Principles of Health Insurance

Premium Part A Costs

$0/month (40 credits - Fully Insured) $224/month (30-39 credits) $411/month (under 30 credits) In order to keep Part A, the individual must continue to pay all monthly premiums and stay enrolled in Part B. Paid Part A coverage begins 'prospectively,' meaning it is based on the enrollment period in which the individual chooses to apply for Part A coverage. In regards to the PPACA individual mandate, individuals who qualify for Medicare Part A are not required to participate in the Marketplace, nor will any tax penalty be imposed for non-participation.

Delayed Disability

A 'window' of time, usually 60-90 days, following an injury in which the insured is still qualified for DI benefits.

Group Health Insurance

A Master Contract is issued to the employer and employees are given Certificates of Insurance to provide medical coverage under the group's master contract. Group insurance is usually offered to full-time employees, 90 days after the date of hire, and the eligibility period lasts for 30 or 31 days without having to show proof of insurability.

Concurrent Review and Discharge Planning

A concurrent review is conducted during treatment, or while admitted to a hospital as medical care is being administered, to maintain appropriateness and timing of care, including establishing a plan for patient discharge.

Medicare

A federal program that is funded primarily through employer and employee payroll taxes. It is administered by the Centers for Medicare and Medicaid Services (CMS) and is provided to Medicare 'enrollees,' also referred to as Medicare 'recipients.' Medicare eligibility and premium processing is conducted through the Social Security Administration, though it has no authority over Medicare laws or the administration of the program.

Hospital Indemnity (Income)

A specific benefit amount that is paid on a 'first dollar' basis. Daily confinement in a hospital equates to a daily indemnity benefit payable to the insured, but not necessarily to cover the cost of hospitalization. Often times the insured will take this amount and direct it towards the major medical deductible and any coinsurance requirements. Major medical insurance will cover the cost associated with confinement, but the indemnity payment will help cover, or at least lower, the amount of deductible and coinsurance expense the insured might incur from an injury or illness. Purchased as a supplement to a major medical policy, an indemnity plan premium is paid separately, or as an endorsement in a major medical policy.

Extra-territorial Provision

A worker is covered under the workers' compensation laws of the state in which employed, even if the worker is temporarily working in a different state.

Flexible Spending Account or Arrangement (FSA)

Accounts offered and administered by employers that provide a way for employees to set aside, out of their paycheck, pre-tax dollars to pay for the employee's share of insurance premiums or medical expenses not covered by the employer's health plan. Typically, benefits or cash must be used within the given benefit year or the employee loses the money.

Optionally Renewable Policies

Allows an insurer to terminate a policy on a date specified in the contract.

Custodial Care

Although it must be given under a doctor's order, this category does not require services to be performed by a medically trained individual. These services include bathing, dressing, getting out of bed and toileting.

Currently Insured

An individual is partially insured under Social Security if he or she has accumulated at least 6 quarters of coverage within the last 13 calendar quarters. The minimum requirement for individuals under age 24 to obtain currently insured status is 6 credits in the last 3 years. Beginning at age 24, additional credits are required to obtain currently insured status based on the individual's age at the time of disability.

Basic Medical Insurance Covers:

Basic hospital expenses Basic physicians' (non-surgical) expenses Basic surgical expenses

'Own' Occupation

Benefits are payable upon the inability of an insured to complete the job requirements at his or her own occupation. The majority of DI policies follow the 'own' occupation method of determining total disability.

Keeps Young Adults Covered

Children can remain on their parents policy until age 26

Time of Payment of Claims

Claims must be paid immediately after receiving notification and proof of loss from the claimant, except for policies that pay the insured periodically, such as a disability income policy.

Presumption of Disability

Common with most DI policies, the Presumption of Disability Provision states that an insured is automatically determined to be totally disabled in the event that, as the result of an accident, he or she becomes blind, deaf, loses his or her speech, or suffers the loss of two (2) or more limbs. Presumptive disability benefits are paid as a lump-sum to the insured, even if he or she is able to continue working.

Major Medical Insurance

Covers a wider range of medical expenses with generally higher individual benefits and policy maximums.

Cost Containment in Health Care Delivery

Delivering health care in an appropriate and cost-effective manner is the primary focus of all insurers, and healthcare 'utilization management' provides the means for its delivery.

Business Overhead Expense Insurance (BOE)

Disability insurance is often used by small business to pay for company overhead expenses during the period that a business owner or key-person is disabled, thus allowing the business to continue to operate.

Physical Exam and Autopsy

During the period of claims, insurers have the right to make physical examinations of the claimant at the company's own expense. In the event of an insured's death, insurance companies have the right to conduct an autopsy as long as it does not conflict with state law or the deceased's religion.

Individual Employer Plan

Established by a single employer to provide health insurance coverage for its employees. Plans are either fully insured by an insurer or partially insured by insurer, meaning that the employer assumes some risk before the insurer begins to cover any loss.

Franchise Insurance

Health insurance provided for groups too small to be considered a group by most state standards. Generally, this type of insurance is marketed to the employees of a small business or members of an association or professional society. It provides members with a lower premium group policy with similar provisions for each member; however, each member can customize certain benefits based on his her needs.

Physical Exam

If deemed necessary, a physical exam can be requested by the insurer to ensure the validity of the insured's disability claim.

Proof of Earnings

In addition to providing the insurer with proof of loss, the claimant must also provide prior and current earnings to the insurer so that the Disability Income benefit amount accurately reflects actual lost earnings.

LTC Partnerships

In an effort to encourage the purchase of long term care insurance and reduce the expense of Medicaid services on state budgets, many states provide 'lifetime asset protection' for individuals who purchase qualified LTC plans.

Service Providers

In contrast to the reimbursement method used by commercial insurers, service providers offer benefits in the form of medical services, which are prepaid by customers in the form of monthly premiums and do not require reimbursement for medical services rendered. The service provider approach is utilized by the following types of organizations: BCBS companies Health maintenance organizations (HMOs) Preferred provider organizations (PPOs) POS plans and EPOs

Premium

In exchange for health insurance coverage, an insured policyholder pays a monthly premium to the insurance company. The premium mode, or frequency that a premium is usually paid is on a monthly basis, but a policyholder can also elect to pay premiums on a quarterly, semi-annually or annually basis, and is paid in advance of the period in which coverage is provided. The Initial Premium is the first month's payment, often paid upon submission of the application and collected by the agent or directly through the insurer's website.

Waiver of Premium Rider

Included in most guaranteed renewable policies, this rider to a DI policy waives all future premium obligations to an insurer if the insured becomes permanently and totally disabled. All future premiums required to maintain the DI policy are waived while the insured is receiving DI benefits; however, this requires the insured to be totally and permanently disabled for at least 3 - 6 months before such waiver becomes effective, at such point it retroactively waives all premium payments from the insured.

Individual DI Benefits (Flat Amount)

Individual DI payments are usually payable on a 'flat amount' basis, meaning that a pre-determined sum is payable, usually on a monthly basis. Though the flat amount approach pays a specific sum, it is not intended replace the insured's entire lost income.

Non-Union Employers

Individual Employer Plan Multiple Employer Plan Multiple Employer Trust (MET)

Protects One's Choice of Doctors

Individuals may choose the primary care doctor they want from their plan's network

Basic Required HMO Services

Inpatient hospital and physician services Outpatient medical services Preventive health services In and out of area emergency services

Medicare Part A - Compulsory Hospital Insurance (HI)

Inpatient hospital care Skilled nursing facility care (SNF) Home health care Hospice Care

Reviews Premium Increases

Insurance companies must now publicly justify any unreasonable rate hikes

LTC Benefit Payments

Long-term care insurance policies provide benefits through either Fixed Dollar amounts or Expense-Incurred amounts. LTC benefit payments are based on a per-day basis to cover the daily LTC expenses incurred by the insured individual.

Constructive Delivery

Occurs when an insurer mails a policy to a customer directly or to the agent, who then delivers the policy to the customer.

Qualifying event

Occurs when the insured employee, spouse, or dependent child becomes ineligible for coverage under the group insurance. Examples include family coverage after the death of a covered employee, termination of employment or reduction of hours under full-time status, Medicare eligibility, legal separation spousal coverage, child ineligibility on the group plan, or if the employer declares bankruptcy and employment ends. Employee termination resulting from misconduct does NOT qualify under COBRA.

Irrevocable

Policyholder cannot change beneficiary designations at a later date

Pregnancy Discrimination Act

Prohibits employers with fifteen (15) or more employees, including state and local governments, from discriminating against pregnant women in regards to childbirth or related medical conditions. Women who are pregnant or are affected by pregnancy-related medical conditions are covered under this law. As an exception to this law, costs associated with abortion are not required to be covered, unless the life of the mother is endangered. Pregnant employees must be able to continue to work for as long as they are able to perform their work duties, and employers are prohibited from requiring any set period of time off after childbirth before allowing the woman to return to work. Employer-sponsored health insurance must cover expenses for pregnancy-related conditions on the same basis as for other medical conditions and cannot require any additional or increased deductible amount. Employers must provide the same coverage for the spouse of a male employee as they do for the spouse of a female employee.

Commercial Insurers

Reimbursement Approach Right of Assignment

Prepaid Plans

Subscribers pay a monthly premium to receive medical services. A subscriber does not have to assign payments from the insurer to the health care provider, so it is not considered reimbursement.

Types of Major Medical Insurance Plans

Supplementary Major Medical Comprehensive Major Medical

Employer Shared Responsibility Payment (ESRP)

The Affordable Care Act requires certain employers with at least 50 full-time employees (or equivalents) to offer health insurance coverage to its full-time employees (and their dependents) that meets certain minimum standards set by the PPACA or to make a tax payment called the 'Employee Shared Responsibility Payment (ESRP).' No employer with fewer than 50 full-time employees is subject to the Employer Shared Responsibility Payment in any year.

Primary Insurance Amount (PIA)

The benefit amount that an individual receives when he or she chooses to begin receiving retirement benefits at his or her normal retirement age. Based on the AIME amount, the PIA determines the correct amount of Social Security benefits for each recipient based on the amount of annual income he or she produced while in his or her working (and FICA taxed) years.

Policy Effective Date (Accident vs. Illness)

The date that a health insurance policy begins to provide financial protection for the insured. While accident coverage generally begins on the date chosen by the policyholder, illness coverage generally has a 15 day waiting period before becoming effective so it is important to review the policy with the newly insured policyholder.

Elimination Periods

The elimination period in an LTC policy is often referred to as a 'time deductible,' and can range from zero to 365 days. Generally speaking, the longer the LTC's elimination period, the lower the LTC's premium, as well as, the longer the LTC's benefit period, the higher the LTC's premium.

Specified Exclusions

The following are almost always excluded from LTC policies: acts of war, self-inflicted injuries, and drug and alcohol dependency.

Primary Insurer

The primary insurer provides coverage to the insured first, up to its policy's limits, often covering all of the insured's medical expenses.

State and Federal Health Exchanges

To provide a fair and affordable selection of insurance plans from which to choose, the PPACA also mandates each state to provide an insurance 'Exchange,' or Marketplace, in which multiple private insurance plans are offered U.S. citizens who are not currently enrolled in an individual or employer-based insurance policy, Medicare, Medicaid or other government-sponsored plan. If a state does not offer its own exchange, residents of such state must purchase insurance through the federal exchange by enrolling online through healthcare.gov.

Skilled Nursing Care

Usually administered at nursing homes, this type of long-term care involves around-the-clock care by a licensed medical professional under the supervision of a certified physician.

Conditionally Renewable Policies

Will only allow an insurance company to terminate a policy in the event of expressed conditions, such as age or the loss of gainful employment.

