Accident and Health Exam Ch 11-17

according to domicile

-a domestic insurer: formed under the laws of the state where it was authorized -foreign insurer: authorized in one state but its principle office is in another state -alien insurer: authorized in any state within the US but its principle office is in another country

types of losses and benefits -in addition to income losses from disability and hospital and medical expenses losses (mentioned in intro) other forms of losses involve:

-accidental death and dismemberment (AD&D) -dental expenses -long term care -home health care -accelerated death benefits -vision care and limited or special health exposures (cancer only policy)

insurer financial state and rating services

-all states regulate insurers in order to protect the insurance buying public, they do this by regularly examining (audit) to determine their financial stability -in addition there are numerous independent ratine services (WEISS RESEARCH-most popular)

EXCLUSIONS in disability income policy

-allow insurer to reduce the cost of product and protect it from adverse selection and catastrophic type loss 1. war, declared or undeclared 2. intentionally self inflicted injuries 3. aviation related unless commercial aircraft or pilot is involved which is already covered 4. military service since the insured is covered by government while in its service 5. as a result of engaging in any illegal occupation (robbing bank) some insurers may also include military suspension provision-limits or suspends disability income protection when the insured serves in the armed services

according to authorization

-authorized insurer=allowed to conduct insurance business in a particular state=admitted insurers, authorized company is issued a=certificate of authority -unauthorized insurer=non-admitted company, not permitted to conduct insurance operations in a particular state

methods of risk management available *whats most common way

-avoidance - retention (deductible) - sharing - transfer * most common=transfer risk to an insurers by purchasing an insurance policy

additional providers of health insurance

-blue cross/blue shield

BLUE CROSS/BLUE SHEIDL (BC/BS)-community or service organizations that provide health care to subscribers

-blue cross: covers hospital charges on a UCR basis including but not limited to :room and board, lab fees, diagnostic testing, anesthesia charges, physical therapy, chemotherapy, outpatient testing, skilled nursing care Blue shield: covers physicians fees -can be written on individual or group basis -both function on either a for profit or non profit basis depending upon state legislation -receive favorable tax treatment since many states exempt them from premium and income taxation -bc/bs enter into written agreement with physicians and hospitals to provide medical care and services to subscribers, through these contracts they agree to reimburse providers for medical services dispensed although they do set limits on the benefits provided -required to disseminate to the subscriber all pertinent info with regard to the operation and procedures involved in securing care -diff corporate structure compared to commercial health insurance with regard to delivery and favored tax status, the nature of benefits and type sod coverage offered are similar -premium rates for these plans like many other insurers vary upon benefit selected by the insured -primary types of benefits offered by BC/BS plans are similar such as basic and major medical and dental expense -limitations and exclusions among all health insurance companies are similar -those insured by BC/BS=subscriber, participant, member -sometimes referred to as a nonprofit hospital service corporation, BC/BS include an open enrollment period of at least 2 months -method by BC/BS reimbursed the health care provider generally results in an advantage compare to insurance companies -with regard to hospitalization: most plans pay a participation hospital an amount per day for every day a member is confined to a hospital no matter the actual charge , therefor BC/BS plan will make money on some confinements but lose money on others

UCR charge basis-usual, customary, reasonable

-blue cross=traditional service type of provide, pays covered amounts directly to hospital or physical on a usual customary and reasonable (UCR) basis -any remaining balance is billed to and paid by insured -refer to the standard of range fees that a physician charges

recurrent disability

-clause appears in a disability income insurance, utilized when a insured becomes totally disables for a time but appears to make a recovery, however in next couple months insured suffers a relapse/recurrence of the same injury and becomes totally disabled again, later disability would be considered a recurrence of the initial disability if it occurs within 6 months after the insured returned to work, no new eliminated period needs to be satisfied -recurrent provision aids insurer in determining how and when benefits are payable, if recurrence occurs within 6 month period and the insured goes back out on total disability benefits will continue as if the disability had not been interrupt, advantage of the insured since he or she will not have to satisfy another elimination period (p.224)

types of providers

-commercial insurance companies -health maintenance organizations -preferred provider organizations -blue cross and blue shield plans -employer-sponsered plans -government insurers

comprehensive major medical

-comprehensive major medical plan combines basic (first dollar) expenses and a major medical plan, it may be characterized as an initial or corridor deductible and provides the most comprehensive (broadest) health insurance coverage, covers virtually all types of medical services/ supplies, very similar to traditional major medical plan except that it provides first dollar coverage up to specified limit (basic expense) before deductible needs to be satisfied by insured, others may include benefits such as 90/10 instead of 80/20 exclusions: war, elective cosmetic surgery, routine dental care except if necessary from accident, routine physical exams, occupational injuries/disease covered by WC, intuitional self inflicted injury, care provided by govt, long term/custodial/convalescent (recovery) care, vision or hearing care, private duty nursing, some exclude coverage for mental illness, alcoholism, rug addition unless state mandates it, until pregnancy discrimination act many plans excluded maternity benefits as well

group disability insurance

-covers a 2 party contract between insurer and employer that provides coverage for covered employees -group insurance underwriting is not as strict as individual underwriting due to large number of covered persons -insurers may offer short term and long term disability programs -STD (short term plans) provide 13, 26, 52 weeks but generally no longer than 2 years -benefits are generally "co-terminus" which means that the benefits are paid for the same length of time whether the disability is due to an accident or illness, characterized by waiting periods and may be contributory or non contribute -LTD (long term plans) provide benefits for 2 years or longer and usually issues for 5, 10, years to age 65 in in some cases for life, cost is greater -any benefits payable by a STD or LTD will be offset or reduced by any benefits payable by other forms of insurance such as workers compensation or social security tax considerations- -LTD and STD are deductible to employer, premiums paid are not considered income to the employee but the benefits payable are income and ARE TAXED -when employer pays premium, insurers must deduced social security (FICA) for the employee for first 6 months of disability, if employEE pays premium there is no FICA deduction, employer paid disability coverage will have tax consequences for a covered employee coordination with or offsets from other providers-group disability benefits are generally coordinated with or decreed by disability income received from government plan

earned vs unearned premium vs total

-earned premium=amount an insurer is entitled to since it provided coverage for a specific period of time -unearned premium=amount that is returned to an insured by the insurer since it was paid and no coverage was provided total=earned+unearned

health insurance policies may be classified in several ways as well including:

-franchise and group plans -coverage offered by government or private (commercial) carriers -limited plans (those that cover one of few types of loss) -comprehensive plans (those that cover a broad range of medical services such as Blue Cross/Blue Shield)

employer group health insuranc

-group coverage is not underwritten in the same manner as individual policy, group health insurance criteria is far different than individual, insurers review the characteristics of a particular group as well as plan design factors, persistency factors and administrative capabilities, persistency important as far as keeping business on its book -groups that change insurers frequently=bad thing, insurer most often will lose money due to the initial acquisition expenses of underwriting, medical/physical exams not required since number of participants is greater -administrative cost of group underwriting is less than that of individual, size of group and its other characteristics such as what entity is responsible for the payments of the premium, will help determine cost, if plan is contributory where premiums are shared by employer and employee at least 75% of eligible employees must participate (share premium) if plan is non contributory 100% must participate -eligibility for group coverage, an legible employee must be in a covered classification, must satisfy any probationary period required and be actively working full time, rarely is coverage prodded for part time employees, the element that limits a part time workers eligibility is the # of hours he or she has works, not ones age, income or total length of time that the employee has worker, same benefits that are provided for an eligible employee are also available for employees dependents -rarely are benefits provided for dependent spud and children unless the employee is covered by the group plan, coverage generally provided as of the date that the employees coverage commences -group plan generally include a coordination of benefits provision-protects insurer against any duplications of coverage, prevents the covered employee from receiving more in benefits that in expenses incurred, prevents the covered employee from profiting as a result of being covered by more than one policy , this provision establishes the primacy of insurance policies, priorities are established for the payment of benefits under each policy, length of time coverage has been in force will sometimes determine primacy, if primacy cannot be established for some reason the plan having provided coverage for the longest period of time will be deemed primary -when coverage is changed, whether benefits are modified or reduced or an employer changes insurance companies, covered employees and deponents may be affected, coinsurance amounts and any deductible must be considered, purpose of carry over portions is to credit expenses incurred so as not to penalize the insured, no loss no gain provisions are also applicable which prevent covered employee from profiting -laws vary by state in regard to terminating group coverage-unless state law intervenes, coverage for an employee and dependents terminates on the date employment is terminated , other termination possibilities exist depending upon scenario 1. date on which an employee ceases to be eligible 2. date when master policy is surrendered/cancelled 3. date when benefits are exhausted 4. at end of a period for which an employee has made any required contribution , many medical expense plans provide extend benefits for a covered employee or dependent who is totally disabled at time of termination -coverage under group plans may be continued for certain employees and dependents even after employment is terminated, COBRA-provides for continuation of group coverage after an employee has been terminated or dies -group plans also provide conversion privilege, allows an employee whose employment is terminated to simply purchase an individual health insurance plan at a higher individual rate, poring insurability is generally not required is an employee who wishes to convert small employer medical expense insurance-specific regulations must be followed by insurers who market group health insurance plans to employers of small businesses, 50 or fewer employees, working on at least 50% of days during the previous calendar quarter, types of plans available to these small groups include health care center plans, HMO plans and smaller employer carrier plans (percentage participation by the employees is an important underwriting consideration) , renewability rates can be changed (carriers marking small employer health plans must offer at least 2 health plans to employer 1. basic health 2. standard plan)

marketing of health insurance

-health insurance is marketed through the independent agent system, the direct writer system or direct response system (Direct mail, junk mail) -all insurers must comply with state laws with regard to marketing and advertising -in most states, prepared sales presentations are considered to be a form of advertising and thus fall under state advertising law and guidelines -in addition most states require that an outline of coverage be provided to insured/policy wonders which summarizes the principle benefits, limitations and exclusions that are contained in the health insurance policy

POS-hybrid-POINT OF SERVICE PLAN 2 TYPES-EMPLOYER ADMINISTERED, MULTIPLE EMPLOYER TRUSTS/MULTIPLE EMPLOYER WELFARE ARRANGEMENTS (METS/MEWAS)

-hybrid arrangement that combines aspects of traditional HMO and a PPO-higher degree of managed care than a PPO -in this plan members elect whether to receive treatment within network or outside -subscribers are allied to use services of physicians within HMO or outside plan -if outside network doctor will be paid on fee to fee basis -the benefits may be reduced as similarly to PPO if you go out of network -some POS plans require that member inform POS they are going to seek outside network treatment so the PCP can convince them to seek treatment indie network 2 TYPES OF PLANS 1. EMPLOYER ADMINISTERED PLANS-coverage for employees and their dependents, may be self funded or self insured, employer retains a portion of the exposure by self insuring up to a specified limit (dollar amount) self insuring allows the employer to reduce cost of providing health care to employees, in order for self insurance to work 1. group or employees must be large enough 2. agreement must be in place for the insurer to cover the excess charges over and above the stop loss limit 3. must be a third party administrator (TPA) to manage the submission of claims TPA-person or organization that is hired to provide specific administrative services to group medical plans, the primary functions include receiving employee reports, keeping track of employee eligibility, preparing required reports, handling complaints, processing of claims for submission to insurance company DOES NOT communicate changes in benefits and coverage to the employee, that is responsibility of insurer 2. MULTIPLE EMPLOYER TRUSTS/MULTIPLE EMPLOYER WELFARE ARRANGEMENTS (METS/MEWAS) -MET- also known as multiple employer welfare arrangement (MEWA) has recently provided a vehicle in which to secure group insurance coverage to small businesses with common employments to band together to purchase more affordable group insurance due to medical care and insurance premiums is been difficult for small companies to afford need coverage -mets have provided small companies with a means with which to secure health coverage ex. several shoe makers can't afford cost of individual so BAND together to become a larger group and get MET coverage -METs may be sponsored by an insurance company and therefor are consider to be fully insured METS, some are administered by TPA and others may be uninsured or self funded-last type is not yet subject to state regulatory authority in many areas -may involved group sod employers who pool risks in order to self insure, some may be compromised of individuals or firms from similar industries, the employer is issued a joinder agreement which spells out the relationship between MET/MEQA and the replier and species the coverages to which employer has subscribed -MEWA, must subscribe and become a member of MEWA, its not necessary for employers to subscribe to all coverage offered by a MET or MEWA

cost containment

-insurers utilizing a combo of cost containment techniques in order to manage care more efficiently, several cost saving methods are available including: preventative care, wellness programs, physical exams, mammograms, pap smears -characteristics of preventative care: providing care on outpatient basis, identify medical problems early and encouraging early treatment, would NOT INCLUDE chemotherapy, hospice care, admitting a patent into hospital -hospital outpatient benefits such as pre admission drug testing help asses if hospital treatment is necessary, alternatives such as skilled nursing facilities, birthing centers, hospice centers and ambulatory surgical center have helped to reduce cost of health care -case management procedures such as pre admission certification, concurrent review, prospective review, ambulatory services and utilization review have also aided in lowering cost of care -pre admission certification requires an insured to be examined in an outpatient facility prior to admission for surgery (designed to reduce number of unneeded hospitalization and surgeries) -ambulatory facility=walk in, may be used to avoid admitting an ill to hospital -utilization review-case management, most preformed by a physical with expertise in the area being review, can be preformed on a prospective basis, concurrent basis, retrospective basis or combo of all three -prospective review-involves analyzing a case to determine type of treatment, ex. second surgical option, this is advantageous for an employer since it allows it to also contains costs (premiums) concurrent review-monitoring of a hospital stay by nurse to determine when they will be released, if they require home health care, or transfer to another facility (hospice) retrospective view-analysis for care, after following hospital discharge to determine if it was necessary and appropriate, purpose is not to deny class but to monitor trends regarding treatment so that future actions may be taken to reduce/eliminate unnecessary costs

in order for pure risk to be in insurable... (elements of insurable risk)

-it must involved a chance of loss that is MEASURABLE AND CALCULABLE -LAW OF LARGE #s must also apply -loss must be large enough to cause financial hardship (death) -loss must not be catastrophic (due to war) -cost for coverage (premium) must not be unreasonable -loss must be accidental

categories of dental treatment

-may be covered under medical or standalone plan -if included in medical plan coverage may be pervaded on a schedule or nonscheduled basis -if plan is an integrated on the deductible may be satisfied by either dental or medical expense incurred, integrated plan is one that inludes both dental and medical expenses -when dental is offered as option benefit the plan is considered non integrated -scheduled-posses individual categories of treatment with stated limits of coverage for each -non scheduled-pays benefits on a UCR basis -most dental plans provide coverage for diagnostic and preventive treatment and medical plans don't provide this -diagnostic and preventative treatment: oral exams, x rays, teeth cleaning other categories of treatment: restorative/restoration beenfits-fillings, crowns, and other procedures that restore the natural function of teeth oral surgery-tooth extraction, additional surgical treatment of injuries, diseases or jaw defects endodontics-root canals or treatment for ideates of the dental pulp within teeth periodontics-gum disease prosthodontics-replacement of missing tooth or artificial devices such as bridgework or dentures orthodontics-corrective teeth devies, braces/retainers

government disability

-may be paid by social security (OASDHI) under federal government or through state government providing state sponsored benefits or workers compensation, workers compensation pays anywhere from 60-90% of employees salary if he or she is inured on the job

definitions of total disability

-most insurers today cover an insured in "his or her own occupation" this is a regular occupation in which the insured was engaged in when he or she applied for policy -additional definitions include "inability to engage in any occupation for which the insured is qualified by reason of education, training or experience" or "the inability to engage in any gainful occupation" which is basically a non occupational definition of disability -more liberal the definition the higher premium -some policies provide benefits for loss of time versus pure loss of income or income replacement -most disability insurers require that the disabled insured be under the care of a physician to verify proof of loss

A&H minimum standard for policie

-must contain outline of coverage, must include exclusions/limitations, referred to as disclosure form, form must include 1. name of carrier 2. description of policy 3. policy number 4. description of benefits 5. deductible, coinsurance and benefit amounts 6. free lock period 7. any exclusions, limitations, reductions -any exclusions, limitations, reductions must also appear in face( first page of policy) -if medical exam is required must be listed on ad -if an impairment ride is added an insured must sign a form stating that the rider has been explained to them by agent/insurer

marketing considerations-group plans

-must take into account state regulatory requirements when advertising and marketing group/any type of insurance plan, group insurance by burton beam-a group contract will generally insure individuals residing in more than one state, raises question as to which state possesses regulatory jurisdiction over the contract -under doctrine of comity-by which states recognize within their own territory, the state in which the group insurance is delivered to policy owner is the state of jurisdiction, group contract must only conform to the laws and regulations of the acceptable place of delivery (state of delivery), however jurisdiction could also be determined by state where policy owner is incorporated, the state where the greatest number of employees reside or the state where the policy owners principal or home office is located

according to ownership

-mutual company: owned by its policyholders, formed without capital stock that issues participating life insurance policies, policyholders are allowed to share in its surplus in any particular year by receiving a dividend -stock company: owned by stockholders, don't pay dividends -mutual and stock differ according to ownership

considerations in replacing health insurance - like life insurance whenever a producer recommends to a client that he or she should replace a health insurance policy with a new one several considerations must be weighted and provisions must be reviewed in order to make a sound decision whether or not to replace existing policy

