Health Insurance Policy Provisions
Mandatory (uniform) provisions
Health policies must contain the statutory required provisions, including: entire contract; time limit on certain defenses (after two years only fraud or nonpayment can void the policy); grace period (7 days for weekly, 10 days for monthly, 31 days for other modes); reinstatement (coverage restored on payment, with accidental injury covered immediately); notice of claim (20 days) and claim forms (15 days); proof of loss (90 days, extendable); time of payment of claims (immediately after proof, with periodic payments at least monthly); payment of claims; physical examination; legal actions (not before 60 days after proof of loss and within the statutory limit, commonly three years); change of beneficiary; and misstatement of age.
Optional provisions
Change of occupation (reduces benefits and returns unearned premium), other insurance in this insurer, insurance with other insurers, relation of earnings to insurance, unpaid premium, cancellation, conformity with state statutes, illegal occupation, and narcotics.
Policy features
Deductibles, coinsurance (the insured's share of covered cost), copayments, out-of-pocket stop-loss, internal limits, preauthorization, and benefit periods. Exclusions commonly include war, self-inflicted injury, workers' compensation injuries, and cosmetic surgery. Conversion and continuation rights let insureds keep coverage after leaving a group.
Traps: students confuse the two-year time limit on certain defenses with life insurance contestability; grace periods differ from elimination or waiting periods; and a pre-existing-condition limitation is not a deductible. Rule of thumb: 20-15-90 - notice of claim in 20 days, claim forms within 15 days, proof of loss within 90 days.