Accident and Health Insurance Basics

3 most important factors when underwriting health insurance:

1. physical condition of the applicant and other insureds; 2. moral and morale hazards; and 3. occupation

sickness, medical necessity and emergency

2nd type of health insurance peril

3 types of limited accident policies

Accidental Death and Dismemberment (AD&D), Travel Accident, Specified (Dread) Disease

advertising don't do's:

CANNOT contain descriptions of policy limitations that are worded in a positive manner. Accuracy of the negative aspects much be forthright. Cannot imply anything beyond the coverage in the policy terms. i.e. "THIS IS A LIMITED POLICY"

orthodontic care

If included, will have separate maximum and separate deductible, which may differ from the deductible for restorative care.

government insurance

Medicare/Medicaid for disabled and 65+ (Medicaid offers federal and state sponsored programs), also disability insurance through Social Security

sales presentations

Must be accurate and complete. Including any and all promotional materials, policy applications, replacement forms, outline of coverage and any other forms or information used in connection with solicitation or sale of accident/health insurance.

dental care

Several types of insurance provided: Routine and Preventative Maintenance; Routine and Major Restorative Care; Orthodontic Care

Specified (Dread) Disease

a dread disease, or limited risk, policy provides a variety of benefits for a specific disease such as cancer policy or heart disease policy. Benefits are usually paid as a scheduled, fixed-dollar amount of indemnity for specified events or medical procedures, such as hospital confinement or chemotherapy.

waiting period

a period of time that must pass after a loss occurs before the insurer starts paying policy benefits

enrollee

a person enrolled in a health insurance plan, an insured (doesn't include dependents of the insured)

riders

added to the basic insurance policy to add, modify or delete policy provisions

fully insured plans

administered and guaranteed by an insurance company, standard premium collection process and insurer assuming risk for policy period.

association group

alumni group or professional group (e.g. state teacher's association) can purchase group insurance for its members. Normally: maintain minimum 100 members, have been active for at least 2 years, have constitution and by-laws, and hold meetings at least annually.

copayment

an arrangement in which an insured must pay a specified amount for services "up front" and the provider pays the remainder of the cost

solicitation

an attempt to persuade a person to buy an insurance policy; it can be done orally or in writing

medical emergency

an emergency medical condition is one which is so severe in pain or symptoms that if not treated quickly and properly could cause serious bodily harm, or possibly death.

routine and preventative maintenance

annual maximum without deductible or copayment. Usually has: routine exams and cleanings once a year, maybe full mount X-rays once every 3 years.

health insurance

broken up into two categories: insurance related to health care expenses, and insurance to assist in loss of income due to health episodes.

Accidental Death and Dismemberment (AD&D)

can be rider or separate policy; frequently part of group life and group health plans; lump sum benefit payment upon death or loss of specified limbs. ACCIDENTS ONLY. Principal sum paid on death (face amount or policy worth). Capital sum paid for loss of sight or limb, a percentage of the principal sum. Policy usually pays principal (all of it) for total sight loss or 2+ limbs lost. Sometimes policies pay double or triple indemnity.

pre-existing conditions

conditions for which the insured has received diagnosis, advice, care, or treatment during a specific time period prior to the application for health coverage

comprehensive plans

cover all sickness or accidents that are not specifically excluded.

vision and hearing care

cover eye examinations and eyeglasses, or hearing aids on a limited basis. Some employers provide this type of group insurance. Affordable Care Act makes pediatric vision benefits mandatory.

blanket insurance

covers members of a particular group when they are participating in a particular activity. Such groups include students, campers, passengers on a common carrier, or sports teams. Insured names are often unknown because they come and go. Unlike group health insurance, individuals are automatically covered, they do not receive a certificate of insurance. Commonly written, pay on an accident-only basis.

limited insurance plans

covers only specific accidents or diseases

private insurance

covers the large portion of all individual and group health insurance.

differences in group plans from individual plans

evaluation of inherent hazard and assignment of the appropriate class and premium rate. Underwritten to prevent adverse selection against the insurer by individuals eligible for coverage.

employer group

formed by one employer for the benefits of its employees. Employee includes: owner running business, partners in partnership, retired employees, former employees, directors of corporation.

Comprehensive coverage

health insurance that provides coverage for most types of medical expenses

medical necessity

healthcare services that a prudent healthcare professional would provide to a patient in order to prevent, diagnose, or treat an illness, injury, or disease.

credit disability

issued only to those in debt to a specific creditor. In case of the borrower's disability, payments to the creditor will be made on the loan until the disabled borrower is able to return to work.

self funded plans

large companies that engage in the same types of activities as commercial insurance when dealing with its own risks. When involving the law of large numbers and predictions regarding future losses, commonly referred to as self insurance. Must develop formal programs for identifying, evaluating and funding their own losses.

outline of coverage

must be delivered at the time of application or upon delivery of the policy. Does not need to be immediate with direct response sales, just ASAP there

sickness

normally defined as an illness that first manifests itself while the policy is in force. The majority of health insurance claims result from sickness rather than accidental injury.

accidental injury

one type of health insurance peril; accidental bodily injury is an unforeseen and unintended injury that resulted from an accident rather than a sickness

travel accident

provides coverage for death or injury resulting from accidents occurring while a fare-paying passenger is on a common carrier. ONLY PAID IF THE LOSS OCCURS during the time of travel.

dependent

someone relying on the insured for support

hospital indemnity

specific amount on a daily, weekly, or monthly basis while the insured is confined to a hospital. Payment is unrelated to the medical expense, BASED ONLY ON THE NUMBER OF DAYS CONFINED IN A HOSPITAL. i.e. hospital fixed-rate policy.

underwriting

the first step in the total process of insuring health risks. Basic purpose is to minimize the problem of adverse selection.

deductible

the portion of the loss that is to be paid by the insured before any claim may be paid by the insurer

routine and major restorative care

treatments for cavities, oral surgery, bridges, and dentures. Covered up to a specific maximum, subject to annual deductible per insured family member and a coinsurance.

insolvent

unable to meet financial obligations

individual plans

underwritten to cover the applicant, their spouse and family

advertising of Guaranty Association

unfair trade practice to make any statement than an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association.

prescription drugs

usually an optional benefit under a group medical policy. Generally, insured pays a copayment, insurer pays the balance. Generally there are limitations on quantities that one can purchase at one time.

common exclusions from coverage:

war or act of war injuries/sicknesses; intentionally self-inflicted injuries; elective cosmetic surgery; experimental/investigative procedures; conditions covered by worker's comp; government plans; participation in criminal activity; injuries resulting from drug or alcohol intoxication (unless administered by physician)