverage; insurers counter with underwriting, waiting periods, preexisting-condition limits, and experience rating.

Moral hazard is behavior change after coverage; controlled by deductibles, coinsurance, and policy limits.

Law of large numbers: as the number of similar exposure units increases, the relative variance of actual-to-expected losses decreases.

Premium components: expected claims (pure premium) + operating expenses + taxes/licenses + risk/contingency margin + profit; the loss ratio is incurred claims divided by earned premium.

Indemnity principle: health benefits restore actual loss, not profit; benefits may not exceed the actual expense incurred unless the policy specifies a fixed benefit.

Reinsurance transfers part of an insurer's risk (e.g., stop-loss or quota share); it does not change the insured's contract with the primary insurer.

Provider models: HMO (closed panel, gatekeeper, capitation common), PPO (network with out-of-network benefits, no referrals), POS (hybrid with gatekeeper but out-of-network option), EPO (network only, no out-of-network coverage).

HMO capitation pays a fixed per-member-per-month amount regardless of services used; fee-for-service pays per service; the incentive structures differ accordingly.

ACA Marketplace plans are metal-tiered by actuarial value: Bronze ~60%, Silver ~70%, Gold ~80%, Platinum ~90%; only Silver plans carry cost-sharing reductions for eligible enrollees.

Guaranteed issue and community rating apply to ACA individual/small-group markets; rating may vary only by age (3:1), geography, family size, and tobacco use.

Open enrollment for the federal Marketplace generally runs November 1 through January 15, with coverage starting the following month; special enrollment periods follow qualifying life events.

Premium tax credits cap the household's required contribution as a percentage of income and are based on the benchmark Silver plan; they are advanceable.

Risk adjustment transfers funds among insurers based on enrollee health; reinsurance and risk corridors were separate ACA stabilization programs.

Medicare Advantage, Medicaid managed care organizations, and FEHB plans are separate distribution channels from the individual Marketplace.

Basic medical expense coverages: hospital, surgical, and medical (physicians' visits); they pay scheduled or actual charges up to stated limits.

Major medical features a high maximum benefit, a deductible, and coinsurance; comprehensive major medical combines basic and major coverage in one policy.

Coinsurance splits covered costs between insurer and insured (e.g., 80/20 means the insurer pays 80%); an out-of-pocket maximum caps the insured's share.

Deductible types: calendar-year, per-cause, and family (embedded or aggregate); once the family deductible is met, remaining members' costs are covered.

Internal limits cap specific services (e.g., $X per day for room and board); external limits cap the total policy benefit.

Stop-loss limits the insured's coinsurance outlay; a common individual stop-loss is $3,000-$5,000 with a lifetime or annual aggregate.

Coordination of benefits: the primary plan pays first, the secondary pays the lesser of remaining allowable expense or its own benefit; the birthday rule determines primary coverage for dependent children of parents with overlapping plans.

Usual, customary, and reasonable (UCR) reimbursement limits payment to the prevailing charge in the geographic area.

Own-occupation definition pays if the insured cannot perform the duties of their own occupation, usually for a stated period; any-occupation is more restrictive and pays for inability to perform any job for which reasonably fitted.

Benefit period options commonly run 2 years, 5 years, to age 65, or lifetime; the longer the benefit period, the higher the premium.

Elimination (waiting) period is the time between disability onset and benefit payment; common choices are 30, 60, 90, 180, or 365 days; longer elimination periods lower premium.

Residual (partial) disability benefits pay a proportional benefit when income loss is partial, often tied to a percentage of prior earnings.

Benefit amount is typically 60-70% of pre-disability income; insurers limit benefits to reduce malingering and preserve work incentives.

Presumptive disability pays full benefits for specified losses (e.g., loss of sight in both eyes, loss of two limbs) without requiring the elimination period.

Noncancelable policies guarantee renewal and fixed premium; guaranteed renewable guarantees renewal but allows premium increases by class; conditionally renewable permits insurer nonrenewal under stated conditions.