RS 125 Plan (Cafeteria Plan) - Also known as a Flexible Benefits Plan

it is a benefit program under Section 125 of the Internal Revenue Code that offers employees a choice between permissible taxable benefits, including: cash, and nontaxable benefits such as life and health insurance, vacations, retirement plans and child care.

Functions of an HMO

* The HMO pays for its members' healthcare services in exchange for a prepaid monthly premium. * The HMO coordinates and manages its members' healthcare services - a function not performed by other service providers or commercial insurers. HMOs are known for stressing 'preventive care' and health 'maintenance.' Subscribers of an HMO pay a monthly premium, and in return are provided with medical services from hospitals, physicians, and specialists that participate in the corresponding HMO network.

Total Temporary vs. Total Permanent Disability

A 'temporary' total disability qualifies an insured for total disability benefit levels, but is expected to last temporarily with the insured's recovery over time. A 'permanent' total disability qualifies an insured for total disability benefit levels and is expected to be paid up to the maximum time limit available under the policy due to both the total and permanent disability of the insured.

Preferred Provider Organizations (PPO)

A PPO is a type of network characterized by its size and resulting convenience in choosing in-network providers within a larger geographical area, usually encompassing several states or throughout the country. Though PPO providers are independent entities of the PPO insurer, they agree to lower their rates for PPO members that use their services, in exchange for a larger clientele as a result of being part of the PPO network.

Medical Loss Ratio (MLR)

A basic financial measurement used in the Affordable Care Act to encourage health plans to provide value to enrollees. The MLR is also referred to as the '80/20 Rule,' and generally requires insurance companies to spend at least 80% of the money they take in on premiums on actual health care and quality improvement activities instead of administrative, overhead, and marketing costs. If an insurer uses 80 cents out of every premium dollar to pay its customers' medical claims and activities that improve the quality of care, the company has a medical loss ratio of 80%. A medical loss ratio of 80% indicates that the insurer is using the remaining 20 cents of each premium dollar to pay overhead expenses, such as marketing, profits, salaries, administrative costs, and agent commissions. Insurance companies selling to large groups (usually more than 50 employees) must spend at least 85% of premiums on care and quality improvement. The PPACA sets minimum medical loss ratios for different markets, as do some state laws. Any insurer that fails the MLR test in a calendar year for all plans in a given market segment (individual or group) must refund excess premiums to consumers enrolled in plans in that market segment.

Deductible 'Carry-Over'

A clause added to a major medical policy that provides for expenses incurred in the final 3 months of the calendar year (October - December) to be carried or 'rolled over' and applied toward the next year's deductible. Essentially, this clause eliminates the risk of paying multiple deductibles within a short period of time.

Comprehensive Major Medical

A combination of basic and major medical expense coverage. This type of health insurance plan is known for extensive coverage under a single policy.

Special Enrollment Period (SEP)

A currently employed individual who is still insured under a group health plan when he or she reaches age 65 can either enroll into Medicare while still covered by his or her group health plan, or defer Medicare enrollment until he or she retires. Once employer group health coverage has ended, a retiree enters a Special Enrollment Period (SEP) in which he or she has 8 months to enroll into Parts A and B without being charged late Part A and Part B enrollment penalties.

Eligibility and Rate Factors

A disability insurance policy is underwritten just the same as a health insurance policy would be underwritten in that the insurer rates the applicant based on his or her age, gender, health (past and present), job classification and his or her personal avocations. In addition, a disability insurance policy considers the income requirement of an individual in determining premium rates and benefit amounts. The eligibility and premium rates associated with higher risk applicants who might be in poor health or involve high risk professions or avocations, are determined by the insurer's underwriting guidelines. Eligibility and premium rates are also based on the characteristics of the DI policy, such as its probation and 'elimination,' or waiting periods. DI insurance benefit payments typically require a brief elimination period before benefits are paid to the insured.

Cost Sharing Reductions

A discount that lowers the amount payable for out-of-pocket for deductibles, coinsurance, and copayments. This reduction is available for individuals who get health insurance through the Marketplace, their income is below a certain level, and they choose a health plan from the Silver plan category. Members of a federally recognized tribe may qualify for additional cost-sharing benefits.

Capitation Fee

A fixed payment, per HMO member, given on a regular basis paid by the HMO to the third-party employer in a group-model. This third-party employer then pays its physicians for their services towards HMO members.

Conversion Privilege

A group health insurance policy must allow an employee to convert his or her group insurance policy into an individual plan with the same insurer only upon leaving the group without requiring the individual to provide proof of insurability to the insurer. This conversion period is usually 31 days from the time of termination from the employer.

Prohibiting Discrimination Based on Health Status

A group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish rules for eligibility (including continued eligibility) of any individual to enroll under the terms of the plan or coverage based on any of the following health status-related factors in relation to the individual or a dependent of the individual: Health status Medical condition (including both physical and mental illnesses) Claims experience Receipt of health care Medical history Genetic information Evidence of insurability (including conditions arising out of acts of domestic violence) Disability

Appeals Process

A guaranteed right of every Medicare enrollee is the right to a fair process to appeal decisions about an his or her health care coverage or payments. Regardless of the specific Medicare plan in which he or she is enrolled, every enrollee has the right to appeal the following: An application denial for a Medicare program A service or item that the enrollee received is not covered by the plan and the enrollee believes it should be A service or item is denied and the enrollee thinks it should be paid The amount that Medicare paid for a service or item If Medicare or the enrollee's plan provider stops providing or paying for all or part of a health care service, supply, item or prescription drug the the enrollee believes he or she still needs

'Any' Occupation

A more restrictive method of determining the total disability of an insured is based on the insured's ability to perform the duties of 'any' occupation in which the insured can be trained to perform such duties. Under this method, if the insured can be trained and employed through an alternative occupation, regardless of wage differences, he or she would not qualify for DI benefits under this method.

Taft-Hartley Trust

A multiemployer plan is established through a Taft-Hartley trust which is specific to employers who are associated through a common bargaining agreement. The name of this trust refers to the two Congressmen who spearheaded the Labor Management Relations Act of 1947, also referred to as the 'Taft-Hartley Act' which set forth regulation for such trusts to provide safeguards against unethical mismanagement of employee funds and plan benefits. Such regulation includes appointing a joint employer-union board of trustees to serve as the plan's sponsor. Responsibilities include establishing and maintaining the trust, as well as regulating funds within the trust.

Multiple Employer Trust (MET)

A multiple-employer plan is established through a multiple employer trust in which each employer joins and pays premiums towards in order to participate in the multiple-employer plan. The trust is established and managed by trustees who serve as the master policyholder and sponsor of the trust. As a small employer joins the trust, its employees receive certificates of insurance under the group health plan paid for through the trust.

Point-of-Service (POS) Plan

A newer type of health plan that combines elements of both HMO and PPO coverage together whereby an insured can choose medical care from either in-network or out-of-network providers. A POS plan is named as such because it allows the insured to choose, at the time of service, to see his or her HMO PCP (primary care provider) or to go outside the HMO network for care. If in-network coverage is used, all care is managed by the PCP and the highest level of benefits are given without having to submit a claim If out-of-network coverage is used, the insured usually pays a higher amount of the cost and must submit a claim to the insurer for reimbursement

Non-disabling Injury (Medical Expense) Rider

A non-disabling injury rider, also referred to as a 'medical expense' rider, can be added to a DI policy to protect against non-disabling injuries that do not qualify for DI benefits. Essentially, this rider provides the insured with a reimbursement of medical expenses resulting from injuries that do not disable the insured. A non-disabling injury rider, also referred to as a 'medical expense' rider, can be added to a DI policy to protect against non-disabling injuries that do not qualify for DI benefits. Essentially, this rider provides the insured with a reimbursement of medical expenses resulting from injuries that do not disable the insured.

Activities of Daily Living (ADL)

A patient's daily activities, including bathing, feeding and toileting, as well as administering medicine and general maintenance of the patient.

Coinsurance (Percentage Participation)

A percentage of additional medical expenses that a policyholder must pay in addition to a deductible. While it is common to hear 80/20 coinsurance, policies can also come with 100/0, 90/10, or 70/30 coinsurance split where the insurance company is always responsible for the higher percentage amount.

Policy Term

A policy will remain in force as long as premium payments are received on time by the insurer. Depending on the frequency (mode) of premium payment, a policy's term is extended each time a premium is paid.

Right of Assignment

A policyholder's ability to assign benefit payments from an insurance company directly to a health care provider for services rendered by the policyholder.

Prospective Review

A prospective review is conducted prior to any procedure or admission for medical care and includes any pre-hospital admission certification, as well as any second opinion requirements for non-emergency surgeries or procedures before care administered. Second opinions require patients to obtain the opinion of another doctor after a physician has recommended a non-emergency or elective surgery or procedure to be performed. Health policies typically require that such opinions be obtained from board-certified specialists with no personal or financial interest in the outcome.

Retrospective Review

A retrospective review is conducted after discharge has occurred in order to evaluate the effectiveness and timing of the medical care provided.

Medicaid

A state-administered welfare health care program provided to qualified individuals who cannot afford health insurance due to their limited income. Although it was originally established by the federal government, Medicaid is regulated by the states and is administered by each state's government for its citizens.

BCBSA vs. Commercial Insurers

A subscriber does not have to assign payments from the insurer to the health care provider, so it is not considered reimbursement.

Gatekeeper System

A subscriber must choose a Primary Care Physician (PCP) who serves as the insured's primary physician, or 'gatekeeper,' and who provides basic medical services, coordinates and, if required by the plan, authorizes referrals to specialists and hospitals.

Advanced Premium Tax Credits (APTC)

A tax credit that can help an individual afford coverage bought through the Marketplace. Unlike tax credits claimed when filing annual taxes, these tax credits can be used right away to lower monthly premium costs. If qualified for an APTC, an individual may choose how much advance credit payments to apply to premiums each month, up to a maximum amount. APTCs may be available to most households with income not more than 400% of the federal poverty level. If the amount of advance credit payments received for the year is less than the tax credit due at the end of the year, the difference is provided as a refundable credit when filing an annual federal income tax return. If advance payments for the year are more than the amount of tax credit due, repayment of the excess advance payments are due with when filing an annual federal income tax return.

Health Savings Account (HSA)

A tax-advantaged medical expense savings account that works in conjunction with a qualified high deductible health insurance plan (HDHP) as a means of helping policyholders reduce their overall healthcare costs. It is a relatively new type of savings account that has replaced Medical Savings Accounts (MSAs). Often set up by employers for their employees or by the self-employed, an HSA provides tax advantages for both contributions to the account and withdrawals from the account for qualified medical expenses that are not covered by the HDHP. It is established through a bank or other financial institution often provided to the policyholder by the insurance company responsible for the HDHP. Withdrawals from the account are made through HSA debit cards or financial institution checks associated with the HSA.

High Deductible Health Plan (HDHP)

A type of health insurance plan that is associated with an HSA or MSA and is named after the typically high deductible amounts attached to such plans.

Specified (Dread) Disease Coverage

A type of low cost, limited risk insurance, purchased as a stand-alone policy, that protects against a specific infrequent disease outlined in the policy such as heart disease or cancer. Coverage of dread disease is important due to the large expenses associated with such illness or disease, as well as the length of time needed for recovery.

Impairment Rider

Added by a DI insurer to specifically exclude a certain medical condition or injury to still allow an individual to qualify for the DI policy. An impairment rider can be very beneficial because it enables certain individuals to purchase disability insurance (with the exclusionary rider) when normally the individual would be refused coverage (due to the pre-existing condition).

Hospital Confinement Rider

Adding this rider to a DI policy helps pay the regular total disability benefit during the elimination period when the insured is hospitalized.