-pre-existing conditions: health condition due to an accident/illness prior to effective date of health insurance contract, pre existing conditions waiting period-6-12 months, if condition is severe enough insurer may issue an impairment rider which will restrict coverage for the illness or in jury in question for a period of years for the life o the policy-allowed insurer to deny claim for health condition existing prior to coverage being provided under a new policy, reduces benefits or coverage for a limited period of time -many states say that insurers must reduce this eriod if the insured has prior creditable coverage (HIPAA) or provide credit to an applicant for a previously satisfied pre-existing condition -however, pre existing condition exclusions do not apply in the case of NEWBORNS, ADOPTED CHILDREN (UNDER 18), PREGNANCIES existing on the effective date of coverage -use of genetic info as pre existing condition is prohibited -waiting period: elimination period, common to most type of disability income insurance, similar to deductible, on each occasion that an insured becomes totally disabled a waiting period must be satisfied during which no monthly benefit is payable, longer waiting period=lower policy premium -probationary period: one time event which must be satisfied before health insurance policy's coverage becomes effective, accidents would be covered immediately but sickness/illness would not be covered until expiation of a one time 30 day period-ALLOWS insurer to deny small pre-existing claims -no loss/no gains provision: state laws that prevent a policy wonder from profiting from a purchase of insurance, purpose of policy is to indemnify person for loss (bring back to whole) -benefits, exclusions, limitations: health insurance policies include sections describing benefits covered and types of losses that are not covered, these areas must be in an outline of coverage provided to a policy owner underwriting requirements: function of underwriting department is to determine if a health insurance risk is eligible for coverage, sound underwriting will reduce danger of adverse selection producer composition limitations for intra-company replacement: regulators and insurers place compensation or commission limits on replacement of existing policies within the same insurer, normally the compensation paid to the producer for new policy may not exceed amount of renewal commission that he or she is entitled to with regard to the contract begin replaces, this regulation is intended to discourage or dissuade a producer from replacing policies simply to receive a new first year commission producer liability for errors and omissions: producers are exposed to liability for negligence in their duties as a producers, insurers produces E&O coverage in case they are sued by the insurance buying public due to negligence or incompetence of their producers, intentional acts by producers NOT covered gap in coverage: whenever a producer confines ac consumer to surrender one policy for another it is important for the producer to make sure the applicant is insurance according to the underwriting guidelines of the insurer issuing the policy, insurability should be proven before the current policy is surrendered or there may be a gap in coverage until new policy becomes effective

underwriting criteria group plans

-premiums determined by age, sex, occupation of group -also: past rating may be used what premium to charge on larger groups -group policies are generally issued with less less restrictive underwriting than individual risk, other criteria used: purchase of health insurance must be incidental to the formation of the group, 75% participation is required for contributory plans, 100% participating requirements for non-conributory plans to prevent discriminatory practices by an employer -employees may join group plan by enrolling at an allotted enrollment period, 30 day period during the year when new employees can elect coverage under a group plan -those who don't enroll during that period can receive coverage as a late enrollee

HMO

-prepaid group practice plan originally designed to reduce the high cost of medical care and services, generally a cored member (enrollee/subscriber) must go to the hmo facility to receive treatment , can only seek treatment from names who appear on HMOs list of doctors regular medical services: -covers regular medical services for injuries/illnesses, additional services inlude:mental, nervous, emotional disorders, alchoholism/drug treatment, pregnancy/infacnt care, cardiac rehab, cytological screening mammogram, nursing care, outpatient treatment, lab fees, speech, physical and occupational therapy, prenatal/post natal care -DOES NOT COVER ADMIN EXPENSES and don't provide chiropractic care required coverage: -must provide coverage for dependents including occupational, physical and speech therapy, physiological counseling, dependent children are covered from birth, must provide continuation of group coverage if a covered member is laid off additional hmo reglations: 1. hmos may disclose patient info to law enforcement authorities if reason to believe insured is committing fraud 2. hmos must cover bone marrow transplants, glucose treatment, hospice related care for a person during his or her final six months

premium collection and reveres

-producers generally collect premiums from the insured at time of application -all future premiums are billed to insured by insurer -insureds who cannot afford premiums may use a premium financing organization/similar to installment loan -reserves of an insurer are funds set aside to pay future claims

additional legal principles regarding the utmost good faith of an applicant/insured for insurance coverage include but are not limited to:

-representations= statements made by applicant of reinsurance recorded on application that are true -misrepresentations=a false statement made by an applicant, don't affect coverage unless false statement is made about health status (ex. if you mis state your address your fine), if you lie about health status=material misrepresentation ex. if you say you haven't been sick in past 5 years and you have been really sick 2 times that is a material misrepresentation, if policy is issued and insurer later learns of this material misrepresentation it will void the policy warranty=a representation made by the application that is GUARANTEED TO BE ABSOLUTELY TRUE ex. if a bank keeps getting robbed the insurer tells them they have to gets guard, in order to receive coverage bank warranties (guarantees in writing) that they will get a guard and will comply if they don't and get robbed again insurer can technically deny claim concealment=failure to disclose material facts, an insured can't withhold any material facts that he should realize the insurer would want to know, concealment is fraudulent in nature and is grounds for voiding policy, if concealment is intentional and material insurer may void contract fraud=deliberate or intentional deceit (filing a false claim) waiter/estoppel=two legal principles that may prevent insurers form denying a claim waiver=voluntary surrendering of a right, deliberate, voluntary or intentional abandonment of a known right by the insurer ex. if someone died in war and the insurer says policy is void if you die in war but the person died protecting our country the company officer communication constitutes a waiver so the insurer cannot deny claim another example is if the insurer mistakenly accepts an incomplete application and issues a policy, they can't deny claim because they later realize it was incomplete, another example: if insurer fails to enforce a provision in the policy like if insurer finds out the insured lied about health and doesn't tell the insured within a reasonable amount of time that his policy is now void it has engaged into a "waiver by silence" estoppel=legal principle involves a broken promise, prohibits insurer from denying a claim due to specific actions by the insurer, one party makes a false representation (agent states insured is fully covered) another party relies on that statement (the insured) harm then results to the insured (if these three elements are present the insurer will be "estopped" or prevented from denying the claim)

producer responsibilities

-required to act in a fiduciary capacity when collecting premiums/dealing with public posses fiduciary responsibility when engaging in insurance transactions -possesses duty to act honestly/represent insurer faithful -producer must account for all funds collected from a consumer -producer must strive to increase their knowledge-most states have continuing education laws to ensure that producer continually increases his or her knowledge for benefit of the consumer -if a producer makes an unintentional error or honest mistake=error and omission (E+O insurance) purchased to cover the malpractice or negligence of producers A producer possesses a fiduciary responsibility to the insurer with which he or she places business, the staff with which he or she interacts and the clients that he or she represents. (1036) (insurance client, insurance agent personnel, insurer) NOT insurance commissioner

occupational vs non-occupational policies GROUP=NON OCCUPATIONAL INDIVIDUAL DISABILITY INCOME=OCCUPATIONAL

-some policies do not provide coverage if the insured will also collect from workers compensation or other social insurance plans, this type of disability income contract is called non-occupational -group disability insurance is an example of non occupational coverage, if policy pays a monthly income in addition to any benefits received by workers compensation or other social insurance plans, it is referred to as an occupation policy -example of occupational plans=individual disability income policy -many people have both occupational and non occupational disability coverage, difficult to determine if injury/illness is work related -group policies (non occupational) provide limited at work coverage since anything collected from workers compensation insurance offsets benefits provided by group disability policy-gaps in coverage may exist -some insurerers now offer 24 hour coverage policies, combine occupational and non occupational with medical expense benefits in a single contract -disability benefits are provided for all of an employees injury or illness's whether work related or not while medical benefits are provided ONLY for work related -disability protection is provided on 24 hour basis whereas medical is occupational only

prepaid premium

-some policies issued by commercial insurers function on a reimbursement basis and require prepaid premium (prepaid financing) -an insured is paid directly or reimbursed by the insurer after the submission of a claim form -prepaid plan=one where health care providers are paid for medical services in advance, whether or not any are provided -amount paid to providers is based upon projected annual cost determined by provider

reinsurance

-the transfer of risk from one insurance company to another (2 kinds, facultative and automatic) -helps insurer avoid catastrophic losses -in reinsurance transaction the insurer seeking reinsurance is known as the ceding insurers, the insurer assuming risk is known as reinsurer -ceding insurer's risk=net retention (net line) -transferring risk to the reinsurer is called "ceding" while the risk itself is referred to ask "cession" -example: assume main mutual write property insurance, win mutual is a small insurer and can't afford to cover any risk for more than 1 million, if an applicant seeks coverage for 5 million main mutual will retain coverage up to its line limit (1 million) and will cede the excess 4 million of protection to richmond reinsurance company, the main mutual can continue to provide protection for its client but it does not assume the entire risk, reinsurance defined as=the transfer of risk from one insurance company to another, two types of reinsurance 1. facultative-risk considered individually by both parties (ceding company and reinsurer), the ceding insurer may submit the risk to the reinsurer and the latter may either accept or reject it on a case by case basis 2. automatic-treaty reinsurance agreement, the reinsurer agrees in advance to automatically accept or assume a portion of risk written by the ceding insurer, covertly the insurers agreed to "cede" a portion of the risk automatically by the reinsurer other kinds: -quota share-involves a ceding insurers agreeing to pay a reinsurer a specific percentage of the premium collected if the reinsurer agrees to pay the same percentage of any loss that occurs

adverse selection

-this concept is paramount of a health insurer -involve the danger to which an insurer is exposed when approving more bad risks that good ones or tendency of poorer risks seeking insurance -sound and competent underwriting may reduce the chance for adverse selection -all insurers attempt to avoid adverse selection by thoroughly underwriting all individual risks submitted -policy provisions attempt to reduce adverse selection after underwriting such as (suicide clause, incontestable clause, pre-existing condition limitation/provision, war/aviation/intentionally self inflicted injury exclusions also assist in avoiding adverse selection)

PPO-PREFERRED PROVIDER ORGANIZATIONS

-very similar to HMO and different in others -PPO=organization generally administered by a third party (TPA) which enters into a contractual arrangement with doctors or hospitals in order to secure medical covered for its insureds -PPO is not traditional comprehensive health care provider -the provider=physical or hospital providing medical services -physicians paid fee for fee -covered insureds may choose any PCP they desire to treatment -the provider offers to discount medical service fees while organization promise to increase patient volume -objective of PPO-channel patients to providers that discount medical services -to entice more members may offer concessions like lower deductibles or coinsurance provisions -PPO's provide health care through its network also allow members to seek treatment out of network if desired, this aspect of a pop functions on an indemnity basis (reimbursement) -range of services provide compared to comprehensive care like HMO -can function on open panel or closed panel basis -multiple option plans also available-generally sponsored by single provider who offers the employer a variety of plans-provide a choice of physicians and hospitals to the member as well as medical services as a reduced cost -PPO's may be run by BC/BS, by an insurance company, or as a result of an employee-employer relationship -new providers may be added to the plan if they agree to follow PPO standards -arrangement between individual physical and preferred provider is called a PPA-preferred prover arrangement-must be approved by division of department of insurance in any state -a member may seek treatment OUTSIDE A PPO NETWORK HOWEVER COVERAGE AND BENEFITS MAY BE REDUCED -many PPOS offer catastrophic health plans-covers essential health benefits but has really high deductible ,safety net coverage, premiums may be lower than traditional health insurance plan but deductibles are way higher-you must pay thousands of dollars out of pocket before you receive treatment

types of agent authority

1. actual or express authority: insurer is responsible for acts of its agents, this agreement specifies actual powers of the producer, generally in written form, producers/agents are allowed to: solicit appointments, select/reject risks, complete applications, collect premiums, submit applications/premiums to insurer, express authority is extended to a producer in an agency contract or agreement 2. implied authority: unwritten/not specifically identified in agreement-extensino of producers regular duties, any business that are usual and customary are implied ex. its implied that producer who solicits insurance is permitted to sign the application/can ask applicant questions regarding health history of proposed insurance 3. apparent authority-type of authority the insurance buying public perceives the producer possess-the public believes that the agent/producer possesses this form of authority

additional underwriting criteria

1. age of insured-older, higher premium 2. sex of insured-females charged more than males because they tend to seek medical treatment more 3. insured's height, weight, general build-build is consideration, overweight higher premium 4. insured's health history and health history of his/her family-genetic health problems will want to take a closer look 5. hobbies and personal habits-sky diver, bungee jumping, high risk activity, hobbies=avocations 6. insured's occupation-how hazardous your occupation is (private investigator) more susceptible to injury 7. insureds financial condition-financial trouble more likely to file false claims or fake an injury to collect benefits from disability income policy 8. insures personal activities 9. blood tests or lab fees

the following are considered dependents

1. an employees spouse who is not legally separated from the employee 2. unmarried or married dependent children up to a specified age 3. natural, adopted, step children up to age 26 as a result of the affordable care act

term interstate commerce means

1. commerce within district of columbia or any territory or possession of US 2. all commerce between DOC/US and any point outside thereof 3. all commerce between points within the same state through any place outside such state 4. all commerce over which the US has jurisdiction

manage care plans generally involve several basic characteristics including:

1. control access to providers-encourages or forces subscribers to use predetermined providers, utilized primary care physicians (PCP)who act as gatekeepers to determined the necessity of care 2. case management-involves reviewing of individual cases at all levels to determined type of treatment needed, monitoring ongoing care and determining the success of treatment provided 3. preventive care-attempts to prevent or detect medical conditions before symptoms appear 4. risk sharing-involves the plan and he providers sharing in the financial consequences of medical decisions (doctor gets a bonus for not ordering unnecessary tests) 5. quality care-plan will carefully select medical providers who are competent and experiences, allow an insurer or provider organization to exert influence over the deliver;use and costs of services in order to achieve the purpose of managed care which is to control health insurance costs and claim expenses

how to accomplish risk management (4)

1. detecting the potential loss exposure 2. selection a method or tool to reduce risk 3. executing a course of action 4. periodically reviewing the measures taken

primary forms of health insurance

1. disability income 2. medical expense insurance

types of insurers (3)

1. domicile 2. ownership 3. authorization

additional classifications of insurers

1. fraternal associations-benevolent societies which provide insurance only for their members (exempt from federal income and state taxes since operate on lodge system/due to charitable nature) 2. reciprocal-unincorperated organization all members insure one another, managed by an attorney-in-fact (manager) who attempts to secure additional subscribers 3. self insuring: method used where an individual os business assumes total risk of possible losses, not for profit un-incorperated associations consisting of 5 or more private/public employers who are engaged in the same association which has been in existence for less than 5 years, agree to pool their liabilities for workers compensation 4. risk retention groups-provide product liability coverage to businesses that make up the group 5. surplus lines-available to those who need protection but its not available through private or commercial carriers, non tradition insurance market, someone will seek this if they want to secure coverage for substandard or unusual risks, you can only apply for this if you have already been denied by standard insurers

the 12 uniform provisions

1. grace period-included in all policies, allow for payment of a premium, not lapse if premium is not paid by its due date, quarterly, semi annual or annual basis are 31 days, policies where premium paid monthly grace period is 10 days if premiums paid weekly grace period is 7 days 2. reinstatement-policyholder may reinstate health insurance coverage following a policy lapse as long as such action is requested of the insurer within 3 years of the date lapse, once reinstatement application is provided to insurers it has 45 days to inform the applicant whether or not the policy has been reinstated, if this happens policy will be reinstated automatically, reinstated policy will immediately cover accidents which occurs after the reinstatement date, sickness or illness will not be covered until 10 days after the policy is reinstated most reinstatement periods are 3 years, some states have 5 years 3. notice of claim-owner wonder must furnish the insurer with a notice of claim within 20 days after an illness or injury occurs 4. claim forms-once insurer receives notice of claim from policy owner it must send claim forms to policy owner within 15 days, if insurer does not send out claim forms the policy wonder may file an unfair claim settlement practice, the policy wonder is permitted to send in proof of loss in any reasonable form, a claim form = proof of loss form but nOT proof of loss, proof off loss is when someone died =90 days 5. proof of loss-once the policy owner suffers a loss he or she has 90 days to submit written proof of loss to the insurers which is verified by a physician or hospital, failure to send written proof will not invalidate claim as long as it is determined that the policy owner was unable to do so (coma) don't confuse "proof of loss" with "proof of loss form" 6. time limit on certain defenses-the insurer has 2 years from date of policy delivery to contest any info recorded on application, allows an insurance company to deny a claim because of concealment of material health info if discovered in first 2 years 7. entire contract-policy and any other attached forms such as rides, amendments or endorsements plus a copy of the original application constitutes the entire contract 8. legal action-no legal action can be brought against an insured (by insured) until 60 days after written proof of loss has been furnished to the insurer, any suit brought against the insurer by policy owner must be done within 3 years from date the proof os loss with furnished, advantageous of insurer and prevent legal action on the part of insured during the initial 60 days following the furnishing of written proof of loss 9. physical exam and autopsy-allows the insurer at its own expense the right to require a physical exam and autopsy of an insured prior to issuance of a policy or the payment of benefits 10. payment of claims- health insurance benefits must be payable to the insured, allows payment of benefits directly to a hospital or provider, if death benefit is provided under a health insurance policy (accidental death benefit) this provision provides for payment of benefits to a named beneficiary, no payments will be made to a creditor of the insured 11. change of beneficiary-policy owner may change a revocable beneficiary at any time at his or her discretion, if beneficiary is irrevocable policy owner cannot change it without permission of such beneficiary 12. time of payment of claims-requires that a claim be paid by the insurer once it receives the complete claim form, case of disability income claim policy benefits must be paid on a monthly basis within 30 days of receipt of the written proof

insurer marketing and distribution systems (4)

1. independent agency-own the renewals or expirations of the business, places business with an assortment of insurers 2. direct writers-employ captive agents that sell the products of the one individual direct writing insurer they represent, owns renewals or expirations 3. exclusive agency-made up of independent contractors who agree to market products of one exclusive insurer 4. direct mail-market through mail or media

sources of underwritten information (6)

1. insurance application-fact induing (name, address, etc), producer must inform applicant of the notice of information practices such as the fair credit reporting act, signed by both producer and applicant, any changes made to application before underwriting must be initialed by applicant as well, initial premium should be summated and collected along with application 2. producer or agents report-locaed in the application, any addition info at his or her disposal with regard to applicant, any other info that does not appear on a previous part of application 3. physical or medical examination-underwriter will determine that because of questionable health applicant needs to provide addition medical information in order to make final decision, underwriter will request that the applicant submit to a physical or medical exam, medical questionnaires, lab test, blood tests and genetic testing may also be used to acquire more info, in most states insurers are prohibited form using genetic information with regard to underwriting 4. attending physician statement (APS)-when underwriter desires additional health info they can request an APS 5. consumer report-consumer or investigative inspection report may be requested by underwriter which will provide additional info regarding the applicant, if consumer report is completed applicant is permitted to request a person interview to view findings in report 6. medical information bureau reports-MIB-clearinghouse of medical information, most insurers subscribe to this provider of information, maintains computer files describing physical condition of applicants who have previously applied for health insurance with subscribing insurers, insurer can compared the health insurance application info of an application with that same applicants health history, MIB does not include info from the applicants person physician, it ONLY includes info from previous health insurance applications, MIB info is confidential and only available to member subscribers, producer must inform applicants at time of application that a MIB may be requested by the insurers it it is so desired, primary purpose of MIB is to allow an insurers to avoid high risk applicants

provisions affecting cost of medical insurance (4 elements)

