Health Insurance Policy Provisions
Consideration Clause
In legal terms, consideration is an exchange of something of value on which a contract is based. When both parties exchange consideration, the contract is validated. In health insurance, the insurance company exchanges the promises in the policy for a two-part consideration from the insured. A health insurance contract is valid only if the insured provides consideration in the form of: the full minimum premium required; and the statements made in the application. In health policies, the consideration clause not only defines consideration but also states: the date coverage begins; and the length of the initial coverage period. This clause may be stated separately, or it may be part of a renewability clause in the policy.
Insurance with Other Insurers Part 2
If there be other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense-incurred basis and of which the insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss, and for the return of such portion of the premium paid as shall exceed the pro rata portion for the indemnities thus determined.
Utilization review
One cost control mechanism being used by insurers and employers is utilization review. Utilization review consists of an evaluation of the appropriateness, necessity, and quality of health care and may include preadmission certification and concurrent review.
Nonoccupational Coverage
Some people work in occupations that are considered extremely hazardous, such as railroad switchers or steeplejacks. Many insurance companies won't assume the risk of covering such people for the hazards involved in their occupations. To provide these individuals with general accident and sickness or disability income coverage, some companies issue policies that contain a provision excluding job-related injuries. Since policies with this provision do not cover occupational hazards, they are usually called nonoccupational policies. Without the exposure to everyday work hazards, the insurer takes a lesser risk, so the premiums are generally lower than for policies that cover occupational hazards. Remember, though, nonoccupational policies do not provide full coverage, either—for both on and off-the-job injuries. Occupational coverage is basically full coverage. If the health policy provides 24-hour coverage, occupational losses will be covered as well as any other type of loss.
Physical Examination and Autopsy
The insurer at its own expense shall have the right and opportunity to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in case of death where it is not forbidden by law.. According to this provision, while the insured is alive and receiving benefits, the insurer may require that the insured submit to physical examinations. If an insured has died, apparently accidentally, the insurer may have an autopsy performed to determine the exact cause of death. However, any applicable state laws that might prevent such an autopsy take precedence. The insurer is required to pay for examinations or autopsies and may require only reasonable examinations.
Noncancelable Policies
The terms noncancelable and noncancelable and guaranteed renewable are often used interchangeably to describe a noncancelable policy. As the name implies, an insurer may not cancel or refuse to renew a noncancelable policy. Although this appears to be the same as a guaranteed renewable policy, there is one important difference. With a guaranteed renewable policy, the insurer may increase the premiums by classifications. With a noncancelable policy, however, the insurer may only increase premiums based on the terms of the policy. For example, a noncanceleable policy would have to include a premium increase in the contract at the time it is issued.
Optionally renewable
means the insurer may elect not to renew for any reason or for no reason but may exercise that right only on the policy anniversary date or a premium due date
Conditionally renewable
means the insurer may elect not to renew only under conditions specified in the policy
This provision defines the scope of an entire contract as:
the insurance policy provisions; a copy of the application; riders, if any; and attachments or amendments, if any.
Grace Period
A grace period of __ days (the period varies according to premium payment frequency: 7 days for weekly premium policies; 10 days for monthly premium policies; 31 days for all other policies) will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force.. A policy that contains a cancellation provision may add, at the end of the above provision, "subject to the right of the insurer to cancel in accordance with the cancellation provision hereof." A policy in which the insurer reserves the right to refuse any renewal shall state, at the beginning of the above provision, the following: "unless not less than five days prior to the premium due date the insurer has delivered to the insured, or has mailed to the last address as shown by the records of the insurer, written notice of its intention not to renew this policy beyond the period for which the premium has been accepted." The required grace period depends on how often the insured pays the policy premiums. Insurers must allow the insured a period of grace for premium payment. This is a specified time following the premium due date during which coverage remains intact. During a grace period, the company continues coverage in full force and will accept the premium from the policyowner just as if it were not late.
Eleven Optional Policy Provisions
The optional provisions are not required to be included in the policy, but if the subject of any of them is contained in the policy, it must be worded in accordance with the wording of the appropriate optional provision. An insurer may reword any of the optional provisions so long as the new wording is not less favorable to the insured or the beneficiary.
