Introduction to Health Insurance Policies: Module 1 of 5
Summary
TLDRThis video introduces the basics of health insurance, covering essential terms like deductibles, co-payments, and coinsurance. It explains how health insurance policies work, including coverage options like HMOs, PPOs, EPOs, and high-deductible plans. The video also discusses how health insurance contracts are formed, the importance of enrollment periods, qualifying life events, and policy renewal or cancellation. It highlights key legal aspects of insurance policies, including contract modifications, the application of state laws, and the potential for policy disputes and court interventions.
Takeaways
- 💡 Health insurance helps cover medical expenses for illnesses, accidents, and preventive care like routine tests and checkups.
- 📝 Key components of health insurance policies include deductibles, co-payments, and coinsurance, which determine the out-of-pocket costs for the policyholder.
- 🏥 Health insurance plans vary, such as HMOs, PPOs, EPOs, and high-deductible plans, each with different network rules, costs, and flexibility.
- 🔄 An insurance contract is formed between the insured and insurer to cover medical costs, with terms like premium rates, policy duration, and the nature of coverage clearly defined.
- 📅 Open enrollment periods, typically starting November 1st, are the main times to sign up or change health insurance unless there's a qualifying life event.
- ⚖️ Health insurance contracts can include governing law clauses that specify which state’s laws apply in case of disputes.
- 🔍 Court rulings may interpret policy terms, such as coverage limits for mental illness, based on contract law and public policy considerations.
- 🔄 Insurance policies can be renewed or canceled under state laws, and renewal often creates a new contract, subject to current regulations.
- ⚠️ Insurers generally cannot cancel policies arbitrarily, and wrongful cancellations can lead to legal consequences, including punitive damages.
- 🔄 Policyholders can change or modify their insurance plans during open enrollment or after qualifying life events like marriage, childbirth, or job changes.
Q & A
What is the primary purpose of health insurance?
-Health insurance helps lessen the costs of medical expenses, including those related to illness, accidents, and preventive care like routine checkups and screening tests.
What is a deductible in a health insurance policy?
-A deductible is the amount a policyholder must pay out-of-pocket before the insurance plan starts covering healthcare services.
How do co-payments and coinsurance differ in health insurance?
-A co-payment is a fixed amount paid by the insured for covered healthcare services after the deductible is met, while coinsurance is a percentage of the cost of a service that the insured pays after meeting the deductible.
What are the key differences between HMO and PPO plans?
-HMOs typically have lower premiums, require a designated primary care physician, and often need referrals for specialists, whereas PPOs offer more flexibility with a larger network and typically don't require referrals, but tend to have higher premiums and out-of-pocket costs.
What is an EPO plan and how does it compare to an HMO?
-An EPO (Exclusive Provider Organization) plan offers a network of doctors and hospitals that the insured must use, except for emergencies. Unlike HMOs, EPOs usually don't require referrals to see specialists, offering more flexibility.
What is a high deductible health plan, and how is it typically used?
-A high deductible health plan (HDHP) has lower monthly premiums but requires the policyholder to pay higher out-of-pocket costs before the insurer starts covering services. It is often paired with a Health Savings Account (HSA) for pre-tax healthcare spending.
How can an individual obtain health insurance in the U.S.?
-Health insurance can be obtained through a group health plan (e.g., from an employer), privately purchased plans, or through the federal Health Insurance Marketplace.
What is the significance of the Affordable Care Act (ACA) in health insurance?
-The ACA aims to expand access to health insurance, reduce costs, and limit fraud by providing a marketplace for insurance plans, along with guidelines for open enrollment periods and coverage.
What is the role of open enrollment in health insurance?
-Open enrollment is the designated period during which individuals can sign up for health insurance or make changes to their existing plans. Outside of this period, changes can only be made following a qualifying life event.
What are qualifying life events, and how do they affect health insurance coverage?
-Qualifying life events, such as marriage, divorce, having a child, or losing previous coverage, allow individuals to change or update their health insurance plans outside of the open enrollment period.
