Chapter 2 Recap: Types of Health Policies

1. Basic plans have NO deductible

Basic medical plans (hospital, surgical, medical expense) are first-dollar coverage - they pay from the first dollar. Only major medical has deductibles and coinsurance.

2. Corridor deductible is BETWEEN basic and major medical

A supplemental major medical policy has a corridor deductible - a gap between where the basic plan stops paying and where major medical starts. Comprehensive major medical does NOT have a corridor deductible (it's one combined plan).

3. HMO requires a PCP; PPO does not

HMO = primary care physician (PCP) acts as gatekeeper for all specialist referrals. PPO = go straight to any provider, no referral needed. POS = PCP gatekeeper like HMO, but can go out-of-network like PPO.

4. HSA requires an HDHP - FSA does not

You MUST have a High Deductible Health Plan (HDHP) to open an HSA. FSAs are employer-based and don't require an HDHP. Also: HSA rolls over, FSA is use-it-or-lose-it.

5. BOE does NOT pay the owner's salary

Business Overhead Expense pays the business's fixed costs (rent, utilities, employee salaries) while the owner is disabled. It does NOT replace the owner's personal income - that's what individual disability is for.

6. Longer elimination period = LOWER premium

Think of the elimination period as a deductible measured in time. The longer you wait to collect, the less the insurer charges you. The exam loves to reverse this.

7. Principal sum = DEATH; Capital sum = DISMEMBERMENT

Don't mix these up. Principal sum is the full amount paid for death. Capital sum is a percentage paid for losing a limb, sight, or hearing. Memory trick: "Principal" sounds like "primary" which is the bigger/full amount.

8. AD&D 90-day rule

Death or dismemberment must occur within 90 days of the accident. If someone is injured in an accident but dies 100 days later from the injuries, the AD&D policy does NOT pay.

9. Alzheimer's MUST be covered by LTC

LTC policies CANNOT exclude Alzheimer's disease or other forms of dementia. This is a prohibited exclusion. If the exam says "which condition cannot be excluded from LTC?" - Alzheimer's is the answer.

10. LTC cannot require prior hospitalization

An LTC policy CANNOT require that the insured be hospitalized before receiving nursing home benefits. They also CANNOT require skilled nursing care before covering custodial care.

11. COBRA 18 vs. 36 months - know the triggers

18 months: voluntary termination, involuntary termination (not gross misconduct), reduced hours. 36 months: death of employee, divorce/legal separation, employee becomes eligible for Medicare, dependent child ages out. Memory trick: "18 is for the employee, 36 is for the family."

12. HIPAA 63-day gap destroys your creditable coverage

If you have a gap of more than 63 days without health coverage, your prior creditable coverage credit resets to zero. This means a new employer's plan can impose the full pre-existing condition exclusion period.

13. Cancer = ONE disease. Critical illness = MULTIPLE

If the exam describes a policy covering heart attack, stroke, AND cancer - that's a critical illness policy. A cancer policy covers ONLY cancer, nothing else. Also: critical illness requires survival; cancer does not.

14. Conversion is 31 days - COBRA election is 60 days

Don't confuse these two timeframes. You have 31 days to convert from group to individual (no proof of insurability). You have 60 days to elect COBRA continuation. These are completely different rights.