Waiver of Premium
Under this provision, the insurer waives premium payments after the insured has been totally disabled (as defined in the policy) for a specified period, usually three or six months. If the insured remains totally disabled, no further premium payments will be required from the insured. If the insured recovers from the disability, the insured will resume paying the premiums.
Change of Beneficiary
Unless the insured makes an irrevocable designation of beneficiary, the right to change of beneficiary is reserved to the insured and the consent of the beneficiary or beneficiaries shall not be requisite to surrender or assignment of this policy or to any change of beneficiary or beneficiaries, or to any other changes in this policy.. The policyowner, who is usually the insured, may name a beneficiary either revocably, which means that the insured can change the beneficiary later, or irrevocably, which means the beneficiary designation may not be changed. In other words, the right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the insured unless the insured has named an irrevocable beneficiary.
Unpaid Premium
Upon the payment of a claim under this policy, any premium then due and unpaid or covered by any note or written order may be deducted therefrom.
Proof of Loss
Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the insurer is liable, and in case of claims for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give such proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required. Normally, written proofs of loss must be furnished within 90 days after the date of loss. However, when the claim involves periodic payments because of a continuing loss, proofs must be furnished within 90 days after the end of the period for which the company is liable.
Once the policy is reinstated, there is:
a 10-day waiting period for sickness coverages; and no waiting period for accident coverages.
Time Limit on Certain Defenses(Incontestability)
A. After two years from the date of issue of this policy, no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy shall be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such two-year period. B. No claim for loss incurred or disability (as defined in the policy) commencing after two years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition, not excluded from coverage by name or specific description effective on the date of loss, had existed prior to the effective date of coverage of this policy..Unless an insured's misstatements are fraudulent, after two years from the date the policy is issued, the policy becomes incontestable. Part A says that no material misstatements in the application (except for fraud) can be used to void the policy or deny a claim after two years have passed (three years in some states). Fraud can void the health insurance contract whenever it is found and can be proven by the health insurer. Part B states that after two years, the policy cannot be voided, a claim may not be denied, and benefits may not be reduced on the grounds that an illness or a condition was preexisting. This does not prevent an insurer from specifically excluding coverage for a certain condition, but to be excluded, the condition must be named or specifically described in the policy when it is written and is referred to as an impairment waiver or rider.
Insurance with Other Insurers
Although the previous optional provision concerned overinsurance with the same insurer, the next two deal with other insurers. Because they are closely related, they are presented together. The essence of these provisions is this: if an insured has two or more policies from different companies that cover the same expenses, and if the insurers were not notified that the other coverage existed, each insurer will pay a proportionate share of any claim. This prevents the insured from receiving benefits greater than the loss. When both of these optional provisions appear in the same policy, Part 1 must be captioned expense-incurred benefits as it deals with losses to be reimbursed on that basis. Likewise, Part 2 must be captioned other benefits as it deals with overinsurance for losses reimbursed on any basis other than expense incurred.
Cancellation
Although this provision may not be used in noncancelable policies, in policies that may be canceled, the insurer may do so by delivering (usually by mail) written notice to the insured's last known address. Cancellation is effective no fewer than five days after the date of notice. When a policy is canceled before its expiration date, some of the prepaid premium is unearned—that is, the insurance company has not yet earned the premium because the period of time it was intended to cover has not yet passed. The way in which unearned premium is returned to the insured depends on who canceled the policy: the insurance company or the insured. When the insurance company cancels, the portion of the premium dollar the insurer has already earned is kept by the insurer and the entire unearned portion is returned to the insured. This is a pro rata return. When the insured cancels, the insurance company is allowed to retain a portion of premium over and above that which it has earned. So the insurer keeps earned premium and a portion of unearned premium, returning the balance of unearned premium to the insured. This is a short-rate return.
Conformity with State Statutes
Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date is hereby amended to conform to minimum requirements of such statutes.. Although this provision is usually optional, some states insist that it be included in all policies; therefore, in some states, this provision is required. Not only does the provision help insurers avoid issuing policies that conflict with existing state laws, it also can prevent reissuing policies that are in conflict with any ruling enacted during the time a policy is being or is about to be issued. The provision applies to the laws of the insured's state of residence.
Benefit Payment Clause
Health insurance benefits are paid differently depending on the type of policy. How benefits will be paid is set out in the policy's benefits provision. Typically, benefits are paid in the form of: periodic income under disability policies; lump-sum reimbursements for expenses incurred under hospital, medical, surgical, and major medical policies; or lump-sum indemnity payments for death or dismemberment under accidental death and dismemberment policies.
