To fully understand the benefits offered under the Major Medical Policy, the provisions illustrated are typical of policies offered by major health insurance organization. Please understand that laws vary widely by jurisdiction, and some of the policy provisions shown below may not specifically apply in your state. Conversely, your state may have requirements that are not shown in this discussion.
Provision wording is very similar to either individual or group coverage. As a general rule, provisions in a group policy are more liberal as they are more susceptible too political and consumer influence and with a larger base of risk, pricing can become more definitive. In addition, employers, especially large employers, can dictate more easily the terms of certain popular coverages. For instance, individual policies rarely cover maternity benefits except by rider at an additional cost. Group policies almost always either offer or include maternity benefits. (Some states now require that maternity benefits be covered by ALL group health insurance plans).
Wording will also vary by type of health insurance. The provisions discussed below are from a “Preferred Provider Organization” (PPO – discussed in detail later in this text) whereby the insurance company pays the Providers (doctors, nurses, hospitals, etc.) directly based upon a contractual agreement. The “Fee – for – Service” type of contract differs in that the insurer pays the Providers directly, outside of a contract, and pays on a “usual and customary”, or “reasonable and customary” basis. Other than the payment basis provision, the policies are quite similar. Of course a Health Maintenance Organization (HMO) would have different wording, as at the very least, the relationship between the HMO and the “insured” or “policyholder” is different.
It is not possible to identify all of the health insurance changes that has occurred, or to accurately forecast future changes. However, once the basics of providing needed health care is understood, changes can be more accurately anticipated and the relationships between existing programs and new programs can be more easily assimilated.
C.A.
Sam left his employer and has to purchase an individual health policy. He is not familiar with the various plans available today. He asks his agent for assistance.
Sam has expressed an interest in continuing with the same doctor he has had for the past 20 years. The agent explains that a “Point of Service” plan allows full flexibility to choose his doctor and hospitals. The disadvantage is that it is more expensive than other plans, and it will pay on a “usual and reasonable” basis, meaning that Sam may have to pay the difference out of his own pocket.
A reasonable alternative is a Preferred Provider Organization (PPO) plan. The disadvantage is that he would want to use the Providers “in the book” or (Continued)
pay a higher percentage of costs after the deductible has been satisfied. The major advantage is that the Providers will all accept what the insurer pays, so there is less chance of Sam having to pay some of the medical expenses out of his own pocket. However, he has a wide choice of doctors, and there is a good possibility of Sam's doctor being an approved Provider.
Another popular plan is an HMO. Dollar-for-dollar, it probably is the best buy. However, the list of approved Providers (Primary Care Physicians) is quite limited, and all medical referrals must be made through the PCP.
NOTE: The wording of the provisions sections immediately following, are typical of Preferred Provider Organizations (PPO’s) and would not appear in this fashion in a Fee-for-Service policy, or an HMO. The PPO example is used as they have become increasingly popular as they provide considerable flexibility to the policyholders in comparison with an HMO.
ALSO NOTE: Hereafter in this text, Sample or Illustrative provisions will be italicized, and Comments regarding such provisions will normally precede the actual illustration and will be in normal type. Significant and important information will be shaded.
MAJOR MEDICAL INSURANCE CONTRACT
The following text is typical of the language and provisions used on the first page of the Major Medical policy. Much of this information is required by state regulations and may vary by state.
IMPORTANT NOTICE
(NOTE: In most, if not all, jurisdictions, the copy of the Application becomes part of the insurance contract/policy, again stressing the necessity of complete and accurate information on the Application)
Please carefully read the copy of your application attached to this Contract and notify Your Insurance Company, Inc. within 10 days if any information on it is incorrect or incomplete, or if any past medical history has been left out of the application. Your application is a part of your Contract, which has been issued on the basis that the answers to all questions and all information shown on the application are correct and complete.
This Contract Contains a Deductible Provision
(This statement required in most jurisdictions when applicable)
(The following is the Identification section, and while the format may vary by company, it is the minimum required in most jurisdictions)
CONTRACT NUMBER: GROUP #
CONTRACT TYPE:
EFFECTIVE DATE:
MONTHLY RATE:
During the terms of this Contract, Your Insurance Company agrees to provide to covered individuals the health insurance benefits specifically provided in this Contract, subject to all the terms, conditions, limitations, and exclusions.
(The following refund statement or one very similar is used in used in most states, but this “10-day – no questions asked” provision is the most typical)
IF, AFTER EXAMINATION OF THIS CONTRACT AND COPY OF YOUR APPLICATION, YOU ARE NOT FULLY SATISFIED FOR ANY REASON, YOUR PREMIUM PAYMENT WILL BE REFUNDED PROVIDED YOU RETURN THE CONTRACT AND IDENTIFICATION CARDS TO YOUR INSURANCE COMPANY, INC. WITHIN 10 DAYS OF THE DELIVERY DATE. (THIS REFUND DOES NOT INCLUDE A REFUND OF THE APPLICATION FEE)
CANCELLATION PROVISION
This provision allows the company to cancel according to the provisions contained in the contract, but most states require that a statement of this type be on the first page.
This Contract will stay in effect as long as you remain eligible for coverage and you pay your Premiums on time, This Contract can be canceled if you have made a Fraudulent or Material Misrepresentation or omission on your application or we terminate the Contract for everyone covered by it.
We want you to understand and be satisfied with the terms of this Contract. As you read through it, remember that the words "we", "us" and "our" refer to Your Insurance Company, Inc., the insurer (hereinafter referred to as YOUR INSURANCE COMPANY). We use the words "you" and "your" to mean you, the Insured and your Covered Dependents.
