RHU cheat sheet

The indemnity principle means health insurance reimburses actual covered medical expenses rather than creating profit; benefits cannot exceed the loss incurred.

Morbidity is the rate of illness or injury and drives health insurance pricing; mortality is the rate of death and drives life insurance pricing.

Adverse selection occurs when higher-risk individuals are more likely to buy or keep coverage; underwriting, waiting periods, mandates, and group pooling reduce it.

Cost sharing typically combines a deductible, coinsurance, and a copayment, and stops at the out-of-pocket maximum for in-network essential benefits.

Coordination of benefits rules set payment order: the primary plan pays first and the secondary plan pays remaining covered expenses up to its limit, preventing duplicate payment.

Guaranteed renewable individual coverage requires the insurer to renew while premiums are paid but allows premium increases by class; noncancellable coverage prohibits both cancellation and premium increases.

Under ERISA, self-funded employer health plans generally preempt state insurance laws, while fully insured plans remain subject to state insurance regulation.

ACA rules restrict rescission of individual coverage to fraud or intentional misrepresentation and require guaranteed issue in the individual market.

Individual medical underwriting commonly considers age, health history, occupation, tobacco use, and current medications; ACA marketplace individual coverage is guaranteed issue without medical underwriting.

Disability income policies define disability as own occupation or any occupation; own-occupation is broader and usually applies only for a limited initial period.

The elimination period is a time deductible before disability benefits begin; longer elimination periods reduce premium.

Residual disability benefits pay a proportionate amount when the insured returns to work with reduced income rather than requiring total inability to work.

A recurrent disability provision treats a return of the same or related disability within a stated period, often six months, as continuation of the prior claim.

Disability income benefits are limited to a percentage of income, commonly 60% to 70%, to preserve work incentives and reduce overinsurance.

Waiver of premium keeps a disability policy in force by suspending premiums after total disability continues beyond a specified period.

Long-term care insurance commonly triggers benefits when the insured cannot perform two of six activities of daily living or has a cognitive impairment requiring substantial supervision.

Group underwriting evaluates group size, industry, demographics, participation, and prior claims rather than medically underwriting each employee in larger groups.

Experience rating uses the group's own claims history to set premium, while community rating spreads risk across a broader pool and manual rating uses class-based factors.

Group eligibility rules often include a waiting period, an actively-at-work requirement, and dependent eligibility definitions.

COBRA applies to employers with 20 or more employees and generally provides 18 months of continuation for termination or reduced hours, 29 months for disability, and 36 months for other qualifying events.

HIPAA special enrollment rights allow enrollment outside open enrollment after events such as marriage, birth, adoption, or loss of other coverage, within stated deadlines.

A Section 125 cafeteria plan permits pre-tax salary reductions for qualified benefits, and elections generally can change only after a qualifying life event.

For employers with 20 or more employees, Medicare is generally secondary to the employer group health plan for working aged employees and spouses.

ACA employer shared responsibility uses minimum value and affordability tests to determine whether applicable large employers face penalties for coverage offered or not offered.

Capitation pays a provider a fixed amount per patient per month regardless of services used, shifting utilization risk to the provider.

DRG prospective payment pays hospitals a fixed amount based on the diagnosis-related group rather than itemized charges, encouraging shorter stays and cost control.

Utilization management includes prior authorization, concurrent review, and retrospective review to assess medical necessity and control unnecessary care.

HMO plans typically use a primary care gatekeeper and in-network care, PPO plans allow out-of-network care with higher cost sharing, and POS plans combine HMO and PPO features.

The medical loss ratio is claims plus quality improvement spending divided by premium; ACA rules require 85% for large group and 80% for individual and small group markets or rebates are owed.

Risk adjustment transfers funds from plans with lower-risk enrollees to plans with higher-risk enrollees based on diagnoses, reducing incentives to avoid sick members.

Bundled or episode-of-care payment combines services for a procedure or condition into one payment, encouraging coordination and reducing fragmented billing.

Formulary tiers and prior authorization for drugs are common managed care tools that steer utilization and control pharmacy cost.

Medicare Part A covers inpatient hospital, skilled nursing facility, hospice, and some home health; Part B covers physician and outpatient services; Part C is Medicare Advantage; Part D covers outpatient drugs.

Part A is premium-free for most people with 40 quarters of Medicare-covered work; Part B has a monthly premium with income-related adjustments for higher incomes.

Medicare Advantage plans must provide all Part A and Part B benefits and often include extra benefits; HMO and PPO network models are common.

Medigap policies are standardized by letter, do not include prescription drug coverage, and must be sold without medical underwriting during the six-month Medigap open enrollment for people 65 and older with Part B.

Medicaid is jointly funded by federal and state governments, is income-tested, covers mandatory and optional services, and includes EPSDT for children under 21.

ACA marketplace metal tiers have actuarial values of about 60% bronze, 70% silver, 80% gold, and 90% platinum.

Premium tax credits are based on the benchmark silver plan and income relative to the federal poverty level; cost-sharing reductions are available only with silver plans.

Medicare Part D has a deductible, initial coverage, and catastrophic phases; since 2025 the annual out-of-pocket cap is $2,000.

Dual eligibles qualify for both Medicare and Medicaid, and Medicaid may pay Medicare premiums and cost sharing for covered services.

Worksite voluntary benefits are payroll-deducted products such as accident, critical illness, hospital indemnity, and disability coverage, usually paid entirely by the employee.

Voluntary benefits often use guaranteed issue amounts, with evidence of insurability required above a stated limit or for late enrollment.

Section 125 premium conversion allows pre-tax employee contributions for group health and certain other qualified benefits; individual policies generally cannot be pre-taxed through a cafeteria plan unless an exception applies.

Enrollment occurs at annual open enrollment, new hire enrollment, or after a qualifying life event such as marriage, birth, divorce, or loss of other coverage.

Payroll deduction administration requires accurate eligibility files, timely premium remittance, and reconciliation of deductions to coverage.

COBRA continuation generally applies to group health coverage, including group voluntary health products, but not to truly individual policies.

Nondiscrimination rules can affect eligibility and benefits in cafeteria plans, self-funded health plans, and certain voluntary arrangements.

An ERISA fiduciary must act solely in the interest of plan participants, with prudence and loyalty, follow plan documents, diversify plan investments, and avoid conflicts of interest.

Suitability and needs-based selling require recommending coverage that fits the client's needs and disclosing compensation, conflicts, and material policy limitations.

HIPAA requires protecting protected health information, limiting uses and disclosures to the minimum necessary, and obtaining authorization for non-permitted disclosures.

Twisting is misrepresenting a policy to induce a client to lapse or replace coverage; churning involves unnecessary replacement of policies for agent gain.

Rebating, false advertising, misrepresentation, and illegal inducements are unfair trade practices prohibited by state insurance law.

Agents may not bind coverage or modify policy terms unless the insurer grants that authority; they must deliver the policy and handle premiums according to the agency agreement.

Professional practice includes maintaining a current license, completing continuing education, and reporting disciplinary actions or criminal convictions as required.

Errors and omissions coverage protects an agent or broker against claims of professional negligence, and contemporaneous documentation supports the defense.