1. maximum benefit selected 2. deductibles: most policies include initial deductible, amount of the covered loss that must first be absorbed by the insured before other policy benefits are paid, helps reduce medical costs (initial deductibles, calendar year deductibles, individual/family deductibles, corridor deductibles) primary goal is to eliminate smaller claims bc covered by deductible 3. coinsurance-requires insured to share in a portion of the loss after deductible, most 80/20, insurer will pay 80% after deductible and insured will pay 20%, once expenses go over $2500 insurer pays 100% of any further expenses (stop loss limit for this example=2500), purpose of coinsurance is to permit insurer to force insureds to share costs of medical care 4. stop loss limit (SLL)-total out of pocket expenses that an insured incurs as result of deductibles and coinsurance amount, once insured out of pocket expenses reach a certain specified dollar amount (stop loss limit) insurer will pay 100% of any further expenses (higher SLL, lower premium) (lower SLL-higher premium)

COMMISIONER MAY PLACE ON PROBATION, SUSPEND, REVOKE OR REFUSE TO ISSUE OR RENEW AN INSURANCE PRODUCERS LICENSE FOR ANY OF TEH FOLOWING ACTS (14)

1. providing incorrect, misleading, incomplete, or materially untrue info in a license application 2. violating any insurance laws or violating any regulation 3. obtaining or attempting to obtain license through misrepresentation or fraud 4. improperly withholding misappropriating or converting any moneys or properties received in the course of doing insurance (larceny) 5. intentionally misrepresenting the terms of an actual or proposed insurance contract 6. having been convinced of a elony or being prohibited person, a person who has been convicted of a felony may receive a license if they get written permission from an authorized representative of the insurance department such as the commissioner 7. having admitted or been found to have committed any insurance unfair trade practice 8. using fraudulent, coercive, dishonest practices, demonstrating incompetence or financial responsibility in the conduct of insurance business 9. having an insurance license or its equivalent denied, suspended or revoked by any other state 10. forging anthers name to an application for insurance 11. knowingly accepting insurance business from an individual who is not licensed 12. failing to comply with an administration or court order imposing a child support obligation 13. failing to pay state income tax or comply with any administration order directing payment of state income tax 14. cheating on a state pre licensing exam -license may appeal such action within 30 days of receiving notice, once commissioner received appeal and a request for a hearing he or she will hold hearing within 20 days penalties-licensee may have his or her license suspended or revoked, be subject to monetary penalty and be required to make restitution to the aggrieved party Larceny involves a producer misappropriating or commingling premiums collected with personal funds. This is an illegal activity and can result in a license suspension. (1033)

group medical expense insurance

2 party contract between insurer and employer -employee=certificate holder -group conversions functions, covered employee may convert to an individual plan when leaving job without proving insurability, 31 days

type of managed care plan

HMO -dont provide coverage for treatment outside of the managed care network since they required subscribers to utilize the serves of pre approved providers -consumers shy away from these organizations because of lack of choice of providers -however popularity of managed care plans increased since insurers and employers recognized that the escalating cost of health care must be controlled

HMO (logistics)

HMO is an alternative to traditional commercial health insurance -HMO's and commercial insurers finance health care (collect premiums) however an HMO also delivers health care, HMO objective is to reduce the cost of health care by providing services which are aimed at PREVENTING serious illness (preventive care services) (hospital services, emergency care, other basic health serves) -provides comprehensive health services in return for a stipulated prepaid premium -many HMOs own their own hospitals, different from traditional free for free approach (reimbursement basis) HMO's don't provide coverage on a reimbursement (indemnity basis) -HMO premiums are higher because of comprehensive nature of services -most HMOS are group practices plans=CLOSED PANEL, they employ member physicians who are paid a salary for services -individual practice plans/open panel allowed member physicians to provide their own office then they bill the HMO on fee basis for the subscribers treated, not employees of HMO -many HMOs require that members select a PCP as a gatekeeper, specialist types of sponsors for HMO's: -consumer groups -health care providers -insurance companies -BC/BS -labor unions plan designs: -comprehensive, including basic and supplemental benefits basic benefits: doctor serves, emergency services, inpatient and outpatient care, lab and other testing fees, additional preventative services all designed to reduce cost of medical care -supplemental or optional benefits include dental, vision, hem health, long term, prescription medicines, physical and speech therapy, mental health and alcohol related treatment and foot care -usual exclusions appearing in medical expense policies are also present in HMO coverage -PCP is generally selected by the covered subscriber/member/insured

medicare

Medicare consists of Part A--Hospital Insurance and Part B--Supplementary Medical Insurance. Part A is subject to a deductible and provides inpatient hospital care, home health care, skilled nursing care and hospice benefits. Part B is subject to coinsurance amounts and a deductible and covers outpatient benefits and physician's costs. (1138) Part A, Hospital Insurance, provides coverage for medical service conducted in the hospital or connected with hospital confinement. Some of the most common charges paid by Part A include room and board, X-rays (radiology), lab tests, meals, nursing services and inpatient drugs. (1162) Part A of Medicare provides four primary benefits including inpatient hospital confinement, skilled nursing care, home health care and hospice care for terminally ill persons. (1148) Medicare is comprised of Part A--Hospital Insurance and Part B--Supplementary Medical Insurance (SMI). Part A is subject to a deductible which increases each year. Part B is subject to a deductible and coinsurance amounts. (1140) Plan A includes what are known as "core" benefits in a Medicare Supplement policy. Insurance producers must offer these core benefits to a consumer when he or she is considering whether or not to purchase such a plan. The coverage provided by core benefits is standardized. (1089)

Twisting=unfair comparison of policy Misrepresentation=lying about info Defamation=comparing 2 states, financial condition of insurer Rebating=giving material good to coerce LARCENY=missapropriation of funds, commingling of funds unfair practice/boycott

Misrepresentation involves the producer misrepresenting the term, benefits and conditions of an insurance policy. Dividends cannot be guaranteed in a current policy year since it is unknown what surplus exists until the end of the year. Therefore, guaranteeing dividends is illegal. (1057) Anyone who makes maliciously false and derogatory statements with regard to the financial condition of an insurer has engaged in defamation. (1038) The unfair comparison of policies by a producer to induce a policy lapse is known as twisting. Twisting is a form of misrepresentation. (1054) An illegal sales practice where a producer induces a client to lapse or surrender a policy as a result of an unfair comparison of policies best describes: TWISTING Twisting is a type of misrepresentation that involves an illegal comparison of policies in order to induce the client to lapse a currently owned policy in order to purchase a new one. (1035) Rebating involves a producer offering something of value to a consumer in order to persuade him or her to purchase an insurance policy. The offer involves something that is not part of the contract. The most common type of rebating is when a producer offers a kickback of commissions to the consumer in return for his or her purchase. (1059) REBATING=KICK BACK COMISSION Larceny is an illegal marketing practice. Those who engage in such actions will experience a license revocation and/or a monetary penalty. (1032) Larceny involves the misappropriation of funds by a producer. Producers are not allowed to commingle personal funds with premiums collected nor are they permitted to convert premiums for personal use. Larceny is an illegal unfair sales practice and is punishable by license suspension, possible fines, and possible imprisonment. (1052) An illegal inducement occurs when a producer offers something of value to a consumer in order to "induce" or persuade them to purchase an insurance policy. This is also known as rebating. (1030) Rebating involves a producer offering something of value to a prospective insured or policyowner that is not specified in the contract. This offer is an illegal inducement to purchase insurance. (1037) An insurer or producer engaging in an illegal restraint of trade has engaged in the unfair practice of coercion or boycott. (1056) Impersonation, defamation and rebating are all forms of unfair sales practices. Disclosure is not an unfair practice but is required in certain instances. One form of disclosure is the requirement that producers supply a copy of a Buyer's Guide to a prospective policyowner when selling Medigap, long-term care or life insurance. (1045) False advertising is a common type of unfair sales practice. Others include rebating, twisting and other forms of misrepresentation, defamation, coercion and boycott, unfair discrimination and larceny. Engaging in such activities will result in license suspension, monetary fines and possible imprisonment. (1055) Boycott and coercion are unfair marketing practices. Those who engage in such activities are subject to license suspension and a possible monetary penalty. (1007)

what is the primary peril or hazard covered by a life insurance policy

PREMATURE DEATH

qualifications for licensure

PRODUCER- 1. must be mass resident, doesn't have to have resided here for a period of time prior to applying for license 2. must be 18 or older/full age 3. must pass state exam in lines of authority of which individual applied 4. must be deemed competent, honest, trustworthy 5. must pay appropriate license fee and submit any otter info -a producer candidate does not have to be sponsored or appointed by an insurer to take state exam NON RESIDENT- 1. must be currently licensed in good standing with her home state 2. must not have committed any act for which the license could be denied 3. must pay appropriate fee -a non resident producer who moves to commonwealth must submit application within 90 days of establishing legal residence to become a resident license resident business entity-corperation-must pay fee, must submit their articles of incorporation or organization along with the requested business entity name which includes the word insurance, must submit application, must designate a licensed producer ADVISER-individual, partnership, firm, corperation 1. must submit letter of interest describing background, resume work for past 10 years 2. must be 18 or older 3. must pass written exam 3. must never have had insurance revoked 4. must be honest, trustworthy, competent as indicated by three reference (three reputable citizens) of commonwealth

Federal law states that an insurance producer who engages in material misrepresentation that contributes to the liquidation or insolvency of an insurer, may be subject to a monetary penalty of up to:

Producers engaging in material misrepresentation that causes the financial impairment of an insurer are subject to fifteen years in federal prison and a monetary penalty of up to $50,000. (1074)

fair crediting report act

This federal act governs information collected by an insurer and individuals who may receive such information. The purpose is to make sure that information collected by underwriters is accurate, relevant, confidential and used for a legal purpose. (1073) -permits insurere to conduct consermer or other investigative reports on applicants for insurance -applicant can receive a copy of info from report especially if coverage was denied as result of thos info -if any info is wrong applicant has right to request a copy and a personal interview and see that material is corrected -law does not allow the insured to require that the insurer send him or her a copy of report -it allows them to request a copy, if insurer requests info from consumer reporting agency it must notify the insurance applicant of request asap (3 days)

insurance transactions

Transacting insurance does not include filing a claim. Any activity connected with the sale, marketing underwriting, issuance or delivery of a policy is considered "transacting" insurance. (1042) contract issuance, delivery of an insurance policy, collection of premiums NOT-filing of a claim

medigap

Which of the following is not a minimum standard requirement for Medigap insurance? Medigap plans must be guaranteed renewable for life Medigap plans must have a 30-day free-look Medigap plans must cover preexisting conditions after six months Medigap plans must have annual automatic adjustments to reflect changes in medicare deductibles and copayments

gate keeper - HMO's

a PCP-primary care physician-acts as a gate keeper, controls access to specialists, coordinates referrals and provides basic medical services

benefit rides-disability income policy-these can be added for an additional premium charge

additional monthly benefit (AMB/guaranteed insurability)-guarantees that the insured at various specified option dates in the future can purchase additional amounts of disability income without taking a medical exam, extra premium required, as long as the insureds income as increased over years, additional amounts may be purchased without proving insurability-also referred to as additional purchase option (APO) or the future increase option (FIO) accidental death and dismemberment (AD&D)-additional premium, least expensive type of death protection compared to individual policies such as whole life/term life, death benefit under AD&D is called=principal sum, severance benefit paid under AD&D is called=capital sum (usually 1/2 principal sum), sometimes referred to as multiple indemnity coverage, limited to accidental causes -dismemberment involves loss of a limb as result of accident, the loss of use of a limb (paralysis) also qualifies as dismemberment loss, loss of toe/finger does not qualify, some policies pay dismemberment benefits for presumptive types of disability such as loss of sight, hearing or speech -policy will usually pay the capital sum, EXAMPLE: if AD&D is purchased and the insured suffers loss of hearing policy would pay a capital sum of 10,000 (50% of principal), principal is paid when insured loses any combination of limbs, hand/foot, arm/foot, or both eyes , death must occur in 90 days, premiums=not tax deductible, benefits=not taxable, available up to age 70 COL-cost of living-designed to offset decline in purchasing power of monthly disability income as result of inflation, inflation determined by CPI (generally 5%) SIS-social insurance supplement: helps low or middle income persons who might possess gap in disability income coverage, will pay monthly benefit to insured if not receiving benefits under social security medical reimbursement benefit-also known as non disabling injury benefit-insurer will pay for medical expenses up to stated limit as long as the insured has suffered an injury rehab rider-developed based on insurers desire to take an insured off disability gradually and to assist him to become productive again, pays for reasonable expenses incurred for rehab, training programs, tuition, books return of premium-provides fund provision for insured, provide refunds at age 65 or ever 5-10 years ager policy is issued, cash surrender value rides=returns ALL premiums to policy owner at age 65 less any benefits received over the life of contract impairment rider-exclusion rider, insurer feels that it is accepting greater risk ex. if insured has suffered several left knee injuries, if such rider is attached, the producing agent does not have to provide coverage if total disability results from left knee injury

accident and health policy provisions

all accident and health insurance policies must contain 12 uniform provisions, states have tried to induce unity, 23 total provisions, 12 are mandatory, 11 are optional and may be included by an insurer if desires

HI-Hospital Insurance (part a)

all individuals who are 65 and older who are entitled to social security benefits are automatically eligible for medicare benefits part a and b, in addition some people under age 65 are eligible if they are suffering from certain disabilities or are in end stage renal disease (kidney failure or dialysis) -if someone is not receiving social security or railroad retirement benefits 3 months prior to turning age 65 or if a person required regular dialysis or kidney transplant one mUST APPLY FOR MEDICARE benefits -general enrollment period each year (jan 1-march 31) -coverage provided for part A include: 1. in patient services including prescription drugs 2. skills nursing care 3. home health care following hospital stay 4. hospice care for terminally ill seniors (prescription drugs-painkillers, other palliative or pain management benefits, bereavement counseling, daily need and inpatient respite care) -chemotherapy and other curative measures would NOT BE COVERED by hospice care, if patient decides to cancel hospice care and pursue chemotherapy he or she may return to regular medicare coverage, with no regard to pst sharing a per benefits period deductible (1288 in 2016) must also be satisfied by an eligible senior under hospital insurance -HI covers hospital care after a deductible is satisfied during the patients initial 60 days in hospital , from 61-90th day the patient pays a specified (coinsurance amount) per day while medicare pays remainder, the benefit period or "spell of illness" commences on the first day the insured is admitted to hospital (or extended stay facility)period ends when the insured has been discharged for 60 consecutive days -covered in patient expenses: room and board costs, x rays, lab tests, and ordinary nursing services , hospital costs are paid directly to hospital or health care provider by HI, each person is provided with a lifetime reserve of 60 days as well, these days are not renewable, once 60 are used there are none left -part a also provides up to 190 days during a seniors life time for physiatrics car provided in a hospital elgibility-anyone 65 and older who is eligible for social security benefits is covered under part a at no monthly cost, medicare pays for hospital care if patient meets the following criteria" 1. physician prescribes in patient hospital care for treatment of the illness or injury 2. patient requires the type of care that can only be provided in a hospital 3. hospital is participating in medicare 4. any review committee does not approve of stay -cost sharing of medical expense is provide which mean that the patent must absurd deductibles and coinsurance amounts -medicare covers the following in patient services : 1. bed and bored in a semi private room 2. the cost of a price room only if it is require for medical reasons 3. the services of the hospitals medical and social workers 4. use of regular hospital equipment, supplies, applicants such as oxygen tents, wheel chairs, crutches, casts, surgical dressings and splints 5. drugs and biologicals ordinarily furnished by hospital 6. operating room costs 7. blood transfusion after the first 3 pints 8. x rays and other radiology services 9. lab tests and rehab services such a physical, occupational and speech therapy 10. diagnostic or therapeutic items appliances (pacemaker) medicare DOES NOT PAY FOR: 1. services of physicians and surgeons 2. services of a private duty nurse or attendant 3. first 3 pints of blood 4. personal conveniences (telephones or tv) 5. supplies and applicants for use outside hospital unless continued use is required (pacemaker) 6. private rooms 7. private duty nurses -only type of skilled nursing care for which medicare pays it that type of care for rehab such as recovery time following a hospital discharge if approved by the at tenting physician -medicare will NOT PAY for custodial services such as activities of daily living (ADLS) bathing, eating, dressing, continence-may be covered by LTC policies -medicare is secondary when it comes to kidney disease / kidney failure, the individuals group medical expense plan is primary for specified length of time -HMOs providing benefits must meet geographical limit (within 7 miles of member) -coverage is available through medicare plus choice plans as well

signatures require on the application

all insurance applications require at least TWO signatures before the application is submitted to the home office for underwriting, producer must always sign application as well as future policy owner (applicant) -if third part ownership is present the proposed person to be insured must also sign -if required signatures do not appear on application underwriting department will return application to producer for completion

PPO

alternative to an HMO which covers medical services of members -basic differences between PPO and HMO is that covered member may choose his or her own physician under PPO -ppo contracts with doctors who will provide medical services, known as preferred provider arrangement PPA, these contracts must conform to state law -PPO must meet standards for quality of hleaht care, controlling health care costs, assuring reasonable levels of access to health care and proper utilization of health care services -PPO must maintain adequate records of all treatment and transactions

essential health benefits ACT

ambulatory patient services emergency services hospitalization coverage maternity and newborn care mental health and substance use disorder services prescription drugs rehab services and devices lab services preventive and wellness service and chronic disease management pediatric services

tax considerations major medical insurance

amount of benefits received by an insured from major medical/medical expense plan are NOT TAXABLE AS INCOME -if any reimbursements exceed actual expenses the excess received is taxed as income -PREMIUMS not deductible -with regard to partners and sole proprietors, since considered to be self employed, premiums aid are currently deductible

insurable interest

an individual may not purchase insurance covering another person unless he or she possesses an insurable interest in that person (financial or economic interest) -this rule was designed to prevent people from benefitting form another's illness -insurable interest MUST EXIST AT THE TIME OF APPLICATION -similar to concept of indemnity