We have issued this Contract in return for the completed application (which is made a part of this Contract) and initial Premium payment.
(NOTE: The above typically completes the first page of the contract. In some states, if a company is marketing their health insurance policies from an out-of-state trust (ERISA account), thereby removing or restricting the authority of the Department of Insurance to act in regards to that policy, some notification may be required. One state requires a statement to appear in red ink on the first page, which states essentially that the provisions of that policy are under the jurisdiction of another state other than the one in which the policy is issued. )
SCHEDULE OF BENEFITS (EXAMPLE)
TOTAL LIFETIME MAXIMUM BENEFIT PER INSURED,............................$1,000000
HOSPITAL INPATIENT DAYS PER INSURED PER CALENDAR YEAR:......Unlimited
INDIVIDUAL MAXIMUM DEDUCTIBLE AMOUNT PER CALENDAR YEAR......$1,000
(Applies to each Covered Insured.)
(These amounts are rather typical but can vary depending upon policy, company and state)
COINSURANCE PERCENTAGE PAYABLE BY YOUR INSURANCE COMPANY FOR COVERED SERVICES AND/OR SUPPLIES
To reiterate: The following language, and most of the language used in these provisions, are typically those used in a Preferred Provider (PPO) policy. Statements referring to “Service Area” and PPO organizations, etc., would not appear in a Fee for Service or HMO policy.
(The coinsurance provisions assume an 80/20 PPO plan with 60/40 when non-PPO Providers are used.)
For Insureds who resided in a Service Area at the time the service or supply was rendered, and for Insureds who received the service or supply in a Service Area:
Preferred Patient (PPO) Hospitals, Preferred Patient (PPO) Physicians, and all Medical Professionals and Suppliers...80% of the applicable Preferred Patient (PPO) Schedule;
Non-PPO Hospitals and Non-PPO Physicians ... 60% of the average of the PPO Schedule(s) for the applicable Service Area;
(NOTE: The limited coinsurance does not automatically mean that an insured will be liable for only 40% of the bill when treated by a non-PPO Provider under this provision. Pay close attention to the wording: “60% of the average of the … schedule. This means that since the company has no contract with the Provider as to allowances, then an insured could easily pay more than the 40%, as the company only pays 60% of the average of the schedule, which in many cases, is lower than the Provider charges. The insured is responsible for the difference!)
Skilled Nursing Facilities and Home Health Agencies ... 80% of the Allowance;
For Insureds who did not reside in a Service Area at the time the service or supply was rendered and did not receive the service or supply in a Service Area:
All services and supplies from all Providers ... 80% of the Allowance.
Those who reside within the Service Area who elect to receive medical treatment outside the Service area ... 60% of the Allowance.
NOTE: Please refer to your PPO Directory (and updates) to determine which Providers are PPO Providers.
(It is still the responsibility of the INSURED to make sure that the Provider is still contracted with the insurer. Insured’s should ALWAYS verify the Provider standing as the list changes periodically.
INDIVIDUAL MAXIMUM OUT OF POCKET COINSURANCE EXPENSE
AMOUNT PER CALENDAR YEAR (Applies to each Covered Insured.) $XXXX
Maximum Out-of-Pocket Coinsurance Expense does not include (1) the amount applied toward the Deductible, (2) any benefit reduction, non-covered services, (3) your Coinsurance amount for covered services and supplies for Inpatient and Outpatient Mental and Nervous Disorders and Inpatient Alcohol and Drug Dependency, (4) your Coinsurance amount for covered services of a Non-Preferred Patient Hospital or Physician, or charges in excess of the PPO Schedule or Allowance (whichever is applicable), unless related to covered Medical Emergency/Accident Care services and supplies. These amounts are your responsibility.
MEDICAL EMERGENCY & OR ACCIDENT CARE
This provision is frequently used and states simply that a medical emergency or medical charges as the result of an accident, are treated as being within the PPO.
Services by a Preferred Patient Provider ... 80% of the Preferred Patient Schedule
Services by a Non-Preferred Patient Provider In or Outside of the Service Area ... 80% of the Allowance
For An Insured Residing In the Service Area and Traveling Out of Area: Paid as a Medical Emergency
GENERAL TERMS
Accident: An unintentional, unexpected event, other than the acute onset of a bodily infirmity or disease, which results in traumatic injury. Some examples include, but are not limited to, serious burns and poisoning.
Medical Emergency: The sudden, unexpected onset of a Condition of such a severe nature that immediate care must be given to prevent death of the Insured or serious impairment of the Insured's health or bodily function as determined by YOUR INSURANCE COMPANY. Some examples include but are not limited to the following: unusual or excessive bleeding and convulsions.
DEFINITIONS
Definitions are provided by regulations by most states, as a result of attempts to make the insurance policies more “friendly” to the consumer. You will note the informality of the wording in the contract, used in most, if not all, jurisdictions
The following section provides you with the definition of many Providers and the meaning of many of the terms we use in this Contract. If you read this section carefully, you will better understand the rest of this Contract.
The first part of this section defines covered Providers and the second part of this section defines general terms.
PROVIDERS
An Ambulatory Surgical Center is a Facility properly licensed pursuant to State Statutes, or other states' applicable laws, the primary purpose of which is to provide elective surgical care to a patient, admitted to and discharged from such Facility within the same working day, and such Facility is not a part of a Hospital.