Reinstatement
If any renewal premium is not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy; provided, however, that if the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the 45th day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application.. According to this part of the provision, with certain exceptions, a lapsed policy is reinstated when either the company or the company's authorized agent accepts subsequent premiums. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than 10 days after such date. In all other respects, the insured and insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with the reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than 60 days prior to the date of reinstatement..
Misstatement of Age
If the age of the insured has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased at the correct age.. When an insured is younger, a premium dollar buys a certain amount of insurance. As the insured ages, the same premium dollar buys less insurance. This provision is similar to the previous provision regarding a more hazardous occupation. If the insured has misstated his age on the application, the company may adjust benefits to the amount the premiums paid would have bought had the insured's correct age been known. If an insured overstated his age—stated an older age than he actually was—when applying for the coverage, the insured has been paying a premium that is too high. Under this provision, the insurer could increase any benefits to the amount the premium paid for. Or, if the insured had understated his age, the company would pay the insured (or a beneficiary, in the event of accidental death) a smaller benefit. Whether the insured misstated his age intentionally or unintentionally, the company simply adjusts benefits accordingly.
Insurance with Other Insurers Part 1
If there be other valid coverage, not with this insurer, providing benefits for the same loss on a provision-of-service basis or on a expense-incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense-incurred coverage of this policy shall be for such proportion of the loss as the amount which would otherwise have been payable hereunder plus the total of the like amounts under all such other valid coverages for the same loss, and for the return of such portion of the premiums paid as shall exceed the pro rata portion of the amount so determined. For the purpose of applying this provision when other coverage is on a provision of service basis, the like amount of such other coverage shall be taken as the amount which the services rendered would have cost in the absence of such coverage.
Guaranteed Renewable Policies
In some policies, the insurer relinquishes its rights to cancel at any time and to refuse renewal at a premium due date. This type of policy is called guaranteed renewable, and it includes several important features. Renewal is guaranteed as long as the insured pays the premium. The insurer may not cancel unless the insured fails to pay the premium. Premiums may not be increased on an individual basis. Premiums may be increased on the basis of an entire classification, such as occupation. The guarantee to renew ends at a specified age. Nonpayment of premium is the only reason an insurer may cancel or refuse to renew a guaranteed renewable policy. Furthermore, the insurer is not permitted to increase the premiums on the basis of individual insured's experience. It may, however, increase the premiums on a class basis.
Time of Payment of Claims
Indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of such loss. Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid _______ (insert period for payment which must not be less frequently than monthly), and any balance remaining unpaid upon the termination of liability will be paid immediately upon receipt of due written proof.. According to this provision, except for claims involving periodic payments over a specified time span, the insurer must make the payment immediately after receiving proof of loss. Payment of periodic indemnities (for disability, for instance) must be made at least monthly.
Free Look (Right to Examine Clause)
Many states require that health policies contain a free-look provision, allowing individuals to look over the policy for a specified period with the right to refuse it. Usually, this is a 10-day trial period, and in some states, may be a 15- or 20-day period, beginning on the day the individual receives the policy. If the individual decides to return the policy by the end of the trial period, that individual receives a full refund of the prepaid premium. This free-look provision permits applicants to inspect the policy at their leisure and make a final decision about whether it meets their needs. If the individual cancels during the trial period, the insurance company is not liable for any claims originating during that period. Under a free-look provision, the policy usually may be returned either to the insurer or to its agent within the time specified. Check your state laws and your health policies to see if a free-look provision is required. Your company may include such a provision even if it isn't required by state law.
Uniform Individual Accident and Sickness Policy Provisions Law
Nearly every state has modified the law to some extent, but all have adopted it in principle. The law includes 12 mandatory provisions that must be included in individual health insurance policies and 11 optional provisions. Each of the mandatory provisions must be included in each policy, usually in a section of the policy titled "Mandatory or Required Provisions." Insurance companies need not use the exact wording of the provisions, but any variations must be at least as favorable to the insured as the original statutory wording. Provisions may also be referred to as clauses. There is no additional cost attached to a provision or clause.
