Kansas V. Types of Policies Study Guide

Wavier of Premium

• Waives further premium payment after initial waiting period

• Refunds any premiums during the waiting period (90 days)

Coordination with Government Benefits

Workers compensation or other government progams

Additional Monthly Benefit (AMB) Rider

• Pays additional benefit during first 6 to 12 months

• Pays even if the insured receives government benefits

Social Insurance Supplements (SIS)

• Pays when social benefits are not being paid

• Makes up the difference between the government benefit and the amount of the rider

  • Does not pay in addition to Social Security or Workers Comp while the insured is disabled

• Pays only during the policy benefit period

Occupational vs. Non-occupational coverage

• Occupational - Both job related and non-job related

• Non-occupational - only non job related

Partial Disability benefits

• Returns to work in a reduced capacity

• Usually pays 50% of total benefit

• usually no longer than 3 to 6 months

Residual Disability

• Paid whether insured is able to work full or part time

• Benefit based on reduction of income

• pays as long as the reduction in income continues

Cost-of-living Adjustment (COLA) rider

• increasing benefit while receiving disability

• Based on the CPI

• Adjustments usually made every 12 months

Future Increase Option (FIO) Rider

• Allows insured to increase policy benefits

• No evidence of insurability

• The insured income must have increased

  • Sometimes refereed to as the Guaranteed Insurability rider

• May be attached to disability income.

Relation of Earning to insurance

• Allows insurer to change policy benefit if insured income has decreased

• Portion of the premium will be refunded

Rehabilitation Benefit

• Helps insured train for a new occupation

• Pays as long as insured is disabled and stays in the program

Disability Underwriting

• Occupation

• Benefit Limits

• Policy insurance alternatives

  • Increased premium

  • Impairment rider

Business overhead expense policy

The policy will cover business expenses as rent, taxes, insurance premiums, utility bills, and employee compensation, but NOT the owners or partners salaries.

• Elimination period: 15 or 30 days & benefits 1 to 2 years.

Business Disability Buyout Policy

Business owner or partner who becomes disabled and can no longer contribute to the business.

• Elimination period for disability buyout is 1 to 2 years

• Uses:

  • Key Person

  • Business overhead expense

  • Disability buy sell.

Group Disability income Policy

Group disability policy is less expense than an individual policy because the risk is spread over more participants. Benefits are often less in group policies which accounts for lower cost.

• Two different types of Coverage

  • Short - Term Disability: Benefit Period 6 to 24 months -→ Very short elimination period

  • Long Term Disability: 2 year to age 65 → Elimination period usually the benefit period of STD.

Key Employee Policy

Pays a monthly benefit to a business to cover expenses for additional help or outside services when an essential person is disabled.

Economic value is determined in terms of lost business income that would occur during to replace the key person

• Benefits can be paid lump sum or monthly installments. Benefits paid for 1 to 2 years

• Elimination Period 30-90 days

Accidental Death and Dismemberment or (AD&D)

Amount of rider is the principal sum

• Paid if accidental death - usually a multiple of the monthly disability benefit

  • Lump-sum payment, This rider does not provide periodic benefit payments

• Loss of sight in both eyes or loses two limbs

If only one limb or eye = Capital sum (1/2 of principal sum)

Basic Hospital, medical, and surgical polices

• Lower coverage amounts

• No deductibles

Major Medical Policies

• Broader Coverage

  • Supplemental Major Medical

  • Major medical pays when basic ends

• Comprehensive major medical

  • Stand alone policy

• Deductibles

  • Family

  • Individual

  • Corridor

Health Maintenance Organization (HMOs) aka Preventative Care (Closed Network)

• Features of HMO’s

  • Prepaid Services

  • Managed Care

  • Co-Pays (Flat Dollars amount)

  • Gatekeeper (PCP)

  • Limited Choice of Providers

  • Limited Service Area

• HMO Services

  • Preventive Care

  • Emergency Care → In or out of the area

  • Hospital Services

  • Office Based care and outpatient services

Preferred Provider Organization (PPOs) Open Network

• Managed Care

• Do not offer Health Coverage

• Fee for Service

• Pre-negotiated Rates

• Insured Pays less in network of PPO providers

• Prearranged cost

  • Government Programs can NOT contract with PPOs

• Do NOT have Gatekeeper

Points of Service (POS) Plans

• Type of HMO sometimes referred to as a gatekeeper PPOs

• Subscriber can access both in network and out of network care.

• No gate keeper for out of network services

• Subscribers pay more of the cost

• Called open-ended HMO

Flexible Spending Accounts (FSA’s)

• Employee Authorizes Employer to reduce employee salary

• employer puts the money into FSA account

• Withdrawals by employee are not taxed

  • Only certain approved benefits

• Spend it or lose it

High Deductible Health Plans (HDHPs) and related Health Saving Accounts (HSAs)

Is a health plan that offers lower premiums and requires the insured to pay a high deductive when the plan is used. The amount of the deductible required changes yearly.