Social Security disability requires total disability expected to last at least 12 months or result in death; DI benefits are offset against many individual policies.

Accidental death and dismemberment (AD&D) pays a principal sum for accidental death and a capital sum (often 50%) for loss of a limb or sight.

Accident policies typically pay for accidental bodily injury within a specified time (e.g., 90 or 180 days) of the accident; sickness policies cover illness with a waiting period.

Business travel accident policies cover only while on employer business; blanket accident policies cover groups such as students or volunteers.

Critical illness policies pay a lump sum on diagnosis of a covered condition (e.g., cancer, heart attack, stroke) and are not indemnity-based.

Hospital indemnity policies pay a fixed daily or per-admission benefit regardless of actual expenses; benefits may exceed charges and are taxable if employer-paid.

Accident and sickness policies commonly exclude self-inflicted injury, war, and injuries sustained while committing a felony.

Disability income is often sold alongside accident and sickness coverage to replace income when injury or illness prevents work.

Coordination with major medical: fixed indemnity benefits are paid directly to the insured and may be used for any purpose.

Benefit triggers: inability to perform at least 2 of 6 activities of daily living (bathing, dressing, eating, toileting, transferring, continence) or cognitive impairment requiring substantial supervision.

Benefit amount is a daily or monthly maximum; the pool of money equals benefit amount times benefit period (e.g., $150/day x 3 years).

Elimination period is stated in days of service (e.g., 0, 30, 90) and functions like a deductible; longer elimination periods reduce premium.

Inflation protection riders compound or simple-increase the benefit over time; compound is more expensive and more valuable over long durations.

Tax-qualified LTC policies receive favorable tax treatment; premiums may be deductible as medical expense above age-based limits.

Nonforfeiture provisions (contingent or shortened benefit period) protect against lapse after premiums have been paid for a specified period.

HIPAA restricts rescission of LTC coverage for misrepresentation after 2 years and prohibits certain practices; states also regulate LTC under the NAIC model.

Home care, adult day care, assisted living, and nursing home benefits may be covered; some policies restrict to skilled nursing only.

Medicare Part A covers inpatient hospital, skilled nursing facility (after a qualifying stay), hospice, and some home health; funded by payroll taxes and no premium for most.

Part B covers physician services, outpatient care, and durable medical equipment; premium is income-related and enrollment is generally automatic at 65 if receiving Social Security.

Part C (Medicare Advantage) is private plan alternative to Original Medicare; Part D covers outpatient prescription drugs.

Medicare eligibility: age 65 with 40 quarters of payroll contributions, or under 65 with 24 months of Social Security disability, or ESRD.

Medigap policies supplement Original Medicare and are standardized by letter (A, B, C, D, F, G, K, L, M, N); Plans C and F are not available to those newly eligible after January 1, 2020.

Medicaid is a joint federal-state program with income and categorical eligibility; it is the largest payer of long-term care services.

Medicare does not cover custodial long-term care; Medicaid covers nursing home care for those who meet state income and asset tests.

Dual-eligible beneficiaries qualify for both Medicare and Medicaid; Medicaid may pay Medicare premiums and cost sharing.

Group underwriting evaluates the group as a whole, not individuals; characteristics include group size, industry, age/gender mix, and prior claims experience.

Eligibility rules: employees must meet actively-at-work and waiting-period requirements; dependents are defined in the plan document.

COBRA requires continuation coverage for 18 months (longer in disability or second qualifying event cases) for groups of 20+ employees; the qualified beneficiary pays up to 102% of premium.

Coordination of benefits and nonduplication provisions prevent overinsurance when an employee is covered under two group plans.

Group life and health premiums: employer-paid premiums are generally tax-deductible to the employer and not taxable to the employee; employee-paid portions may be paid with pre-tax dollars under a cafeteria plan.

Experience rating uses the group's own claims history; community rating uses the experience of the entire pool.

Fully insured vs. self-funded: self-funded (ASO) plans are governed by ERISA and generally exempt from state insurance mandates.