UNFAIR OR DECEPTIVE INSURANCE PRACTICES

any licensee or insurer engaging in these activities will be subject to a monetary fine and license suspension or revocation after a hearing these illegal practice are also referred to as, unfair or deceptive acts of unfair methods of competition, punishment=penalty not more than 1000, commissioner may order the offender to make a restitution to insurance policy holder who suffered a loss, any action to recover on an insurance policy court may also aware punitive damages in addition to the amount of claim, not to exceed 25% of the claim misrepresentation-this unfair practice and other prohibited acts are identified, this type of unfair marketing practice involves a licensee or any insurance company officer/representative making false written/oral statements which misrepresent the terms, conditions, privileges, benefits provided by a policy, any licensee who includes or omits a statement tending to mislead or decide a member of the public has engaged in this unfair ace -misrepresentation can be an accident, when the lincesee KNOWS the statements are false the misrepresentation is generally material -ex, when a producer makes illegal or unfair comparison of policies in order to persuade a person to lapse or surrender his current insurance plan in force and purchase a new one from producers, this is called TWISTING, anyone engaging in misrepresentation of a material nature may be fine not more than 1,000 or receive a prison sentence of no more than 6 months, if twisting or other types of misrep cause person to lapse his current policy in force he or she may take action against the parties (insurer and producer) the aggrieved person has 2 years after new policy is secured to follow this course of action, all premiums paid will be returned and benefits of the lapsed contract willl be reinstated at the expense of the twisting insurer

insurable interest

applies to anyone who is purchasing health insurance on the life of another person, policy wonder must possess a direct economic or financial interest in the person being insured, insurable interest must exist WHEN at the time of application

types pf insurers

authorized-company that has been allowed to conduct insurance business in that state, also known as an admitted insurer or licensed insurer, receives a certificate of authority unauthorized user-not allowed to transact insuracence, non admitted insurer domestic-chartered and formed in the laws of state, its principal office is in this state as well, commissioner examines it at least once every 5 years to make sure they are solvent foreign-authorized in this state but chartered and principal office in another state alien-principal office located in another country stock-owned by stock hollers, issues non participating policies, do not pay dividend, surplus at years end is divided amount share holders mutual-owned by policy owners, issue participating policies which may permit policy holders to receive dividends mutual and stock differ according to owndership

classes of accident and health insurance coverage

basic hospital expense insurance-individual plan, basic medical expense plan, designed to pay or reimburse all or some of the cost of ROOM AND BOARD for a specified number of days (30, 60, 90, 120, 180) policy may pay $100 or $200 per day while the insured is confined to hospital -other covered medical expenses while hospital confined include: nursing care, x rays, in patent testing, ambulance charges, lab testing fees, medication administered in hospital, anesthesia, fees for the use of the operating room, prosthetic devices, hospital extra, other medicines, ancillary (miscellaneous) expenses limits of basic hospital expense insurance: generally writing on reimbursement basis-insured pays the hospital then submits plain to insurer, will pay "up to its coverage limit" as long as accident/illness occurs during policy period, if occurs prior to policy period will not be covered, some plans are written on an indemnity basis where amount per day is paid by the insurer directly to hospital "up to the stated limits" basic surgical expense coverage-cost of surgeons fee, an assistant surgeon, fees of an anesthesiologist and any postoperative expenses, these policies can function in 3 ways 1. schedule basis-($2000 for knee operation) with an itemized list of all surgical procedures covered and their assigned dollar limit, this benefit schedule means that a max dollar amount of coverage is provided in an "itemized list" for each surgical procedure 2. usual, customary and reasonable (UCR) basis-policy pays a benefit deemed to be the UCR charge for the geographical area where the procedure was preformed 3. relative value basis-pays benefits based on a point system assigned to each procedure, identifies dollar per point value (conversion factor) knee surgery=50 points and a policy paid $50 per point, benefit paid would be 50*50=$2500 physicians expense-provides benefits to cover a physicians fees for nonsurgical care in the hospital, doctors office, or in the home (House call), referred to as outpatient services, general include with either the hospital/surgical expense plan, usually not written alone, an amount per visit (i.e. $50) is usually paid for treatment of injury or illness comparison with other provider types-basic medical expense provide benefits in various ways -some provide fee for free service or reimbursement basis-provider (doctor) treats patient charges a fee and is reimbursed for services provided by the insurer (HMOS don't function no a reimbursement basis and offer coverage on a prepaid basis emphasizing preventive care) -some plans offer specified or limit coverage -others provide comprehensive coverage -in managed care of HMO's member/subscriber may have limited choice of providers versus medical plans allow for a choice of ANY provider -commercial insurers refer to their clients as insured -hmos, BC/BS refer to such individual as participants, members or subscribers -these policies include common limitations with regard to benefits similar to limitations found in major medical he alt insurance -exclusions appearing in these plans are also similar -these policies include provisions that permit an insured to control his or her cost of coverage as well as including a stop-loss limit, coinsurance, deductibles and other cost containment or cost saving methods -if insurer fails to provide an insured with claim forms the insured may file an unfair claim grievance with dept of insurance and send insurer a provider certified explanation of the medical procedures and treatment received

underwriting process

begins with field underwriting preformed by the producer, purpose of this involves producer recording answers to questions asked of an applicant that are recorder on application, this is when initial contact occurs with potential policy holder -it is extremely important that the producer disclose ALL information regarding the applicant and or the proposed insured to the insurers in order to properly underwrite the risk, each insurers must also conform with state and federal laws regarding the dissemination of an application or insureds private information according to consumer primary regulations

types of funding and administration

benefit funding methods as an alternative to conventional/traditional fully insured group health insurance policy, traditional form is characterized by an employer paying premiums and an insurer paying claims, employers looking for alternative in order to reduce cost of health insurance coverage and improve cash flow

mEDICARE SUPPLEMENTS/MEDIGAP

both sold by private or commercial insurers and other health care providers, purpose of which is to help fill any gaps in coverage under medicare, medigap policies provide accident and sickness coverage, cover medical expenses not covered by medicare -medigap is designed to help pay ones medicare cost sharing amounts (deductibles, coinsurance) -deductibles, coinsurance and excluded medical expenses are considered gaps in coverage -NAIC has established 12 regulated levels of coverage including plans A-L -best time to buy is during open enrollment period period of 6 months from the date you fist enroll in medicare part b and are 65 age or older one has there right to purchase medigap policy

disciplinary actions

cease and desist order-when commissioner believes that a licensee has or is engaging in any unfair sales he or she will issue a cease and desist order until a hearing can be held, if commissioner does find bad practice offender may be ordered to compensate the insurer or policy holder for any loss or damage suffered, anyone who violates this order may be fined up to 10,000 per violated and be subject to licensee suspension or revocation hearings-hearings concerning suspension or revocation or license are sufficient, whenever insurer is suspected of committing unfair trade practice commissioner will send a notice of hearing to the offending party, hearing shall not be less than 21 days do lowing notice probation, suspension, revocation, refusal to issue or renew- license may not be suspended until afar a hearing has been held in order to allow licensee to defend himself

COMPANY REGULATION

certificate of authority-comissioner must conduct an extensive exam determining that an insurer is financial sound (solvent) prior to issuing authority solvency-comissioner regulates an insurer for solvency he or she may also examine the affairs of any person engaged, comissioner is required to examine domestic insurers at least once every 5 years to ensure they are solvent -rates-massachusettes is a file and use state, this means that the insurer will file or submit proposed minimum rates toe be charged for specific plans to the commissioner and then may use them unless they are found by the state to be unfair, commissioner also sets rates used by auto insurers in this state policy forms-if commissioner does not send to the insurer a rejection of forms within 40 days after receiving them the insurer may use them, protects the public against the possibility of unfair provisions in the insurance contact examination of books and records-commisioner may examine books and record of insurers who are authorized currently and who wish to do business in this state, regulates an insurer for solvency producer appointments-to appoint a producer as its agent the appointing insurer shall file in a format approve by the commissioner a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted -if insurance producer is determined ineligible for appointment the commissioner shall notify the insurer within 5 DAYS of its determination, an insurer shall pay an appointment fee fore each insurance producer applied by the insurer termination of producer appointment-an insurer or authorized representative of that insurer that terminates the appointment, employment, contract, or other insurance business relationship with a producer shall notify the commissioner within 30 days following termination -within 15 days after making notification required by state law the insurer shall mail a copy of the notification to the producer at his or her known address The sharing of commissions is a legal activity if both producers are licensed in the same line of insurance as the insurance business being solicited. (1048)

OPTIONAL uniform health insurance provisions

change of occupation-allows for some toe of reduction when an insured changes job, more hazardous occupation policy premium will remain same but the MONTHLY income benefit will be reduced, less risky occupation switch the befit provided will remain constant and premium be reduced misstatement of age-if an insured misstates age, insurer will adjust benefits accordingly, insurer will pro rate the claim and pay what the premium would have purchased at the correct age other insurance in this insurer-only maximum benefit is payable, prevent insured from profiting if covered by 2 policies insurance with other insurer-expense incurred basis and does not notify the primary insurer the liability of the insurer is limited to its proportionate share of the expenses incurred, insurance with other insurer-rarely included, identical to previous provision except that it applies to benefits provided on an other than expense incurred basis relation of earnings to insurance-disabilty income policies, prevents over insurance since it protects an insurer against an insured purchasing more monthly benefit in relation to his or her monthly income, protects against moral hazards (filing a false claim), an individual whose disability benefits are greater than income do not posses much incentive to go back to work unpaid premiums-insurer may deduct any unpaid of owed premiums from the benefits payable by the policy cancellation-insurer has the right to terminate or cancel contract at any time with at least 5 days written notice to th ensured conformity with state statutes-modifies the policy to comply or conform with minumu state requirements illegal occupation-insurer can deny claim of the insured is injured during the commission of an illegal act or while engaged in any other felonious occupation intoxicants and narcotics- relives the insurance company of liability for losses if the insured was under the influence of non prescribed drugs or alcohol

types of HMOS (closed panel, open panel, open ended) LATTER=SECOND OPTION

closed panel: group practice plan, characterized by doctors who are directly contract with or employed by theHMO, subscriber is required to use the physicians who are employed by HMO open panel: individual practice association basis-offer more flexibility with regard to subscribers selecting physicians , many physicians provide services at their own office, they can treat any HMO subscriber and any other patient who are not HMO subscriber (non HMO subscribers are treated on fee to fee basis) open ended: up to 10% of medical services it provides may be delivered by physicals who are not affiliated nor formally contracted with the HMO

fee-for-fee service basis

commercial, health and casualty insurers provide health insurance coverage on a traditional fee-for-fee service basis-biking method for health services where a provider charges separately for each services rendered, most physicals, hospitals and clinics bill on this basis -commercial insurance company's fee for fee plans generally allowed an insured to choose health care from any qualified provider -HMOS, blue cross/blue shield or managed care this is not the case, there are limited choice of providers

advertisement of a and health insurance

commisioner regulates all advertisements but doesn't approve them all individually, this would take way to long, relevant advertising info: -advertising may not be misleading, testimonials must be genuine, may include statistical info but only if its accurate and relevant, insurers must include their trade name in all advertisements and appropriately identify themselves in such advertisements, must also keep a copy of all advertisements for at least 4 years

false advertising regulations

commissioner shall regulate all advertising in state with regard to the sale or marketing of insurance, annuities and endowments, advertising includes making, publishing, disseminating, circulating, placing at the disposal of the public any notices, circulars, direct mailers, othe tools which describe the benefits of a policy or the services provided by an insurer and its licenses -insurers are required by the state to keep a copy of all their advertisements for a period of FOUR YEARS advertisements include: 1. prepared sales talks 2. audio visual aids 3. radio and television announcements or ads 4. newspaper and magazine ads 5. circulars or flyers distributed by mail or in person 6. billboards, signs, and other like types of advertisements -examples: making false statements concerning the possible dividends or share or surplus previously paid or to be paid on any insurance policy, not fair to make statements since they are not authorized in all 50 states only one, comments such as these are defamatory, those responsible for such action may be charged with defamation defamation of insurer-any person make false or untrue statements regarding a competing insurer, any such comments or remarks will demand to be defamation, false statements regarding the financial condition or authority of a competing insurer are generally viewed as defamation boycott, coercion, intimidation-describued the unfair practice and states that no person may enter into any agreement to commit any act of boycott, coercion/intimidation which result to tends to result in the unreasonable restraint of or monopoly in the business of insurance false financial statements- knowingly, making, publishing, dissemination, circulating, delivering to any person or placing before the public any false material statement of fact as to the financial condition of any person or knowingly making any false entry of a matieral fact in any book, report or statement of any person is illegal and unfair and deceptive practice, no insurer or person i allowed to create false financial statements that may deceive the public failure to maintain complaint record-all insurers are required to maintain proper and adequate complain handling procedures for the benefit of public, failure to do so many result in monetary fine or license suspension, a complaint is any written communication primarily expressing a grievance, producers and adjusters must maintain any complains received for a period of 2 years with record of their disposition unfair discrimination-no insurer may discriminate unfairly in the assessment of premium rates, same class, color, creed, national origin, marital status unfair claims settlement practices-illustrations of unfair claim practices, if committed by insurer commissioner may suspend certificate of authority, any employees of the insurer who are responsible for unfair claim practice may be disciplined as well, some of more common types of unfair practices: 1. misrepresenting insurance policy provisions or pertinent facts concerning coverages provided 2. refusing to pay claims without conducting an equitable and fair investigating based on all available information 3. failing to effectuate a prompt, fair, equitable settlement of claims in which liability has become reasonably clear 4. failing to adopt/implement reasonable standards for the prompt investigate 5. failing to acknowledge and act reasonably and promptly upon communications with respect to claims 6. seeking to pay an insurance claim that is less than actual amount 7. failing to provide claim or proof of loss corms in timely fashion 8. forcing an insured to institute legal action to recover amounts 9. unfairly refusing to pay claims to making known to an insured that the insurer has a policy of contesting claims by going to arbitration which may induce the claimant to accept a lower amount to which he or she is entitled 10. failing to promptly provide a reasonable response to an insured with relation to facts or applicable law regarding denial of claim

legal purpose-contract law

contract must be in existence with the public interest in mind -may not be contrary to public policy, must be created with best interest of public in mind -organized crime "hit" contact is not valid or in best interest of public

claim settlement-computation of major medical loss

corridor deductible-must be satisfied after the insurer pays the bail expenses, falls between basic expenses and major medical coverage, must be satisfied by the insured once the base plan pays up to its specified amount, then the 80/20 amount may be applied -if john has $1000 coverage by plan and the policy includes 500 corridor and then 80/20 coinsurance amount, if john incurs $4000 expenses -insurer wil pay first $1000, then john will pay his $500 deductible then they will split the 2500 remaining 80/20

medical expense insurance

covers cost of medical care resulting from an accident or illness=provides for the payment or reimbursement of medical expenses incurred, generally includes: hospital expense coverage, surgical expense courage, physicians expense, prescription drugs, nursing care, diagnostic treatment, lab few, rehab, physical therapy and oner miscellaneous or ancillary medical related expenses -generally referred to as "health" insurance some plans provide basic benefits and others provide comprehensive coverage for all medical services provided as a result of illness/accident -benefits paid by policy are sent directly to provider (Physician) or institution (hospital) as a reimbursement of actual expenses incurred -can be purchased as individual or group (employer-sponsered) basis -individual or family member covered by these plans is referred to as an insured (vs hmo or ppo refers to covered persons as members/subscribers) -policies may be written on a reimbursement or indemnity basis, indemnity plan does not pay specifically for medical expenses rather is pays an insured a stated benefit identified in contract

other coverages and state mandates provisions

dependent child age limit=26 or 2 years after such persons last qualified as dependents, whichever comes first disabled adult children-if proof of incapacity recieved within 31 days continuation allowed

adult day care

designed for seniors who live at home but whose family members are not able to stay at home with them during the day since the primary care giver is absent to at work

social insurance

different from commercial or private insurance in that it is operate by the government in some capacity, is provided for those in society who may not be able to afford burdensome health costs on their own, therefore social insurance attempts to assure the members of society a minimum stands of living, social insurance is provided through social security (OASDHI) medicare ,medicaid, WC, other mediums, these mediums provide protection for senior citizens and other who are in special situations

health insurance

disability income-covers loss income, pays monthly income benefit to an insured when he or she cannot work due to disability medical expense-cover almost every expense connected with hospital and medical care long term care-pays a benefit to an insured when he or she is unable to preform activities of daily living due to a physical or cognitive impairment

disability income vs medical expense

disability income-replaces lost income as a result of illness or injury medical expense-provides for the payment or reimbursement of medical expense incurred *injury is covered by health insurance since it is caused by a covered peril known as an accident, also cover expenses incurred as a result of a sickness or illness

INJURY OR ACCIDENT VERSUS SICKNESS

disability policies provide benefits if the insured has suffered a disability caused by an accident or illness accident=fortuitous event that is unexpected and unintended and results in an injury, also referred to as accidental bodily injury -may be contrasted with accidental means, a more restrictive definition of an accident, which indicates that the cause and result must be accidental or no coverage is provided, example: if person anger hurls a tool across room and it bounces off wall and strikes that person and he is injured there would be no coverage according to definition of accidental means, the result is accidental but the cause (throwing the tool) is not, if an individual jumps of a bus the act of jumping is intentional even if actual injury was accidental -sickness or illness is also under disability income policy, if insured contracts a diease or other form of illness there will be coverage unless the illness is restricted by a pre-existing condition

PUBLIC ASSISTANCE PROGRAM

each state receives federal funds and combined with its own funds derived from tax revenues has been able to expand public assistance programs -medicaid provides medical care for: low income persons, person with limited assets, those with insuffiencet or low income, those receiving welfare benefits, and those in financial need who are blind, aged, disabled or under 21, to qualify applicants must have BOTH income and assets below certain limits -varies from state to state -medicaid covers: in patient hospital services, out patient hospital services, physician searches, lab and x ray services, home health care, rural health clinic, family planning services, nurse and mid wife services , prenatal care, necessary transportation

contract law-elements that must be present

elements that must be present in order for any contract to be legal and enforceable- 1. offer and acceptance (agreement) 2. consideration 3. competent paries 4. legal purpose

