Health Insurance Basics and Policy Provisions
Core definitions and cost sharing
Health policies define accident, sickness, injury, and disability precisely; read the definitions before the exclusions. Cost sharing: deductible (insured pays first), coinsurance (percentage split after deductible), copay (flat fee), and out-of-pocket maximum (annual cap on covered in-network cost sharing). Elimination periods and probationary periods delay benefits; preexisting condition rules depend on whether the plan is grandfathered, individual, or group.
Required provisions to memorize
Entire contract; free look (often 10 days); grace period (with notice requirements); reinstatement (coverage restored with evidence, often with a waiting period for sickness); incontestability after two years; notice of claim (usually 20 days) and proof of loss (usually 90 days); time limit on legal action (often 3 years); change of occupation; illegal occupation; misstatement of age; other insurance in this insurer; insurance with other insurers; relation of earnings to insurance; unpaid premium; cancellation; conformity with state law.
Coordination of benefits
When two plans cover the same person, primary/secondary rules prevent overpayment: the plan covering the patient as employee is usually primary over the plan covering them as a dependent; the birthday rule governs dependent children (parent whose birthday falls earlier in the year is primary).
Trap
Time limits, grace periods, and claim deadlines are commonly tested and often differ by product. Do not confuse the free-look period (return the policy) with the probationary period (benefits not yet payable).