• Low Premium

• High Deductible

Health Reimbursement Accounts (HRAs)

Employer: Makes Tax deductible contributions

• Established by the employer

• Employer contributions are pretax

• HDHP not required

• Employee can use money in the HRA to pay deductibles, coinsurance and co-payments

• Money rolls over from year to year

Medicare Supplement Polices (Medigap)

• Private insurance plan

• Premiums not subsidized by Medicare

• Cannot be sold to an enrollee in a Medicare Advantage Plan

• Core benefit Plan A

  • Must cover hospital co-pays for 61-90 and lifetime days

  • Adds an additional 365 days of coverage to a benefit period - covered at 100%

  • Covers Medicare part B coinsurance

  • Must offered if company sells any Medicare supplement plans

  • Doesn’t cover Part A & B deductibles.

COBRA

• Federal Law

• Applies to employers who regular employ 20 or more people

• Employers must allow employee or dependents to remain on the group plan

• Applies to medical and dental - not life insurance

• Extended coverage for 18 months if

  • employees employment is terminated

  • reduction in hours

• Extends coverage for 36 months if dependents no longer qualify due to

  • Divorce

  • Too old

  • Death of employee

• Premium is 102% of regular group premium

  • Employer does not contribute

• COBRA automatically ends

  • Premium not paid

  • Employer stops the group plan

  • individual becomes covered by another plan

  • Individual becomes eligible for Medicare

• OBRA

  • 29 months if disabled at time of termination.

Individual/ Group Long Term Care (LTC)

Eligibility:

• ADLs

  • Bathing

  • Dressing

  • Toileting

  • Transferring

  • Continence

  • Eating

    • May be eligible for LTC if they are cognitively impaired

• Levels of Care

  • Skilled Nursing care (24/7)

  • Intermediate care (only 7)

  • Custodial Care (ADLs)

• Other Types

  • Home Health care

  • Adult day care

  • Respite Care

  • Assisted Living Facilities

Dental: Types of Dental Treatment

• Diagnostic and preventive

• Restorative

• Oral Surgery

• Endodontics

• Periodontic

• Prosthodontics

• Orthodontics

Features of Dental Insurance

• Choice of Provider

• Scheduled vs. Nonscheduled

• Combination

• Deductibles / Coinsurance / Limits

• Predetermination Benefits

Dental Exclusions

• Cosmetic Treatment

• Replacement of teeth missing before coverage

• Loss of dentures

• Occupational injuries

Vision

Medical expense policy’s only cover disease and injury to the eyes but not routine eye care

• Eye examinations

• Cost of lenses and frames

• Cost of contract lenses; and

• Other corrective items

Critical Illness or Specific Disease

Specified (Dread) Disease/ Critical Illness cover a number of life-threating diseases or serious conditions including:

• Stroke

• Coma

• Liver Failure

• Kidney Failure

• Organ or bone marrow Transplants.

Worksite (Employer- Sponsored)

Injury or illness that is work related is normally not covered by health insurance but is covered by workers compensation.

Hospital Indemnity

Hospital Income or Hospital indemnity plan pays a flat dollar amount as a daily benefit for each day that the insured is hospitalized as an inpatient.

Short-Term Medical

The length of coverage is typically 90 days, 6 months, or 12 months

• The limited Benefit Policies

  • Accident only

  • Dread disease

  • critical illness

  • Hospital indemnity

  • Credit Disability

  • Blanket Coverage

  • Prescription drugs

  • Vision

  • Hearing

  • Short-term medical expense plans

Accident

Accident - only policies only cover accidents as a peril, and exclude any types of sickness or disease.

Social Security

• Sometimes called the social insurance substitute rider

• To be eligible for SS benefits, the person has to be totally and permanently disabled for at least 5 months.

• Or the disability must be expected to last at least for 12 months or in death, and the person must be fully insured and disability insured.

  • For a fully insured worker to be eligible for disability benefits, a worker must be fully insured, which meaning earning 40 credits, or worked about 10 years contributing to Social Security.

Social Security PIA

The SS spouse benefit for a spouse caring for an unmarried child under age 16 or disabled before age 22 is 50% of the PIA.

Medical reimbursement benefit

• The benefit does no pay disability benefit but instead reimburses the insured for medical expenses incurred to treat a non-disabling injury.

Medical Cost Management

• Mandatory Second Opinions

• Precertification Review

• Ambulatory Surgery

• Case Management

Utilization Management

Prospective

Concurrent

Retrospective

Reduce Health Care

• Outpatient benefits

• Second Surgical Opinions

• Preauthorization

• Limits on length of stay