Transplant Expense Provision

Additionally, DI policies often include a provision that provides total disability benefits to an insured in the event he or she becomes sick or disabled as a result of receiving a transplanted organ, or in the event that he or she becomes sick or disabled as a result of cosmetic surgery to correct disfigurement.

Annual Contribution Limits (Self-Only & Family HDHP Coverage)

All contributions, regardless of its source, count towards the annual maximum limit. Annual limits have increased each year since the inception of the HSA in 2004. The 2018 contribution limit for self-only coverage is $3,450, up from $3,400 in 2017, and for family coverage the 2018 contribution limit is $6,900, up from $6,750 in 2017. Unlike an FSA, funds in an HSA roll over each year and accumulate over time. Policyholders age 55 and older may make additional annual deposits, called 'catch-up' contributions of up to $1,000 on top of the annual contribution limit. Funding an HSA is similar to funding an IRA in that contributions are invested and grow tax-free over time. An HSA is also portable from one HDHP to another and if the policyholder dies, the HSA is transferable to the policyholder's spouse tax-free. If no spouse exists, the account will pass on to a named beneficiary designated at the inception of the policy; however, unlike transferring to a spouse, the HSA will end on the date of the policyholder's death and the distribution of the account will be taxed as income to the beneficiary. If no beneficiary exists at the time of the policyholder's death, the account will be distributed to the policyholder's estate and taxed as such.

Future Increase Option (FIO)

Allows an insured the right to purchase additional disability insurance at future dates regardless of insurability. Essentially, this rider enables an insured to increase his or her disability coverage to adequately match any future earnings. Proof of current earnings is required when purchasing any additional DI insurance, and premium rates for additional coverage are based on the insured's current age.

Change of Beneficiary

Allows for a change in beneficiaries as long as the original policy's beneficiary designation is not considered to be 'irrevocable.'

Open-Access HMO

Allows subscribers to visit an in-network specialist without needing a referral from their PCP.

Partial Disability

Also called 'residual' disability, an insured qualifies as partially disabled when he or she can perform one or more of his or her normal occupational tasks and duties, but cannot perform all of the normal duties performed before the disability, thus resulting in a decrease in income. Under a residual benefit policy, payments reflect the percentage amount of actual lost income, though most insurers do not provide DI benefits for earnings that account for less than 20-25% of pre-disability income.

Lifetime Maximum Limits

Also directly correlated with premium is the amount of time in which benefits are payable by the insurer. It is important to choose a policy that is both affordable and provides enough LTC coverage for what an individual might expect in the future. An insurance agent's job is to help determine the correct amount of coverage based on his or her evaluation of the applicant.

Blue Cross and Blue Shield

Also known as 'The Blues,' BCBS is considered to be one of the most well-known service providers in the country and is considered to be the nation's largest 'provider' of health insurance. Blue Cross and Blue Shield are considered two separate entities as well, though in most states both aspects are part of a typical BCBS plan; however, 'Blue Cross' covers the hospital and doctor's expenses, while 'Blue Shield' covers medical and surgical expenses.

Stage 2 Elimination Period

Also known as a 'time deductible,' the elimination period begins immediately after a disability begins, in which time benefits are not payable to the insured. This elimination period is similar to a health policy's deductible amount in a medical expense plan because both require an insured to incur some expense before benefit payment begin. In the case of disability, coverage does not provide for lost income until after the elimination period has expired. A DI policy's elimination period is chosen by the insured based on the policy's premium charged. The longer or shorter the policy's elimination period, the lesser or more expensive the policy's premium are for the insured. Elimination period choices range from 30 days to 1 or 2 years; however, the most common DI elimination period is 90 days.

Open-Ended HMO

Also known as a Leaky HMO, it allows subscribers to better control their choice of health care providers.

Principal Sum (Death Benefit)

Also known as the policy's death benefit amount, in the event of death, a policyholder's beneficiary will receive the principal sum stated in the contract. The principal sum is the maximum amount that an AD&D policy will pay out to the policy's beneficiary; however, if the insured dies as a result of circumstances that are specifically listed in the AD&D policy, the principal sum, or death benefit, can double or triple in the amount that is paid out to the beneficiary.

Consideration Clause

Also written into all health contracts, the consideration clause specifies the premium amount and date on which payments must be received to maintain the health policy. A policy's effective date is printed on the first page of the insurance policy. Typically, health policy premiums are due by the 1st or the 15th of each month. The most common option for paying health insurance policy premiums is by 'automated bank draft'. Using this method of payment, an automatic withdrawal is made directly from the consumer's checking or savings account and is withdrawn on a specified date, as prescribed in the policy. Although not as common, policy premiums can also be made by mailing a personal check to the insurer; however, most insurers include a service or handling fee, in addition to the premium amount.

HMO vs. PPO

Although HMOs and PPOs are both considered to be service providers, they differ in many respects: HMOs require members to choose a primary care physician (PCP) to authorize and coordinate the member's medical needs and are limited to a much smaller geographical area in which to choose from available HMO providers PPO insurers do not require a PCP and provide a larger network of physicians and hospitals, usually encompassing providers within several states, or throughout the country HMOs pay a fixed monthly capitation fee per member to medical providers in exchange for services rendered to HMO members, regardless of the amount of services rendered PPO insurers pay a fee-for-service to medical providers for actual services rendered, in comparison to a fixed capitation fee HMOs are highly regulated by both the states and federal government PPO insurers are less stringently regulated by the government

Elective States

Although all businesses in the U.S. are required to pay for work-related illness and injury of their employees, 'elective' states allow employers and employees the decision of providing or not workers' compensation insurance.

Integrated Deductible

Although not as common as a corridor deductible, an integrated deductible is considered to be 'integrated' into a policyholder's basic and major medical benefits and can be partially or completely satisfied by the basic plan's first-dollar benefit amount. This depends on both the integrated deductible amount and the amount of first-dollar coverage provided based on the type and duration of expense incurred by the policyholder under the basic plan.

Cost of Living Adjustment (COLA) Rider

Although similar to the automatic increase provision, upon adding a COLA rider, the insured's benefit payment is adjusted upward on an annual basis to match the Consumer Price Index (CPI) to more accurately compensate for rising inflation. This rider can be very beneficial for a younger individual who will experience the greatest effects of inflation over time. Designed for long-term disability periods, a COLA does not initially adjust benefit amounts for the 1st benefit year. In order for adjustments to the benefit amount to occur, the insured must be disabled for more than a year.

Exclusive Provider Organization (EPO)

An EPO is a more restrictive type of preferred provider organization plan under which an insured must use providers from a specified network of physicians and hospitals to receive coverage. Coverage under an EPO is not provided for care received from a non-network providers, except in an emergency situation. An EPO if often used in conjunction with and to complement a PPO where the insured's health is managed by a primary care doctor, providing services within a specific hospital.

Network Model

An HMO contracts with multiple groups of physicians and IPAs who offer their services to HMO subscribers, and also to non-HMO individuals on a fee-for-service basis. They are not exclusive to the HMO such as in the staff or group models.

Health Maintenance Organizations (HMO)

An HMO is a type of service provider that assumes both the financial risks associated with providing comprehensive medical services (Financing member expenses) and the responsibility for coordinating such health care services to HMO members (coordinating member services).

'Service-Incurred' basis

An HMO requires a prepayment from its members and then provides any necessary services required of each member, as opposed to the reimbursement approach, which requires paying for service and then submitting claims to the insurer to be reimbursed to either the insured or healthcare provider.

ASO (Administrative Services Only)

An arrangement in which an employer hires a third party to deliver administrative services to the employer such as claims processing and billing; the employer bears the risk for claims.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

An employer group must consist of at least 20 employees Extends group health coverage to former employees and their families for up to 18 or 36 months, depending on the 'qualifying event' after termination of employment The COBRA premium rate remains the same as the group rate, but the terminated employee pays more because there is no longer an employer contribution

Open Enrollment

An employer's open enrollment period is the time in which an employee can enroll for health insurance coverage. It is usually a 30-day period in which employees enroll and select their benefits.

Fully Insured Status

An individual qualifies as fully insured when he or she has accumulated the required quarters of coverage based on his or her age. All social security benefits are given to a fully insured worker and any dependents. To be fully insured, an individual must obtain at least one credit for each calendar year after turning the age of 21, and the earliest of the following: The year before attaining age 62, The year before death, or The year an individual becomes disabled The minimum number of credits needed is 6 and the maximum number needed is 40. Any year (all or part of a year) that was included in a period of disability is not included in determining the number of credits needed to be fully insured. Unlike private disability insurance, Social Security Disability Insurance (SSDI) only provides benefits to individuals who are totally disabled, as oposed to partial or short-term disability. SSDI defines total disability as the inability to engage in any substantial gainful activity due to physical or mental disability and must last at least 12 months or end in death. Benefits are paid after a 5 month waiting period to ensure the individual is totally disabled. In addition to being totally disabled, an individual needs to be fully insured and have earned at least 20 quarters of coverage in the last 40 calendar quarters (last 10 years) ending with the quarter in which the disability begins. A qualified beneficiary will receive 100% of his or her PIA. In addition, his or her spouse and dependent children under 18 years of age will receive 50% of the worker's PIA.

Legal Actions

An insurance company has 60 days from the time a policyholder submits a proof of loss before legal actions can be taken against them by a policyholder.

Qualified Health Plan (QHP)

An insurance plan that is certified by the Health Insurance Marketplace that provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts) and meets other requirements. A qualified health plan will have a certification by each Marketplace in which it is sold.

Subscriber

An insured member of a BCBS company that 'subscribes' to BCBS services in exchange for a prepaid monthly premium. A subscriber to a BCBS company is not under a personal contract with BCBS; As a result, subscribers can move to various parts of their state or the country and transfer to the local BCBS plan without needing a medical review.

Open-Panel vs. Closed-Panel System

An open-panel system is one where a dentist accepts both prepaid dental plan subscribers as well as nonmembers. Closed-panel systems only accept subscribers to the prepaid dental plan.

Removes Insurance Company Barriers to Emergency Services

Anyone can seek emergency care at a hospital outside of their health plan's network.

Americans with Disabilities Act (ADA)

Applies to employer groups of 15 or more employees Protects qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, and all other facets of employment Disabled employees must be given equal access to the group's health care coverage Cannot limit or exclude group health coverage for deafness, AIDS, cancer, major disease, or general disability

Mixed Model

As a new approach to managed care, HMOs are beginning to incorporate a variety the above-mentioned models to effectively contract with enough physicians to provide necessary services for HMO subscribers.

Guaranteed Renewable and Non-Cancellable

As a requirement of HIPAA, as long as premiums are paid, all LTC plans must be guaranteed renewable and non-cancellable. An insurer cannot make any other changes to a LTC policy once it becomes effective. The insurer has the right to increase premium rates on an LTC policy over time only if it increases the overall premium of a large group, or 'class' of individuals, but not on an individual basis.

Rehabilitation benefits

As a result of the Federal Vocational Rehabilitation Act, federal aid is provided towards employee rehabilitation in every state to help the employee return to the workforce.

Essential Health Benefits

As defined by healthcare.gov, The Affordable Care Act ensures health plans offered in the individual and small group markets, both inside and outside of the Health Insurance Marketplace, offer a comprehensive package of items and services, known as essential health benefits. Essential Health Benefits are defined as a set of health care service categories that must be covered in order to be certified and offered in the Marketplace. Essential health benefits must include items and services within at least the following 10 categories: Ambulatory and outpatient care Emergency room services Hospitalization (inpatient care) Maternity and newborn care Mental health and substance use disorder services including behavioral health treatment, counseling and psychotherapy Prescription drugs Rehabilitative services and devices including physical and occupational therapy, speech-language pathology, psychiatric rehabilitation and more Laboratory services Preventive and wellness services, and chronic disease management Pediatric services including oral and vision care

Minors and Adult Child Coverage Extension

As of 2010, children are allowed to remain on their parents' insurance policy until the age of 26, regardless of if they live with their parents, are financially dependent of their parents, a student, or married.