A Certified Registered Nurse Anesthetist is a properly licensed nurse who is a certified advanced registered practitioner within the nurse anesthetist category pursuant to State Statutes, or other states' applicable laws.
A Home Health Agency is a state-licensed public agency or private organization which has been approved for payment by us and which provides Home Health Services and other services to people who are essentially confined at home (home bound). This treatment takes the place of continued Hospital care. A Home Health Agency may operate independently or as part of a general Hospital and must be approved for payment by us.
Home Health Services are health and medical services and supplies, furnished to an Individual, by a Home Health Agency or others under arrangements with the Home Health Agency, on a visiting basis, in the Individual's home.
Hospital
The term Hospital means an institution, licensed as a Hospital and operating pursuant to law, which has been recognized as a Hospital approved for payment by us and which:
• provides Inpatient services and is compensated by or on behalf of its patients;
• primarily provides medical and surgical facilities to diagnose, treat, and care for the injured and sick;
• has a staff of Physicians licensed to practice medicine;
• provides nursing care by or under the supervision of Registered Nurses on duty 24 hours a day;
The term Hospital does not include:
• an Ambulatory Surgical Center, as defined by and licensed under State law;
• a convalescent, rest, or nursing home;
• facilities primarily providing custodial, educational or Rehabilitative Care; birthing centers, or
• A Veterans Hospital or a Hospital contracted for or operated by the national government for treatment of members or ex-members of the Armed Forces.
NOTE: If services specifically for the treatment of a physical disability are provided in a licensed Hospital which is accredited by the Joint Commission on the Accreditation of Hospitals, The American Osteopathic Association, or the Commission on the Accreditation of Rehabilitative Facilities, payment for these services will not be denied solely because such Hospital lacks major surgical facilities and is primarily of a rehabilitative nature. Recognition of these facilities does not expand the scope of benefits provided by this Contract, it only expands the settings where covered Contract services may be performed.
Maximum Skilled Nursing Facility Days Per Insured Per Calendar Year: 60 (example)
Maximum Home Health Care Visits Per Insured Per Calendar Year: 60 (example)
(up to 2 hours per Visit)
MENTAL AND NERVOUS DISORDER
Lifetime Maximum Benefit $10,000
Many, if not most, policies have some restrictions on Mental and Nervous Disorders, and Alcohol and Drug Dependency benefits. There continues to be political pressure to increase these limitations, or to remove them entirely.
Inpatient Care - Inpatient days and Inpatient medical Visits in a Hospital, to a maximum of 30 days/30 Visits or a maximum payment of $2,000 per Calendar Year, whichever occurs first, for treatment provided by a Physician or Psychologist. Your Coinsurance responsibility for covered services and supplies rendered by a PPO Psychiatric Facility will be based upon the PPO Schedule amount or the Facility's charge(s), whichever is lower.
Outpatient Care - Maximum of 30 Visits or maximum payment of $600 per Calendar Year, whichever occurs first, for treatment provided by a Physician or Psychologist.
C.A.
Bills wife, Ann, was covered under his policy. After her fathers death, she became very distraught and after several weeks, she started believing that her father was talking to her every day. She went to a psychiatrist and it was determined that she needed psychiatric care.
She visited the Sunnyside Clinic on an outpatient basis three times a week for 6 weeks. Her bill for this treatment was $900 ($50 per cession). Her condition worsened and she entered the Sunnyside Mental Hospital for treatment and remained there for 30 days when she was discharged. Her total bill for that period of time was $9,000.
Her policy only paid for 30 days or 30 visits to a hospital for mental or nervous disorders, with a maximum of $2,000 per calendar year. For the outpatient visits, the limits were maximum of 30 visits, or maximum of $600 per year.
Her policy had a $500 deductible, 80/20 coinsurance with out-of-pocket of $1500. Therefore, the outpatient visits satisfied her deductible and left $400 for coinsurance. The company paid 80% or $320.
For the hospital charges, the company paid 80% of $9,000, or $7,200.
The insured, Ann, was liable for 20% of $400 ($80) for outpatient, and 20% of $9,000, or $1,800. Since the maximum out of pocket was $1500, and she paid a total of $1,880, the insurance company paid an additional $330. Ann was also liable for the difference between what the clinic and hospital charged, and the policy limits. Therefore, she was also liable for $300 for the clinic and $7,000 for the hospital. The total amount that Ann must pay is $9,300 (deductible $500; out of pocket $1500 and excess charges of $7,300).
(Please Note: Many policies have provisions regarding out-of-pocket expenses, which do not consider medical expenses for mental and nervous disorder for the out-of-pocket maximum [as discussed later in this text]. Therefore, in that situation Ann would owe an additional $330).
ALCOHOL AND DRUG DEPENDENCY LIFETIME MAXIMUM BENEFIT
$2,000 (Inpatient, Outpatient or any combination of these benefits)
Inpatient Care - Inpatient days and Inpatient Visits are paid up to the lifetime maximum, for treatment provided in a general, specialty or Rehabilitative Hospital. Your Coinsurance responsibility for covered services and supplies rendered by a PPO Substance Abuse Facility will be based upon the PPO Schedule amount or the PPO Substance Abuse Facility's charge(s), whichever is lower.
Outpatient Care - Lifetime Maximum of 44 Outpatient Visits will be paid up to a maximum of $35 per Visit for treatment provided by a Physician or Psychologist.
