Health Insurance Basics and Policy Provisions
Cost-sharing vocabulary
A deductible is the amount paid before benefits begin; coinsurance is the percentage split after the deductible; a copay is a flat fee, usually not subject to the deductible; the out-of-pocket maximum caps insured spending. Know waiting periods, elimination periods, preauthorization, and utilization review.
Delivery systems
HMO: closed panel, primary care gatekeeper, referrals required, copays, generally no deductible. PPO: open network with discounts, no gatekeeper, out-of-network benefits at higher cost. POS blends both; EPO covers in-network only. HDHPs pair with HSAs. Under the ACA, individual and small-group plans are guaranteed issue, cannot exclude preexisting conditions, must cover essential health benefits, and use modified community rating.
Renewability and provisions
Renewability runs from cancellable to optionally renewable, conditionally renewable, guaranteed renewable (insurer cannot cancel but may raise rates by class), and noncancellable (cannot cancel and cannot raise the premium). Also know free look, grace period, time limit on certain defenses (incontestability), claim filing, coordination of benefits, subrogation, and reinstatement.
Coverage types
Disability income pays a percentage of income after an elimination period for a benefit period; own-occupation is broader than any-occupation, and residual/partial benefits pay for reduced earnings. AD&D pays the principal sum for accidental death and a capital sum for dismemberment. Long-term care triggers on inability to perform ADLs or cognitive impairment. Also know Medicare Parts A–D, Medigap, Medicaid, COBRA, HIPAA portability, and workers' compensation.
Worked example
$500 deductible, 80/20 coinsurance, no OOP cap, $5,000 bill: the insurer pays 80% of $4,500 = $3,600; the insured pays $500 + $900 = $1,400.