Outlines
🏥 Health Insurance Overview and Key Terms
The first paragraph introduces the basics of health insurance, emphasizing its role in reducing medical expenses for both preventative and illness-related treatments. It explains core concepts like deductibles, co-payments, and coinsurance. Deductibles are amounts policyholders must pay before the insurance kicks in, after which co-payments or coinsurance come into play. Plans with lower premiums tend to have higher deductibles, while those with higher premiums may offer lower or no deductibles. Examples are provided to illustrate how co-payments and coinsurance work in practice.
📜 Health Plans and Coverage Types
This section provides an in-depth look at various health plan types available in the U.S. It covers HMOs (Health Maintenance Organizations), PPOs (Preferred Provider Organizations), EPOs (Exclusive Provider Organizations), and high-deductible health plans. Each plan's characteristics, such as network size, costs, and referral requirements, are detailed. HMO members have lower premiums but stricter doctor and specialist access. PPOs offer larger networks and flexibility but are more expensive. EPOs combine network restrictions with some flexibility, while high-deductible plans offer lower premiums but higher out-of-pocket costs.
📜 Health Insurance Contracts and Acquisition
The third paragraph describes the formation of health insurance contracts. It explains how individuals can obtain coverage through employer-sponsored group health plans or by purchasing private insurance through the marketplace. The passage highlights the significance of the Patient Protection and Affordable Care Act (ACA) in expanding access to health insurance, outlining how individuals can sign up during open enrollment or after qualifying life events. Key contract terms, such as premiums, duration, and risks covered, are also described.
📅 Policy Terms, Renewal, and Governing Law
This section dives into the intricacies of health insurance policy terms and provisions. It explains that insurance policies often include 'choice of law' clauses that determine the jurisdiction for legal disputes. It discusses how courts interpret policy terms according to contract law and public policy. Examples are provided, including cases involving disputes over mental health coverage and the recognition of common-law marriages. This part emphasizes that policies must adhere to statutory regulations and that renewal of a policy often creates a new contract with updated legal standards.
⏳ Duration of Coverage and Modifications
The fifth paragraph details the duration of health insurance policies, which typically cover a benefit year from January 1st to December 31st. It also discusses temporary coverage (binders) and the conditions under which policy modifications can occur, such as qualifying life events (e.g., marriage or childbirth). The passage explains how courts handle disputes related to coverage start dates and under what conditions an applicant may lose eligibility for coverage.
📜 Court Reformation and Insurance Policy Changes
This paragraph covers extraordinary situations where courts may reform insurance policies to better reflect the parties' actual intent. Reformation is typically sought due to mutual mistakes in policy terms. The explanation provides insights into how courts are generally reluctant to allow retroactive reforms unless clear evidence supports a change. It also covers the four types of qualifying life events (e.g., marriage, divorce, or changes in residence) that can trigger changes in coverage.
♻️ Renewal and Cancellation of Health Insurance
This final section focuses on the renewal and cancellation processes for health insurance policies. It explains how each renewal creates a new contract, potentially incorporating changes in law. The discussion includes a Florida case where an insurance company violated state law by denying a claim after a policy was renewed. It also explains how policyholders can cancel coverage, such as when they acquire new coverage through a job or become eligible for Medicare. Finally, it discusses legal limitations on policy cancellation and potential court actions for wrongful cancellations.
🚫 Fraud and Wrongful Cancellation
The last paragraph discusses legal repercussions for fraudulent cancellation of health insurance policies. It provides a case study where a South Carolina court found an insurer guilty of fraud for misleading a policyholder about claim coverage. The passage concludes by introducing the scope of health insurance coverage and how courts may intervene in cases of policy exclusions or disputes.
Mindmap
Keywords
💡Health Insurance
💡Deductible
💡Co-payment
💡Coinsurance
💡HMO (Health Maintenance Organization)
💡PPO (Preferred Provider Organization)
💡EPO (Exclusive Provider Organization)
💡Affordable Care Act (ACA)
💡Qualifying Life Event
💡Policy Renewal and Cancellation
Highlights
Health insurance helps lessen the costs of medical expenses for both illness and preventative care.
A deductible is the amount paid by the policyholder before insurance benefits are applied.
Co-payment is a fixed out-of-pocket amount for covered healthcare services after paying the deductible.
Coinsurance is the percentage of healthcare costs that a policyholder pays after the deductible is met.
