Health Insurance Basics and Medical Expense Policies
The cost-sharing chain
Know the order: deductible first, then coinsurance (classically 80/20), then the out-of-pocket maximum, which counts deductibles and coinsurance but not premiums. A copay is a flat fee, often not subject to the deductible. Morbidity, not mortality, drives health underwriting.
Delivery models
Indemnity/fee-for-service allows any provider with reimbursement. HMO: closed panel, primary care gatekeeper, referrals required, emergency-only out-of-network care. PPO: network discounts, no referrals, out-of-network allowed at higher cost. POS: hybrid. EPO: network only, no gatekeeper. ACA marketplace plans fall into metal tiers - bronze 60%, silver 70%, gold 80%, platinum 90% actuarial value - and must cover essential health benefits.
Policy families
Basic medical (hospital, surgical, physician) versus major medical (broad coverage, high limits, deductible plus coinsurance). Supplemental products include Medicare Supplement, critical illness, cancer, hospital indemnity, dental/vision, and long-term care, which triggers on inability to perform activities of daily living and pays after an elimination period. Group coverage uses a master contract with certificates issued to members, no individual underwriting, and a conversion privilege.
Traps
Occupational versus nonoccupational coverage: work injuries are normally excluded because workers' compensation pays. Coordination of benefits: the primary plan pays first, and for dependent children of two working parents the birthday rule makes the parent with the earlier birthday in the year primary. AD&D pays only for accidental loss, often as a percentage of a capital sum.
Rule of thumb: if the stem says "no referrals but in-network savings," it is a PPO; if it says "gatekeeper," it is an HMO.