Nursing Facilities (Adult Day Care and Assisted Living)

Assisted living centers, also known as 'nursing homes,' are available for individuals who require substantial assistance in daily living activities and provide a variety of healthcare services, as well as a group living environment, versus seclusion for individuals who are 'homebound,' or have lost the ability to live alone.

Total Disability

Based on whether or not the insured individual has lost the ability to earn gainful employment, each insurer defines total disability according to an employee's 'own occupation' or, in some cases towards 'any occupation,' or any type of gainful employment.

Death benefits for an employee's survivor

Benefits paid to the surviving spouse of a deceased employee due to occupational death. Payments are based on the deceased employee's average earnings as well as the number of surviving dependents.

Medical expense benefits

Benefits that fully cover any medical treatment as a result of the occupational injury.

Disability income benefits

Benefits that replace lost income due to an occupational injury and are paid on a weekly basis or as a lump sum (or combined). Temporary disability is usually paid weekly, while a permanent disability is generally paid as a lump-sum benefit.

Blanket Customer Groups (teams, passengers and others)

Blanket insurance is non-specific group insurance provided when a group is constantly changing. Specific members are not listed under the policy and proof of coverage is recognized by proof of membership to the group. An example of a college covering all full-time students shows that due to the continual changing of the population of the group, membership to the college equates to membership under the group insurance. Similar examples are players on a sports team, executives flying in a corporate jet, or passengers on a cruise ship. Groups can be either contributory or noncontributory regarding premium payment.

11 Optional Individual Health Policy Provisions

Change of Occupation Misstatement of Age (Mandatory in some states, optional in others) Other Insurance with This (Within the Same) Insurer (Identical) Insurance with Other (Another) Insurer Insurance with (Multiple) Other Insurers Relation of Earnings to Insurance Unpaid Premiums Cancellation Conformity with State Statues Illegal Occupation Intoxicants and Narcotics

3 Categories of Healthcare Providers

Commercial Insurers Service Provider Organizations State and Federal Programs

TRICARE

Comprehensive and affordable health care coverage provided to members of the armed forces. As a form of managed health care for active and retired members of the armed services, coverage is also included for family members and survivors of deceased armed services personnel, if not qualified under Medicare.

The 'Original Medicare' Plan

Comprised of Medicare Part A and B, the 'Original Medicare', enacted in 1965, provides inpatient hospitalization coverage (Part A) as well as outpatient care, medical supplies and physician services (Part B). Medicare Part A is automatically offered free of charge on the first day of the month in which an individual turns age 65 and is eligible for Social Security, unless the enrollee waits until a later date. Individuals who have not earned the necessary 40 credits through Social Security may still purchase Medicare Part A. Medicare Part B is voluntary and regardless of Social Security eligibility, everyone pays a Part B monthly premium in order to retain Part B coverage. If eligible for Social Security, monthly premiums are usually deducted from an enrollee's social security check. Part B is automatically offered upon enrollment into Part A, though it is not required and can be purchased at a later date.

Health Reimbursement Arrangement (HRA)

Considered a dominant form of consumer-directed health plans, an HRA is a high-deductible health plan associated with a tax favored saving account that an employer creates for each employee.

Qualified beneficiary

Considered anyone covered under the group policy the day before the qualifying event occurs and normally includes the employee, spouse, and dependent children (includes children born or adopted during COBRA - 1996 amendment)

Disability Income (DI) Insurance

Considered to be 'income protection,' and is commonly referred to as 'income replacement insurance.' In its most basic form, this type of insurance is designed to provide continual, periodic (monthly) payments to an insured in the absence of regular working income, due to a qualified disabling illness or injury.

Prescription Drug Coverage

Considered to be a discount drug program for generic and brand name prescriptions used by a network of pharmacies, a typical prescription drug card provides generic drugs under a small copay, while brand name drugs are given a discount in price.

Usual, Customary, and Reasonable (UCR) charges

Conventional insurance plans operate based on usual, customary, and reasonable (UCR) charges which is defined as the amount money that a physician or hospital charges for a particular service cannot exceed the usual and customary amount for that particular service in that particular geographical area of the country, and is reasonable, based on the circumstances of the situation. Instead of UCR charges, PPO plans often operate based on a negotiated (fixed) 'schedule of fees' that recognizes charges for covered services up to a negotiated fixed dollar amount. This negotiation is between the PPO insurer and the healthcare providers who are within the PPO network.

Basic Hospital Benefits

Coverage for an insured's room and board, as well as additional benefits to cover expenses such as x-rays, anesthesia, and medications while hospitalized. It does not include coverage for any surgeons or other physicians' services performed while in the hospital.

Qualifying Events for 36 Months of COBRA

Coverage for surviving dependents of a deceased employee Former spouse of an employee after legal separation or divorce Dependent children that no longer qualify as dependent COBRA coverage ends when a Disqualifying Event occurs such as failure to pay premium, Medicare entitlement, or once new insurance is issued

Long-term disability

Coverage includes a longer (90 days to 6 months) elimination period and provides benefits lasting several years, up to age 65. It also provides benefit amounts equal to 60-70% of the insured's pre-disability income.

Short-term disability

Coverage includes a short (30 days or less) elimination period and provides benefits usually lasting around 6 months to 2 years with disability benefit income amounts equal to 60-70% of the insured's pre-disability income.

Dental Insurance

Coverage is often an added benefit to a group health insurance policy, but it can also be sold as a stand-alone policy. Most 'routine' dental care including cleanings and x-rays are covered as Scheduled Benefits, or predefined amounts of coverage per procedure using first-dollar coverage. Unscheduled or 'non-routine' benefits such as oral surgery, for example, require a separate dental deductible along with a coinsurance amount and provide benefits up to a maximum benefit amount. Two types of dental insurance plans are 'comprehensive' dental and 'pre-paid' dental.

Vision Care

Coverage of basic eye examinations and corrective lenses or contacts, as well as discounts on LASIK surgical procedures. A network of eye care specialists allow participants to receive care, usually only requiring a co-payment at the time of the visit. It is important to note that pediatric vision benefits are mandatory. Common limitations include one eye exam per year, and corrective eyeglass replacements on a bi-annual basis. Replacement of eyeglasses due to loss or breakage, sunglasses, safety glasses, or medical attention normally provided by medical insurance is generally not covered under vision care insurance.

Credit Health (Disability) Insurance

Credit health insurance is actually disability insurance that covers an insured's debt to a creditor upon disability. A credit health policy is issued by an insurer associated with a bank or similar lending institution and covers the amount of debt owed by a debtor over the period of time in which he or she is paying off the debt. In the event of permanent disability, the policy pays the remaining difference of what is still owed by the debtor in order to pay off the debt. A credit policy's disability amount is regulated to ensure that such policy covers only the amount of debt owed by the debtor, and serves to fulfill the debtor's contractual obligations while disabled or in the event of permanent disability.

Individual vs. Group

Credit health insurance serves to protect both the debtor and creditor in the event that a debtor becomes disabled and is not able to finish paying of his or her debt. A credit health policy can be purchased by an individual, or it can be purchased by a creditor who serves as the master policyholder and assigns certificates of coverage to debtors in which it transacts business. Group credit insurance is more commonly maintained by larger customer groups and creditors who acquire several new debtors each year as a way of insuring against the inability of debtors to pay back debt owed to the creditor through contractual agreements. The housing and automotive industries are examples of companies who purchase credit insurance on customers while in the process of paying off home mortgages and auto loans.

Key-Person DI Insurance

DI benefit proceeds are used to fund the hiring and training process of a replacement key-person for the company, or to provide for lost profits in the absence of the key-person in order to maintain the financial stability of the company.

Minimum and Maximum Benefits

DI policies contain both a minimum monthly benefit amount to ensure that the insured receives at least a minimum monthly benefit payment, as well as a maximum monthly benefit amount, regardless of its percentage of lost income to the insured.

Automatic Increase Provision

DI policies often include an automatic increase provision that automatically increases the individual's benefits annually to keep up with inflation, without requiring proof of insurability.

Payment of Claims

Death benefits for a life policy or rider are paid to the policy's specified beneficiary, while medical and living benefits are paid to the insured or to the healthcare provider for services rendered.

Managed Care

Defined as any healthcare system that is established to manage the costs of medical care through a network of physicians, hospitals urgent care centers and home health care providers that are contracted with an insurer, or the government, to provide medical services to members within the network. Health care is also managed through various programs provided to qualified U.S. citizens by state governments, as well as the federal government. Examples of managed care include: Commercial Insurers (Stock and Mutual companies) Blue Cross and Blue Shield companies Health maintenance organizations (HMOs) Preferred provider organizations (PPOs) Exclusive provider organizations (EPOs) Multiple Employer Trusts (METs) Multiple Employer Welfare associations (MEWAs) State Governments and the Federal Government

Capital Sum (Dismemberment Benefit)

Defined as the benefit amount that is paid to the insured as a result of dismemberment or the loss of eyesight. The benefit amount, often expressed as a percentage or fraction of the principal sum, will fluctuate depending on the seriousness of an accident. Accidents that result in the loss of one foot or hand frequently result in 50%, or 1/2 of the principal sum. In the event an accident yields in the loss of an arm or leg, two-thirds of the principal sum is provided. In extreme cases such as the loss of eyesight, both arms or both legs, 100% of the principal sum is paid out to the insured, but because it is payable to the insured, not the policy's beneficiary, it is still considered to be the policy's capital sum.

Stop Loss

Defined as the policyholder's annual financial limit upon satisfying the policy's deductible and coinsurance dollar amounts. Also referred to as the policyholder's 'out-of-pocket maximum,' once he or she has satisfied the policy's deductible and coinsurance amount, any remaining medical expenses are covered 100% by the insurer for the remainder of the current calendar year. Deductible + Coinsurance dollar amount = Policy Stop-Loss (Out-of-Pocket Maximum)

Uniform Individual Accident and Sickness Policy Provisions Act

Developed by the National Association of Insurance Commissioners (NAIC) and adopted by most states. The following 12 mandatory and 11 optional individual health policy provisions were developed by the National Association of Insurance Commissioners (NAIC). Although this act has been accepted by each state, some states recognize 12 mandatory policy provisions and 11 optional provisions, while other states recognize 13 mandatory and 10 or more optional provisions. The final lessons of your course will review your state's specific provision requirements

Recurrent Disability

Disabilities can and often do reoccur. Aware of this fact, disability insurers provide provisions that account for such recurrences. To avoid a new elimination period, a recurrence of the same disability is covered under the previous disability claim if it occurs after such period ends. Dependent on each insurer, recurrent eligibility periods range from 90 days to 6 months after the initial benefit period ends. Any recurrence thereafter is covered under a new disability claim, requiring the insured to go through a new elimination period.

Benefit Integration

Disability benefits can be provided through multiple sources including private insurance, Workers' Compensation and Social Security. When multiple policies are issued to the same individual, each source communicates with the other in order to integrate coverage for the individual, acting as primary and secondary benefit sources so as to not exceed actual lost income.

Cause of Disability

Disability income insurance benefits are only payable as a result of an accident or illness.

Limitation of Benefits

Disability income insurance is not designed, nor does it replace 100% of an individual's pre-disability income. Insurers place limits on the amount of disability benefits, most commonly providing a pre-determined payment amount that is less than what would equal 100% of the individual's normal income on an individual basis, or in a group policy, by providing a percentage, typically 60-70%, of an individual's pre-disability income level. Often, the lower amount of income encourages a quicker return to work; however, it is also of importance for the insurer to curb potential insurance fraud.