Legal Actions
No action at law or in equity shall be brought to recover on this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished.. When written proof of loss has been submitted, the company needs time to investigate the claim and make certain it is valid. To provide the insurer with this time, this provision prohibits the insured from suing the insurer for at least 60 days after filing a written proof of loss. The maximum time during which suit can be filed is three years after written proof of loss is furnished.
Preexisting Conditions
Preexisting conditions can be excluded from coverage under a health insurance policy. This exclusion may be permanent or temporary. By definition, a preexisting condition is any condition for which the insured sought treatment or advice before the effective date of the policy. Furthermore, a preexisting condition can also be defined as any symptom that would cause a reasonable and prudent person to seek diagnosis and medical treatment. This concept prevents an applicant who suspects that he may have a serious medical problem from buying health insurance and then going to a doctor for diagnosis and treatment. Preexisting conditions may be covered by the insurer if they are indicated on the application. The insurer will then review the medical information and, depending on the condition, may elect to cover the problem or exclude it. Usually, only serious or chronic conditions will be excluded.
The Policy Face
The face of the policy is a standard printed form containing the name of the insurance company and providing enough information to give the insured a capsule summary of what type of policy and what type of coverage are provided by the contract. The policy face identifies the insured and states the term of the policy (when it goes into effect and when coverage expires). The policy face also states how the policy can be renewed. The policy face usually gives a brief statement of the type or types of benefits. However, it is essential to examine the benefit provisions within the body of the contract to obtain a complete understanding of the coverage provided.
Narcotics
The insurer shall not be liable for any loss sustained or contracted in consequence of the insured's being under the influence of any narcotic unless administered on the advice of a physician. As with of the illegal occupation provision, many insurers include this optional provision. Injuries or death resulting while the insured is under the influence of either alcohol or narcotics is commonly excluded.
Illegal Occupation
The insurer shall not be liable for any loss to which a contributing cause was the insured's commission of or attempt to commit a felony or to which a contributing cause was the insured's being engaged in an illegal occupation.. In our discussion of common exclusions, you learned that most companies exclude coverage for injuries or accidental death suffered while the insured is committing or attempting to commit a felony. Therefore, you can assume that most policies do include the illegal occupation provision.
Claim Forms
The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within 15 days after the giving of such notice, the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made. When an insurer receives a notice of claim, it should furnish the insured with forms to provide proof of loss within 15 days. If the insurer fails to do so, however, the insured is required to act to protect the claim by filing written proof of loss detailing the occurrence, the character, and the extent of the loss.
Insuring Clause
The insuring clause is usually the initial policy clause. In general, it represents the insurer's promise to pay under the conditions stipulated in the policy. The insuring clause performs these functions: Describes the general scope of coverage, Provides any definitions required, Sets forth the conditions under which benefits will be paid. This clause is often viewed as the foundation of a health policy in terms of the insurer's general agreement to provide coverage.
Exclusions and Reductions
These provisions limit the insurer's obligation to pay. An exclusion or exception is a provision that entirely eliminates coverage for a specified risk. A reduction is a decrease in benefits as a result of specified conditions. Most health insurance policies exclude war and acts of war, self-inflicted injuries, aviation, military service, and overseas residence. Benefits will not be provided if the cause of a loss is due to military service, a war or civil disorder, a self-inflicted injury such as an attempted suicide, or if the loss is due to aviation as a pilot. In general, coverage is temporarily suspended if an individual resides in a foreign country for a specified period of time or if the individual is serving in the military. Coverage is reinstated or reactivated when the insured returns to the United States or no longer is serving in the military.
facility of payment clause
This first optional paragraph is often called the facility of payment clause because it makes claim payment easier under the circumstances described. It stipulates two things. If the insured or the beneficiary cannot legally release the company from further liability, as when the insured or beneficiary is a minor or is legally incapacitated, the company may pay the benefits to any relative by blood or marriage who is deemed to be entitled to the money. The amount paid to this person cannot exceed $1,000. If a claim is paid under this provision, the payment absolves the company of further liability.