(NOTE: Most policies state that detoxification shall not be considered as a benefit under this outpatient program)
ADMISSION CERTIFICATION
Admission Certification is required on all Admissions to a PPO Hospital. For non-certified admissions to PPO Hospitals, the penalty is a reduction in payment to the PPO Hospital by the amount specified in that PPO Hospital's Contract with YOUR INSURANCE COMPANY. This reduction will be the responsibility of the PPO Hospital and Physician, and will not affect your benefits.
NOTE: This Contract contains a Qualified Exclusion For Expenses Related to AIDS or ARC.
An Independent Clinical Laboratory is a laboratory properly licensed pursuant to State Statutes, or other states' applicable laws, where examinations are performed on materials or specimens taken from the human body to provide information or materials used in the diagnosis, prevention, or treatment of a Condition.
A Licensed Practical Nurse is a person properly licensed to practice practical nursing pursuant to State Statutes, or other states' applicable laws.
A Massage Therapist is a person properly licensed to practice massage, pursuant to State Statutes, or other states' applicable laws.
A Medical Professional is any person, other than a Physician, who is duly licensed by the state in which the person is engaged in the practice of their health care specialty, and is recognized by for payment purposes (for example, Registered Nurse (RN), Licensed Practical Nurse (LPN), Registered Physical Therapist (RPT), Psychologist, Occupational Therapist, Speech Therapist, or Pharmacist).
An Occupational Therapist is a person who is duly licensed by the state in which the person is engaged in the practice of Occupational Therapy.
A Pharmacy is an establishment licensed as a pharmacy pursuant to State Statutes, or other states' applicable laws.
A Pharmacist is a person properly licensed to practice the profession of pharmacy pursuant to State Statutes, or other states' applicable laws.
A Physical Therapist is a person properly licensed to practice physical therapy pursuant to State Statutes, or other states' applicable laws.
The title Physician includes individuals practicing medicine and licensed, or;
• Doctor of Medicine (M.D.) or Doctor of Osteopathy (D.O.)
• Doctor of Dental Surgery (D.D.S.) or (D.M.D.);
• Doctor of Podiatric Medicine (D.P.M.);
• Optometrist (O.D.); and
• Chiropractor (D.C.) - (all above) when acting within the scope of their licenses.
C.A.
Marie LaBeau suffered from stomach pains and had been treated by a gastroenterologist (M.D.) but he was unable to offer much relief. Her sister had suffered similar discomfort some months previously, but seemed to have been cured by taking a treatment of herbs and vitamins. Marie's doctor refused to prescribe any such treatment, calling it “quackery.”
Marie decided to take matters into her own hands, and went to the “Doctor” who claimed to be a Doctor of Naturapath Healing (N.D.). He prescribed certain vitamins and herbs and a diet that would help her, and after 3 weeks of this treatment her stomach pain left, and as long as she stayed essentially on the diet and took the prescribed herbs and vitamins, she felt that she was cured.
Since her policy had a definition of Physician that did not mention a ND, they would not cover this treatment, even though her gastroenterologist later confirmed that her problems no longer existed. The gastroenterologist, being a Medical Doctor, was paid for his services under the policy.
A Psychiatric Facility is a Facility properly licensed under State law, to provide necessary care and treatment for Mental and Nervous Disorders. For purposes of the Contract, a Psychiatric Facility is not a Hospital.
A Psychiatrist is a Physician who is licensed to practice medicine and who specializes in the study and treatment of mental disorders.
A Psychologist is a person properly licensed to practice psychology pursuant to State Statutes, or other states' applicable laws.
A Registered Nurse (RN) is a person properly licensed to practice professional nursing pursuant to State Statutes, or other states' applicable laws.
A Skilled Nursing Facility is a state-licensed institution which provides 24 hour nursing care for a patient whose Condition does not warrant hospitalization and has been approved for payment by us. The Facility can operate independently or as part of a Hospital.
A Speech Therapist is a person properly licensed to practice speech therapy pursuant to State Statutes, or other states' applicable laws.
A Substance Abuse Facility is a Facility properly licensed under State law, or other states' applicable law, to provide necessary care and treatment for Alcohol or Drug Dependency. For purposes of the Contract, a Substance Abuse Facility is not a Hospital.
We do not supply you with a Physician, Hospital, Home Health Agency, or Skilled Nursing Facility. You may select your own Provider. We are not responsible for any injuries or damage you may suffer due to the actions of a Provider.
C.A.
Mrs. Johannsen had a heart attack and was taken to the Emergency Room. She had no family doctor and had not seen a doctor for many years. After being released by the Emergency Room she picked a doctor from the book of Preferred` Providers furnished her by her insurance company. The` doctor referred her to a heart specialist, also on the PPO list, who recommended` that she have a by-pass at the local hospital (also a PPO Provider).
During the surgery, a nerve was severed, resulting in paralysis of her left arm, hand and shoulder. Her attorney also sued the insurance company, claiming that the insurance company “made” her use the doctor and hospital, both of which were responsible for her paralysis. They contended that because the insured would have to pay a higher portion of the medical bills if she chose a doctor outside of the` network, and the other doctors would charge more than the PPO doctors would.
The attorney did not succeed in his suit against the insurance company as there was no restrictions in the policy in the Providers to be used, plus the policy plainly stated that the insurer does not furnish the insured with a doctor or hospital, and the insured may always select their own Provider. Further, there is a statement, highlighted in a prominent position in the policy, that states they (the insurer) are not responsible for any injuries or damage you may suffer due to the actions of a Provider.