Conversion privilege allows a terminated employee to convert group coverage to an individual policy without evidence of insurability, usually within 31 days.

Entire contract clause: the policy plus attached application and endorsements constitute the entire agreement; only authorized officers may modify it.

Incontestability: after 2 years, the insurer cannot contest the policy for misstatements (except fraudulent ones in some states); reinstated policies restart the period.

Grace period: 7 days for weekly premium, 10 days for monthly, 31 days for other modes; coverage continues during the grace period.

Reinstatement provision allows restoration of a lapsed policy upon evidence of insurability and payment of overdue premiums; a new contestable period may apply.

Notice of claim and proof of loss provisions set time limits for the insured to notify the insurer and submit documentation.

Legal actions provision limits the time to sue the insurer, typically 3 years from the date proof of loss is filed.

Change of occupation and misstatement of age provisions adjust benefits to what the premium would have purchased at the correct age or occupation.

State regulation: insurance departments license insurers and producers, approve policy forms and rates, and enforce unfair trade practice and marketing rules.

NAIC model laws and regulations provide uniformity among states but are not themselves law until adopted by a state.

Risk pooling: an insurer combines many independent exposure units so actual losses approach expected losses; the larger and more homogeneous the pool, the more predictable the loss ratio.

Insurable risk elements: loss must be accidental, measurable, definite, and of sufficient frequency/severity; speculative and catastrophic-only risks are generally uninsurable.

Adverse selection occurs when those with higher expected claims buy more coverage; insurers counter with underwriting, waiting periods, preexisting-condition limits, and experience rating.

Moral hazard is behavior change after coverage; controlled by deductibles, coinsurance, and policy limits.

Law of large numbers: as the number of similar exposure units increases, the relative variance of actual-to-expected losses decreases.

Premium components: expected claims (pure premium) + operating expenses + taxes/licenses + risk/contingency margin + profit; the loss ratio is incurred claims divided by earned premium.

Indemnity principle: health benefits restore actual loss, not profit; benefits may not exceed the actual expense incurred unless the policy specifies a fixed benefit.

Reinsurance transfers part of an insurer's risk (e.g., stop-loss or quota share); it does not change the insured's contract with the primary insurer.

Provider models: HMO (closed panel, gatekeeper, capitation common), PPO (network with out-of-network benefits, no referrals), POS (hybrid with gatekeeper but out-of-network option), EPO (network only, no out-of-network coverage).

HMO capitation pays a fixed per-member-per-month amount regardless of services used; fee-for-service pays per service; the incentive structures differ accordingly.

ACA Marketplace plans are metal-tiered by actuarial value: Bronze ~60%, Silver ~70%, Gold ~80%, Platinum ~90%; only Silver plans carry cost-sharing reductions for eligible enrollees.

Guaranteed issue and community rating apply to ACA individual/small-group markets; rating may vary only by age (3:1), geography, family size, and tobacco use.

Open enrollment for the federal Marketplace generally runs November 1 through January 15, with coverage starting the following month; special enrollment periods follow qualifying life events.

Premium tax credits cap the household's required contribution as a percentage of income and are based on the benchmark Silver plan; they are advanceable.

Risk adjustment transfers funds among insurers based on enrollee health; reinsurance and risk corridors were separate ACA stabilization programs.

Medicare Advantage, Medicaid managed care organizations, and FEHB plans are separate distribution channels from the individual Marketplace.

Basic medical expense coverages: hospital, surgical, and medical (physicians' visits); they pay scheduled or actual charges up to stated limits.

Major medical features a high maximum benefit, a deductible, and coinsurance; comprehensive major medical combines basic and major coverage in one policy.

Coinsurance splits covered costs between insurer and insured (e.g., 80/20 means the insurer pays 80%); an out-of-pocket maximum caps the insured's share.

Deductible types: calendar-year, per-cause, and family (embedded or aggregate); once the family deductible is met, remaining members' costs are covered.

Internal limits cap specific services (e.g., $X per day for room and board); external limits cap the total policy benefit.