Payment of Claims
This long provision actually contains both a required portion and two optional paragraphs. Here is the required section: Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be prescribed herein and effective at the time of payment. If no such designation or provision is then effective, such indemnity shall be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured's death may, at the option of the insurer, be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured.. Here is the first of the two optional paragraphs that are included in the payment-of-claims provision: If any indemnity of this policy shall be payable to the estate of the insured, or to an insured or beneficiary who is a minor or otherwise not competent to give a valid release, the insurer may pay such indemnity, up to an amount not exceeding $_____ (insert an amount which shall not exceed $1,000), to any relative by blood or connection by marriage of the insured or beneficiary who is deemed by the insurer to be equitably entitled thereto. Any payment made by the insurer in good faith pursuant to this provision shall fully discharge the insurer to the extent of such payment.. Here is the second of the optional paragraphs that may be included with the payment-of-claims provision: Subject to any written direction of the insured in the application or otherwise, all or a portion of any indemnities provided by this policy on account of hospital, nursing, medical, or surgical services may, at the insurer's option, and unless the insured requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services, but it is not required that the service be rendered by a particular hospital or person. According to this second optional paragraph, unless the insured specifically directs otherwise, the company may pay benefits to a hospital or person rendering medical or surgical services. However, the company may not require that the insured enter a specific hospital or see a particular doctor.
Entire Contract
This policy, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this policy shall be valid until approved by an executive officer of the insurer and unless such approval be endorsed hereon or attached hereto. No agent has authority to change this policy or to waive any of its provisions.. In order for something to be included in the contract, it must be attached, and it must be in writing. Nothing else is part of the contract. An agent or producer may not change a policy or waive any of its provisions, but changes may be made if they are approved by an executive officer of the insurance company. Any changes requested by the owner and approved by the company will be added in the form of an amendment. The insured will be aware of any such changes because the insured will be endorsed on or attached to the policy.
Other Insurance with This Insurer
This provision deals with insurance of the same type with the same insurer. If an individual has so much insurance that it is more profitable to see a doctor, enter a hospital, or stay home from work, there might be some temptation to do just that rather than to have a quick recovery. Such an individual is overinsured—a situation insurers try to avoid. This optional provision allows an insurer to control overinsurance through its own policies. The company can establish maximum amounts payable to any one insured for certain coverages—disability income insurance being the most common—so no matter how many policies an insured has with this particular company, there is a limit on the amount of benefits that will be paid. Either of the two provisions may be included in the policy. If the insurer chooses the first paragraph, it is the insurer's responsibility to decide on the maximum indemnity that will be paid and the type of coverage to which the provision applies. When these limitations are included in the policy, any amount of like insurance over the specified maximum is considered void, and the insurer will return premiums paid for these void benefits to the insured or to the insured's estate. If the insurer uses the second paragraph, coverage is limited to one policy as selected by the insured, the beneficiary, or the administrator of the insured's estate. When the second optional provision is used, the premiums paid for the other policy or policies are refunded.
Change of Occupation
This provision relieves the insurer from paying benefits not anticipated when the premium was established. If an insured's occupation is more hazardous than the insurer knew, and resulted in injury or illness, the insurer might be required to pay a larger benefit than the premium warrants.
Relation of Earnings to Insurance—Average Earnings Clause
This provision specifically concerns loss of time, or disability income, coverage. This optional provision is also designed to prevent malingering—remaining disabled in order to collect insurance. The provision specifically addresses the relationship between what the insured actually has been earning on the job and the amount of insurance available by failing to return to work. According to this provision, if the total monthly benefits from all policies are more than the insured's monthly income, each insurer will pay a proportionate share of the lost income. This will prevent the insured from receiving benefits greater than the loss. Because the insured paid for more coverage than can be collected, each company must refund a proportionate share of the excess premiums.
Case Management Provisions
To control the costs associated with medical care, many insurers are instituting methods to reduce costs while giving the insured options for health care. As health care costs have risen, more and more policies provide for some type of administrative oversight in an attempt to contain costs. These provisions are variously called case management, managed care, claims control, cost containment, or similar terms.
Renewability Clause
To remain in force, health policies must be renewed periodically, that is, the coverage remains in force only for the length of time for which premiums have been paid. When the premium is due again, the policy may be renewed or it may expire. Both the policyowner and the insurer have a role in the renewal process. A policyowner has the option of canceling a policy at any time by notifying the insurer, or of allowing it to lapse at a premium due date by not paying the premium. Health policies also include specific provisions that determine whether the insurance company may refuse to renew a policy. When the insurer has the option to refuse to renew, the policy may be one of two types: Optionally renewable or Conditionally renewable. Health status is not a condition used when determining renewability. If an insured moves outside the service area, for example, the insured may no longer meet the conditions of the policy, and that would determine if the policy will be renewable at the anniversary date. Upon renewal, the company can modify the premiums on an anniversary date based on classification only. To protect the insured when a valid claim is being paid or is eligible for payment at the time the premium is due, the insurer may not prejudice that claim. That is, the claim will be paid even if the insurer elects not to renew the policy.