MAJOR medical insurance

evolved as result of increased expenses associated with medical procedures, treatment, care, designed to protect individual and family against catastrophic type losses: the hospital expense, surgical expense, physicians expense coverages previously described were the precursor of major medical insurance -provide a broad range of benefits under one policy since they cover hospital/surgical expense but with a greater ceiling of coverage , posses higher coverage limits -include initiate deductible-then insured and insurer pay coinsurance (80/20 basis) insurer pays larger to the two -provides "blanket" of coverage as well, usually expressed as a % of eligible expenses (80%) -will pay up to its stated limits -premiums are influenced by the provisions including deductible selected, coinsurance amount, maximum benefits or ceiling of protection selected and the stop loss limit selected by policy owner ceiling of protection-limit or ceiling protection 250,000 or 500,000, 1 million, policy will change whether policy limit is applied to accident or an illness (could apply to an accident or an illness or both) additional coverages-provide coverage for medical searches included in basic hospital expense, surgical expense, physicians expense, include coverage with common limitations including but not limited to: hospital room/board, extended care, home health care, hospice benefits for terminally ill, dental care, vision and hearing care, care for mental and nervous disorders, care for alcohol and substance abuse, pregnant and maternity coverage including costs of abortion, specific limitations for prescription drugs, blood tests, transfusions, artificial eyes/limbs, crutches, casts, splints, nurse midwife expense and wheelchair rentals exlusions-los caused by war, elective cosmetic surgery, routine dental care except if necessitated by an accident, routing physical exams, occupational injuries/disease covered by WC, intentional self inflicted injury, care provided in a govt sponsored medical facility, long term/cestodial/convalescent (recovering) rest car, vision or hearing care, private duty nursing, some medical expense and major medical plans exclude coverage for mental illness, alcoholism, drug addiction unless required to cover by state -passage of pregnancy discrimination act many plans exclude maternity benefits as well, this act requires that plans sponsored by employers with 15 or more members treat child birth, pregnancy and other related conditions the same as any other illness

federal regulations pertinent to insurance

fed regulation 18 USC 1033 and 1034 state that anyone who is engaged in business of insurance whose activities affect interstate commerce and knowingly with attempt to deceive make any false material statement are subject to monetary penalty and imprisonment -interstate commerce violation-$50,000 10 years in prison -material misrepresentation that jeopardizes the insurer (if insurers solvency is threatened)-15 years prison

MEDICARE

federal health insurance program comprise of 4 PARTS, govt sponsored program provides health care and other medical benefits for those age 65 and older and those eligible who are disabled, it is administered by OASDHI and funded or financed through payroll taxes paid through social security by employers, employees and self employed (sole proprietor) A. hospital insurance (HI) B. if elected covers supplementary medical insurance (SMI) C. and D are Medicare advantage and prescription drug plan, -Medicare generally does not pay for treatment outside the US

regulation of employer group plans

federal regulation has affected the establishment and character of group insurance, following regulations have influenced group insurance plans tremendously over past 2 decades: employee retirement income security act (ERISA)-purpose is to protect the interests of plan participants and beneficiaries in employment benefit plans, pension reform act, usually applies to pension plans, group insurance plans, employee welfare benefit plans, fiduciary responsibility and reporting and disclosure -fiduciary responsibility-fiduciary=a person or entity who exercises discretionary authority or control over a benefit plan, must show a high degree of trust and confidence when overseeing assets and can include a co-fiduciary, plan sponsor or plan trustee, fiduciary duties: act for elusive purposes of providing benefits to participants, defray reasonable expenses of administering the plan, diversity investment of plan to minimize risk or large loss, govern plan consistent with the rules and provisions of ERISA, any fiduciary that breaches these duties is personally liable for full amount of any loss reporting disclosure-ERISA requires that certain info concerning any employee benefit be made available by the plan administrator to the following 1. plan participants/beneficiaries 2. dept of labor 3. irs, info provided must include summary of material modifications, annual return, annual report, any terminal report and certain underlying documents, ERISA imposes severe monetary penalties for failure to comply with these reporting and disclosure requirements Age discrimination in employment act (ADEA)-applies to employers with 20 or more employees and affects employees age 40 and older, compulsory retirement not allowed, employee benefits must continue for older employees so that cost of providing benefits for such employees is no greater than the cost of providing them to younger employees, exception is employee that is 65 or older, must be offered coverage under group plan even though the cost may be greater, benefits cannot reduce for older employees due to increased cost to the employer, ADEA also applies to group disability and group medical expense coverage Civil rights act/pregnancy discrimination act-prengnacy discrimination act of 1978 was an amendment of civil rights act of 1964, law requires that women affected by pregnancy, childbirth or related medical conditions such as abortion be treated the same for employment related purposes as other persons who are not affected by these same conditions, if a women is pregnant and is unable to preform her employment duties she will be entitles to benefits as if she was suffering from an illness covered by the plan, it is not a requirement that pregnant women be in immediate danger in order to receive coverage for abortion procedures, pregnancy has to be treated like a disability since unable to preform work, this act applies to benefit plans both insured and self insured covering employers with 15 or more employees nondiscrimination rules-rules apply to employee benefit plans that provide retirement benefice, purpose is to deny favorable tax treatment to plans that do not provide equitable benefits to a large cross section of employees, if plan is designed primarily for a couple employees and not everyone firm will no receive tax favored benefits relationship with medicare-most employees and their dependents are eligible for medicare when they reach 65 group plans mud include a provision to prevent any duplication of benefits, medicare is often the second payer to employer sponsored medical expense coverage, group plan=primary, medicare=secondary, if for some reason group plan didn't provide coverage medicare would be primary health insurance portability and accountability act (HIPAA)-this legislation has expanded health insurance coverage regulation, purpose was to help ensure that individuals would not lose medical courage or be subject to a new pre-existing condition period if they changed or lost their job, ithe act hopes to increase access and portability of health insurance and to reduce or eliminate pre existing condition exclusions or waiting periods when coverage is sought under a new plan, important provisions of HIPAA 1. increased availability of medical expense coverage by placing limitations on what can be included in pre existing conditions 2. increased portability of medical expense coverage 3. expansion of eligibility for COBRA benefits 4. favorable tax treatment with regard to certain health insurance plans (LTC insurance), HIPAA applies to groups of 2 or more it does NOT govern disability insurance, key provisions included in this recent law include but are not limited to: portability-dont allow employees to take specific insurance from one job to another, places limitations on pre existing condition exclusions and allows employees to use evidence of prior insurance coverage to reduce or eliminated the length of any re existing condition exclusion, applies to almost all group health plans that have at least 2 participants (employees), does not apply to disability insurance, if an employee has been without coverage for at least 63 days between jobs the full pre existing condition period applies, this proves creditable coverage and also reduces a pre existing waiting period, an employee who has one month of creditable coverage may apply this toward the satisfaction of one moth of pre existing waiting period establishing eligibility-state law prohibits a group health policy from establishing eligibility for enrollment or coverage based upon a persons individual health status, physical/mental medical condition or history, genetic background, claim history, evidence of insurability, disability or whether the person has received health care in past penalty exemption-exemption provided from the 10% penalty tax on premature IRA withdrawals taken after 1996 if they are utilized to pay medical expenses in excess of 10% of a person adjusted gross income, excise tax tax considerations-tax treatment of long term care insurance was made more favorable by this act with regard to qualified contracts, if plan is qualified the premium paid for it may be combined wit other unreimbursed medical expenses and may be deductible if this amount exceeds 10% of individuals adjusted gross income, benefits received usually not taxable, permitted tax deduction for the premiums of self employed individuals is now the entire premium paid pre existing conditions-the limitations found in a pre existing condition exclusion appearing in a medical plan are allowed only if treatment, advice, care or diagnosis for the condition is received by the insured within 6 months prior to employees attempt to get new plan, maternity/births/adoptions not subject to pre existing condition, HIPAA has limited the period of time which a group health policy may deny coverage for pre existing conditions to 12 months, case of late enrollee the pre existing condition period is 18 months, length of pre existing period must be reduced by the length of creditable coverage earned, an individual will receive creditable coverage if he or she receives medical care protection under 1. group health plan 2. individual medical plan 3. medicare 4. medicaid 5. military sponsored medical plan 6. state medical services risk pool 7. peace corps 8. medical program of the indian health services guaranteed issue-all small employers are guaranteed to be able to have health insure made available to them, insurers can not refuse to cover small groups (5-20 employees) based on health history or group members, larger groups are not guaranteed coverage but once they have coverage they are guaranteed renewability, renewability of any group may be denied for nonpayment of premium, fraud, termination of coverage in the market or failure to meet participate or contribution requirements renewability-state law provides for the guaranteeing of health insurance coverage for all group health plans unless the plan has 1. engaged in fraud 2. terminated coverage 3. failed to pay the premium 4. moved beyond the service area 5. terminated association membership, with regard to individual plans a similar guarantee of renewability is also provided unless individual engages in just listed acts privacy protections-HIPAA also states that individuals must be given a notice of privacy practices statement by the facility providing medical services, notice states how health care providers may use the private info from patients medical file and when and to whom they can give such info, info protected includes: office visits, tests/procedures, diagnosis, only persons directly involved in patients care have access to private info including : doctors, nurses, billing office personnel, secretarial persons

insurance fraud regulations

fraud=when insurance producer or other peson knowingly and willingly makes false statements or representations in connection to any application -any person who makes false statements, engages in concealment , with holds information for the purpose of obtaining any fee, commission, money, uses the funds of another for his or her use may be guilty of fraud, punishment=100-500, prison sentence 1 month-1 year -fraud VS perjury -perjury involves making a false statement as part of a SWORN STATEMENT, insurance forms are consiered to be sworn statements when signed by any party

other provisions

free look-10 days to examine policy from date of policy delivery , can receive full premium refund (medicare-30 days) "right to examine" insuring clause-provides a summary of coverage provided by the policy, located on the face page of policy, identifies the parties, benefit provided, annual premium, frequency with which paid, policy period, beneficiary designation-allows insurer to deny a claim if the policy was purchased after an accident or illness occurred, coverage is provided Only during policy period and not before consideration clause- in order for policy to be legal both parties must exchange value , insurers consideration=promise to pay valid claim, policy owners consideration=2 fold, 1. premium paid 2. statements made on health insurance application renewability provisions: noncancelable-may never be canceled as long as policy owned prays premium, no policy conditions may be modifies or increase in cost, policy is renewable up to a specific age generally 65 guaranteed renewable-premiums may be increased but only on an occupational or other type of class basis , coverage renewed up to a specified age usually 65 cancelable/nonrenewable-policy can be canelled by insurer at its discretion, least adventagous of all renewability provisions, premium is very low may cancel if insured files too many claims conditionally renewable-insurer may terminate contract by not renewing it under certain conditions stated in policy optionally renewable/renewable at company option-no guarantee of continuance period of time-short term major medical plans=term policies=only renewable for stipulated time (6 monte) when term expires so does coverage pre-existing conditions-limitation states that coverage under a health insurance policy will not be provided for any health condition of an insured that existent prior to coverage becoming effective, helps protect insurer if applicant knows he or she is ill, purpose is to protect an insurer against adverse selection, pre existing condition=waiting period, usually several months, if pre existing condition is severe enough insurer may issue impairment rider which will restrict coverage for the illness of injury in question common accident provisions-one deductible when two or more individuals in the same family are injured in the asme accent owners rights-entiteld to all ownership rights=policy holder, including right to assign benefits to another or name or change the beneficiary beneficiary provision-accidental death benefit is added, beneficiary may be designated, primary beneficiary receives accidentally death proceed first, contingent receives if primary predeceases the insured modes of premium payment-monthly, quarterly, semi annual, annual, annual=least expensive coordination of benefits/non duplication of benefits-benefits will not be paid for medical expense amount reimbursed by other policies, an insured is not permitted to collect in claim benefits more than 10% of total covered medical expense no matter how many policies he owns, designed order by which the policies will pay (primary/secondary) reductions in coverage-policies don't reduce coverage amounts following a loss according to this provision, although most policies have maximum lifetime stated coverage limits benefit payment provision-how many benefits will be paid, will differ depending upon policy involved, monthly (periodic) in disability income accumulation-simply additions to certain benefits, similarly defines as percentage additions to the insurance benefit when the contract is specified for a continuous policy renewal, benefits are given as accrual (accumulation)l results from the cash interest in the policy

specialist referalls-from PCP in HMO

gatekeeper will refer subscribers to an appropriate specialist for needed consultation and treatment -specialist includes: cardiologist, neurologist, ophthalmologist, pediatrician, podiatrist, urologist -organization managers and medical directors are not considered to be specialists

MEDICAID

government sponsored program which provides aid to families with dependent children, temporary aid for needy families (TANF) provides such assistance, tax funds from fed govt and each state finance this program which provides medical assistance for certain individuals and families with low incomes or limited assets, separate from medicare, administered by state

GOVT Insurers

govt provides health insurance as well, social security helps to fund programs such as Medicare, federal and stat governments provide funds for medicaid CHAMPUS-civilian health and medical program of the uniformed services, government organization that provides health care benefits for the families of members of the armed services, active service members, retired service members, deceased service members, active service members who are eligible for part A of medicare are not eligible TRICARE-health benefit program for all seven uniform services and their dependents including army, navy, air force, marines, coast guard, public health service, national oceanic and atmospheric administrations-regionally managed program, offers eligible persons three choices for their health care including 1. tricare prime-military treatment facilities are the principal source of health care 2. tricare extra-which is a preferred provider option that saves money 3. tricare standard that operates on a fee for service option (champus coverage)

group health insurance

group must form for an employment related purpose not for exclusive intent to purchase, generally must be an employer-employee relationship in order to purchase group coverage -group contract is purchased by employer=policy owner of the master contact, the covered employees receive a booklet or certificate of coverage, covered employee=certificate holder -use of experience rating-if group is large enough the actual claim experience of this group will be a factor in determining future premium, experience is determined either at the issue date or at the end of the policy period, experience rate may also be used to determine amount of a refund to which an employer is entitled if he or she possesses a better claim experience than anticipated, many experts feel that experience rating provides premium equity among all policy owners -some group plans utilize community rating method-used for smaller groups/individuals and utilizes the identical premium rate structure, the premiums in community rating are generally based upon the overall claim experience of the insurer, variation in premiums (BC/BS) function on this basis eligible groups-employment related groups or individual employer groups are eligible for this type of coverage, other groups eligible 1. negotiated trusteeships 2. trade associations 3. customer groups (credit-debtor groups) 4. labor union groups 5. MET/MEWA trusteeships-taft harley trusts, formed as a result of collective bargaining of benefits between union of employers and their employer, the act prohibits employers from paying funds directly to labor union for the purpose of providing group health insurance to its members, payments by an employer must be made to a trust fund created to pay for the members group health insurance, different because it finances insurance benefits and how it determines employee eligibility for benefits-employers will make its contributions based on # of hours worked by an employee, can be based on a minimum # of hours worked during a previous quarter by employee trade associations-associatiosn that have been formed for reasons other than purchasing insurance, generally made up of many employers in the same industry, (alumni, sole proprietors, franchise/professional group), adverse selection and administrative costs are greater in this plan, underwriting large associations or groups reduces adverse selection customer groups-credit-debtor relationships, give rise to groups that are eligible for term life and disability insurance, offer credit insurance on loans/debts, function differently in that policy owner (bank) must also be the beneficiary of the contract as well labor unions-may establish group plans for members subject to taft hartley act, members should not be forced to pay entire premiums, multiple employer trusts (METS) are legal entities in form of trusts which may be sponsored by an insurers, independent administrator or other organization, designed to make available group health insurance benefits to participants, mets may be fully insured when sponsored by an insurer, insured when managed by a TPA other than insurer, or self funded which means they are established and marketed by the persons or organizations that will manage/administer them -blanket customer groups-sports team, passenger on common carriers also can secure coverage -alumni associations, veterans associations, professional groups, credit card holders, savings account depositors also may be eligible

exposure definition

hazardous condition brought by the nature of the activities of an insured

producer regulation

impersonation-a licensee who advertises or markets himself as something they are not has engaged in impersonation, examples: someone claiming to be a producer when they are not, a producer claiming to be a licensed insurance adviser, or any licensee including a producer who advertised themselves by a hem or trade name other than the one appearing on the license on record with the commissioner, can use another name IF YOU GET approval from division of insurance, fine for impersonation=anyone engaging in this unfair practice may be fined with 10-100 in addition any guilty party will be subject to license suspension or revocation larceny-producer engage in negotiation, selling, or renewing an insurance policy who commits larceny shall be subject to fine or prison, premiums collected and personal funds may not be commingled in the premium trust account, if a producer misappropriates, illegally commingles, or uses premiums for persona ouse he or she may be charged with larceny, monetary penalty is not more than 1,000 1. premiums may be deposited in a premium trust account by an independent producer 2. if premiums are not paid to insurer by producer within 30 days after heir receipts a written demand will be sent 3. ignoring the written demand for premiums due constitutes larcenous activity 4. failing to refund premiums due to those who are entitled to refund may be considered larceny as identified unlicensed persons compensation-no person shall accept any commission or compensation unless insurance licensed as well, anyone violating will be charged 50-500

consideration-contract law

in order for agreement to be binding both parties must provide each other with something of value, must be an exchange of values between parties -applicants/insured consideration is the premium paid and the representations (statements) he or she makes -insurers consideration is the promise to pay legitimate claims for coverage provided during policy period -consideration can be referred to as a bargained exchange, consideration is the BINDING force in the insurance policy

"health insurance"

includes: accident and health, accident and sickness, sickness, disability income, accident only, travel accident and many other forms

additional disability income principles

individual disability income policy-issued to person based on the info recorder on application, insurer will decide whether to accept or reject risk based on underwriting, applicant is also responsible for paying the policy premium, this form of health insurance protects an individual against loss of earnings or income as a result of total disability, disability can be described as "living death" once someone is unable to work and earn income it will be a living death expenses such as mortgage, clothing, food and other necessities continue but the income to provide them may not, disability income policies are designed to PROTECT ONES EARNED INCOME, these policies provide income or monthly income indemnity benefits to insureds that become totally disabled , require that insured be under the care and treatment of a doctor or benefits will not be forthcoming, will provide coverage until an insured is retired and reaches 65, some plans provide continuing coverage after 65 other unique aspects to its underwriting: -premiums-manual premium rates are determined based on the monthly income benefit selected, criteria that will affect amount-waiting period desired, monthly income benefit or coverage amount desired, age, sex, income, occupation and health of applicant, period of time benefit is selected (for life), whether or not insured owns disability income insurance, waiver of premium feature is included in disability income policy-waives premium if the insured is totally disabled for 90 consecutive days (6 months for life insurance) monthly benefit limit-most insurers permit an applicant to purchase or limit a monthly benefit that is 50-60% of their gross monthly earned income, some allow 80% of the net monthly, group coverage permit greater %'s (60-70%) sometimes more waiting period=ELIMINATION PERIOD, functions like deductible, on each occasion that the insured becomes disables a waiting period must be satisfied during which no monthly benefit is payable, longer waiting period=lower premium, inclusion of elimination period allows insurer to reduce cost of coverage, common waiting periods (30,60,90,180, 365) some group plans include 7-10 days, elimination period should be determined based on cash flow, if your poor should do short one bc you won't be able to pay premium, if your rich you may choose longer period bc you can pay premiums and will reduce annual premium benefit period-maximum length of time for which an insured collects monthly income will also affect premium charged, most common benefit periods are (12, 24, 30 months and 5, 10, 20 years or to age 65, or for life) -proposed insured occupation is much more important to a disability income underwriter than it is to a life insurance underwriter -individuals whose occupations is one of the professional type (physician, attorney, CPA, dentist) are engaged in a less hazardous or less risky type, even if these individuals become ill or injured they will attempt to do everything in their power to return to work since they will earn a great deal more money if they are able to provide their professional services to the public as opposed to receiving monthly disability income benefits -occupations that are not of the professional type are looked on by insurer as being more risky especially when incentive to return to work is not great, therefor the risk to the insurer involves much more criteria, also takes into consideration the severity or frequency of a possible claims as well -morbidity will also influence the cost of coverage=probability of an individual becoming disabled at any particular age -in most cases insurers will place applications into insurable and uninsurable groups of occupations based upon the risk or hazard involved -hazardous jobs stay away form as well as seasonal employees since opportunity for malingering is greater -some insurers utilize policy issuance alternatives in their underwriting which allows them to include someone who may normally be uninsurable if they are part of a large group of proceed insureds tax considerations-premiums paid on individual disability income policy are NOT tax deductible, benefits received from this policy however are TAX FREE without limitations -non contributory group disability premiums ARE TAX DEDUCTIBLE to the employer (business expense) and monthly benefits paid to the disabled employee are considered to be ordinary income, lump sum or single sums may be paid out for presumptive types of disability such as loss of sight limitations on benefits provided-must be a relation of earnings to the disability income amount desired, can't be same amount as income because then there is no desire to work

respite care

individuals who provide living assistance at home are called care givers, respite care provides relief or off time for the major care giver (gives care giver a break) and may include overnight stay by a respite care giver, also provided at adult day care centers