Stop-loss limits the insured's coinsurance outlay; a common individual stop-loss is $3,000-$5,000 with a lifetime or annual aggregate.

Coordination of benefits: the primary plan pays first, the secondary pays the lesser of remaining allowable expense or its own benefit; the birthday rule determines primary coverage for dependent children of parents with overlapping plans.

Usual, customary, and reasonable (UCR) reimbursement limits payment to the prevailing charge in the geographic area.

Own-occupation definition pays if the insured cannot perform the duties of their own occupation, usually for a stated period; any-occupation is more restrictive and pays for inability to perform any job for which reasonably fitted.

Benefit period options commonly run 2 years, 5 years, to age 65, or lifetime; the longer the benefit period, the higher the premium.

Elimination (waiting) period is the time between disability onset and benefit payment; common choices are 30, 60, 90, 180, or 365 days; longer elimination periods lower premium.

Residual (partial) disability benefits pay a proportional benefit when income loss is partial, often tied to a percentage of prior earnings.

Benefit amount is typically 60-70% of pre-disability income; insurers limit benefits to reduce malingering and preserve work incentives.

Presumptive disability pays full benefits for specified losses (e.g., loss of sight in both eyes, loss of two limbs) without requiring the elimination period.

Noncancelable policies guarantee renewal and fixed premium; guaranteed renewable guarantees renewal but allows premium increases by class; conditionally renewable permits insurer nonrenewal under stated conditions.

Social Security disability requires total disability expected to last at least 12 months or result in death; DI benefits are offset against many individual policies.

Accidental death and dismemberment (AD&D) pays a principal sum for accidental death and a capital sum (often 50%) for loss of a limb or sight.

Accident policies typically pay for accidental bodily injury within a specified time (e.g., 90 or 180 days) of the accident; sickness policies cover illness with a waiting period.

Business travel accident policies cover only while on employer business; blanket accident policies cover groups such as students or volunteers.

Critical illness policies pay a lump sum on diagnosis of a covered condition (e.g., cancer, heart attack, stroke) and are not indemnity-based.

Hospital indemnity policies pay a fixed daily or per-admission benefit regardless of actual expenses; benefits may exceed charges and are taxable if employer-paid.

Accident and sickness policies commonly exclude self-inflicted injury, war, and injuries sustained while committing a felony.

Disability income is often sold alongside accident and sickness coverage to replace income when injury or illness prevents work.

Coordination with major medical: fixed indemnity benefits are paid directly to the insured and may be used for any purpose.

Benefit triggers: inability to perform at least 2 of 6 activities of daily living (bathing, dressing, eating, toileting, transferring, continence) or cognitive impairment requiring substantial supervision.

Benefit amount is a daily or monthly maximum; the pool of money equals benefit amount times benefit period (e.g., $150/day x 3 years).

Elimination period is stated in days of service (e.g., 0, 30, 90) and functions like a deductible; longer elimination periods reduce premium.

Inflation protection riders compound or simple-increase the benefit over time; compound is more expensive and more valuable over long durations.

Tax-qualified LTC policies receive favorable tax treatment; premiums may be deductible as medical expense above age-based limits.

Nonforfeiture provisions (contingent or shortened benefit period) protect against lapse after premiums have been paid for a specified period.

HIPAA restricts rescission of LTC coverage for misrepresentation after 2 years and prohibits certain practices; states also regulate LTC under the NAIC model.

Home care, adult day care, assisted living, and nursing home benefits may be covered; some policies restrict to skilled nursing only.

Medicare Part A covers inpatient hospital, skilled nursing facility (after a qualifying stay), hospice, and some home health; funded by payroll taxes and no premium for most.

Part B covers physician services, outpatient care, and durable medical equipment; premium is income-related and enrollment is generally automatic at 65 if receiving Social Security.

Part C (Medicare Advantage) is private plan alternative to Original Medicare; Part D covers outpatient prescription drugs.

Medicare eligibility: age 65 with 40 quarters of payroll contributions, or under 65 with 24 months of Social Security disability, or ESRD.