Medicare Part B - Supplementary Medical Insurance (SMI)

Doctors' services Home health care and Hospice Care (if not covered by Part A) Outpatient medical services and supplies

Premium-free Part A

Due to the fact that Medicare is funded by payroll taxes, an individual qualifies for premium-free Part A coverage once he or she has worked at least 10 years in 'Medicare-covered employment.' This simply means that at least 10 years of wages have been taxed for Medicare (10 years x 4 'quarters of coverage' or credits per year = 40 credits). In addition to the general enrollment requirements, individuals may also qualify for free Medicare Part A coverage under the following circumstances: Individuals age 65 or older who have qualified for Social Security (40 credits) or the Railroad Retirement Board (RRB) benefits (regardless of whether or not benefits have begun) Individuals, regardless of age, who have received Social Security disability benefits for at least 24 months before Medicare benefits begin Individuals, regardless of age, who have been diagnosed with permanent kidney failure, known as 'End-Stage Renal Disease (ESRD)'

Occupational vs. Non-occupational Coverage

Due to the fact that Workers' Compensation is state-mandated to cover occupational injuries and disabilities, DI insurance coverage for 'occupational' claims begins after Workers' Compensation coverage is exhausted. This is most common in group DI policies where an employer provides employees with additional DI coverage as a benefit for employment, above and beyond the state-mandated Workers' Compensation for on-the-job injuries and disability claims. In comparison, 'non-occupational' injuries and disabilities unrelated to one's occupation are not covered under Worker's Compensation, but are covered under a DI policy.

Summary of a Producer's Responsibilities

Effectively communicate on behalf of the insurer Ethically market insurance products Understand pertinent insurance laws Accurately complete the application process Thoroughly review the policy with the client

Part B

Eligibility for Part B depends on whether an individual is eligible for premium-free Part A or whether he or she has to pay a premium for Part A coverage. Individuals who are eligible for premium-free Part A are also eligible for enroll in Part B coverage once they are entitled to Part A. Individuals who must pay a premium for Part A must meet the following requirements to enroll in Part B: Be age 65 or older; Be a U.S. resident; AND Be either a U.S. citizen, OR Be an alien who has been lawfully admitted for permanent residence and has been residing in the United States for 5 continuous years prior to the month of filing an application for Medicare.

Group Health Plan Sponsors

Employer groups, unions and labor groups, associations, and fraternal benefit societies, among other plan sponsors, establish group health plans with the intention of providing members with health insurance as a benefit of employment or membership in the group.

Social Security Disability Insurance (SSDI)

Enacted by Congress as part of the Social Security Act of 1935, SSDI is a federal program is funded primarily through employer and employee payroll taxes, known as 'FICA taxes,' and provides benefits to eligible individuals in the form of Social Security Disability coverage as well as health coverage through Medicare and Medicaid. Social Security Disability is available to all working Americans that pay FICA taxes and become eligible for benefits upon becoming disabled. An individual becomes eligible for Social Security Disability benefits based on his or her Insured Status, which is determined by how many Quarters of Coverage or Credits he or she has accumulated while being employed and taxed under FICA. One credit can be earned for each quarter in the calendar year that an employee pays FICA payroll taxes, with a maximum annual accumulation of 4 quarters of coverage, or credits, per calendar year, beginning after an individual turns 21 years old.

12 Mandatory Individual Health Policy Provisions

Entire Contract Time Limit on Certain defenses Grace Period Reinstatement Notice of Claim Claims Forms Proof of Loss Time of Payment of Claims Payment of Claims Physical Exam and Autopsy Legal Actions Change of Beneficiary Revocable Irrevocable

Multiemployer Plan

Established by two or more employers within a related industry who are also part of a collective bargaining agreement. Unions and similar labor organizations establish multiemployer plans for the benefit of employees who may transfer between employers within the same union. Because a collective bargaining agreement exists between these employers, the group is categorized and treated as a single entity. Group size is based on whether the plan covers local members only or if it provides coverage on a larger national or international scale.

Multiple Employer Plan

Established by two or more similar employers within a related industry, but who are not part of a collective bargaining agreement. The purpose of a multiple employer plan is to provide smaller employers, who are related based on the type of business or industry, with the opportunity to group together in purchasing health insurance to increase the size of the group in order to provide health insurance for employees at a more affordable rate. Although multiple-employer plans are purchased by related employers within the same or similar industry, they are not related in the sense that they do not share a collective bargaining agreement, nor are they members of the same association or union and are not taxed as a single employer

Claims Process

Every 3 months, Medicare provides enrollees with a Medical Summary Notice (MSN), also known as an Explanation of Medicare Benefits (EOMB) that shows the enrollee's medical care services and supplies that were billed to Medicare during the previous 3-month period, as well as the amount paid by Medicare, and any excess cost still owed by the enrollee.

Omnibus Budget Reconciliation Act (OBRA)

Extends COBRA continuation benefits from 18 months to 29 months for disabled employees at the time of the qualifying event or who become disabled during the first 60 days of COBRA coverage. Clarified Medicare as an 'entitlement' program which allows eligible Medicare recipients to sign up for Medicare coverage before becoming disqualified and thus losing continuing health coverage through COBRA or OBRA.

The Mental Health Parity and Addiction Equity Act

Federal law that generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits. MHPAEA originally applied to group health plans and group health insurance coverage and was amended by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the "Affordable Care Act") to also apply to individual health insurance coverage. The US Department of Health and Human Services (HHS) has jurisdiction over public sector group health plans (referred to as "non-Federal governmental plans"), while the Departments of Labor and the Treasury have jurisdiction over private group health plans.

Dual Choice Provision

Federal legislation requires employers with at least 25 employees to provide the option to receive health coverage through an area HMO, if one exists, as an alternative to the company's indemnity, PPO, EPO, or POS health plan. Employer premium contributions are not required to be any higher for HMO contributions than it pays for any other health plan it offers to eligible employees.

Although it must be given under a doctor's order, this category does not require services to be performed by a medically trained individual. These services include bathing, dressing, getting out of bed and toileting.

Federally qualified to receive tax benefits when such plans stipulate that covered individuals must be diagnosed as chronically ill, whether such illness is physical or cognitive, unless prior hospitalization occurred and the individual is considered acutely ill.

Fee-for-Service

Fees are paid by the insured at the time of service to physicians instead of paying a monthly fee.

Health Insurance

Financial protection against loss resulting from illness or bodily injury. It is designed to indemnify an insured for medical treatment or financial loss in the event of an accident, illness, or disease. The indemnity is the amount of coverage payable, based on the policy's schedule of benefits, to the health care facility and doctors to help cover medical expenses incurred by the insured.

Grandfathered vs. Non-Grandfathered

Grandfathered health plans are defined as health plans that were issued prior to January 1, 2014. Although all health plans going forward are mandated under the PPACA to cover pre-existing conditions, currently in 2014, individuals may remain on pre-PPACA plans which may still exclude pre-existing conditions. In comparison, non-grandfathered health plans are those plans that comply with the pre-existing condition inclusion legislation set forth by the PPACA. Any health plan issued after January 1, 2014 is considered to be 'non-grandfathered.' For purposes of the state licensing exam, if a health plan excludes pre-existing conditions, it is considered to be a 'grandfathered' plan. By the end of 2015, such grandfathered plans will be eliminated, or modified by insurers to include pre-existing conditions in order to be compliant with the PPACA.

Group DI Benefits (% of Pre-disability Income)

Group DI payments are usually payable on a monthly basis to the insured, and payment amounts are contingent on the insured's pre-disability income. Benefit amounts are usually limited to a percentage of the insured's total pre-disability earnings, commonly around 60%, though percentages can vary.

Group Health Insurance Provisions

Group health insurance includes several provisions that are similar to an individual health insurance policy; however under a group health policy, the grace period generally extends to 31 days.

Associations & Organizations

Group health insurance is also common in non-employment groups including professional, civic, community organizations, alumni and professional associations, and societies such as fraternal benefit societies or other similar groups. As with an employer-related group, a trust can be established by a group of similar associations in order to increase its 'economy of scale,' or size to reduce rates for is members. As defined by the NAIC Group Health Insurance Standard Provisions Model Act and adopted by the states, common requirements for associations and other similar groups to attain group life eligibility include: Not being controlled by an insurer Having been established at least 1 year for a common purpose other than to obtain health insurance Maintaining a constitution and by-laws requiring at least an annual meeting of the association Requiring membership dues to be collected, member voting rights and representation within the governing board of the association or similar group Participation by all of any classes of members selected by the association or similar group to participate in the group health plan Policy premiums paid by the established trust fund for the purpose of benefiting members of the group, not the group's organizers

Small Employer Plans

Groups of usually 50 or less employees have become expensive to insure with the rising costs of health care. Recent developments by several states include mandating insurance to be offered to small employers, limits on waiting periods, and guaranteed coverage regardless of pre-existing health concerns. Plans cannot be canceled due to a rise in health claims, but can be canceled if premium is not paid by the employer.

HSA Withdrawals (Qualified vs. Unqualified)

HSA funds are withdrawn from the account through an HSA debit card or checking account that is provided at the time the account is established. Prior approval to withdraw funds is not required and may be done so anytime the policyholder needs to access the account. HSA withdrawals are either qualified or unqualified, meaning the funds can be withdrawn tax-free or subject to income tax (and an additional penalty tax). Tax-free qualified medical expenses are those that are not already covered by the HDHP such as the policyholder's deductible, coinsurance and co-pay expenses. Several additional medical expenses that are payable using HSA funds include bandages, birth control pills, chiropractor visits, dental treatments, eye exams and elective surgery, stop-smoking programs, prescriptions and certain over-the-counter drugs, as well as many other HSA-qualified medical expenses. However, the HDHP's policy premium is not a qualified HSA expense. Withdrawals for non-qualified medical expenses, as well as any other withdrawal, is taxed as ordinary income, and if withdrawn prior to age 65, is also subject to a 20% early withdrawal penalty tax. After age 65, withdrawals made for non-qualified expenses, or any other withdrawals, are taxed as ordinary income but are not subject to the 20% penalty tax.

Renewability Clause

Health insurance policies contain certain renewable provisions that allow the insurer to continue or discontinue coverage.

Unearned vs. Earned Premium

Health insurance premiums are always paid at the beginning of the month in which it is about to provide insurance coverage. This prepayment to the insurer is considered Unearned by the insurer until the period in which the premium was paid has ended, at which point it is considered Earned by the insurer. If a policyholder were to cancel his or her health insurance during the middle of any prepaid period (based on premium mode), he or she would be refunded at a pro-rated amount of premium for any days remaining in the period in which the premium was prepaid.

Ends Pre-Existing Condition Exclusions for Children

Health plans can no longer limit or deny benefits to children under 19 due to a pre-existing condition

Types of Group Health Insurance Policies

Hospital expense Surgical expense Medical expense Disability Accidental Death and Dismemberment (AD&D)

Guaranteed Renewability of Coverage

If a health insurance issuer offers health insurance coverage in the individual or group market, the issuer must renew or continue in force such coverage at the option of the plan sponsor or the individual, as applicable.

Co-payments

If a subscriber uses any supplemental services, a 'copay' is charged for those services at the time of visit, in addition to the monthly premium to maintain the HMO policy.

Annual Renewable Term (ART) Rider

In addition to other DI benefits, an insured can add an Annual Renewable Term (ART) life insurance rider to his or her DI policy which provides a life insurance death benefit to the insured's designated beneficiary in the event of the insured's death. This rider is renewable annually without requiring proof of insurability by the insured.

Rehabilitation Benefit Payments

In addition to providing an insured with periodic benefit payments to provide for lost income, some insurers offer benefits payable towards the rehabilitation of the insured to return to work, or for a new occupation.