HMOs typically require the use of a primary care physician and may need referrals for specialists.
PPOs offer larger networks of doctors and hospitals, and generally don't require referrals for specialists.
An EPO limits care to in-network providers but doesn't require referrals for specialist visits.
A high-deductible health plan offers lower premiums but higher out-of-pocket expenses.
The Patient Protection and Affordable Care Act was passed to reduce the number of uninsured Americans.
Health insurance can be acquired through employer plans or purchased individually through the marketplace.
Health insurance contracts are governed by state laws, with modern contracts often including choice-of-law clauses.
Courts typically interpret insurance policy terms according to standard contract law, unless ambiguous.
The renewal of an insurance policy often forms a new contract, incorporating any changes in law.
Insurance coverage can be changed after qualifying life events such as marriage or loss of coverage.
Insurers cannot arbitrarily cancel policies, and policyholders can contest wrongful cancellations in court.
Transcripts
module 1 introduction to health
insurance policies health insurance
helps lessen the costs of medical
expenses in the event of an illness or
accident and for preventative medicine
such as routine medical tests checkups
and screening tests in our introductory
module we will learn about the basics of
health insurance including the formation
of an insurance policy the validity of
coverage the duration of health
insurance coverage modification renewal
and policy cancellation health insurance
basics
health insurance policies are full of
terms such as deductibles co-payments
and coinsurance let's look at what these
terms mean other than for preventive
services a policyholder must first pay a
deductible before the insurance plan
pays any benefits after she pays the
deductible
she'll pay a co-payment or coinsurance
for covered services the insurer pays
the rest generally plans with lower
monthly premiums have higher deductibles
a plan with a higher monthly premium may
have a lower deductible or even no
deductible a co-payment or copay is an
out-of-pocket fixed amount paid for a
covered healthcare service after paying
the deductible for example a plan may
have an allowable cost for a doctor's
office visit of $100 the co-payment for
a doctor visit may be $20 for each visit
the insured pays $20 and the insurance
company will pay the rest coinsurance
featured by some health insurance plans
is the percentage of costs of a covered
healthcare service that is paid by the
insured after the deductible let's take
for example a person who had a surgery
that costs $10,000 allowable under the
plan with a $1,000 deductible and 20%
coinsurance the policyholder would first
pay a $1,000 deductible she would have
to pay coinsurance of 20% of the
remaining balance after the deductible
or $1,800 she would have total
out-of-pocket cost of $2,800 for the
$10,000 surgery including a 1,000 dollar
deductible and a $1,800 coinsurance many
plans also have limits on coinsurance
after reaching a certain level as with
the deductible a plan with low monthly
premiums generally has higher
coinsurance types of health plans a
variety of different health plans are
available to the American consumer an
HMO or health maintenance organization
is a plan that offers a policyholder a
local network of doctors and hospitals a
member of an HMO will typically pay
lower monthly premiums than under other
plans
HMOs typically require the insured to
use a designated primary care physician
and may require referrals for the use of
specialists even within the HMOs Network
a preferred provider organization plan
known as a PPO is a health plan that
offers a larger network with more
doctors and hospitals policyholders
usually need not designate primary care
physicians and referrals are usually
unnecessary to see specialists PPOs also
may be more flexible and covering
out-of-network services out-of-pocket
costs such as premiums and co-pays are
usually higher with a PPO than with an
HMO or EPO plan an EPO or exclusive
provider organization plan offers a
local network of doctors and hospitals
as a member of an EPO the policyholder
can use doctors and hospitals within the
network but cannot go outside of it for
care except in case of emergency EPO s
are more flexible than HMOs in that they
usually do not require referrals to see
specialists a high deductible health
plan or catastrophic plan is a plan with
a higher deductible than a traditional
insurance plan the monthly premium is
usually lower but the policyholder pays
more health care costs herself before
the insurer starts to pay its share this
plan is often combined with usage of a
health savings account which is a tax
device that allows pre-tax dollars to be
used to pay health care expenses forming
an insurance contract
a health insurance policy is a contract
between the insured and a health insurer
to cover medical expenses the health
insurer promises to pay healthcare
expenses on a specified contingency in
exchange for premium payments by the
person seeking insurance there are
several methods of acquiring a health
insurance policy first a person can
acquire health insurance through a group
health plan offered through an employer
or spouse's employer the second option
is to purchase an individual health
