Health Insurance: Cost Sharing, Managed Care, and Disability Income
What the exam actually tests
Health questions split into cost-sharing mechanics, delivery systems, and disability income design.
Cost sharing. The deductible is satisfied first (preventive services are commonly exempt). Coinsurance is the insured's percentage of the remaining bill; the out-of-pocket maximum caps coinsurance but almost never includes premiums. Copays are flat amounts, frequently outside the deductible. Know usual, customary, and reasonable reimbursement and coordination of benefits, including the birthday rule for dependent children.
Delivery systems. HMO: gatekeeper PCP, in-network only except emergencies, capitation. PPO: network discounts with out-of-network options, no referrals. POS: hybrid with a PCP and tiered in/out-of-network benefits. EPO: network only, no gatekeeper. Also know renewability language - noncancellable, guaranteed renewable (insurer cannot cancel but may raise rates by class), conditionally renewable.
Disability income. The definition of disability drives everything: own occupation is broader but usually shorter in duration; any occupation is stricter and lasts longer. Also know the elimination period (a time deductible), benefit period, residual/partial benefits, and the typical 60–70% income replacement cap. Benefits are tax-free only when the insured paid the premium; employer-paid premiums make benefits taxable. Business forms include key person and business overhead expense.
Worked example. $2,000 deductible, 20% coinsurance, $6,000 out-of-pocket maximum. A $12,000 covered claim: insured pays $2,000 + 20% of $10,000 = $4,000, still under the cap.
Rule of thumb: always subtract the deductible before applying coinsurance - answer choices that apply coinsurance to the full bill are the classic trap.