GENERAL TERMS
NOTE: There are a lot of items under this section, but these terms will be used later in the policy, particularly in the Benefits section. Therefore, there is little in the way of Consumer Applications that is applicable here, however all agents that market Health Insurance should be familiar with the following terminology.
Accident - see Medical Emergency.
Admission Certification means certification must be received from YOUR INSURANCE COMPANY to receive full Contract benefits for ALL Inpatient Hospitals Admissions (i.e., elective, planned, emergency and maternity) to PPO Hospitals.
Adoption or Adopt is the act of creating the legal relationship between parent and child where it did not exist, thereby declaring the child to be legally the child of the adopted parents and their heir-at-law and entitled to all the rights and privileges and subject to all the obligations of a child born to such adopted parents, or as otherwise defined by State Statutes.
Alcohol or Drug Dependency is a Condition where a person's alcohol or drug use:
* injures his or her health; or
* interferes with his or her social or economic functioning; or
* causes the individual to lose self-control.
A person is Drug Dependent when he or she is dependent on or in imminent danger of becoming dependent on any controlled substance.
Allowance is, when applicable as indicated on the Schedule of Benefits, the maximum benefit YOUR INSURANCE COMPANY will provide for covered services and/or supplies under this Contract. This amount is determined solely by YOUR INSURANCE COMPANY, and may vary depending upon many factors, including, but not limited to: the type of Provider; the type of service or supply; the geographic area in which the service was rendered; the charge(s) of the Provider; the charge(s) of similar Providers within a particular geographic area, as established by YOUR INSURANCE COMPANY; various pre-negotiated payment Allowances; and the cost of providing the services or supplies. However, for Providers other than Hospitals, the Allowance or maximum allowable payment ("MAP") will not be greater than the Provider's charge(s). YOUR INSURANCE COMPANY may modify the Allowance for a particular service or supply at any time.
Ambulance is a ground or water vehicle, airplane, or helicopter equipped to transport and staffed to provide Medically Necessary care. The Ambulance must be state-certified.
The Anniversary Date is the annual return of the Effective Date of this Contract.
Assign Benefits is a procedure where you assign your Benefits to certain Providers. In those instances where such assignment is allowed under this Contract, you must sign the claim form in the appropriate space indicating that you want payment to be made directly to the Provider.3
Bone Marrow Transplants means human blood precursor cells administered to a patient to restore normal hematological and immunological functions. Human blood precursor cells may be obtained from the patient in an autologous transplant or an allogeneic transplant from a medically acceptable related or unrelated donor, and may be derived from bone marrow, the circulating blood, or a combination of bone marrow and circulating blood. If chemotherapy is an integral part of the treatment involving Bone Marrow Transplantation, the term "Bone Marrow Transplant" includes both the transplantation, the administration of chemotherapy and the chemotherapy drugs. The term Bone Marrow Transplant also includes any services or supplies relating to any treatment or therapy involving the use of high dose or intensive dose chemotherapy and human blood precursor cells and includes any and all Hospital, Physician or other health care Provider services or supplies which are rendered in order to treat the effects of, or complications arising from, the use of high dose, intensive dose, or standard dose chemotherapy or human blood precursor cells (e.g., hospital room and board and ancillary services).
A Calendar Year begins January 1st and ends December 31st in any given year.
A Catastrophic Illness is a severe Condition that has rendered a person temporarily or permanently disabled.
Coinsurance means the sharing of expenses by YOUR INSURANCE COMPANY and the Insured. After you satisfy the Deductible requirement, we pay the percentage of the PPO Schedule or Allowance (whichever is applicable), as specified on the Schedule of Benefits for covered services. The unpaid portion of the PPO Schedule or Allowance (whichever is applicable), constitutes your Coinsurance obligation.
A Condition means any covered disease, illness, ailment, injury, or bodily malfunction of an Insured.
Conditional Receipt is a process by which the proposed Insured/applicant signs and receives a copy of a receipt for Premium collected and is assigned an Effective Date of coverage contingent upon the proposed Insured/applicant being Medically Acceptable to YOUR INSURANCE COMPANY.
C.A.
Applicant Don was given a Conditional Receipt when he gave the agent the first premium. His present policy (not COBRA) expires on the 31st; the application was taken succeeding 5th.
On the 27th, he was mugged and spent 3 days in the hospital, incurring large medical bills.
Typically if the insurance company had completed their underwriting and he was considered eligible for insurance, then the medical bills would be covered.
If during the underwriting, it was discovered that Don had a hernia that would soon require surgery, and he was aware of this but had not stated so in the application (actually, even if he had stated it on the application) he would not be eligible for the insurance, and the policy would be canceled and the premiums refunded. The policy would not cover the costs associated with the mugging.
The Contract includes this document, the application for coverage signed by the Contract Holder, the identification card(s) issued to the Contract Holder, and any Rider(s) and Endorsement(s).
The Contract Holder is the person who has contracted with YOUR INSURANCE COMPANY to provide health care benefits.
Cosmetic Surgery is surgery primarily to improve the appearance of the individual but not to restore bodily function or to correct a deformity.
A Covered Dependent is a family member of the Contract Holder who meets and continues to meet the eligibility requirements set forth in this Contract, and is actually covered by this Contract. A Covered Dependent must be the Contract Holder's spouse or unmarried natural child(ren), Newborn child(ren), Adopted child(ren), Foster child(ren) or stepchild(ren). (Children must be under the limiting age specified in the Eligibility section of this Contract.)
A Crippling Injury is an injury that has changed the normal action of an organ or body part.