insurance plan privately or through the
federally managed health insurance
marketplace the rising cost of health
care have increased the need for
individuals to have access to health
insurance in 2010 Congress passed the
Patient Protection and Affordable Care
Act to reduce the number of uninsured
Americans and to improve access to
health care services the Affordable Care
Act attempts to expand access for health
insurance coverage reduce costs and
limit fraud under the Affordable Care
Act a person can sign up for health
insurance on the exchange only during an
annual open enrollment period unless the
person has a qualifying life event such
as marriage or having a child
open enrollment normally begins November
1st each year through the health
insurance marketplace and when an
employee buys health insurance through
his employer the employer must inform
him of the open enrollment period an
employee can also change coverage after
a qualifying life event a valid health
insurance contract must include specific
terms including the person or interest
to be insured the premium rate the
duration of the policy the nature of the
risk and the amount of insurance
occasionally an issue may arise in
determining which state law governs an
insurance contract under the traditional
approach the law of the state where the
parties formed the insurance policy
governs this is typically the place
where the policy was issued or the place
where the policy was delivered to the
insured today most insurance companies
follow the modern trend of contract law
include choice of law clauses in
insurance contracts this Clause may have
a heading such as governing law the
Clause designates the jurisdiction that
will govern any disputes that may arise
between the parties for example since
many health insurance
companies are headquartered in
Connecticut the policy may specify that
Connecticut law governs should a dispute
arise if the parties have provided for
the application of a jurisdictions laws
courts will usually honor such an
agreement subject to public policy
considerations policy terms and
provisions
the policyholder and the insurer are
free to agree to terms of their choice
so long as the provisions in terms
aren't ambiguous a court will construe
the terms of an insurance policy
according to the general rules of
contract law in one case a father
brought an action against a group health
insurer to cover medical bills for the
treatment of his child for autism the
insurer claimed that the policy's
limitations on coverage for mental
illness allowed it to limit coverage for
the autism treatments however the court
looking to the tenets of contract law
applied the plain and ordinary meaning
of the term mental illness to reach a
decision it held that the insurance
company did not have a reasonable basis
upon which to limit treatment and found
in favor of the insured moreover a court
won't enforce a provision in an
insurance contract that violates public
policy or an applicable statute for
example a federal appeals court held
that under Alabama law a group health
policy provision which provided coverage
for the spouse of a participant who had
entered into ceremonially solemn Knives
marriage but which denied coverage for a
common-law spouse was void and violated
public policy the court concluded that
contractual provisions denying
common-law marriages the same status as
ceremonially solemnized marriages were
against public policy duration of
coverage a health insurance policy must
indicate the dates of coverage the
benefit year for most plans begins
January 1st and ends on December 31st
sometimes though disputes arise over the
effective date of the policy the
effective date may be tied to making the
first premium payment or signing the
application depending on the
circumstances for example an Oklahoma
appeals court held that an applicant for
an insurance policy who failed to sign
the application and pay the premium
relieved the insurer from having to pay
for injuries sustained by the applicant
an insurer may also provide temporary
coverage typically between 30 and 90
days through a binder prior to issuing a
policy a binder is an insurers
memorandum giving the insured temporary
coverage while the application for an
insurance policy is being processed or
while the formal policy
is being prepared changing or modifying
policies privately insured people can
change insurance at any time typically
those covered by health insurance
marketplace policies can only change
plans during the open enrollment period
but there are other opportunities to do
so if there are qualifying life events
or job related changes there are four
types of qualifying life events loss of
health coverage
examples of these events include when a
person turns 26 years old and loses
coverage through a parent's plan or if a
policyholder loses Medicare eligibility
changes in household a policyholder may
marry divorce or have a child thereby
needing a change to a health insurance
plan during the benefits here changes in
residence and other qualifying events
such as changes in income or becoming a
US citizen a qualifying life event will
trigger a special enrollment period that
lasts 30 to 60 days during this time a
policyholder can select a new plan or
add a dependent to a plan court
reformation of an insurance policy in
extraordinary circumstances a court may
reform an insurance policy Reformation
