Healthcare Policies
Healthcare Policies tests cost-sharing math, managed-care structures, and disability income design. Expect calculation questions on deductibles and coinsurance, and definition questions on own-occupation versus any-occupation.
Cost-sharing mechanics
- Deductible - member pays first, per year or per episode.
- Coinsurance - percentage split after the deductible (e.g., 80/20).
- Copay - flat dollar amount, often outside the deductible.
- Out-of-pocket maximum - caps member coinsurance; premiums usually do not count.
- Usual, customary, and reasonable (UCR) - caps what an indemnity plan pays.
Managed care
- HMO - closed panel, primary care gatekeeper, capitation, referrals required, no non-emergency out-of-network coverage (emergencies are always covered).
- PPO - discounted network, no referrals, out-of-network allowed at lower reimbursement.
- POS - HMO-style gatekeeping with an out-of-network option.
- EPO - network only, no gatekeeper.
Disability income
- Own occupation - pays if unable to perform your own occupation, typically 24–60 months, then any-occupation.
- Any occupation - pays only if unable to perform any occupation for which reasonably suited by education and training.
- Elimination period, benefit period, benefit amount (usually 60–70% of income).
- Residual/partial disability - proportional benefit when income drops.
- Restrictions: occupational versus nonoccupational policies, Social Security offset, integration with group LTD.
Other products
Long-term care pays when the insured cannot perform 2 of 6 ADLs (bathing, dressing, toileting, transferring, eating, continence) or has cognitive impairment. AD&D pays accidental death and dismemberment, not illness.
Worked example
A $250,000 claim, $1,000 deductible, 80/20 coinsurance, $4,000 out-of-pocket maximum. The member pays the $1,000 deductible, leaving $249,000. Coinsurance would be $49,800, but the out-of-pocket maximum caps it at $4,000. The insurer pays $245,000; the member pays $5,000 total.
Traps
Calling a copay coinsurance; believing an HMO denies emergency care; defining own-occupation as any work; requiring 3 ADLs for LTC eligibility; forgetting residual disability is income-based, not task-based; and missing that individual disability policies usually exclude pre-existing conditions for a stated period.