General Enrollment Period (GEP)

In addition to the initial enrollment period, individuals who choose not to enroll into Medicare initially may do so any year following their 65th birthday. A General Enrollment Period (GEP) from January 1st through March 31st provides eligible individuals with the opportunity to enroll into Medicare Parts A and B with coverage beginning on July 1st. Part A enrollees who then enroll in Part B at a later date, beyond the initial enrollment period, are considered to be enrolling 'late' into Part B. As a result, a late enrollment penalty is added as a percentage increase in premium above the standard Medicare premium for the lifetime of the policy.

Part B Deductible & Coinsurance

In addition to the monthly premium, Part B includes an annual deductible of $166, after which Part B pays 80% of covered services with no annual out-of-pocket maximum for Part B claims. As with Part A, enrollment into Part B can only occur during the initial, general or special enrollment periods. Enrollment into Part B can also be delayed until a later date; however, a late enrollment penalty will be applied to the monthly Part B premium for as long as the individual has Part B.

HSA Contributions

In addition to the policyholder, anyone can contribute to a policyholder's HSA including the policyholder's employer, family members, and friends. Contributions made by the policyholder are 100% tax deductible up to his or her annual self-only or family contribution limit. Contributions made by family members or friends must be payable to the account holder, who in turn, deposits it into his or her HSA account. Employer contributions and self-employed income contributions are deposited into an HSA with pre-tax dollars and is not considered to be taxable income for the employee or self-employed policyholder. These pre-tax contributions are not treated as income to the policyholder and therefore are not included in his or her annual taxable income amount. Unlike a Health Reimbursement Arrangement (HRA), the HSA policyholder controls the account and once deposited into the HSA, contributions become the property of the policyholder, even if he or she changes employment.

Cognitive Impairment

In order to qualify as cognitively impaired (a deficiency in the ability to think or reason), an impairment diagnosis must be certified by a physician within the previous 12 months.

Reinstatement

Individual health insurance policies must also include a reinstatement provision that further protects an individual in the event that he or she fails to submit his or her policy's premium within the policy's grace period. Policy reinstatement is largely dependent on the length of time that has lapsed after the policy's grace period has ended, and can require proof of continued insurability. Generally, the sooner the missed premium is paid by the individual, the less likely the insurer will require proof of continued insurability. If proof of insurability is not required, a lapsed policy is reinstated on the date the insurer receives the missed premium. If proof of insurability is required, a conditional receipt is provided to the individual upon payment of the missed premium along with the submission of an application for reinstatement. The insurer will notify the individual of its acceptance or denial of such reinstatement; however, if notification is not provided by the insurer, the policy will be automatically reinstated on the 45th day after receipt of the missed premium by the insurer. Upon reinstatement, the contract between the insurer and insured continues as if the health policy had not lapsed. A reinstated policy provides coverage immediately for accidents but requires a 10 day waiting period for illness claims.

Grace Period

Individual health insurance policies must provide a grace period for a specified period of time after a policy's premium is due in which the insured can still submit payment to the insurer. Although some states provide for no less than a 31 day grace period, most states define a policy's grace period based on the mode of premium in which it is paid: 7 days for policyholders whose premiums are paid weekly 10 days for policyholders whose premiums are paid monthly 31 days for policyholders whose premiums are paid quarterly, semi-annually or annually

Individual Practice Association Model (IPA)

Individual physicians and specialists who work out of their own offices and contract with an independent practice association, which in turn contracts with the HMO. Subscribers can choose from a list of participating physicians. An IPA is considered an open-panel plan because physicians also accept non-HMO individuals on a fee-for-service basis.

Premium (Paid) Part A

Individuals who do not meet the 40 credit Social Security requirement for premium-free Part A coverage can still purchase Part A when they turn age 65; however, Part A is not automatically offered to them. To purchase premium Part A coverage, an individual must apply for Part A through the Social Security Administration during a valid enrollment period, such as the 'initial' enrollment period, 'general' enrollment period or 'special' enrollment' period. He or she must also enroll in or already have Part B coverage.

Group LTC Coverage

LTC insurance can also be provided to members of a group. As with life and health insurance, a group LTC policy is issued to by the insurer to the sponsor of the group who serves as the master policyholder and issues certificates of LTC coverage for participating members of the group. Upon termination from the group, an individual must have the right to continue or convert to an individual LTC policy without requiring evidence of insurability.

Individual LTC Coverage

LTC insurance can be purchased on an individual basis where the policy is paid for by the individual and provides coverage directly to the individual for whom the policy is written, or can be written as an endorsement (rider) to a life insurance policy. LTC premiums are determined by the age and medical history of the applicant. Generally speaking, the younger the individual, the lower the LTC premium required.

Non-qualified LTC plans

LTC plans that do not require an individual to be diagnosed as chronically ill, nor any other specific requirement, since it is not mandated under the federal tax code, unlike a qualified LTC plan. While such plans do not receive favorable tax treatment, individuals who do not qualify for a qualified LTC plan, based on the individual's medical diagnosis, often do qualify for a non-qualified LTC plan.

Self-Insured Plans

Large corporations, labor unions and other qualified groups 'self-insure,' paying the more common and less expensive medical expenses incurred by their employees or members to reduce the premium costs involved with providing insurance.

Ends Lifetime Limits on Coverage

Lifetime limits on most benefits are banned for all new health insurance plans

Social Insurance Supplement (SIS)

Many DI insurers provide supplemental coverage for recipients of various governmental programs to cover their expenses while satisfying the programs' waiting periods and to help reimburse some expense incurred outside of the various government programs.

State and Federal Programs

Medicaid Workers' Compensation Medicare Tricare Social Security Disability Insurance (SSDI)

3 Categories of Health Insurance

Medical Expense Insurance Disability Income Insurance Accidental Death and Dismemberment Insurance (AD&D)

Home Health Care

Medically-necessary care conducted by a registered nurse is often performed within the home of the patient, in comparison to care within a hospital. This type of rehabilitative service is designed to help patients readjust to everyday living, commonly provided after a stay in the hospital.

Medicaid covers certain Medicare costs including:

Medicare deductibles Part B premium Medicare co-payments Part A premium (if not eligible for Social Security)

Waiver of Premium

Most LTC policies include a waiver of premium provision that waives an individual's need to pay premium while receiving LTC benefits. This option is usually effective once a patient has been under the care of a licensed physician for a period of at least 90 days of confinement.

Guaranteed Renewable Policies

Most medical expense policies are guaranteed renewable up to age 65. As long as premiums are paid, the insurer cannot cancel an individual's insurance policy. If a premium increase occurs, it cannot affect an individual policyholder unless premiums increase for an entire class of insureds.

Multiple Employer Trust (MET)

Multiple employers within a similar industry or field join and receive health insurance from a series of trusts that are established and maintained to provide insurance to employees of multiple companies at a lower and more affordable rate. An insurer or Third Party Administrator (TPA) creates and administers the insurance for the various employers, and all claims are paid through the series of trusts that the insurance was established through.

Covers Preventive Care at No Extra Cost

No copayment or doctors fee for preventive care

The Patient Protection and Affordable Care Act (PPACA)

Often abbreviated simply as the 'Affordable Care Act (ACA),' this federal statute is actually 2 laws, called the 'Patient Protection Act' and 'Affordable Care Act.' Enacted between 2010 through 2014, and amended by the Health Care and Education Reconciliation Act, the federal government has reformed both the private health insurance industry and government-sponsored health programs such as Medicaid and Medicare to provide U.S. citizens with more comprehensive healthcare coverage by eliminating the current exclusions of pre-existing conditions, as well as expanding the availability of Medicaid. All health plans issued after January 1, 2014 must provide coverage for pre-existing conditions, and insurers cannot deny coverage for applicants with pre-existing conditions. As defined by healthcare.gov, under the law, a new "Patient's Bill of Rights" gives all Americans the stability and flexibility we need to make informed choices about our health and to put consumers back in charge of their health care. [hhs.gov]

Group Model

Often working out of one or more facilities, an HMO contracts with a third-party employer that employs physicians and specialists to offer services only to subscribers of the HMO. It is considered a closed-panel plan because physicians do not accept individuals outside of the HMO

Supplemental (Optional) HMO Services

Optional services include prescription drugs, vision and dental care, home health care, nursing services, and long-term care, as well as, mental health and substance abuse services. These services are often purchased as a supplement to an HMO policy

Disability Buy-Sell Insurance

Partners often purchase DI insurance on each other as a means of providing the partnership with financial protection in the event that one of the partners becomes disabled and is unable to continue providing his or her duties to the partnership. Usually a 1 to 2 year elimination period is required to allow the disabled partner the opportunity to recover and avoid prematurely losing share in the business.

Non-Skilled Nursing Care

Pertains more to the personal daily living assistance, known as the 'activities of daily living (ADL)' of a patient including bathing, feeding, administering medicine and general maintenance of the patient.

Staff Model

Physicians and specialists that are exclusive employees to the HMO and paid on a salary basis from the HMO, often working in offices owned by the HMO.

Qualified Health Plan Categories

Plans in the Marketplace are primarily separated into 4 health plan categories (Metal Tiers): Bronze (60% coverage) Silver (70% coverage) Gold (80% coverage) Platinum (90% coverage) Qualified health plans are based on the percentage the plan pays of the average overall cost of providing essential health benefits to members. The plan category chosen affects the total amount an individual is likely spend for essential health benefits during the year. The percentages the plans will spend, on average, are 60% (Bronze), 70% (Silver), 80% (Gold), and 90% (Platinum). This isn't the same as coinsurance, in which an individual pays a specific percentage of the cost of a specific service.

Consumer-Driven Health Plans (CDHP)

Plans that require the insured consumer to take control of their medical decisions in an effort to reduce or eliminate unnecessary procedures and expenses and improve the overall quality of health care

First-Dollar coverage

Policy benefits are provided up front to the insured without having to satisfy any plan deductible.

Maximizes the Use of Premium Dollars

Policy premium dollars must be spent primarily on health care - not administrative costs

Revocable

Policyholder can change beneficiary designations at a later date

Medicare Part D - Prescription Drug Insurance

Prescription drug coverage

Medigap - Private Medicare Supplement Insurance

Private supplemental Medicare insurance that is designed to fill in the 'gaps,' or cover the expenses that are not covered under Medicare Part A and B Standardized by the CMS, Medigap policies are purchased from private insurers as an alternative to Part C (Medicare Advantage)

HMO Organization (Profit vs. Nonprofit)

Profit - Considered a 'producer's cooperative,' owned and operated by a group of physicians. Non-profit - Considered a 'consumer's cooperative,' where doctors are salaried employees of the HMO.

Basic Surgical Benefits

Provide an insured with funds to help cover the costs associated with in-hospital surgeon's services and services rendered by an anesthesiologist before surgery, though, the anesthesia drug, itself, is covered under the miscellaneous expenses in a basic hospital expense plan.

Basic Physicians' (Non-Surgical) Benefits

Provide an insured with funds to help cover the costs rendered by non-surgical physicians while he or she is confined to a hospital, as well as physicians' office visits outside of the hospital.

Family and Medical Leave Act (FMLA)

Provides 'eligible' employees with the ability to take an unpaid leave of absence of up to twelve (12) workweeks during any 12-month period for certain qualified medical, family and military reasons. An employee becomes eligible for FMLA protection upon being employed by the same employer for at least one (1) year and has worked for 1,250 hours over the previous 12 months. Employers are required to maintain the employee's health coverage under the employer's group health plan as well as any other employment benefits in the absence of the employee. In addition, an employer must accept an employee back to the company after a qualified FMLA period of absence for the same or an equivalent job position as before taking such leave of absence. Enforced by the Department of Labor, all State and Federal agencies and employers, as well as private employers with 50 or more employees within 75 miles of the employer must provide such employment protection. Eligible employees are responsible for providing sufficient information and documentation pertaining to a need for a leave of absence and should provide advance notice, when possible, of 30 days before needing to take such leave from employment.