Cancelable Policies
With a cancelable policy, the insurer may cancel coverage at any time, provided it returns any unearned premiums to the insured. Cancellation does not relieve the insurer from paying valid existing claims. Cancelable policies are not common and, obviously, are not advantageous to the insured. Unless the policy contains a clause that permits the company to cancel on other than a premium due date, it simply cannot be canceled. The company may refuse to renew the policy on a premium payment date, but, unless specifically stated in the policy, health insurance policies usually are not cancelable by the insurer. When canceling a cancelable policy, the company must notify the insured in writing, mailing the notice and the unearned premium to the insured's last known address. In most states, cancellation is effective not less than five days from the date of the notice.
Notice of Claim
Written notice of claim must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or in behalf of the insured or the beneficiary to the insurer at __________ (insert the location of such office as the insurer may designate for the purpose), or to any authorized agent of the insurer, with information sufficient to identify the insured, shall be deemed notice to the insurer.. When a claim arises, certain stipulations apply. If reasonably possible, the insured must give written notice of claim to the insurer within 20 days after the loss occurs. The insured may send the notice either to the address the insurer provides or to the agent. Although the term reasonably is not defined, an example will illustrate one possibility. An insured is injured in an accident and remains in a coma for five weeks, thus failing to provide written notice of claim within the required 20 days. The company is still liable for the claim because it could not reasonably have required the claim to be filed during the time the insured was in a coma. Policies providing loss-of-time benefits payable for at least two years will include the following statement. Subject to the qualifications set forth below, if the insured suffers loss of time on account of disability for which indemnity may be payable for at least two years, he shall, at least once in every six months after having given notice of claim, give to the insurer notice of continuance of said disability, except in the event of legal incapacity. The period of six months following any filing of proof by the insured or any payment by the insurer on account of such claim or any denial of liability in whole or in part by the insurer shall be excluded in applying this provision. Delay in the giving of such notice shall not impair the insured's right to any indemnity which would otherwise have accrued during the period of six months preceding the date on which such notice is actually given. The essence of this provision is that if the policy provides disability income for an extended period, the insurer can require that the insured provide, every six months, written notice that the claim is continuing. This provision does not apply when the insured suffers a legal incapacity.
second surgical opinion
a provision that can be included in policies that offer surgical expense benefits. This coverage allows the insured to consult a doctor, other than the attending physician, to determine alternative methods of treatment. Although the use of this provision is sometimes optional, it is more often mandatory for certain procedures, such as tonsillectomy, cataract surgery, coronary bypass, mastectomy, and varicose veins. Some insurance companies have medical examiners review claims, and the examiner's decision to approve or deny a claim is considered the required second opinion.
This required portion of the payment of claims provision states that:
death benefits will be paid to the named beneficiary; if there is no beneficiary designated, the company will pay the benefit to the insured's estate; if the insured was receiving monthly indemnities under the policy and some accrued benefits remain at the time of death, the company may pay these accruals to either the beneficiary or the insured's estate; and while the insured is alive, all other benefits are paid to the insured unless otherwise specifically designated in the policy.
Ambulatory outpatient care
the alternative to the costly inpatient diagnostic testing and treatment. Today, ambulatory care is best known to operate in hospital outpatient departments. However, this care can be provided by special ambulatory care health centers, group medical services, hospital emergency rooms, multispecialty group medical practices, and health care corporations. These ambulatory facilities provide, in addition to diagnosis and treatment, preventive care, health education, family planning, and dental and vision care.
concurrent review
the insurer monitors the insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned.
precertification provision (also known as precertification authorization or prospective review)
the physician can submit claim information before providing treatment to know in advance whether the procedure is covered under the insured's plan and at what rate it will be paid. This way both the physician and the insured know in advance what the benefit will be and can plan accordingly. This provision allows the insurance company to evaluate the appropriateness of the procedure and the length of the hospital stay.