FSA-FLEXIBLE SPENDING ACCOUNT

irs section 125 cafeteria plan that allows an employe to set aside a portion of earnings to pay for qualified medical expenses including but not limited to inpatient outpatient care, prescription drugs, dental care, vision care, no elective cosmetic surgery, disadvantage of FSA-funds not used by end of year plan are lost to the employee known as the "use it or lose it" rule, employees have the option of a pre take payroll deduction that may be used for some insurance premiums, un reimbursed medical expense and child/dependent care, employers utilize availability of an fsa to retain quality employees and help hire new employees

patient protection affordable care act

jan 2014 obama, health provisions to take effect in 4 year period including prohibition health insurers from denying coverage or refusing claims based on pre exisint conditions, expanding medicaid, subsidizing insurance premiums, providing incentive for businesses to provide health care benefits, establishing health insurance exchaned, support for medical research -tax penalty or citizens who don't obtain health insurance unless they are exempts -provides immediate reforms to be implements within 6 months include: teportary high risk pool with subsidized premiums , ending health insurance recession ause, banning overage exclusions, requiring publi deisloser of overhead, providing coverage of certain preventive health, eliminating lifetime limits on benefits , requiring insurers that offer depend to cover up to 20, developing uniform explanation of coverage documents for enrollees -bans coverage exludions of pre existing health conditions -requires guarantee issue and guarantee renewability -without cost sharing -most preventative costs are now 100% covered with no cost sharing requirements such as out of pocket co pays, deductibles, co insurance

concept of agency

legal relationship between two parties when one of the parties acts on behalf of another, doesn't just apply to insurance field -may be applied to insurance business to illustrate relationship between insurer and producer -ex. this legal relationship exists when a producer (agent) represents and insurer -insurer=principal -producer=agent or authorized representative -when the agent/producer acts the insurer/principal is bound or responsible for such action

managed care

managed care involves medical expense plans that ATTEMPT TO CONTROL COSTS BY CONTROLLING THE BEHAVIOR OF PARTICIPANTS (those insured) -involve prepaid financing, managing and delivery of health care serves by a group of medical providers who share financial risk of the plan (who have an incentive to deliver cost effective medical services)

COBRA - consolidated omnibus budget reconciliation act

mandated that employers must provide an employee and any "qualified beneficiary" with group health coverage following a "qualified event" (if fired): job termination, death, divorce, or child ceasing to be eligible for group coverage, COBRA states that the terminated employee may continue coverage under employers plan for up to 18 months as long as he or she pays premium, employer will collect premium from terminated employee at a rate of no more than 102% of group premium, employers are mandated to offer COBRA if they employ 20 or more employees -other qualifying events: if employee dies, terminated for a reason (resigning, retiring, laid off) other than gross misconduct (stealing from employer), divorce or legal separation (For divorce must notify employer within 60 days in order to elect COBRA coverage), continuation under these circumstances is 36 months -employers who do not comply with COBRA may be striped of their federal income tax education, an individual receiving coverage under COBRA may also apply it toward creditable covered (according to HIPPA) -POINT OF THIS ACT: contain regulations designed to better guarantee that group medical benefits made available to children, applies to adopted children or placed for adoption with same terms

marketing of group plans

marketed through employer sponsored plans or association sponsored plans (association of professional insurance agents)

law of large #'s

mathematical law of probability that states that the large the number of occurrences (number of lives covered) the more predictable losses will be -the large number of homogeneous units (similar risks) loss predictability will increase -BASICALLY: the more people covered by insurance and the more casualties that occur the easier it will be for insurance companies to predict loss probability based on their large amount of data and experience

business disability insurance types:

may be used in business scenarios to protect owner of business BOE-buisness overhead expense-buisnesses may use a disability income policy to ensure continuation if the owner becomes totally disables, pays the business expenses and other overhead expenses which are usual and necessary if owner is totally disables -overhead expenses: include monthly rent cost/mortgage payment, heat, electricity, telephone, advertising, employee salary, DONT INCLUDE-salary or profit of the business owner -ARE TAX DEDUCTIBLE as a business expense, benefits received ARE TAXABLE to the business as ordinary income but are deductible when they a rep aid out by the business to meet continuing expenses which they are designed to cover key employee policy-purchased to protect and indemnity the business in the event that a key employee becomes disabled, partners in business may purchase this on one another, employer=policy owner retains all ownership rights, premiums paid for the policy are not tax deductible and benefits are received tax free disability buy sell/buy out-health insurance equivalent of life insurance buy sell agreement, a buy out agreement funded by disability income insurance is written to protect the firm and a partners monetary interest (value), helps transfer ownership of business when an owner to partner in business becomes disabled

medicare

medigap-pays benefits for medical services not covered by medicaid, gap covered if the insured owns medigap policy, exclude eyeglasses and hearing aids -15 days before advertisement every issuer shall file with the commissioner with review 2 copies of any advertisement twisting=knowingly making any misleading representations or incomplete fraudulent comparison for purpose of inducing any person to lapse high pressure tactits-using marketing method to induce purchase of insurance by force, freight, threat cold lead advertising-using any marketing method that fails to disclose that is purpose is the solicitation of insurance and that contact will be made by an insurance producer or insurer -policy shall not indemnify against losses resulting from sickness on a dif basis than losses resulting from accidents 2. any medicare supplement policy shall provide that benefits design to cover cost sharing amounts under medicare will be changed automatically to coincide with any changes in the applicable medicare deductible amount 3. no medicare supplement shall contain benefits that duplicate benefits provided by medicare 4. no medicare supplement policy shall contain ANY waiting period or pre existing condition limitation ore exclusion 5. no medicare supplement shall provide of termination of coverage spoley ecuase of occurrence of an event specified for termination other than nonpayment of premium 7. all guarantee renewable -medigap insurance must posses loss ratio of 65% -open enrollment, feb1-march31 coverage effective june 1 -establish an order in which plans pay their claims when a person is covered by more than one plan, coordination of benefits COB,

employer group health insurance

must include annual open enrollment, provides coverage for dependents (children up to 26) stipulate employee elbility (employee must work at least 30 hours per week) -gropu of smaller groups can be purchased, not allowed to be purchased by civic or cultural groups small group plans -elgible employee-any employee who works full time with a normal work week of 30 or more hours includes an wonder, sole propriety/parntership, employee must have been hired to work for period not loss than 5 months elgible dpends-spous or children up to 26 of eligible employee elgible buisness-buisness that t least 50% of its working days during preceding year employed from 1-not more than 50 eligible empoloeyess intermediary-trade association chamber of commerce or other organization formed purpose for obtaining insurance -annual open enrollment july 1-aug 15 exceptions: made at least 3 or more late payment sin last 12 months, committed fraud/misreperesented eligibility of an employee, filed to comply in material manner, been covered by 3 or more health benefit plans with same class of business during 4 years preceding premium determined by age, sex, industry, group size -participation rate adjustments groups of 5 or fewer not to exceed 100, groups of 6 or more not to exceed 75% -premiums based on collective experience renewability-renewable with respect tot elgibilep ersons, if haven paid premiums or commuted fraud, failed to comply with matieral, fails time of renewal, not actively engaged in business, carrier must provide 60 days written notice of non renewal -pregnancy NOT pre exisitng condition -new waiting d period of not more than 4 months

rebating=the offer of a consideration that is not part of the written contract, it is an unfair sales practice

no insurer, licensee, policy ownder/beneficiary shall offer anything of value to a prospective insured or policy owner that is not specified in the contract in return for the purchase of an insurance policy 1. any valuable consideration or special favor not stated in policy which is used to induce an applicant to buy insurance 2. licensee offering a rebate is called the offeror, this person is knowingly accepting the rebate is the offeree 3. an insurer or its representative may not provide a special offer or advantage to members of the public in order to persuade them to purchase policy 4. most common form **** involves a producer offering to share commissions (kick back) with an applicant in return for purchasing the policy -offering stocks, bonds, securities, season tickets to sporting events, anything of value = illegal inducement, when committed knowingly both parties guilty of rebating -person engaged in rebating may be fined, receive prison sentence for not less than a month - year embezzlement-any producer who embezzles funds from an unsure including premiums or any other funds will be subject to prison sentence in state prison for a term of up to 5 years

maintenance duration temrination and expiration of licenses

notice of license renewal will be sent by the division 30-45 days prior to license renewal renewal and reinstatement-license good for 3 years and renews on holders birthday, triennial free is 225, producer who allows his license to lapse within 12 months from due date or renewal fee may reinstate the license without the necessity of passing state exam but a penalty in the amount of double the renewable fee is required, if try to renew after 12 months must re pass state exam -simply passing exam doesn't count, must be issued by commonwealth, a licensed insurance producer who is unable o comply with license renewal procedures due to military service may request waiver exemptions:1. person who is mass resident and a veteran 2. person who is blind 3. widow/widower of a licensee business entity and nonresident business entity-license will renew one year form the original date of licensure, renewal fee is 75 adress change-change of business address, residence, or email must notify change within 30 days , person needs letter of clearance or clarification letter from department of current home reporting of actions-producer must report to mass commissioner any administrative action against him or her by another state within 30 days assumed names-any party that engages in advertising or conducting insurance under name that is not filed with division of insurance will be deemed to be operating under an assumed name, party must notify commissioner, prior to using such assumed name continuing education-an auto club agent, travel accident agent, baggage agent, fraternal a gens or any other person holding license that has no exam required are not subject to continuing education, licenses must complete 3 credit hours of continuing education and health in ethics -during first 3 years must complete 30 credit hours of approved study - during next 3 years must complete 45 credit hours -surplus of credit hours may be carried over to the ensuing 3 year period only -if licensee fails to comply license will be suspended until they comply although extensions may be granted by commissioner -ce requirent for public insurance adjuster is 15 credit hours every 3 years ce courses: 1. life underwriting training and council 2. chartered life underwriter courses 3. insurance instate of america 4. chartered property casually underwriter course 5. certified insurance counselor courses 6. accredited association in insurance courses 7. any other course including correspondence courses that are approved by commissioner

social security

old age survivors disability health insurance (OASDHI) is the formal name for social security, benefits under social insurance program are payable to covered works when a worker died, retires or becomes disability benefis under OASDHI- reitrement benefits: workers who are 65 or older full insured and entitled to monthly retirement income for the remainder of their lives, based opon primary insurance amount PIA, not paid automatically, recipient must complete an application, may receive retirement income at age 62 but at reduced amount lump sum death benefit-when a fully or currently insured worker dies a lump sum death benefit of 255 is paid to an eligible surviving spouse or dependent disability benefit-an individual is eligible for disability benefits under social security based upon his or her length of employment, if worked meets the restrictive total disability definition under social security , this definition is = the inability to engage in any gainful activity by reason of any medically determinable physical or mental impairment which has lasted or could be expected to last for a continuous period of 12 months or result in death -once a worker is eligible he or she must satisfy 5 month waiting period before benefits are payable, therefore benefit payments would begin in the 6th month -dependent benefits-benefits are paid to the children of deceased worker during the blackout period until the youngest child reaches 13 insured status- fully insured if he has earned the required number of quarters coverage , 40 quarters of coverage (10 years of employment) is considered fully insured, entitled to retirement benefits and survivors are eligible for retirement benefits when the worker dies -benefit is provided if a worker is fully insured and meets the definition of disability , must have 40 quarters of overage and 20 of the 40 quarters must be earned immediately preceding the disabling event -a worker is currently insured if he or she has earned at least 6 quarters of coverage in 13 quarters immediately preceding death or disability funding-for social security and all its social insurance counterparters (medicare, medicaid) is accomplished through tax funds collated from employers, employees, self employed they fund insurance programs

policy issuance and delivery

once underwriter decides to accept a particular risk a health insurance policy will be issued, policy is then sent to the agent in order for it to be delivered to the insured/policy owner, WHEN THE POLICY IS DELIVERED TO THE INSURED, THE FREE LOOK PERIOD BEGINS -producer responsibilities: when agent delivers policy he or she should take time to review policy with wonder, if an impairment rider is attached its restrictions and limitations must be explained at time of delivery, policy owner must sign a statement that he or she is aware of and understands the effects and limitations of this type of rider statement of continued good health:if initial premium is not paid when the application is completed by the producing agent this statement is generally required, if agent senses that coverage may not be provided because of potential health problem no premium may be collected, if applicant is later approved the police will be issued and sent to agent for delivery, when agent travels to policy owners residence he must have a statement of continued good health signed by the insured before the policy will actually be delivered, at this point initial premium will be collected so that coverage is effective and the policy owners consideration is complete

qualified plan according to HIPAA

one that 1. cannot pay expenses that are reimbursable under medicare 2. is at least guarnatted renewable 3. does not include cash surrender value 4. only provides long term care services 5. complies with various consumer protection provisions 6. states that all reruns of premium and policy ownder dividers if any must be applied as future reductions in premiums or to increase future benefit, a qualified plan must include at least 5 adls described in HIPAA legislation -whenever a ltc policy is replaced any pre existing condition limitation in the new policy will be waived to prevent against unintentional lapse exclusions: war, treatment for drug and alcohol abuse, intentionally self infflicted injuries, attempted suicide, institutional care received outside the us or care for which benefits are payable under WC tax consideration-premiums paid on individual LTC are not tax deductible, benefits therefor will not be taxable -premiums paid by an employer under group plan are tax deductible, benefits received by an employee are not taxable -if expenses exceed 10% of gross income they are tax deductible non forfeiture option, 3 forms 1. after paying premiums for a specific number of years if the insured ceases payment a reduced paid up policy would result 2. after paying premiums for a specific number of years if the insured stops paying premiums the same benefit would apply for a shorteners period of time 3. following payment of premiums for specific minimum number of years if premiums cease a specific dollar amount will be refunded to the insured (most expensive form) -offer is usually made at time of application or prior to the issuance of policy, no age requirement inflation protection-insurer offer some sort of inflation protection, cost of protection is usually built into the initial premium, if included the benefit usually involved a 5% increase each year, this type of coverage must be included unless it is rejected in writing by the policy owner

scheduled basis

opposite of UCR: -ex: surgical expenses,

methods of alternative funding

opposite of conventional or tradition fully insured group plan is a self funded plan, in a totally self funded plan an employer is responsible for paying claims, administering plan and bearing risk that actual claims will exceed those expected, most employers do not operate totally self funded plans since they don't wish to bear entire risk, methods used by employers fall somewhere between conventional fully funded and totally self funded, 3 general methods used today 1. modified fully insured plans 2. partially self funded plans 3. fully self funded (self administered) plans -traditional=buying coverage from an insurer 1. modified fully insured plans-generally most insurers permit only medium and large employers to use traditional fully insured plans (buying coverage from insurer) since an insurer as ultimate responsibility for paying all benefits, some of the more common types of modified fully insured plans include but are not limited to: -premium delay arrangements-allows employer to defer the payment of premiums beyond the normal 30 day grace period, lengthen this period 60/90 days, allows the employer use of other funds for other purposes, also provides a financial advantage to the employer since he or she can earn more interest on the amount of the delayed premiums -reserve reduction arrangements-similar to premium delay arrangement, in this case the employer is permitted to retain an amount of the annual premium that is equal to the claim reserve, allows the employer the use of the retained funds, again, if the insurance contract is terminated, any deferred premiums must be paid by the employer -retrospective rating arrangements-an insurer charges the employer an initial premium that is less than what would be justified bye expected claims for year, discount up to 10% of the traditional group insurance premium, if claims exceed premium paid the employer must pay an addition fee at end of policy period (retrospectively) partially self funded plans-those where an employer bears a portion of the risk with regard to medical expense plans, problem with fully self funded medical expense plan is that it is difficult for an employer to estimate the average severity of claims, most employers are unwilling to assume the entire risk but do have at their disposal some partially-self funded arrangements including: -stop loss coverage: allows employer to utilize elements of self funding to protect itself against catastrophic claim, one form of protection for employers against an unexpectedly high level of claims, if total claims during the year exceed some specified dollar limit an insurer will assume the responsibility for the claims beyond this stop loss limit -ASO contracts: known as an administration services only (ASO) contract, stipulates that the employer purchased specific administrative services from an insurer (or independent TPA) , services usually include the administration of claims but could also include prescription drug cards, COBRA administration and employe communications, this means that an employer has the option to purchase services for those administrative functions that can be handled more cost effectively by another party (insurer or TPA) -501 (c)(9) Trust: internal revenue code provides the establishment of voluntary employees beneficiary associations (VEBAs) through section 501c9-funding vehicle for the employee benefits that are offered to members, funds accumulating in their trust are used for employee benefit plans, contributions made to trust are tax deductible just as if they were paid to insurer as premium, cost to establish and maintain trust is high, membership in trust is restricted to those who share a common employment related bond, membership must be voluntary on the part of employees, trust must provide eligible benefits only (medical expense, death, disability) and its sole purpose must be to provide benefits to its members, finally the trust must be controlled by 1. membership 2. independent trustee such as bank 3. some other fiduciary on behalf of its members Fully self funded/seld administered-totally self funding (self insured) employee benefit plans are the opposite to traditionally fully insured group insurance plans, characteristically in a fully self insured plan the empoyer is responsible for paying claims, administering plan and bearing full risk, in many cases employer will contract TPA to manage self funded plan, advantages of self funds plan: state premium taxes are eliminated ,state mandated benefits are avoided and cash flow is improved, an employer may also be abler o reduce his or her operating expenses to the extent that the self funded plan can be administered at a lower cost than purchasing coverage from insurer, an employer best served to consider a fully self funded plan if conditions are suitable including 1. severity of claims predictable 2. plan is noncontributory 3. employees are not members of union 4. employer possesses the ability to effectively and efficiently handle claims 5. employer possesses the ability to provide other admin services (plan design, communication with employees, compliance with government) 6. employer has the ability to negate discounts with health care providers (physicians, hospitals) benefits offered by employers that are most suitable for self funding include: short term disability, dental care, vision care, prescription drugs, legal expense coverage -major problem with self funding is the severity of claims, small and medium size employers will shy away from self funding although many small employers will self fund basic medical expense benefit and insure major medical benefits, larger employers with thousands of employees are more apt to engage in self funding