Accidental Death and Dismemberment (AD&D) Insurance

Provides a lump-sum benefit in the event of the accidental death of an insured, or in the event that the insured loses a body member, such as a hand, foot or a limb. An AD&D policy's benefits are also paid to an insured in the event that he or she loses eyesight in one or both eyes. AD&D policies are often attached as a rider on a life or health insurance policy due to its limited protection.

Social Security Rider - Also known as an Additional Monthly Benefit (AMB) Rider

Provides benefits during the elimination period, as well as the 12 months before disability benefits begin. AMB riders provide benefits during times when Social Security does not, as well as in addition to the benefits provided through Social Security.

Health Insurance Portability and Accountability Act (HIPAA)

Provides both for the portability of group insurance from one employer to another or from an employer sponsored policy to an individual policy if becoming self-employed. Federal mandates also provide for pregnant women and the mentally ill. The new employer must immediately offer coverage if the new employee is switching from a previous employer's coverage (if previously covered for at least the last 18 months). Portability is mandated for 63 days between jobs. Individual insurance through self-employment is considered portable from group insurance (premium is higher due to individual vs. group risk).

Long-Term Care (LTC) Insurance

Provides coverage for expenses associated with custodial care and assisted living for individuals who have lost the ability to remain completely independent. LTC coverage provides care, usually for a period 90 days or more, and can be provided by an adult care center, nursing home or at an individual's home. While some LTC policies offer unlimited lifetime coverage, most plans limit coverage periods from 3 to 5 years, often with limited benefit amounts.

Hospice Care and Respite Care

Provides for the control of pain and provides a comfort of living for terminally ill patients. Respite care allows for the temporary medical care of a dependent that allows for the primary caregiver, usually family member, to receive a short period of time 'off' from providing care, whether for a few hours per day or for a period of a few weeks. The dependent is either cared for within their residence or at a medical institution.

Basic Medical Insurance

Provides limited benefits in the form of indemnity payments which are paid directly to the insured, and are provided as a limited benefit for services incurred by the insured. The indemnity payment is limited to a specific amount of money that is provided by the insurer to an insured on a daily basis for a specific period of time to aid in offsetting costs incurred by the insured for his or her illness or injury.

Medicare Part C - Medicare Advantage

Replaces and covers expenses found in Part A and B Medicare private fee-for-service plans (PFFS) Medicare managed care plans (HMOs and PPOs) Medicare specialty plans

Skilled Nursing Care

Requires the care of a licensed nurse under the orders of a physician.

Medical Savings Account (MSA)

Savings accounts designated for out-of-pocket medical expenses by the insured throughout the year. One major difference between a Flexible Spending Account (FSA) and a Medical Savings Account (MSA) is the ability under an MSA to carry over the unused funds for use in a future year, instead of losing unused funds at the end of the year.

Methods to Determine Surgical Expense Benefits

Schedule of Surgical Procedures Usual, Customary, and Reasonable (UCR) Approach Relative Value Scale

Multiple Employer Welfare Association / Arrangement (MEWA)

Similar to a MET, a 'MEWA' is the technical term used under federal law to define any arrangement not maintained pursuant to a collective bargaining agreement (other than a state-licensed insurance company or HMO) that provides health insurance benefits to the employees of two or more private employers. Essentially, these types of arrangements are usually established by trade associations or other similar groups of employers to combine the purchasing power of several employers in an effort to self-insure employees. This allows smaller employers with a means of offering more affordable health coverage through participation in the MEWA.

Pre-Paid Dental Plans

Similar to an HMO, plans are paid in advance and provide services to subscribers of the plan. Premium is paid into the insurance policy monthly to the insurer who then pays a monthly capitation fee to the dental providers for services performed. Any licensed dentist can participate in a pre-paid dental plan and subscribers can choose any participating dentist as their provider.

Comprehensive Dental Insurance

Similar to comprehensive health insurance, it provides the highest amount of benefits including routine dental care, non-routine dental care, and sometimes, orthodontic care, depending on the insurer.

Intermediate Nursing Care

Similar to skilled nursing care, 'intermediate' long-term care is also offered at nursing homes by registered nurses under the supervision of a physician, but without around-the-clock care.

Individual Mandate for Minimum Essential Coverage

Since its enactment, the PPACA has required most individuals to attain health insurance coverage or pay an annual tax penalty. Penalties are reduced from an individual's tax refund, if any; however, if an individual does not receive a tax refund and is not exempt from the penalty, he or she will not be subject to criminal prosecution, nor can a levy or lien be placed on the individual's income or property. Under the PPACA, individuals are required to maintain 'minimum essential coverage' for themselves and their dependents. Minimum Essential Coverage is defined as: Coverage under certain government-sponsored plans Employer-sponsored plans, with respect to any employee Plans in the individual market Grandfathered health plans Any other health benefits coverage, such as a state health benefits risk pool, as recognized by the HHS Secretary Minimum essential coverage does not include health insurance coverage consisting of excepted benefits, such as dental-only or vision-only coverage. Some individuals are exempt from the individual mandate and do not have to pay a penalty tax. Most exemptions are claimed when filing tax returns, while others, including 'hardship exemptions,' are applied for with a paper application. Individuals who do not maintain minimum essential coverage and are not exempt from the mandate are required to pay the annual tax penalty which is the greater of a flat dollar amount or a percentage of applicable taxable income.

Average Indexed Monthly Earnings (AIME)

Social Security benefit amounts are based on an individual's lifetime earnings that were taxed under the FICA payroll tax using an indexed earnings average, called the 'Average Indexed Monthly Earnings (AIME).' This average, which is computed over a 35 year period of time, reflects changes in wage levels and more accurately accounts for inflation when determining benefits. This average is used within a formula to determine the individual's 'primary insurance amount,' or 'PIA.'

Special Enrollment Period Requirements

Special Enrollment Periods are times outside of the Open Enrollment Period during which individuals have a right to sign up for health coverage. In the Marketplace, an individual qualifies for a Special Enrollment Period 60 days following certain life events that involve a change in family status or loss of other health coverage. Job-based plans must provide a Special Enrollment Period of 30 days. Life events that qualify an individual for a Special Enrollment Period include: Getting married Having a baby Adopting a child or placing a child for adoption or foster care Losing other health coverage Moving to a new residence Gaining citizenship or lawful presence in the U.S. Leaving incarceration Individuals already enrolled in a Marketplace plan qualify for a Special Enrollment Period if a change in income or household status occurs that affects eligibility for premium tax credits or cost-sharing reductions. Voluntarily quitting a Marketplace plan mid-year does not qualify an individual for a Special Enrollment Period. Members of federally recognized Indian Tribes or Alaska native shareholders can enroll in or change plans once per month any time of year (not just during Open Enrollment).

Types of HMO Models

Staff Model Group Model Capitation Fee Individual Practice Association Model (IPA) Network Model Mixed Model

Stages of Disability Income Coverage

Stage 1 Probationary Period Stage 2 Elimination Period Stage 3 Benefit Period

Medicare-Aid

State-administered supplemental health coverage for Medicare is also provided through Medicaid to cover most of the health care costs incurred by qualified Medicare recipients who cannot afford private Medigap insurance. Depending on the individual's income, this additional aid is provided through various levels including 'Comprehensive' and 'Limited' Medicare-Aid.

Accidental Means Provision

States that the cause of an injury must be unexpected and accidental.

Accidental Bodily Injury Provision

States that the result of an injury must be unexpected and accidental. Most plans today use the accidental bodily injury provision because it is not as restrictive as the accidental means provision.

Subscriber vs. Insured

Subscribers can modify their plans to include additional family members, or to create a group plan from an individual plan, and vice versa and are not required to start a new plan when moving to a different area or if they decide to modify their plan. In comparison an insured enters into a 'personal contract' with an insurer; therefore, any changes to the insured's plan or if the insured moves to a different zip code or state, a new contract is created, sometimes requiring a new medical underwriting review.

Qualifying Events for 18 Months of COBRA

Termination of employment (most common) Hours of employment are reduced

Military Caregiver Leave

The FMLA also provides for an unpaid, job-protected leave of absence for any qualifying crisis arising out of the fact that the employee's spouse, child or parent if a covered military member on 'covered active duty.' An additional 26 weeks of leave during a 12-month period are provided to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember's spouse, child, parent or next of kin.

Guaranteed Issue

The PPACA mandates that all health insurers offering health insurance coverage in the individual or group market throughout the United States must accept every employer and individual that applies for such coverage; however, enrollment is restricted to 'open enrollment' or 'special enrollment' periods.

Shared Responsibility

The Patient Protection and Affordable Care Act will accomplish a fundamental transformation of health insurance in the United States through shared responsibility. Systemic insurance market reform will eliminate discriminatory practices such as pre-existing condition exclusions. Achieving these reforms without increasing health insurance premiums will mean that all Americans must be part of the system and must have coverage. Tax credits for individuals and families will ensure that insurance is affordable for everyone.

Deductible

The amount of medical expense that the policyholder must 'absorb,' or pay before benefits are covered by the insurance company. In a major medical insurance policy, the deductible is covered 100% by the policyholder and is usually based on a calendar year medical expense basis. Generally speaking, the higher a policy's deductible, the lower the monthly premium, so insurers offer consumers a variety of choices in deductible amounts in order to remain within the consumer's budget. Some policies provide for 'first-dollar,' or up-front benefit payments before the deductible is required, while other policies require the deductible to be met before any benefits are payable by the insurer. Deductibles are commonly considered All-Cause, meaning that all medical expenses fall under a single annual deductible. A less often used Per-Cause deductible must be satisfied for each new medical occurrence in a given year.

Open Enrollment Period

The annual Open Enrollment Period is the period of time during which individuals who are eligible to enroll in a Qualified Health Plan can enroll through the Healthcare Marketplace. The Open Enrollment Period starts on November 1st and continues through December 15th. Plans sold during Open Enrollment start on January 1st. The individual market has set this timeframe every year for Open Enrollment, much like Medicare, where new and renewing members can enroll. If that window of time is missed, the individual must wait until the next Open Enrollment Period to get coverage, unless he or she experiences a qualifying life event that allows for enrollment through a Special Enrollment Period.

Entire Contract

The entirety of an insurance contract includes the policy, itself, a copy of the original application, and any attached written riders to the original policy.

Utilization Management

The evaluating, monitoring and planning of health care services by insurers to ensure that appropriate and cost-effective healthcare is 'utilized' by hospitals, outpatient care facilities and physicians. In an effort to avoid the high cost of inpatient hospitalization, cost-saving services such as preventive care, hospital outpatient benefits and alternatives to hospital services are utilized to provide the most appropriate care necessary. To determine appropriated care, a Utilization Review is conducted by a registered nurse or specialist employed by the insurer prior to, during and after medical services are rendered to the insured.

Modified Adjusted Gross Income (MAGI)

The figure used to determine eligibility for lower costs in the Marketplace and for Medicaid and CHIP. Generally, modified adjusted gross income is the adjusted gross income plus any tax-exempt Social Security, interest, or foreign income.

Initial Enrollment Period (IEP)

The first opportunity for a qualified individual to enroll into Medicare Parts A and B. Three months before an individual reaches age 65, he or she enters into this 'initial' period, and as long as the individual is eligible for Social Security benefits or Railroad Retirement benefits, he or she may sign up for Medicare Parts A and B. More specifically, this initial enrollment period provides an eligible individual with a 7 month period in which to enroll into Medicare, beginning 3 months before turning age 65, and lasting up to the 7th month limit, which includes the 3 months after turning age 65 (in addition to the individual's actual birth month).

