Chapter 14 Flashcards Preview

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Flashcards in Chapter 14 Deck (43):

how does the length of the grace period included in individual health insurance policies vary (compared to individual life insurance)

it varies depending on how frequently renewal premiums are paid.
- usually 30-31 days


how is the incontestability provision included in most individidual medical expense policies?

states after the policy has been in force for a stated period of time (2-3 yrs) the insurer can not use a material representation unless the misrepresentation is fraudulent.


what is special about the US once an individual medical expense insurance policy is in force?

insurers are prohibited from denying any claim on basis of material misrepresentation unless the misrepresentation if fraudulent.


does the incontestability provision included in the individual disability income policies include a reference to fraudulent misrepresentation?



what is the incontestability proivision included in LTC policies?

states an insurer's right to avoid the insuance contract on the basis of material representation in the application typically varies depending on the length of time the policy has been in force.


if the individual long-term are policy has been in force for 6mo-2yrs, can the insurer use material representation in the application to contest the policy or deny a claim?

no, unless the misrepresentation pertains to the condition for which the benefits are sought.


what is the claim provisions associated to individual health insurance policies.

define both the insured's obligations to provide timely notifications of loss of the insurer and the insurer's obligations to male prompt benefit payments to the insured.


Individual health insurance policies typically include a legal actions provision. What is it:?

limits the time during which a claimant who disagrees with the insurer's claim decision has the right to sue the insurer to collect the amount the claimant believes she is owed under the policy.


To prevent insured from profiting form an illness or injury, many individual health insurance policies contain an overinsurance provision. what does it stare?

the benefits payable under the policy will be re5duced if the insured is overisnure5d.


what is an overinsured person?

one who is entitled to receive either 1) more in medical expense benefits than the actual costs incurred for tx; or 2) a greater income amount during disability than the amount that would have been earned from working.


when does the overinsurance provision take effect?

only if the insurer was not notified of the other existing coverage at the time of application.
- the amount of the benefit is reduced and premiums are refunded for the excess coverage;.


what is a physical examination provision?

state that the insurer has the right to have an insured who has submitted a claim examined by a physician of the insurer's choice at the insurer's expense.
- allows for validity of the disability income claims
- also verifies that the insured is still disabled.


What are the 7 primary factors that affect the degree of morbidity risk a proposed insured presents?

1. age
2. health
3. sex
4. occupation
5. avocation
6. work history
7. habits and lifestyle.


what are 4 differences between life insurance and health insurance in terms of financial design?

1. amount payable. life= definate, health= less so.
2. claims. health= many, life= one death claim
3. inflation, health=affected, life= less so.
4. geographical areas. health= medical cost around the country different, life= death benefit doesn't vary


how does an insurance company create the financial design of a health insurance product?

calculates the product's claim costs.- the cost the insurer pre5dicts that it will incur to provide the policy benefits promised.
- estimates the claim cost for each type of benefit provided.


what is the premium the customer pays for a health insurance policy based on?

choices the applicant makes concerning the coverage the policy provides.
- the amount of the policies deductible,
- possible elimination periods
-maximum benefit peri8ods


a number of jurisdictions require an insurer's loss ratio to be at least a minimum stated percentage. What is a loss ratio?

stated as the % of premium paid out in benefits for a block of policies.
- calculated by dividing the total amount the insurer paid out in the policy benefits for a block of policies by the total premiums the insurer received for that block of policies.


What type of health insurance policy is typically issued by commercial insurers?

Group health policies. which is a contract between an insurer and the group policy holder that purchased the group insurance coverage


what goes each insured group member receive from a group health insurance, instead of a contract copy?

certificate of insurance/ benefit booklet
-explains terms and rights of the policy


can a group policy holder choose to purchase various types of health insurance coverage from multiple providers?



what does the group medical expense insurance policy specify ?

the types of medical expenses they cover, the max benefit, and the deductible amount and the coinsurance features


what does the group LTC policies specify?

the types of care covered, the benefit triggers, the daily benefit amount, the length of the max benefit period and the length of the elimination period.


do group disability income policies provide coverage for dependents of group members?



do both individual disability income policies and group disability income policies include a physical examination provision.



why was the coordination of benefits provision created?

it was desgined to prevent a group insured who is covered under more than one group medical expense policy from receiving benefits amount that are greater than the amount of medical expenses the insured actually incurred.


what is an allowable expense, in terms of determining the amount of payable benefits using COB provision?

Are the reasonable and customary expenses that the insured incurred and that are covered under the insures group medical expenses plans. `


another type of coordination of benefits provision is ca nonduplication of benefits provision. Define this.

its a COB provision that, if included in a secondary providers plan, limits the amount payable by the secondary plan to the difference between the amount paid by the primary plan and the amount that would have been payable by the secondary plan had the plan been the primary.


how do you determine which plan is the primary provider of benefits?

1. most stat that when an insured also is covered by a plan that does not include COPD, the one without COB is the premary.
2. if they both have COB the primary plan is defined as the plan covered by employer over individual


what is a common rule for determining a primary provider when an individual is covered as a dependent under more than one group plan (think couples)

birthday rule.
- employees who's birthday falls earlier in the calendar year will be considedred the primary provided of benefits for a dependant.


what does the conversion provision do?

give an insured group member who is leaving the coup a limited right to purchase an individual medical expense policy without presenting evidence of insurability.


a person who elects to continue group medical expense coverage typically pays what?

the full cost of continuation coverage, including any portion of premiums that the employer had paid.


what is funding mechanism?

the way in which group insurance plan's claim costs and administrative expenses are paid


there are two extremes to the funding mechanism. Fully insured plan and fully self-insured plan. Define these

1. fully- group policyholder makes periodic premium payments to an insurance company and the company bears the responsibility for all claim payments.
2. self- the group policyholder (employer) takes complete responsibility for all claim payments and related expenses.


are most group long-term disability income and group LTC insurance plans fully insured or self-insured?

fully insured.


many employes use what kind of contribution plan to cover most fully self-insured short-term disability income coverage ?

a salary continuation plan, which provides 100% of the insured employee's salary, beginning on the first day of the employee's absence resulting from illness or injury and continuing for a special period.


are most group medical expense insurance plans full or self-insured plans?

they are partially self-insured.
- employer is responsible for paying certain level of claims, and the extra is transferred to traditional health insurance provider.


what is stop-loss insurance.

associated to employers that purchase self-insurance, it enables employers to place a max dollar limit on their liability for paying health insurance claims.


what is the stop-loss satement under individual stop loss coverage?

the insurer reimburses the employer for all claims paid for any individual that exceeds a stated amount in a stated period of time.


what is individual deductible?

the dollar amount of claims that an employer must pay for any individual in a stated period of time before the stop-loss insurer reimburses the employer for any excess amount.


what is stated under the aggregate stop-loss coverage?

this is where the insurer begins to reimburse the employer for claims when the employer's total claims exceeds a stated dollar amount within a stated period of time.


What is an attachment point (AKA aggregate deductible)

its the total dollar amount of claims that the employer must pay within a stated period of time before the stop-loss insurer begins to reimburse the employer.


can an employer purchase both individual and aggregated stop-loss coverage?



What is a TPA (third-party administrator_

organization other than an insurance company that provides administrative services to the sponsors of group benefits plans. Under an ASO (administrative service only) contract, the employer pays a fee in exchange for the administrative services provided by the insurer or TPA.