SUPPLEMENTARY MEDICAL INSURANCE - SMI PART B

optional or voluntary coverage, benefits provided after a $166 calendar year deductible is satisfied, after deductible satisfied 80% of the approved medicare charges will be paid, not 80% of actual charges, enroll in part b by paying a monthly premium (104.90 per month)usually deducted from his or her monthly social security retirement benefit -with regard to cost sharing, the insured is responsible for the deductible and the 20% coinsurance amount -gap in coverage=deductible and applicable coinsurance amounts in addition to any medical expenses that are excluded are reffered to as -gaps can be filled in later if the insured possess medicare supplement or medigap policy, approve amount is determined by program -SMI is funded by premiums paid by insureds and tax funds -coverages provided include: 1. physicians and surgeons services 2. home health services even if insured has not been in the hospital 3. diagnostic lab tests, surgical dressings, splints and medical equipment (rent/purchase) 4. outpatient services and office visits, flue shots and other immunizations are also now covered -EXCLUDED: routine physical exams, eye exams, hearing exams, routine foot care, most prescription drugs that can be self administered, dental care/dentures, cosmetic surrey, eyeglasses or hearing aids -initial open enrollment period available according to medicare manual, the 7 month period beginning on the first day of the third month before the month age 65 is attained -if person wants to wait can enroll in general enrollment period which is jan 1-march 31 each year and coverage will start on july 1 -medicare+choice, expanded choices available to most beneficiaries by permitting them to choose benefits through one of several alternatives to traditional parts a and b, this new part includes HMOs, PPOs, PSOs, private contracts with doctors, medical savings accounts or private fee for service plans -act of 2003-government has expanded this program though the medicare advantage, part c now offers expanded benefits generally for an additional premium through private insurance programs that have contracts with medicare and medicare pays a predetermined amount of money to the private provider for an individuals health care -to be eligible for benefits under part c one must be enrolled in part a and b , the individual must also live in the plans service area and must not be suffering from end stage renal disease -no evidence of insurability required if enrollment occurs during 6 month period following individuals 65th birthday -act of 2003 also provided for a prescription drug plan (PDP) this is known as part D, provide benefits for this 65 and older and other disabled individuals, PDPS will be offered and administered by private companies providing conventional type prescription drug coverage including monthly premiums and copayments if you are 65 or older and are entitled to social security you are qualified you are also qualified if 1. anyone under 65 who is permanently disabled and has been receiving social security disability benefits for last 2 years 2. anyone receiving kidney dialysis for permanent kidney failure or someone in need to kidney transplant 3. individual suffering from ALS -donut hole=gap, in 2016 plan also includes a 260 annual deductible and a 25% payment on the next 2210 of prescription drugs, once the first 3310 in benefits has been provided no further benefit is payable for next 4850 of prescription drug charges=THIS GAP=DONUT HOLE

HMO'S-HEALTH MAINTENANCE ORGANIZATIONS

organized systems of health care that provide comprehensive health care services to enrollees (members) living within a specified regions -formerly referred to as pre paid group practice plans, a prepaid premium must sol be paid and members are then allowed to seek treatment when needed at an HMO facility -dont function on a reimbursement basis -member provides proof on enrollment to the facility, pays small copayment (10,20 bucks) and then receive needed treatment -no claim forms need to be processed -therefor, HMOs combine health care delivery with prepaid financing -several characteristics that distinguish HMOs from traditional forms of medical expense insurance -offer members a variety of comprehensive care services including outpatient services and hospitalization -HMOs emphasize preventive care which was not a covered benefit by traditional insurers nor the blues-attempts to detect medical problems before symptoms appear, includes services such as routine physicals/immunizations/mammograms/pap smears/well baby care/family planning services other benefits include: 1. physicians services 2. inpatient and outpatient hospital services (require subscribers to use the HMO facility) 3. emergency services 4. limited outpatient mental health services 5. treatment for drug and alcohol abuse/addiction 6. diagnostic lab and radiology services 7. home health care services 8. medical social services -hospital services covered in full for length of stay -emergency care is covered, as long as its necessary urgency it can be with an out of network doctor -optional coverages can be added and require additional premium (nursing home, vision care, dental, prescription drugs) SUMMARY HMO: -provide for the delivery of medical services by salaried physicals (contrasted with commercial plan that functions on fee for service) -subscribers are required to seek treatment affiliated with plan -HMO's offer medical serves to those living in specific geographic boundaries or territories (county) -emphasizes treatment by a primary care physician swell (PCP) disadvantage: -limits the choice of physicians and the areas where can be received

mass child health insurance program

part of mass health provides low cost health coverage to children in families that earn too much money to qualify for medicaid 1. routine check ups 2. immunizations 3. doctor visits 4. prescription drugs 5. dental/vision 6. inapteint/outpatient 7. lab x ray 8. emergency services

mass health

pays for health care for certain low and medium income people, those elgible=under 65 and who are not living in nursing home include 1. families with children under 19 2. children under age 19 3. pregnant women 4. disabled persons 5. adults who work for qualified employers 6. people out of work for long time 7. people who are hiv positive coverage and limits: in patient hospital services/out patietnece medicl services such as lab test, x rays, hearing aids, eyeglasses 4. mental health and substance abuse services 5. well child screening including medical vision dental hearing, shots, prescription 6. disabled adults who also recede 7. transportation services -if eligible coverage begins 10 calendar days before date of division of insurance received medical benefits requires, if all received with 60 days

peril vs hazard

peril-cause of a loss hazard-a condition present that increases the chance of loss occurring (icy steps, reckless driver)

MEDICAL SAVINGS ACCOUNT MSA

personal savings account that may be used to pay for unreimbursed medical expenses including deductibles, coinsurance amounts=copayments, employers may even sponsor an mea but they are for the benefit of an employee and are portable, if employee leaves MSA may be taken along, msa also described as a tax deferred bank or savings account combined with a low premium/high deductible insurance policy, participants are encourage to invest the premium savings in an MSA by making tax deductible contributions, unused monies in account will roll over tax free elgibility-anyone who is self employed or an employer with 50 or fewer employees as an alternative to current ways of paying for medical care cash contributions-maximum annual MSA contribution allowable is 65% of medical plan deductible for an individual and 75% if a family plan, contributions can only be made by individual (account holder) or the employer but not both in the same year tax treatment-DEDUCTIBLE-contributinos made by individual are deductible, reducing ones adjusted gross income, contributions made by employer are deductible as a business expense and excluded from income of an employee distributions-not subject to income taxes provided that these expenses are not covered by a health insurance policy, if account holder dies/disabled funds in account will be distributed subject to income taxation but no penalty, distributions for other reasons prior to age 65 will be subject to income tax and a 15% penalty tax

parties involved in insurance contract

policy owner-responsibily for paying premiums and posses all ownership rights insurer-issues policy once application is approved *when policy owner is different from insured party, third party ownership is in existence (ex a wife owning a policy covering her husband or a business owning life insurance on a key employee)

commissioners general powers and duties-

power to administer and enforce insurance laws and relations throughout this state, commissioner is appointed by the governor and therefor this regulatory position is an appointed position and not an elective one -principal duty of commissioner is to administer and enforce and insurance laws that are in effect today, it is NOT THE POWER of duty of this office to propose legislation, make laws, or pass laws that is the responsibility of the state legislature -comissioner possesses several powers: -issue insurance related licenses or a certificate of authority -if a licensee or insurer breaks any laws the commissioner may after a hearing suspend the applicable license or certificate of authority or place the guilty party on probation (hearing shall not be less than 21 days following notice) -approve insurance policy forms and premium rates, all rates must not be excessive, inadequate or unfairly discriminatory, all policy forms to be used must be filed with the commissioner for review, if commissioner does not send to the insurer a rejection of the forms within 30 days after receiving them the insurer may use them -MASSACHUSETTES IS A FILE AND USE STATE-RATES MUST NOT BE excessive, INADEQUATE OR UNFAIRLY DISCRIMINATORY -examine the books and records of insurers, commissioner regulates an insurer for solvency -hold public hearings -require an affidavit of domestic insurers which will verify its financial condition in at least in every fifth year ager it becomes authored, insurer must allow the commissioner to examine its books and record at any time -examine and audit insurers at his or her discretion, delegate examining duties to a deputy or other authorize person, examination expenses incurred by the division are paid by the insurer being examined and must be paid within 30 days of receiving notice of charges -determine, set, or compute the reserves of life time insurers -regulate insurance advertising -issue a cease and desist order-10,000 per violation and be subject to license suspension or revocation, anyone that is engaging in unfair sales practice The primary reason for a Commissioner or Superintendent to audit or examine an insurer is to make sure that an insurer is solvent and can meet all of its financial obligations. (1043)

other concepts associated with disability insurance include but are not limited to:

presumptive disability: this a type of disability that is generally assumed to be TOTAl or of a permanent kind, may involved loss of use of limbs (paralysis) or the loss of sight, hearing or speech loss of earnings test: test is utilized to determine if an income loss has actually occurred, income or earnings include wages, salary, commissions, fees or compensation for services preformed (work) earned income does NOT include 1. rental income from real estate 2. interest on savings plans 3. dividends paid on stocks, bonds or other like investment partial disability: someone who is unable to preform one or some but not all of his or her duties,is person is partially disables and has added a partial disability benefit rider to his or her plan he will collect 50% of the monthly income benefit while partially disabled, payable for maximum of 6 months residual disability: like partial, involves a person who is able to preform some but not all of his or her duties, benefit provided by residual disability rider is paid if the loss of income is a residual effect of the disability, pays a percentage of the lost income which usually exceeds the flat 50% paid by partial disability, partial and residual disability riders may NOT be added to the same policy, residual disability will reimburse an insured based on his or her percentage of lost income due to covered disability ex. if insured disability is losing 65% of income a month rider will pay him 65% of monthly total disability benefit, sometimes benefits are "at work" benefits, both orders provide "at work" type of disability benefit since the insured is able to preform some but not all duties, this means that the insured is still able to continue working in some capacity but also able to recite partial or residual benefits from the disability policy permanent and temporary disability: permanent disability-involves the inability of the insured to preform work ever again, can't preform duties for an entire period (lifetime), loss of a leg=example, most presumptive forms are permanent temporary disability-reduces the ability to work on a temporary or limited basis, minor back injury keep individual out of work for 2 weeks=temporarily disabled -both permanent and temporary labels may be associated with total or partial (permanent/total vs partial/temporary), whenever insured is eligible to receive monthly benefits from disability income a general requirement exists which states that the insured must be under care of a doctor, if benefits continue a periodic doctor must be proved which verifies continuation of disability

health benefits mass

prevenetatie/primary emergency services hospitalization amblatory pateint services prescription drugs mental health/sustance abuse ervices three regular doctor visit deductible can't exceed 2000 or 4000 for family

private vs government insurers

private/commerical insurance companies: owned by private citizens or groups, offer individual, grow, industrial or blanket insurance policies govt insurers: owned and operated by fed or state entity, may either 1. write insurance to cover perils that are not insurable by commercial insurers (war, flood, nuclear reaction) or 2. write insurance on risks that are insurable and thus compete with commercial (workers compensation, social security) 3. also write insurance to cover catastrophic perils (flood)

risk management

process used by insurer of treating and managing loss exposures

ALCFs assisted living care

provided in a facility that cares for seniors who are too frail to care for themselves but do not yet require level of care provided by nursing home

long term care insurance

provides a broad range of medical and personal services for individuals who need assistance with daily activities for a lengthy period of time, due to mental or physical impairment as a result of the aging challenge, assistance needed may be provided in a nursing home, adult day care center, seniors home -cost of care provided in nursing home today is astronomically high -medicare and medigap plans provide minimal protection for this risk exposure -need for long term insurance care , can be purchased as an individual policy, group plan or through a rider added to life insurance policy -designed to cover at least 12 consecutive months for one or more necessary types of care in a setting other than hospital , DOESNT include coverage for hospital confinement -in order to be considered for long term care: 1. insurers must provide outline of coverage to consumer 2. policy owner must provide a free look period 30 days which policy may be returned to insurer and full refund of premium paid to owner 3. may not include substantially greater benefits for skilled nursing care than that provided for intermediate or custodial care 4. policies must include a renewability provision of at least guaranteed renewable 5. impairment riders limiting or denying coverage are not permitted -producers selling these policies are principally responsible for determining suitability of such plans, insurers are not permitted to offer producers additional incentives to sell such plans 4 major levels of care 1. skiled nursing care-consists of daily nursing and rehab care that may be preformed under skilled medical personnel and based on the orders of an attending physician , 24 hour nursing 2. intermediate nursing care-intermittent or occasional nursing and rehab care based on physicians orders 3. custodial care -involves the handling of personal ned such as bathing, walking, eating, dressing, taking medication, medically unskilled persons providing such non medical care are generally not medical peronell 4. home health care-may involved all of the mentions types of care, or visits by an Rn, LPN or a licensed vocational nurse (housework, meal preparation, therapy) it is provided in the patients home rather than in a nursing facility

workers compensation-government disability

purchased by an employer who provides benefits to employees who are injured arising out of the scope of their employment, in other words it protects employees who are injured on the job, covers "at work injuries and occupational illness" -includes benefits for unlimited medical expenses, rehab, funeral expenses, dependent benefits, disability income or loss of wages -workers compensation pays for medical expenses and weekly income for an employee injured within scope of his or her employment -employers are required bylaw to provide workers compensation benefits for employees -most common method to purchase WC coverage is in the voluntary (normal/regular) market from an insurer -coverage may be purchased in the involuntary or resident market through a state assigned risk plan if employers policy has been cal celled or non renewed -can also self insure by demonstrating to state officials that they have the ability (funds) to provide benefits to their own or by posting a surety bond -in a few monopolistic states workers compensation can only be purchased from a state operated fund (north dakota, ohio, washington, wyoming)

pure risk vs speculative risk

pure risk-only type that may be insured since it involves chance of loss only speculative-provides opportunity for loss or gain, may not be insured since it posses chance of gain ex. placing wager on super bowl

guaranty fund

purpose is to protect policy owners, insured, beneficiaries, and others against failure in the performance of contractual obligations due to the impairment or insolvency of the insurerer -fund pays the claims of persons whose insurer has become insolvent -fundable by all authorized users, three class assessments that may be levied on insurers when an insolvency arises 1. class a to pay for administrative costs and general expenses 2. class b for expenses incurred in connection with impaired or insolvent domestic insurers 3. class c for expenses incur by insolvent foreign and alien insurers -fund guarantees 300,000 death coverage for a life policy with 100,00 inc ash value -NOBODY CAN advertise anything that uses the existence of the mass life and health insurance guaranty association for the purposes of sales, also prohibited to unfairly advertise with regard to insurance guaranty fund, illegal for producer to inform or give the impression to lint or perspective client that the guaranty fund always covers the amount of claim

LTC long term care

purpose of mass LTC is to promote the sale and benefit of long term care policies to citizens in the commonwealth -standard coverage provided includes: custodial care, intermediate care, home health care, skilled nursing care -policies also provide cover for home day care care, assisted living care, respite care, adult day care -adult foster care, covering room board, personal care, care management which requires prior approval of covered services, chore care such as washing, cleaning, maintenance which allows senior citizen to remain in own house, homemaker care -DOES NOT provide for hospital confindemen standards for marketing/requirements for agent training and marketing -all agents marketing a carriers long term care insurance policy must disclose the fact that the agent receives compensation in connection with the sale or replacement of all long term insurance -LTC can't be issued in mass bless the potential insured receives a disclosure form called "your options for financing LTC" this guide must be provided to consumer no later than the first face to fax contract -no LTC can be delivered unless applicant receives outline of coverage, must be delivered prior to presentation of application enrollment form, carrier must deliver the outline of coverage at time that the application is sent in case of direct response -non forfeiture must be offered to every applicant without underwriting, carrier must require the applicant to specifically reject benefit in writing on application -first page of policy must disclose 1. if policy does not provide coverage for care in a nursing home 2. notice to buyer-this policy may not cover all of the costs associated with LTC incurred in the buyer during period coverage, the buyer is advised to review carefully all policy limitations 3. secant that lists pre exising condition exclusions or limitations 4. renewability section (non cancel or renewable guarantee) 5. any qualification for federal income tax exemptions and certain Mass health (medicaid) exemptions right to return-free look for LTC in mass is 30 LTC can't be delivered unless received policy illustration, deliver it no later than the time of each policy proposal or quote -inflation adjustment benefit is available, must purchase it, applicant must specifically reject it mass health exemption-treatment of former home as an asset, exemption concerning repayment or assistance provided for nursing facility and other lTC services a LTC policy must provide certain minimum courage requirements as determines by division of insurance to qualify for mass health individual must be covered person under a individual.group/employer policy issued on or after 3/15/99 1. policy must cover nursing and custodial care 2. policy must have available benefits of at least 125 per day 3. benefits available suffieiceint to cover at least 730 days/2 years 4. no policy may have an elimination period longer than 365 -adl: dressing, grooming, personal hygience, eating, bathing, accident prevention, walking, continence, taking medication, use of special aids, cognitive impaired such as alzheimers or senile dementia are also benefit triggers -written designation of at least one person who is receive notice of laps of termination of policy-to prevent lapse of policy -exceptions in LTc include pre exisitng condition, illness from war, commission of feolny, intentionally self harmed, attempted suicide, aviation injury, illness when in armed service, treatment in a govt facility, benefits if paid by medicare/ medicaid/WC, drug/alchohol services -post claims underwriting is not permitted, acceptability must be determined before policy is issued -lTC=guarnteed renewable -replacement, any preexisting condition limitation or pvosision in the new plan will be waived -pre exisitng conditions may not be for more than 6 months and must be identified on first page of policy -termination, for a legit reason 30 days of written notice -reinstatemetn allow reinstatement if requested within 5 months after termination

producers (4 types)

refers to the wide range of individuals who solicit insurance products to the public (4 types) 1. agents-represent the insurer that sponsors them 2. brokers-represent themselves and the insurance (client or customer) 3. solicitors-represent and solicit insurance on behalf of an agent 4. service representative-employees of an insurer, need license if getting commission