Medigap policies supplement Original Medicare and are standardized by letter (A, B, C, D, F, G, K, L, M, N); Plans C and F are not available to those newly eligible after January 1, 2020.

Medicaid is a joint federal-state program with income and categorical eligibility; it is the largest payer of long-term care services.

Medicare does not cover custodial long-term care; Medicaid covers nursing home care for those who meet state income and asset tests.

Dual-eligible beneficiaries qualify for both Medicare and Medicaid; Medicaid may pay Medicare premiums and cost sharing.

Group underwriting evaluates the group as a whole, not individuals; characteristics include group size, industry, age/gender mix, and prior claims experience.

Eligibility rules: employees must meet actively-at-work and waiting-period requirements; dependents are defined in the plan document.

COBRA requires continuation coverage for 18 months (longer in disability or second qualifying event cases) for groups of 20+ employees; the qualified beneficiary pays up to 102% of premium.

Coordination of benefits and nonduplication provisions prevent overinsurance when an employee is covered under two group plans.

Group life and health premiums: employer-paid premiums are generally tax-deductible to the employer and not taxable to the employee; employee-paid portions may be paid with pre-tax dollars under a cafeteria plan.

Experience rating uses the group's own claims history; community rating uses the experience of the entire pool.

Fully insured vs. self-funded: self-funded (ASO) plans are governed by ERISA and generally exempt from state insurance mandates.

Conversion privilege allows a terminated employee to convert group coverage to an individual policy without evidence of insurability, usually within 31 days.

Entire contract clause: the policy plus attached application and endorsements constitute the entire agreement; only authorized officers may modify it.

Incontestability: after 2 years, the insurer cannot contest the policy for misstatements (except fraudulent ones in some states); reinstated policies restart the period.

Grace period: 7 days for weekly premium, 10 days for monthly, 31 days for other modes; coverage continues during the grace period.

Reinstatement provision allows restoration of a lapsed policy upon evidence of insurability and payment of overdue premiums; a new contestable period may apply.

Notice of claim and proof of loss provisions set time limits for the insured to notify the insurer and submit documentation.

Legal actions provision limits the time to sue the insurer, typically 3 years from the date proof of loss is filed.

Change of occupation and misstatement of age provisions adjust benefits to what the premium would have purchased at the correct age or occupation.

State regulation: insurance departments license insurers and producers, approve policy forms and rates, and enforce unfair trade practice and marketing rules.

NAIC model laws and regulations provide uniformity among states but are not themselves law until adopted by a state.

Risk pooling: an insurer combines many independent exposure units so actual losses approach expected losses; the larger and more homogeneous the pool, the more predictable the loss ratio.

Insurable risk elements: loss must be accidental, measurable, definite, and of sufficient frequency/severity; speculative and catastrophic-only risks are generally uninsurable.

Adverse selection occurs when those with higher expected claims buy more coverage; insurers counter with underwriting, waiting periods, preexisting-condition limits, and experience rating.

Moral hazard is behavior change after coverage; controlled by deductibles, coinsurance, and policy limits.

Law of large numbers: as the number of similar exposure units increases, the relative variance of actual-to-expected losses decreases.

Premium components: expected claims (pure premium) + operating expenses + taxes/licenses + risk/contingency margin + profit; the loss ratio is incurred claims divided by earned premium.

Indemnity principle: health benefits restore actual loss, not profit; benefits may not exceed the actual expense incurred unless the policy specifies a fixed benefit.

Reinsurance transfers part of an insurer's risk (e.g., stop-loss or quota share); it does not change the insured's contract with the primary insurer.

Provider models: HMO (closed panel, gatekeeper, capitation common), PPO (network with out-of-network benefits, no referrals), POS (hybrid with gatekeeper but out-of-network option), EPO (network only, no out-of-network coverage).

HMO capitation pays a fixed per-member-per-month amount regardless of services used; fee-for-service pays per service; the incentive structures differ accordingly.