The Deductible means the amount of charges for covered services and supplies, up to the relevant PPO Schedule or Allowance (whichever is applicable), that you must pay each Calendar Year before our reimbursement for covered services begins. The Deductible amount applies to each Insured each Calendar Year.
Durable Medical Equipment is equipment that can withstand repeated use and is used solely for medical purposes.
The Effective Date means 12:01 a.m. Eastern Standard Time, on the date this Contract is issued as it appears on the cover of this document.
An Endorsement is an amendment to this Contract that modifies the terms of this Contract.
Experimental or Investigational means any evaluation, treatment, therapy or device which involves the application, administration, or use of procedures, techniques, equipment, supplies, products, remedies, vaccines, biological products, drugs, pharmaceuticals, or chemical compounds if, as determined solely by YOUR INSURANCE COMPANY:
• such evaluation, treatment, therapy or device cannot be lawfully marketed without approval of the United States Food and Drug Administration or the State Department of Health and Rehabilitative Services and approval for marketing has not, in fact, been given at the time such is furnished to the Insured;
• reliable evidence shows that such evaluation, treatment, therapy, or device is the subject of an ongoing Phase I, II, or III clinical investigation, or under study to determine: maximum tolerated dosage(s), toxicity, safety, efficacy, or efficacy as compared with the standard means for treatment or diagnosis of the Condition in question;
• reliable evidence shows that the consensus of opinion among experts is that further studies, research, or clinical investigations are necessary to determine: maximum tolerated dosage(s), toxicity, safety, efficacy, or efficacy as compared with the standard means for treatment or diagnosis of the Condition in question;
• reliable evidence shows that such evaluation, treatment, therapy, or device has not been proven safe and effective for treatment of the Condition in question, as evidenced in the most recently published medical literature in the United States, Canada or Great Britain, using generally accepted scientific, medical, or public health methodologies or statistical practices;
• there is no consensus among practicing Physicians that the treatment, therapy or device is safe and effective for the Condition in question; OR
• such evaluation, treatment, therapy or device is not the standard treatment, therapy or device utilized by practicing Physicians in treating other patients with the same or similar Condition.
"Reliable evidence" shall mean (as determined by YOUR INSURANCE COMPANY):
• reports, articles, or written assessments in authoritative medical and scientific literature published in the United States, Canada, or Great Britain.
• published reports, articles, or other literature of the United States Department of Health and Human Services or the United States Public Health Service, including any of the National Institutes of Health, or the United States Office of Technology Assessment;
• the written protocol or protocols relied upon by the treating Physician or institution, or the protocols of another Physician or institution studying substantially the same evaluation, treatment, therapy or device; or
• the written informed consent used by the treating Physician or institution, or by another Physician or institution studying substantially the same evaluation, treatment, therapy or device; or
• the records (including any reports) of any institutional review board of any institution which has reviewed the evaluation, treatment, therapy or device for the Condition in question.
A Facility is any duly licensed Hospital, Skilled Nursing Facility, Outpatient Surgical Center, Home Health Agency and any free-standing emergency center or Dialysis Center, providing that Facility has been approved for payment by us.
Foster Child(ren) is a person under the age of 18 who is placed in the Insured's residence and care by the State Department of Health & Rehabilitative Services in compliance with State Statutes.
A Full-time Student is one who is enrolled in, and actually attends, an accredited college or university for five months during the Calendar Year in which this Contract is in effect.
The Grace Period is the thirty-one (31) day period immediately following the Premium due date as indicated on the front of this Contract.
A Home Health Care Visit means that a Home Health Agency employee provides services to you, in your home after a written plan of treatment has been submitted to and approved by us.
Home Health Services are medical services and supplies, furnished to an individual, by a Home Health Agency or others under arrangements with the Home Health Agency, in the individual's home. A written plan of treatment must be submitted to and approved by us.
An Inpatient means a patient who is admitted to a Facility as a bed patient and is charged for room and board for Medically Necessary care or treatment upon the orders of a Physician working within the scope of his/her license.
An Insured is the Contract Holder (the person purchasing this Contract) and any of the Contract Holder's Covered Dependent(s).
Investigative see "Experimental or Investigational".
Massage Therapy is the manipulation of superficial tissues of the human body by hand.
Material Misrepresentation is the omission, concealment of facts or incorrect statements made on an application or medical statement by an applicant, Insured or Contract Holder which would have affected our underwriting decision to issue this Contract, issuance of different benefits, or issuance of this Contract only at a higher rate had they been known.
Medical Emergency/Accident is the sudden, unexpected onset of a Condition of such a severe nature that immediate care must be given to prevent death of the Insured or serious impairment of the Insured's health or bodily function as determined by YOUR INSURANCE COMPANY. Some examples include but are not limited to the following: unusual or excessive bleeding, serious burns, poisoning, unconsciousness and convulsions.
Medically Acceptable means that you have submitted a medical history application and based on our underwriting regulations have been approved by us to be acceptable for coverage.
Medically Necessary means that, in the opinion of YOUR INSURANCE COMPANY, a specific medical, health care, or Hospital service is required for the identification, treatment, or management of a medical symptom or Condition. A service, care, or supply is Medically Necessary if, in the opinion of YOUR INSURANCE COMPANY it is: 1) consistent with the symptom, diagnosis, and treatment of the Insured's Condition; and 2) in accordance with standards of good medical practice; and 3) approved by the appropriate medical body or board for the Condition in question; and 4) is not primarily for the convenience of the Insured, a Physician, or other Provider; and 5) is the most appropriate, efficient, and economical medical supply, service, or level of care which can be safely provided. (Note: See “Medically Necessary” under the section entitled “Your Obligations”)
Medicare means the two programs of health insurance provided under Title XVIII of the Social Security Act. The two programs are sometimes referred to as Health Insurance for the Aged and Disabled Act. Medicare also includes any later amendments to the initial law.