COBRA consolidated omnibus budged reconciliation

requires compliance by all employers with 20 more more employees and ensures that a laid off worker may continue health insurance coverage formerly provided by an employer for up to 18 months after lay of -former employee is responsible for payment of premium, beneficiary of a deceased employee will be allowed to continue health coverage for up to 36 months, also responsible for paying premium -group plans must include a provision providing that in the event that the insured person leaves the gropu covered by such insurance said person shall remain insured under such policy for a period of 31 days thereafter unless he or she shall otherwise be benefited (WC)

delivery of group plans

similar to individual, once group health insurance policy is issued it must be delivered to policyholder, producer will generally deliver a group health insurance policy to the location of the employer since the employer is the policyholder

dental insurance

specialized form of health expense coverage focusing on diagnostic and preventative treatment that is designed to pay for regular dental care and care necessitated by accidents -generally write on a group basis and subject to deductible -preventative care-no deductible for routine dental examinations

concept of indemnity

states that the purpose of insurance is to restore an insured to his or her original financial position, makes the insured "whole" again following a loss

other benefits available-medical insurance

supplemental accident benefit-included in major medical plans, may require extra premium, insured will received first dollar coverage up to a stated amount if he or she suffers an accidental injury, no requirement of deductible coverage for dependent children-plans may cover an entire family including the insured, spouse, children, as children are born they are covered immediately, premium must be paid for them, dependent children are covered by their parents health insurance up to a specified age, the affordable care act ACA now allows coverage up to age 26, other plans cover dependents up to 18, but if full time student up to 23 -coverage may also continue for children who are incapable of earning their own living due to emotional, mental or physical infirmity, and physically challenged and handicapped dependents, such children are covered by their parents until they are self reliant , periodic proof of dependency must be provided to the insurer by parents usually at policy renewal

HEALTH SAVINGS ACCOUNT-HSA

tax sheltered savings account similar to IRA, earmarked for medical expenses, referred to some as the next generation MSA -deposits in HSA are 100% tax deductible for the self employed and can be withdrawn to pay for routine medical bills with free tax dollars -what is not used from account each year stays in the account and continues to grow interest on tax favored basis elgibility-any individual under 65 can contribute to HSA if they are covered by a government approved high deductible health plan HDHP-in addition any individual is eligible who 1. is not covered by any other health plan that is not an approved HDHP except WC 2. not entitled to benefits under Medicare 3. may not be claimed as a dependent on the tax return of another person qualified withdrawals-these are tax free at any age if used to pay medical expenses including 1. physicians visit 2. prescription drugs 3. chiropractic 4. dental 5. vision 6. therapies (acupuncture) 7. traditional in patent and out patient medically related expenses -withdrawals can also be used to pay for COBRA premiums, health insurance premiums and png term care premiums penalties for non qualified withdrawals-subject to 20% penalty and must be reported as ordinary income, over age 65 must be reported as ordinary income in the year withdrawn deductibles and contributions-in order to qualify the law requires that an individual carry a high deductible health plan, size of deductible depend upon the number of people actually being insured funding-HSAs can be funded by a combination of employer, employee and family member contributions, all contributions made by or on behalf of an eligible individual are aggregated for the purpose of applying the ams limit, rollovers are not subject to annual contribution limits tax treatment-contributions made by family members are tax deductible, employer contributions are tax deductible,

license process

the common content to be reviewed includes: mass producer licensing info, the powers and duties of the insurance commissioner, illegal sales practices, the fiduciary responsibilities of producers, advertising regulations and types of insurer resident: common wealth is now issuing producer licenses in the following lines of authority: life insurance, accident and health or sickness, property, casualty, personal lines, limited lines credit insurance, variable life and annuity products non resident:an individual may secure this type of license if they are licensed in their home state and satisfy all Massachusetts requirement for a non resident license fire adjuster-must be at least 21, pass state exam, submit letter of interest, have 2 years experience, submit 2 passport sized photographs taken within 60 days of application and be competent and trustworthy, he will settle or adjust losses on behalf of the public-once issued the license is good for three years from its due date of issue, must pay fee every 15 years, and complete 15 credit hours of approved continuing education adviser-an invidiual who provides insurance advice for compensation, in form of prearranged fee ,amount must be disclose to client in writing prior to consolation, also referred to as an insurance consultant, counselor, specialist, analyst/policy holder-you must have an advising license, a licensed attorney or CPA may provide insurance related advice without having an adviser license, to provide free advice must secure license from the commonwealth, an advisor mAY NOT be an officer of regular salaried employee of an insurer (or be producer acting for an insurer), may be an individual, partnership, firm or corperation requirements to become an advisor 1. must submit to division of insurance alter of interest describing background, resume with credentials and work history for the past 10 years written contract 2. must be 18 or older 3. must pass written exam 4. must have never had an insurance license revoked or suspended 5. must be honest, trustworthy and competent as indicated by there references provided to the commonwealth, non refundable license fee paid to commonwealth every 3 years is 200, anyone acting as an advisor without a license or during license suspension may be fined not less than 50 nor more than 500 prison sentence of no more than 6 months special broker-individual who places insurance business with insurers that are not authorized to transact business in this state, also known as a SURPLUS LINES BROKER, can negotiated for many types of insurance except accident and health, WC, compulsory motor vehicle liability or life insurance, can be issued to an individual, partnership, corporation or firm, holder must post a surety bond to guarantee performance as well , every time transaction must file an affidavit within 20 days reinsurance intermediary-secured by an individual or firm that negotiated reinsurance contracts with reinsurers on behalf of the insurer, none can act as a reinsurance intermediary in the commonwealth unless he or she is a licensed producer and maintains an office in this state or is licensed as a producer in another state and their home has reciprocity with the commonwealth of mass, must be 3 years prior licensed as an insurance, applicant shall state all business affiliations for preceding 10 years, pass written exam, competent and trustworthy, once issued license is good for 3 years life settlement broker-must hold a life settlement broker license, must file 1. a coplete life settlement broker license application 2. a check payable to the commonwealth of mass 3. anti fraud plan that meets the requirements state law 4. if applicant is a business entity it must be organized under las of mass temporary license-issued to a surviving spouse or to a court appointed designated person when a licensed individual dies, becomes mentally/physically disables, enters armed services, period will last 180 days and does not require state exam , can't write new business can only receive renewal commissions, this type of license may not continue once the wonder disposes of the business, if an individual designated in a business entity license died or becomes disabled a temporary license may be issued to a member or employee of that business entity An insurance consultant is an individual who provides advice and consultation to a client regarding insurance needs. Most States do not regulate the fee that a consultant charges a consumer as long as it is in writing by the consultant before the advice is provided. (1058)

STANDARDIZED PLANS

the foundation of all medicare supplement plans is the core benefits include, must include core benefits, additional benefits or levels of coverage may also be included but the core benefits are always present 1. par a copayments for days 61-90 of hospitalization 2. part a copayments for days 91-150 which is the 60 lifetime reserve days 3. 100% charges for 365 additional days of hospital confinement once part a and life it reserve are used 4. coverage for the 3 pints of blood not covered under a of medicare (blood deductible) 5. pat b copayments for approved physician and other medical expenses requirements: the NAIC model states that medigap policies must meet several requirements, example: at time of application all applicants must be provided with a medicare supplement buyers guide , all policies must also include a 30 day free look or right to examine provision, additional requirements include: -must be at least guaranteen renewable for life -may not contain any exclusions, limitations, reductions which are not consistent than medicare -pre existing conditions may not be included, waiting period can't exceed 6 months -benefits must increased automatically to cover deductibles and coinsurance not covered by medicare -agent must receive a signed statement from an insured that duplicate coverage is not being solicited=prohibited -minimu loss requirement for individual medigap policies is 65% while requirement for group medigap polices is 75% advertising and marketing- marketed to those who are covered by medicare, policies are generally sold to individuals who are 65 and older, states strictly regular policies -sale of duplicate medigap coverage is prohibited -3 methods used to calculate medigap premiums 1. issue age 2. attained age 3. no age rating (whoever purchases it pays the same rates)

point of underwriting

the function and purpose of this department is to review applications for insurance coverage to determine if the proposed insured is insurable -application accepted=safe to conclude that the underwriter feels that the insurers will derive a profit from this business -application rejected=due to the fact that the risk is excessive as compared with the premium that would be charged, business would not be profitable

competent parties

the parties (applicant and insurer) must posses the legal capacity to enter into that contract, if person is competent he or she has such capacity, most people are considered competent to enter into a contract, exceptions include: -minors (except those entering into agreement for necessities such as food, clothing, shelter) -insane or mentally incompetent individuals -individuals under the influence of alcohol or drugs at time to application -persons forced or coerced into contract -enemy aliens (foreign national of a country with which the us is at war) -convicts (based on state law)

how is transfer accomplished

through an insurance contract between two parties (applicant and insurer)

long term care insurance promises

to pay expenses incurred if the insured is unable to engage safely in various activities of daily living , LTC policies promise to pay benefits if the insured is unable to preform basic daily activities without assistance, most policies require that a functional assessment of the insured be made and that he oe she be unable to preform two activities of daily living for at least 90 days before benefits are triggered, ADL=bathing, dressing, eating, transferring or moving about the home, continence, toiling and taking medication -cognitive impairment=senior suffering from alzheimers disease, strokes or other types of brain damage or senile dementia, provision describes policy will pay benefits if the insured is suffering from cognitive impairment

insurance

transfer of risk from one party to another- through the pooling or accumulation of funds -spreads the risk of loss from one person to a large number of persons through the pooling of premiums -individuals financial uncertainty with regard to a possible loss is reduced *can be referred to as: economic or social device used for the transfer or risk from one part to another through accumulation or pooling of funds (premiums)

disability income insurance

type of health insurance, protects an insured's loss of earnings if he possess the inability to engage in his occupation and earn and income as a result of a covered accident or sickness

risk

uncertainty or chance of financial loss

underwriter duties

underwriters determine whether to accept or reject a risk, classify risks, determine premiums and attach impairment rides or other limitations

risk classifications (3)

underwriters divide applications into different classes or categories or risks, premiums charged will be affected by risk classification, three main classifications 1. STANDARD-one who is in good health and will be charged standard or normal premium, no additional risk facts, smokers/non smokers, a smoker can be standard in every way except for that fact that he or she smokes cigarettes, cigars, or even chews tobacco-extra premium charged, some insurers classify smokers are substandard risk (can include smokers) 2. SUBSTANDARD-those who are not in best health, extra premium charged, applicants who have dangerous hobbies, or in poor health, obese, a substandard risk that IS approved will be charged extra premium because of adverse or increased exposure placed upon insurer, additional premium allows insurer to provide coverage for a substandard risk (extra risks if they need additional premium) 3. PREFERRED-perfect health, non smokers, lowest premium rate, insurer "prefers" this risk

distinct characteristics of insurance contract

unilateral-language developed by one party-the insurer (one sided contract), an act exchanged for a promise, this also means it is a contract where only one party must preform (the insurer makes the promise to provide coverage and pay valid claims) adhesion-drafter by insurer and accepted by applicant, insurers draws up all the contract language and the applicant must act according tot he language-any language that is unclear of ambiguous will be decided in court in favor of the insured ex. doctrine of reasonable expectation-according to this court of law will state that an insurance contract may be interpreted by a "reasonable" consumer to mean what the producer or insurer has indicated it means aleatory-aleatory since one party may recover more in value than he or she has parted with based on possible future event-AKA when someone dies the claim payment you receive will be more than the premium you paid, however the policy owner pays premium with NO guarantee of receiving a benefit unless a loss occurs (the chance that you never need insurance) (an aleatory contract is one characterized by an unequal payment, policy owner receiving a lot of coverage in return for a small fee (premium)) conditional-insurance policy may be described as a conditional contract since its function is conditional upon the performance of the parties arriving at an agreement, the insurer promise of paying claims is conditional upon the payment of premium in order to keep coverage in force, policy owner and insurers must satisfy certain aspects before the contract can be executed personal-agreement between company and a PERSON, even though its providing coverage for a life/home/car agreement is between company and a PERSON utmost good faith-two parties enter into agreement in good faith, each party must tell truth, each are relying on statements from each other -insurer relies on statements made by the insured and the insured relies on the promise made by insurer -if insured intentionally conceals info that would influence whether or not coverage is provided the insurer may posses grounds for voiding contract since the insured has not acted in god faith

how to insurers manage their distribution systems

use of branch office or the general agency system -branch office system: made up of insurer employees -general agency (GA system): 2 types 1. Managing general agent (MGA) type: appoints/hires and supervises producers while also preforming some service work such as underwriting and claims 2. PPGA-personal producing type: does not appoint producers and is general a personal producer

types of dental plans

usually written on indemnity basis (reimbursement) and provide choice of providers -schedule plans=basic plans, function like surgical expense plan, contain no deductibles or coinsurance amounts and provide first dollar coverage non scheduled plans-comprehensive plans, most common, include deductibles and coinsurance, generally divided into 3 categories 1. routine/basic diagnostic and preventive services (x rays, cleaning/fluoride) 2. restorative services (not routine, fillings, oral surgery, periodontics) 3. major services (crowns, orthodontics, facial reconstructions, bridgework) -generally coinsurance amounts are 80% basic services and 50% major services and policy usually includes deductibles -many standard plans include coverage for routine care and other benefits may be added for additional premium another plan=combination plan, combine features of both of the previously mentioned plans, may cover diagnostic and preventive series on a UCR basis but contain a schedule of benefits for other covered service -all dental plans include limitations, exclusions and predestination of benefits -common exclusions: cosmetic procedures, services paid by govt, WC, duplicate dentures, replacement of lost/stolen dentures, oral hygiene instructions -limitations on benefits such as calendar year maximum of 2500 or lifetime maximum of 2000 for orthodontics -predetermination of benefits requirement, review of suggested treatment to ensure that it is reasonable and necessary employer group dental expense-dental coverage can be written as part of an integrated plan or a standalone plan -no matter what plan is involved the insurer continues to be wary of adverse selection, in some cases insurers impose more intense underwriting to minimize adverse selection, some insurers limit/reduce benefits by 50% or exclude them for a specified period which helps them reduce adverse selection -rules regarding open enrollment periods and late enrollees are also applicable to dental plans

agreement-contract law

valid offer and acceptance must be present -offer and acceptance also referred to as agreement -offer=proposal by one party that if accepted by other party will create and agreement, offer generally made by the applicant then the insurer will accept or decline offer based on underwriting, if accepts=agreement -acceptance can be demonstrated by the insurer issuing or the producer delivering the policy -there must be a genuine assent between the parties-neither party must be under duress or any undue influence -if applicant submits application without initial premium he or she is making an invitation -the offer is not complete unless the premium is included -if the insurer makes a counter-offer the original offer made by the applicant has been rejected by the insurer

limited policies

various types of health insurance are provided by limited contracts which generally cover one or a few types of losses, these policies must stipulate in large print and provide notice to an insured that they only provide limited benefits, no age limitations with regard to purchase of limited policies, include but are not limited to: -hospital indemnity/income-pays a daily benefit to an insured if he or she is confined to hospital accident only-pays a benefit to insured if suffers an injury as a result of a type of accident on or off job accidental death and dismemberment (ad&d)-policy pays a tax free lump sum death benefit (principal sum) when an insured dies but also pays lump sum benefits (capital sum) when an insured suffers severance of limb in an accident or sugars presumptive disability as result of accident cancer and specified dread disease-critical illness plans, limited policies pay specified amount for treatment of cancer and other specified disease only travel accident- pays a specified amount of injuries suffered in common carries (Commercial airlines, train, bus) blanket policies-pays a benefit for members of a covered group who are formed for a reason other than employment, student members of sport team bus excursion passengers, summer camps credit disability-available to banks, finance companies, retailers with regard to loans or time payment purchases, any payments made by this type of plan must be used to relieve the debtor (borrower) or making monthly payments during the time he or she is disabled, coverage will decrease as loan is being paid hospital indemnity-hospital income, confined to hospital due to accident/illness, pays amount per day, may depend on accident/illness or cover both prescription drugs-covers cost of drugs required to be dispensed by physicians prescription, normally drugs for which a prescription are not required are not covered except injectable insulin for diabetics , doesn't cover bandaids, needles, or for drugs for sexual dysfunction/infertility, most plans have copayment, 2 methods 1. reimbursement 2. service approach-copayment, what I have -pharmacy benefit managers (PBM's) administer drugs on behalf of insurers, hmos, ppos, self funded employers, BC/BS, TPA -PBMs develop networks for the dispensing drugs and engage in other related activities such as 1. drug utilization review 2. physician profiling/education 3. pharmacy profiling/education 4. patient profiling/ education, also make formulary=list of preferred medications, a formulary informs doctors of approved uses of new panel drugs on the market and appropriate use for existing drugs vision care-available as an individual or care out plan or through group insurance, may provide coverage for 1. routine eye exams 2. vision correction 3. basic frame, these plans DONT cover safety lenses, prescription sunglasses, plastic lenses, upgrade of frames, benefits for necessary eye surgery or treatment for eye diseases schedule benefits-font provide comprehensive health care benefits, less costly

Conditional Recept

when agent takes application and collects initial premium from the applicant a conditional receipt must be provided, coverage will generally begin as of the date appearing no the receipt as long as all "conditions" are satisfied, therefor in many cases an applicant is "conditionally insured" as of the date of the receipt, the date on conditional receipt is ALWAYS prior to the issue date of the policy

hospital confinement benefit

when this benefit is included in a disability income policy an additional benefit is paid over and above the regular monthly total disability benefit while the insured is confide to a hospital, generally benefits are payable from first day of confinement up to 6 months, indemnity type of rider and not one of reimbursement