Chronic Physical Illness

The inability of two or more of an individual's daily activities for a period of at least 90 days, such as feeding, toileting, bathing dressing and mobility.

Stage 1 Probationary Period

The initial stage of DI coverage which begins on the DI policy's effective date, and often lasts for 15 to 30 days. This period is established to prevent preexisting conditions that might require immediate benefits, and therefore, no benefits are payable during this period. This period applies to sickness, but does not apply to injuries that result from an accident.

Proof of Loss

The insured claimant has 90 days in which he or she is required to submit a documented proof of loss. In an extenuating situation, if 90 days is not realistic to submit for the claimant, they are allowed a maximum of one (1) year to submit proof of loss and still be accepted by the insurer. Health Insurance As prescribed by the National Association of Insurance Commissioners, a claimant must provide proof of disability within 90 days of loss, or if due to extenuating circumstances, at the latest, within 1 year.

Notice of Claim

The insured is required to provide written Notification of Claim to the insurer within a reasonable period of time, usually 20 days. As with health insurance, in a DI insurance policy, a claimant has the same 20 days in which to submit notice of a DI claim. In addition, most insurers require an insured to submit a 'Notice of Continued Disability,' usually every 6 months during the disability period, as well.

Claims Forms

The insurer is required to furnish 'claims forms' to the insured within 15 days from the time the insurer was notified of a claim. If the insurer fails to furnish claims forms within 15 days, the insured can submit a 'proof of loss' in any form, explaining the occurrence and extent of loss for which the claim is submitted. It is always the responsibility of the insured to clearly communicate to the insurance company, even when the company fails to provide Claims Forms.

Compulsory States

The majority of the states require all employers within each state to provide workers' compensation insurance for their employees.

Actuarial Value

The percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70%, on average, the insured would be responsible for 30% of the costs of all covered benefits. However, the insured could be responsible for a higher or lower percentage of the total costs of covered services for the year, depending on the insured's actual health care needs and the terms of his or her insurance policy. A fifth tier, titled 'Catastrophic,' pays less than 60% of the total average cost of care on average and are only available to individual under age 30 or who have a received a 'hardship' exemption. Hardships are life situations (such as being homeless, facing eviction, bankruptcy, having received a shut-off notice from a utility company, have experienced domestic violence, to name a few) that keep an individual from getting health insurance and are received, when applied for, through the Marketplace.

Stage 3 Benefit Period

The period of time in which DI benefits are payable to the insured. Benefit periods are classified as either 'short-term' or 'long-term.' Benefit amounts are paid to the insured as a percentage of actual pre-disability income, and payment amounts are calculated based on the Current Income Level of the insured at the time of policy issuance.

Reimbursement Approach

The practice of a policyholder seeking medical treatment from a health care provider he or she prefers and then submitting the expenses to the insurance company for reimbursement. This is the basis of how 'commercial insurers' operate.

Cancellable Policies

The renewable provision in a cancellable policy allows an insurance company to not only increase premiums at specified intervals but also to terminate the policy at will as long as they provide the insured with written notification and refund any advance premiums.

Fiduciary Responsibility

The responsibility of an agent to perform in the interest of the insured, as well as the company. Maintaining good communication throughout the industry will help an agent keep abreast on the newest laws and regulations. Knowledge and compliance with state and federal law is required as well as an ethical business practice, focusing on the consumer's needs.

Secondary Insurer (Excess)

The secondary, or 'excess' insurer provides coverage to the insured second, in the event that the insured's medical expenses exceeded his or her primary insurer's policy limits. The primary insurer pays the claim as if no other coverage existed, and the secondary insurer pays the remaining balance of the claim, if necessary, within its policy maximums. Child dependents are primarily covered under the parent whose birthday comes first in the calendar year or, if divorced, the health plan associated with the parent who has primary custody over the child.

Non-Cancellable Policies

These policies can never be terminated nor can premiums ever increase. Only upon an insured reaching a certain age (65) will the policy cancel.

Lifetime Extension Rider

This added rider enables an insured's DI benefit period to extend beyond the normal benefit period (up to age 65) to the lifetime of the insured.

Time Limit on Certain Defenses

This mandatory provision protects a health policy from being contestable after a specific period of time (usually 2 years, but in some states 3 years). However, unlike life insurance, if fraudulent statements are made on a health insurance application, the contract can be contestable at any time unless the policy is guaranteed renewable. In addition, any pre-existing conditions discovered after this period ends, other than those specifically stated in the policy, cannot be contested by the insurer.

Travel Accident Insurance (Accident Only)

This type of limited coverage can be purchased by individuals while traveling on commercial transportation such as an airplane, train, or cruise ship and are paid for through an employer group AD&D policy as an added benefit and is limited to business related use. Common at airports and for cruise lines, individual, one-time temporary travel insurance is also available to cover accidents while on an airline flight or cruise ship.

Return of Premium Rider

Though not common as the waiver of premium rider, some insurers offer an insured the ability to reclaim a percentage of his or her premium paid into the policy, minus any disability claims, in the event of a total disability.

Credit Unions

Two or more credit unions can group together and form a trust for the purpose of providing health insurance for members of each participating credit union. Similar in structure to other group trusts, credit union trusts are managed by trustees who serve as the master policyholder of the group plan, issuing certificates of insurance to credit union members. All members of participating credit unions, or all of any class of members, are eligible for group health coverage under the trust, which serves the purpose of benefiting members of the credit union, not the trust's organizers. Policy premiums are paid by the trust, which is funded by premiums paid by each member covered under the group plan.

Common Health Policy Exclusions

Typical exclusions all insurers follow include acts of war, self-inflicted injuries (suicide), aviation, military services, or overseas travel (coverage temporarily stops while in military service or overseas, and resumes when discharged back to the U.S.

Workers' Compensation

U.S. labor laws require all businesses to either pay for their employee's medical care, or provide insurance to cover such costs for any work-related medical expenses that occur while working due to a work-related accident. Workers' compensation is the type of insurance purchased by a business to cover such work-related medical expenses. Coverage only applies to job-related illness, injury or disability that occurs while working, but does not provide for such illness, injury or disability claims that occur outside of one's employment.

Part B Premium

Unlike Part A, regardless of the number of credits earned through Social Security, the Part B monthly premium, referred to as the Standard Monthly Premium, is $121.80. High income individuals are assessed higher monthly premiums. Determined by one's modified adjusted gross income (MAGI), married, filing jointly couples pay a higher Part B premium if their MAGI is greater than $170,000. Individuals filing taxes using a different status with a MAGI greater than $85,000 must also pay a higher Part B premium.

Flat Deductible

Used in a comprehensive major medical plan, a flat deductible is a fixed annual amount that must be satisfied before an insurance company will begin to provide any benefits, except as prescribed in the policy regarding doctor's visits or generic prescription coverage. In comparison to a corridor deductible that is only payable after basic benefits are first paid and exhausted by the insurance company, a flat deductible requires payment by the policyholder before any benefits are payable.

Corridor Deductible

Used in a supplementary major medical policy, a corridor deductible works in conjunction with a basic medical expense policy by 'bridging' both policies together. A policyholder's initial medical expenses, prior to payment of the corridor deductible, are covered 100% by the insurance company on a 'first-dollar' basis through the policyholder's basic medical expense policy. After the basic policy's benefits are exhausted, the policyholder then pays the full 'corridor' deductible amount for any expenses exceeding the coverage provided by the basic policy. The policyholder is responsible for paying 100% of the policy's stated corridor deductible amount. Any remaining or additional medical expenses incurred by the policyholder beyond the corridor deductible for the remainder of the calendar year are shared through the policy's stated coinsurance percentage between the insurer and policyholder.

Routine Dental Care (Preventive Care)

Usually covered 100% and includes routine visits and exams, fluoride treatments, x-rays, exams and diagnosis, local anesthetics, and teeth cleanings (usually every 6 months).

Non-Routine Dental Care

Usually requires meeting a dental deductible as well as paying a percentage of coinsurance before being covered as a percentage of the reasonable and customary charges. Repairing or restoring dental work, oral surgery, endodontics, periodontics, prosthodontics, oral pathology, and orthodontics (braces) are all non-routine procedures and fall under an annual maximum benefit of usually $1,000-1,500. Separate deductibles and limited benefit amounts are common with orthodontics as well. It is important to note that pediatric dental benefits are mandatory.

Multiple Employer Welfare Arrangements (MEWAs)

Utilized by two or more employers of similar professions or trades (but not associated through a collective bargaining agreement) who group together and form a type of multiple employer trust or other arrangement in order to provide health benefits to participating employers. In comparison to a typical multiple employer trust in which several small employers group together to purchase insurance at a lower rate as a result of the increased size of the group, MEWAs are often self-insured or partially insured arrangements. Although insurance is sometimes utilized, most MEWAs provided non-insured funds designated to pay employee claims instead of purchasing insurance through an insurer. As a result, MEWAs were often the subject of mismanagement and fraud in the past, prompting both state and federal regulators to place strict requirements on MEWAs under which to operate to ensure compliance with regulation under both ERISA and state insurance laws. Although it is important to understand such arrangements, MEWAs have become obsolete in many states and only few such arrangements currently exist.

Coordination of Benefits

When an individual is insured under more than one health policy, including both group and individual health insurance, total benefits cannot exceed the total medical expenses or loss of wages.

Supplementary Major Medical

When basic medical expense benefits are unable to provide complete coverage for a medical cost, supplementary major medical insurance can be used to absorb the additional costs.

5 Levels of Appeals

When filing an appeal, an enrollee can self-file or appoint a representative to help with the appeals process. A representative can be a family member, friend, attorney, doctor or anyone else chosen by the enrollee. Once chosen, an appeal against a medicare decision or enrollee expense is accomplished through 5 levels of appeals Level 1: Redetermination by the company that handles claims for Medicare Level 2: Reconsideration by a Qualified Independent Contractor (QIC) Level 3: Hearing before an Administrative Law Judge (ALJ) Level 4: Review by the Medicare Appeals Council (Appeals Council) Level 5: Judicial review by a federal district court If an enrollee disagrees with the decision made at any level of the process, he or she can proceed to the next appeal level. At each level, the enrollee is provided instructions in the decision letter on how to move to the next level of appeal. Appeal requests must be in writing and filed within 60, 120 or 180 days, depending on the current level of appeal.

Daily Benefit Limits

Whether fixed or expense-incurred, payments provided by an LTC policy are limited to a daily maximum. Expenses that exceed policy maximums are the responsibility of the insured. Determining the correct daily maximum benefit level is commonly based on the average LTC costs within the geographic area of the insured. While most states mandate a minimum daily benefit amount, daily maximum levels coincide with the amount of premium paid by the policyholder.

24-Hour Coverage vs. Limited (At-Work) Coverage

While Workers' Compensation plans only provide benefits to individuals for disabilities occurring while legally on the 'clock,' DI policies generally provide for 24-hour coverage, regardless of whether the disability is work related or not.

Coordination of DI and Workers' Compensation Benefits

Workers' Compensation always pays for any occupational claims first, before coverage begins from a private DI insurance policy.

Notification statement

Written eligibility notification given to employees (and spouse or other dependents) by the employer when the group plan becomes eligible for COBRA or when a qualifying event occurs. A 60-day period is allowed to elect COBRA coverage, after which the employee is no longer eligible.

Insuring Clause

Written into all health insurance policies, the insuring clause states that an insurance company will honor its obligation to pay benefits. It also describes the scope of coverage, provides any required definitions, and sets forth the conditions under which benefits will be paid.