ACA Marketplace plans are metal-tiered by actuarial value: Bronze ~60%, Silver ~70%, Gold ~80%, Platinum ~90%; only Silver plans carry cost-sharing reductions for eligible enrollees.

Guaranteed issue and community rating apply to ACA individual/small-group markets; rating may vary only by age (3:1), geography, family size, and tobacco use.

Open enrollment for the federal Marketplace generally runs November 1 through January 15, with coverage starting the following month; special enrollment periods follow qualifying life events.

Premium tax credits cap the household's required contribution as a percentage of income and are based on the benchmark Silver plan; they are advanceable.

Risk adjustment transfers funds among insurers based on enrollee health; reinsurance and risk corridors were separate ACA stabilization programs.

Medicare Advantage, Medicaid managed care organizations, and FEHB plans are separate distribution channels from the individual Marketplace.

Basic medical expense coverages: hospital, surgical, and medical (physicians' visits); they pay scheduled or actual charges up to stated limits.

Major medical features a high maximum benefit, a deductible, and coinsurance; comprehensive major medical combines basic and major coverage in one policy.

Coinsurance splits covered costs between insurer and insured (e.g., 80/20 means the insurer pays 80%); an out-of-pocket maximum caps the insured's share.

Deductible types: calendar-year, per-cause, and family (embedded or aggregate); once the family deductible is met, remaining members' costs are covered.

Internal limits cap specific services (e.g., $X per day for room and board); external limits cap the total policy benefit.

Stop-loss limits the insured's coinsurance outlay; a common individual stop-loss is $3,000-$5,000 with a lifetime or annual aggregate.

Coordination of benefits: the primary plan pays first, the secondary pays the lesser of remaining allowable expense or its own benefit; the birthday rule determines primary coverage for dependent children of parents with overlapping plans.

Usual, customary, and reasonable (UCR) reimbursement limits payment to the prevailing charge in the geographic area.

Own-occupation definition pays if the insured cannot perform the duties of their own occupation, usually for a stated period; any-occupation is more restrictive and pays for inability to perform any job for which reasonably fitted.

Benefit period options commonly run 2 years, 5 years, to age 65, or lifetime; the longer the benefit period, the higher the premium.

Elimination (waiting) period is the time between disability onset and benefit payment; common choices are 30, 60, 90, 180, or 365 days; longer elimination periods lower premium.

Residual (partial) disability benefits pay a proportional benefit when income loss is partial, often tied to a percentage of prior earnings.

Benefit amount is typically 60-70% of pre-disability income; insurers limit benefits to reduce malingering and preserve work incentives.

Presumptive disability pays full benefits for specified losses (e.g., loss of sight in both eyes, loss of two limbs) without requiring the elimination period.

Noncancelable policies guarantee renewal and fixed premium; guaranteed renewable guarantees renewal but allows premium increases by class; conditionally renewable permits insurer nonrenewal under stated conditions.

Social Security disability requires total disability expected to last at least 12 months or result in death; DI benefits are offset against many individual policies.

Accidental death and dismemberment (AD&D) pays a principal sum for accidental death and a capital sum (often 50%) for loss of a limb or sight.

Accident policies typically pay for accidental bodily injury within a specified time (e.g., 90 or 180 days) of the accident; sickness policies cover illness with a waiting period.

Business travel accident policies cover only while on employer business; blanket accident policies cover groups such as students or volunteers.

Critical illness policies pay a lump sum on diagnosis of a covered condition (e.g., cancer, heart attack, stroke) and are not indemnity-based.

Hospital indemnity policies pay a fixed daily or per-admission benefit regardless of actual expenses; benefits may exceed charges and are taxable if employer-paid.

Accident and sickness policies commonly exclude self-inflicted injury, war, and injuries sustained while committing a felony.

Disability income is often sold alongside accident and sickness coverage to replace income when injury or illness prevents work.

Coordination with major medical: fixed indemnity benefits are paid directly to the insured and may be used for any purpose.

