Health Insurance Basics and Policy Provisions
Underwriting and renewability
Health underwriting prices morbidity (illness/injury frequency and cost). Know the renewal clauses: noncancellable (insurer cannot cancel or raise rates, only the insured may renew), guaranteed renewable (insurer must renew but may raise rates by class), conditionally renewable (renewal conditional on stated conditions), optionally renewable, and one year/term. Accident-only and specified-disease policies across a class are guaranteed renewable.
Cost-sharing provisions
A deductible is the insured's first-dollar outlay; coinsurance is the percentage shared after the deductible (a classic 80/20 split); copay is a flat fee; out-of-pocket maximum caps the insured's exposure; usual, customary and reasonable (UCR) limits what the insurer pays. Preventive services are covered at no cost-share under the ACA. Other clauses to know: preexisting condition (eliminated in ACA-compliant individual and small-group coverage), waiting/probationary periods, grace periods, reinstatement, coordination of benefits (to prevent duplication), subrogation, preauthorization, and claims timelines.
ACA essentials
The law guarantees issue regardless of health, bans preexisting-condition exclusions, allows dependent coverage to age 26, sets essential health benefits and out-of-pocket caps, and prohibits annual/lifetime dollar limits on essential benefits. Large-group and grandfathered plans operate differently.
Also understand AD&D: principal sum for accidental death, capital sum for dismemberment, and a loss-of-time benefit.
Worked example: $2,000 deductible, 80/20 coinsurance, $5,000 out-of-pocket maximum. A $12,000 covered claim: insured pays $2,000 + 20% of $10,000 = $4,000, which falls under the $5,000 maximum, so the insurer pays $8,000.