Ch. 1* - Health and Accident Insurance Flashcards Preview

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Flashcards in Ch. 1* - Health and Accident Insurance Deck (55)
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Health Insurance

is a general way of describing insurance again t loss through sickness or accidental bodily injury. It is also called accident and health, accident and sickness, sickness and accident, or disability insurance. It is important to remember the general term "health insurance" applies to many different types of insurance, not just medical insurance that pays for doctors and hospital visits.


Disability (income) insurance

is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work. Although disability insurance is designed to protect one's income, there are typically rules and regulations in place limiting the benefits of a disability policy to one's income level, and typically only allowing protection for a portion of their income.


Medical expense insurance

pays benefits for nonsurgical doctors' fees commonly rendered in a hospital; sometimes pays for home and office calls


interim coverage

is a short-term policy purchased on an interim basis typically when in between jobs or waiting for a new policy to start


Accidental death and dismemberment

insurance (AD&D insurance) is the purest form of accident insurance. It provides the insured with a lump-sum benefit amount in the event of accidental death or dismemberment under accidental circumstances


Nonparticipating Plan of insurance

a plan under which the policy owner receives shares (commonly called dividends) of the divisible surplus of the company


Patient Protection and Affordable Care Act

was designed to increase health insurance quality and affordability, lower the uninsured rate by expanding insurance coverage and reduce the costs of healthcare. It introduced mechanisms including mandates, subsidies and insurance exchanges. The law requires insurers to accept all applicants, cover a specific list of conditions and charge the same rates regardless of pre-existing conditions or sex. The patient protection and affordable care act, often shortened to the Affordable Care Act (ACA) and nicknamed Obamacare, only applies to specific medical coverage. It does NOT apply to ALL health insurance policies.


Group Health Insurance

is insurance that provides coverage for a group of persons, usually employees of a company, under one master contract. Group health plans are available to employees, trade and professional associations, labor unions, credit unions, and other organizations. insurance is extended to individuals in the group through the master contract. This normally does not require individual underwriting nor evidence of insurability. the employer or the association is the policyowner and is responsible for premium payments. The employer may pay the entire premium or may require some contribution from each member to cover the insurance cost.


Renewability Provisions

define the rights of the insurer to cancel the policy at different points during the life of the policy. There are five principal renewability classifications: cancellable, optionally renewable, conditionally renewable, guaranteed renewable, and noncancellable. Generally speaking, the more advantageous the renewability provisions to the insured, the more expensive the coverage.


Cancellable policies

allow the insurer the option to terminate the policy on a date specified in the contract. If the insurer decides to renew (not cancel) the policy, they also have the option (and usually choose to) increase the premiums on the anniversary date.


Conditionally Renewable

policies give the insurer the option to terminate the policy only in the event of one or more conditions stated in the contract. Typically, these conditions are age related. If the insurer decides to renew (not cancel) the policy, they also have the option (and usually choose to) increase the premiums on the anniversary date.


Guaranteed Renewable Policies

specify that the policy MUST be renewed (usually until the insured reaches a specified age). However, the insurer still has the option (and usually choose to) increase the premiums on the anniversary date. Medicare supplement policies and long-term care policies are the most common types of guaranteed renewable policies.


Noncancellable plans

state the policy cannot be cancelled nor can its premium rates be increased under any circumstances. Disability policies are the most common cancellable (noncan) policies.


nonrenewable policies

are for established policy lengths of a year or less (typically short-term health insurance) and are considered temporary


cafeteria plans

are benefit arrangements in which employees can pick and choose from a menu of benefits, thus tailoring the benefits package to their specific needs. Taxation of cafeteria plans is regulated by Section 125 of the internal revenue code, thus sometimes cafeteria plans are referred to as a section 125 plan


Business continuation plans

provide a way to help a business continue in the event an owner or key employee dies, or in the event of a disabling sickness or injury.


Business Overhead Expense Insurance

a form of disability income coverage designed to pay necessary business overhead expenses, such as rent, should the insured business owner become disabled. Overhead expenses include such things as rent or mortgage payments, utilities, telephones, leased equipment, employees' salaries, and the like. This includes all of the expenses that would continue and must be paid, regardless of the owner's disability. Business overhead expense policies do not include any compensation for the disabled owner.


Disability Buy-Sell plans (disability buy-out agreement)

are agreements between business co-owners that provides that share owned by any one of them who becomes disabled shall be sole to and purchased by the other co-owners or by the business using funds for disability income insurance. The buy-out plan usually contains a provision allowing for a lump-sum payment of the benefit, thereby facilitating the buyout of the disabled's interest. The policy is legally binding and proceeds are normally received tax-free.


Key person disability insurance

is the protection of a business against financial loss caused by the death or disablement of a vital number of the company, usually individuals possessing special managerial or technical skill or expertise. This type of coverage pays a monthly benefit to a business to cover expenses for additional help or outside services when an essential person is disabled. Benefits are received by the business tax-free because the premium paid is not tax deductible.



is an employee benefit plan under which the employer bears the full cost of the employees' benefits; in most states, the plan must insure 100% of eligible employees



is an employee benefit plan under which the employer bears the full cost of the employees' benefits; in most states, the plan must insure 100% of eligible employees



is a group insurance plan issued to an employer under which both the employer and employees contribute to the cost of the plan. Generally, 75% of the eligible employees must be insured in most states.


Coordination of benefits

is designed to prevent duplication of group insurance benefits. Limits benefits from multiple group health insurance policies in a particular case to a % of the expenses covered and designates the order in which the multiple carriers are to pay benefits.


enrollment period

is the limited period of time during which all members may sign up for a group plan. this period typically happens once a year for a set number of days.


enrollment card

must be completed and signed by a new employee during the open enrollment period to enroll in group insurance


waiting period

is a period of time (often 12 months) beginning with your effective date during which your health insurance plan does not provide benefits for pre-existing conditions. This period may be reduced or waived based on any prior health care coverage you had before applying for your new health insurance plan.


probationary period

a specified number of days after an insurance policy's issue date during which coverage is not afforded for sickness. Standard practice for group coverages as well as disability coverage. The probationary period typically does NOT apply to accidents. The real goal of this provision is to prohibit people from buying insurance only when they need it and immediately filing a claim, otherwise known as adverse selection


health insurance portability and accountability act (HIPAA)

provides the ability to transfer and continue health insurance coverage for millions of american workers and their families when they change or lose their jobs. The HIPAA Privacy Rule provides federal protection for an individual's health information and gives patients an array of rights with respect to that information. The HIPAA security rule provides technical safeguards to assure the confidentiality, integrity, and availability of electronic protected health information.


Conversion Privelege

allows a policy owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at the time of conversion) or at the original issue). Conversion is a common privilege for term life insurance and all group insurance. The insured does not have to prove insurability (good health) when converting a policy.


Preexisting conditions

is an illness or medical condition that existed before a policy's effective date; usually excluded form coverage, through the policy's standard provisions or by waiver. Under HIPAA, are defined as health issues that existed, were treated, or diagnosed within 6 months prior to employment. An enrollee's pre-existing conditions for a health benefit plan may be excluded for up to 12 months (18 months for late enrollees). a late enrollee is an individual who elects coverage after the initial eligibility period.