A Mental and Nervous Disorder is any and all disorders set forth in the diagnostic categories of the most recently published edition of the American Psychiatric Association's Diagnostic and statistical Manual of Mental Disorders, regardless of the underlying cause or effect, of the disorder. Examples include but are not limited to attention-deficit hyperactivity, anorexia nervosa, bulimia, bipolar affective disorder, autism, mental retardation, and Tourette's disorder.
Newborn is a child that is (typically) 60 days of age or less. Note: Newborn coverage will be provided in accordance with the provisions of the Contract and will continue so long as the Contract remains in effect and any applicable Premiums are paid by the Insured.
A Non-Preferred Patient Provider is a Provider who has not entered into an agreement with YOUR INSURANCE COMPANY, to participate in our PPO Organization.
One Person Contract is a Contract covering only the individual named on the identification card.
Occupational Therapy is treatment that follows a Catastrophic Illness or Crippling Injury and is designed to help a patient learn to use a newly restored or previously impaired function.
An Orthotic Device is any rigid or semi-rigid device needed to support a weak or deformed body member or restrict or eliminate body movement.
An Outpatient means a patient who receives care or treatment in a Hospital (without being charged for room and board), Physicians' office, patient's home, Ambulatory Surgical Center, a free standing emergency center or dialysis center.
A Physically Disabled Person is one who has an anatomic loss or impaired function of a body part following Catastrophic Illness or Crippling Injury which significantly interferes with his/her activities of daily living.
Physical Therapy is the treatment of disease or injury by physical or mechanical means. Such therapy may include traction, active or passive exercises, or heat treatment.
Placement or to Place is the process of a person giving a child up for Adoption and the prospective parent receiving and adopting the child, and includes all actions by any person or agency participating in the process, or as otherwise defined by State Statutes.
A Planned Admission is an Inpatient Hospital admission which is not of an urgent or emergency nature and can be scheduled in advance at a time which is convenient for you and your Physician without risking your well being.
A Pre-existing condition is any condition which manifested itself, or which there were symptoms which would cause a reasonable person to seek diagnosis or treatment, or which was the subject of medical advice or treatment by a Provider during the 24 month period immediately preceding the Effective Date of the insured’s coverage.
A Preferred Provider Organization (PPO) is a network of Providers with which YOUR INSURANCE COMPANY has entered into an agreement to provide services to you at a pre-negotiated fee.
A Preferred Patient (PPO) Provider is a Provider who has an agreement with YOUR INSURANCE COMPANY, to participate in our Preferred Provider Organization.
Preferred Patient (PPO) Schedule is, when applicable as indicated on the Schedule of Benefits, the maximum benefit YOUR INSURANCE COMPANY will pay for covered services and/or supplies rendered by a health care Provider, who at the time the service or supply was rendered, was a PPO Provider under this Contract. This schedule is a list of pre-negotiated fees. The fee schedule is determined solely by YOUR INSURANCE COMPANY, and may vary depending upon many factors, including but not limited to: the Provider; and the geographic area in which the service was rendered or the supply was furnished.
The Premium is the total amount you must pay YOUR INSURANCE COMPANY for your coverage under this Contract. The Premium is determined on the basis of the applicable Rate(s) and the number of individuals covered under your Contract.
A Prescription is a request for medication or supplies by a Physician and/or pharmacist acting within the scope of his/her license,
A Prescription Drug is any medicinal substance, remedy, vaccine, biological product, drug, pharmaceutical or chemical compound which can only be dispensed pursuant to a Prescription and which is required to bear the following statement or similar statement on the label: "Caution: Federal Law prohibits dispensing without a Prescription".
A Prosthetic Device is an equipment which replaces all or part of a permanently inoperative or malfunctioning body organ.
A Provider is a Hospital, Home Health Agency, Skilled Nursing Facility, Physician, Medical Professional, or a Supplier, who has been appropriately licensed and is recognized by YOUR INSURANCE COMPANY for payment purposes.
The Rate(s) is the amount(s) YOUR INSURANCE COMPANY charges Preferred Patient Contract Holder(s) for coverage. The Rate will vary depending upon the Insured's Risk Class.
Rehabilitative Services are health care services, the purpose of which is to correct functional defects which remain after a Catastrophic Illness or Crippling Injury, and includes, but is not limited to, Rehabilitative Services related to Alcohol or Drug Dependency, Mental and Nervous Disorders, pain control, or pulmonary or cardiac rehabilitation.
A Rider is an amendment we add to this basic agreement where the scope of coverage under this Contract is restricted.
A Risk Class is a grouping of Insureds who have similar characteristics. For example, Insureds who: are the same sex; in the same age bracket; have similar medical conditions (including whether they use tobacco products); live in the same geographical area; and who have elected the same benefit plan may be grouped into a Risk Class. Your Risk Class is determined by YOUR INSURANCE COMPANY.
Service Area is a geographical location in which YOUR INSURANCE COMPANY has established a Preferred Provider Organization to provide health care services based upon a pre-negotiated fee for services rendered under a Preferred Patient Contract.
Skilled Nursing Services means the performance of those acts requiring substantial specialized knowledge, judgment and nursing skill in the administration of medications and treatment as prescribed or authorized by a duly licensed Physician.
