Introduction to Health Insurance Policies: Module 1 of 5

Summary

This 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

00:00

🏥 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.

05:00

📜 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.

10:01

📜 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.

15:04

📅 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.

Keywords

💡Health Insurance

Health insurance is a policy that helps cover medical expenses due to illness, accidents, or preventative care. It is central to the video's theme, emphasizing the role of insurance in reducing financial burden for healthcare. The video discusses how health insurance policies offer different coverage options, including deductibles and co-payments.

💡Deductible

A deductible is the amount a policyholder must pay out-of-pocket before the insurance company starts paying for covered services. The video explains that policies with lower premiums often have higher deductibles, and this is a key feature in understanding how different health insurance plans work.

💡Co-payment

Co-payment, or copay, refers to a fixed out-of-pocket amount paid by the insured for a healthcare service after the deductible is met. For example, in the video, a $20 copay is given as a typical charge for a doctor’s visit after a deductible is paid. It helps break down the costs associated with accessing healthcare.

💡Coinsurance

Coinsurance is the percentage of healthcare costs the insured pays after meeting the deductible. The video provides an example of 20% coinsurance for surgery costs, highlighting how the remaining balance after the deductible is split between the insured and the insurer. This is another key component in health insurance cost-sharing models.

💡HMO (Health Maintenance Organization)

An HMO is a health insurance plan offering a network of doctors and hospitals with typically lower premiums. The video emphasizes the need for members to select a primary care physician and obtain referrals for specialists. This concept demonstrates the trade-offs between lower costs and reduced flexibility.

💡PPO (Preferred Provider Organization)

A PPO plan provides greater flexibility in choosing doctors and hospitals compared to HMOs, but usually has higher premiums and out-of-pocket costs. The video contrasts this with HMO plans, noting that PPO members don't require referrals to see specialists and have the option for out-of-network care.

💡EPO (Exclusive Provider Organization)

An EPO plan combines elements of both HMOs and PPOs, offering in-network care only but without the need for referrals. The video discusses how EPOs limit coverage to within their network except in emergencies, providing a balance between cost and choice.

💡Affordable Care Act (ACA)

The ACA, passed in 2010, aimed to increase access to health insurance, reduce costs, and limit fraud. It plays a major role in the video's discussion on how individuals can acquire health insurance, particularly through the health insurance marketplace during open enrollment periods.

💡Qualifying Life Event

A qualifying life event triggers a special enrollment period allowing individuals to change or obtain health insurance outside of the open enrollment period. The video mentions examples like marriage, having a child, or losing job-based health coverage, highlighting how these events impact insurance coverage decisions.

💡Policy Renewal and Cancellation

Renewal refers to extending an insurance policy for another term, while cancellation involves ending the coverage. The video explains how state laws govern these processes and gives examples like transitioning to employer-provided insurance or Medicare, emphasizing the importance of timing when switching coverage.

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