is an equitable remedy whereby a court
will modify a written agreement to
reflect the party's actual intent the
purpose of reformation of an insurance
contract is to bring the written
instrument into conformity with the
intent of the contracting parties or to
make the policy conform to a state
statute still courts are reluctant to
allow an insurer to unilaterally and
retroactively Lee reform a policy to
avoid coverage for an incident that
would be covered under the policy at the
time of the incident absent clear
evidence that the insured had reached an
express agreement with the insurer that
was not accurately represented in the
policy to achieve reformation of an
insurance policy the party seeking
Reformation must show that the policy
does not contain provisions desired and
intended to be included the most common
grounds for Reformation is mutual
mistake to show mutual mistake the party
seeking Reformation must show that he
made certain statements to the insurance
agent concerning the covered desire but
the policy issue did not provide the
desired coverage usually inadvertently
renewal and cancellation
state laws govern renewal and
cancellation of insurance policies the
general rule is that each renewal of an
insurance policy creates an entirely new
and independent contract of insurance
where renewal is disputed a court will
consider the following factors in
determining whether an existing policy
is renewed the ongoing relationship
between the parties the beginning date
of a policy and whether there is a
change in the coverage from the previous
policy the renewal of an insurance
contract constitutes the making of a new
contract for the purpose of
incorporating into the policy changes in
law regulating insurance contracts that
may have been promulgated in the interim
in most states a contract of annually
renewable insurance forms a new contract
at each renewal so if the law has
changed in the middle of the year the
policy can finish out the year under the
old law but when the policy renews it
will have to be adjusted to comply with
the new laws or regulations in a Florida
case Bell Care nurse's registry versus
continental casualty company a provider
of home health care services brought an
action for benefits under a home health
care insurance policy the appellate
court found that the insurance company
had violated a florida law that was
effective as of october 1st
1992 in its denial of a claim though the
policy had been issued before that the
court held that the policy was renewed
each time the policyholder paid the
semiannual premium finally we'll move to
cancellation of a health insurance
policy a policy holder may want to
cancel health insurance for a variety of
reasons such as that she started a new
job and is eligible for coverage through
her new employer or because she's turned
65 years old and is eligible for
Medicare if a policyholder acquired
health insurance through the marketplace
she can cancel her account by logging
into her marketplace account and
terminating coverage there is typically
a 14 day waiting period for canceling
coverage if a policyholder acquired
health insurance through an employer she
should contact her company's human
resources department and make sure that
the cancellation date for her existing
coverage is on or after the date when
her new coverage is scheduled to take
effect an insurer generally cannot
arbitrarily cancel a person's policy
state law dictates when an insurer can
cancel a policy in Texas for example an
insurer may cancel a liability insurance
policy at any time during the term of
the policy for a variety of specified
reasons including fraud in obtaining
coverage or failure to pay premiums when
do the Texas Supreme Court considered a
case involving health insurance coverage
for a policyholder and his daughter
after the medical insurer refused a
claim for benefits related to the
daughter's hospitalization the insurance
company argued that after the daughter's
marriage she ceased to be a dependent
under the terms of the policy and so was
not covered by the policy at the time of
the hospitalization however the Texas
Supreme Court held that the clause
providing that the coverage for any
dependent child terminates on the
child's marriage does not become
effective during the period for which
the insurer had accepted premium
payments if the insurer accepted premium
payments for a period the earliest the
insurer can terminate coverage of the
child is the beginning of the next
period a court may award punitive
damages for an insurers fraudulent
breach and wrongful cancellation of a
health insurance policy in one case the
South Carolina Supreme Court held that
the evidence sustained of finding that
an insurer wrongfully cancelled a health
policy when it deliberately misled the
insured into believing that one of its
agents would come back and straighten
out a claim and that in the meantime his
policy would continue in force the court
found that the insurer committed an act
of fraud in breach of contract when the
insurer wrongfully cancelled the policy
in spite of its agents representations
to the contrary in our second module on
health insurance law will analyze the
scope of health insurance coverage
including policy exclusions and whether
certain diseases or treatments are
covered or excluded by a policy
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