Benefit triggers: inability to perform at least 2 of 6 activities of daily living (bathing, dressing, eating, toileting, transferring, continence) or cognitive impairment requiring substantial supervision.

Benefit amount is a daily or monthly maximum; the pool of money equals benefit amount times benefit period (e.g., $150/day x 3 years).

Elimination period is stated in days of service (e.g., 0, 30, 90) and functions like a deductible; longer elimination periods reduce premium.

Inflation protection riders compound or simple-increase the benefit over time; compound is more expensive and more valuable over long durations.

Tax-qualified LTC policies receive favorable tax treatment; premiums may be deductible as medical expense above age-based limits.

Nonforfeiture provisions (contingent or shortened benefit period) protect against lapse after premiums have been paid for a specified period.

HIPAA restricts rescission of LTC coverage for misrepresentation after 2 years and prohibits certain practices; states also regulate LTC under the NAIC model.

Home care, adult day care, assisted living, and nursing home benefits may be covered; some policies restrict to skilled nursing only.

Medicare Part A covers inpatient hospital, skilled nursing facility (after a qualifying stay), hospice, and some home health; funded by payroll taxes and no premium for most.

Part B covers physician services, outpatient care, and durable medical equipment; premium is income-related and enrollment is generally automatic at 65 if receiving Social Security.

Part C (Medicare Advantage) is private plan alternative to Original Medicare; Part D covers outpatient prescription drugs.

Medicare eligibility: age 65 with 40 quarters of payroll contributions, or under 65 with 24 months of Social Security disability, or ESRD.

Medigap policies supplement Original Medicare and are standardized by letter (A, B, C, D, F, G, K, L, M, N); Plans C and F are not available to those newly eligible after January 1, 2020.

Medicaid is a joint federal-state program with income and categorical eligibility; it is the largest payer of long-term care services.

Medicare does not cover custodial long-term care; Medicaid covers nursing home care for those who meet state income and asset tests.

Dual-eligible beneficiaries qualify for both Medicare and Medicaid; Medicaid may pay Medicare premiums and cost sharing.

Group underwriting evaluates the group as a whole, not individuals; characteristics include group size, industry, age/gender mix, and prior claims experience.

Eligibility rules: employees must meet actively-at-work and waiting-period requirements; dependents are defined in the plan document.

COBRA requires continuation coverage for 18 months (longer in disability or second qualifying event cases) for groups of 20+ employees; the qualified beneficiary pays up to 102% of premium.

Coordination of benefits and nonduplication provisions prevent overinsurance when an employee is covered under two group plans.

Group life and health premiums: employer-paid premiums are generally tax-deductible to the employer and not taxable to the employee; employee-paid portions may be paid with pre-tax dollars under a cafeteria plan.

Experience rating uses the group's own claims history; community rating uses the experience of the entire pool.

Fully insured vs. self-funded: self-funded (ASO) plans are governed by ERISA and generally exempt from state insurance mandates.

Conversion privilege allows a terminated employee to convert group coverage to an individual policy without evidence of insurability, usually within 31 days.

Entire contract clause: the policy plus attached application and endorsements constitute the entire agreement; only authorized officers may modify it.

Incontestability: after 2 years, the insurer cannot contest the policy for misstatements (except fraudulent ones in some states); reinstated policies restart the period.

Grace period: 7 days for weekly premium, 10 days for monthly, 31 days for other modes; coverage continues during the grace period.

Reinstatement provision allows restoration of a lapsed policy upon evidence of insurability and payment of overdue premiums; a new contestable period may apply.

Notice of claim and proof of loss provisions set time limits for the insured to notify the insurer and submit documentation.

Legal actions provision limits the time to sue the insurer, typically 3 years from the date proof of loss is filed.

Change of occupation and misstatement of age provisions adjust benefits to what the premium would have purchased at the correct age or occupation.

State regulation: insurance departments license insurers and producers, approve policy forms and rates, and enforce unfair trade practice and marketing rules.

NAIC model laws and regulations provide uniformity among states but are not themselves law until adopted by a state.