Speech Therapy is the treatment of speech and language disorders by means such as, but not limited to, language assessment and language restorative therapy services.
Supplier is any entity, other than a Hospital, Physician, or Medical Professional which is duly licensed by the state in which the entity is engaged in the practice of supplying health care goods, and is recognized by YOUR INSURANCE COMPANY for payment purposes (for example, Ambulance companies, Durable Medical Equipment companies, and Pharmacies).
Totally Disabled means that you are unable to work at any gainful job for which you are suited by education, training, or experience, due to a Condition. This would also apply to an Insured who, although not engaged in an occupation (i.e., student, non-working spouse, or children) might be in such condition as to be unable to perform those normal day to day activities which they would otherwise be able to perform.
An Unplanned Admission is an Inpatient Hospital admission which is of an urgent or emergency nature and cannot be scheduled in advance.
A Visit means the Physician personally examines you while you are an Inpatient or Outpatient in the Hospital, Physicians office, Ambulatory Surgical Center, free standing emergency center or in your home.
Well Child Care is defined as Physician-delivered or Physician-supervised, periodic services not related to a specific Condition, provided for a Covered Dependent child up through 16 years of age.
APPLICATIONS
REPRESENTATIONS BY THE CONTRACT HOLDER/INSUREDS/APPLICANTS
In the absence of fraud, all statements made by applicants or Insureds will be deemed to be representations and not warranties. No statement made for the purpose of affecting coverage will avoid coverage or reduce benefits unless contained in a written application signed by the Contract Holder and a copy of such documents has been furnished to the Contract Holder.
Eligibility for coverage under this Contract is determined by medical risk classifications applicable to the applicant and his or her dependents. Among the factors we consider when making our underwriting decision are the medical information requested on the application, and the sex and age of the applicant and his or her dependents.
Material Misrepresentations, omissions, concealment of facts and incorrect statements made on an application or a medical statement by an applicant, Insured or a Contract Holder which is discovered within two years of the issue date of the Contract may prevent payment of benefits under this Contract and may void this Contract for the individual making the misrepresentation, omission, concealment of facts or incorrect statement. Fraudulent misstatements in the application or medical statement discovered at any time, may result in voidance of this Contract or denial of any claims for the individual making or responsible for the fraudulent misstatement.
In the event of fraud or misrepresentation pertaining to, but not limited to, medical information, geographical area, or the sex and/or the age of applicant or his or her dependents made on an application or medical statement by an applicant, Contract Holder or Insured, the sole liability of YOUR INSURANCE COMPANY shall be the return of any unearned Premium, less benefit payments. However, at our discretion, we may elect to cancel the Contract with forty-five (45) days prior written notice (Time may vary by state regulation &/or company practice) or continue this Contract provided that the Contract Holder makes payment to us for the full amount of the Premium which would have been in effect had the true facts been stated by the applicant, Contract Holder, or Insured.
C.A.
Bernadette was diagnosed with breast cancer in Oregon. Her doctor in Oregon told her that she needed surgery as soon as possible. However, since she was not employed and had no insurance, she decided to move back home to Indiana.
She found a job in Indianapolis, but it had no benefits. Therefore she applied for an individual major medical policy. She did not tell the agent about her cancer and the policy was issued on a standard basis with no riders.
60 days after the policy was issued she had a “routine” mammogram” which “discovered”
(Continued from previous page) the cancer. She told the radiologist at the clinic that she had had a mammogram about a year earlier, at a public health clinic. She did not mention the finding, however. She was immediately admitted to a hospital in Indianapolis and a mastectomy was performed.
During a routine claims review, the insurer sent an inquiry to the Public Health Service in Oregon, which duly reported the earlier findings. Based upon these findings, the insurer canceled the policy based upon a material misrepresentation and refused to pay for any of the medical costs.
INDIVIDUALS COVERED
This Contract will provide coverage for the following individuals only when the person(s): (1) were named on the application; and (2) were Medically Acceptable; (3) the Premiums were paid; and (4) a Contract was issued by us:
• You; or
• You and your spouse; or
• You, your spouse, and your unmarried natural child(ren), Newborn child(ren), Adopted child(ren), Foster child(ren) or stepchild(ren).
(Some individual policies may not contain a section regarding coverage for any person(s) other than the named insured)
DEPENDENTS COVERAGE
Spouse
Your spouse may be covered until legal separation or divorce.
Child(ren)
Your unmarried natural child(ren), Newborn child(ren), Adopted child(ren), or stepchild(ren) may be covered from birth to the end of the Calendar Year in which they reach the limiting age of 19. Foster child(ren) or child(ren) in court-ordered custody of the Insured may be covered to the end of the Calendar Year in which they reach the age of 18.
Newborn Children
The Contract Holder is responsible for notifying YOUR INSURANCE COMPANY of the birth of the Newborn child within 30 days of the date of birth. If notice is received by YOUR INSURANCE COMPANY within this 30 day period, the Newborn child will be covered from the moment of birth and the Contract Holder will not be charged any additional Premium for the first 30 days of coverage.
If YOUR INSURANCE COMPANY does not receive the notice of the birth of the Newborn within the 30 day notice period, the Newborn child will be added as of the date of birth so long as any applicable Premium is paid back to the date of birth.
With respect to a Newborn child of a covered family member other than the Contract Holder or Contract Holder's spouse, the coverage for the Newborn child terminates 18 months after the birth of the Newborn child.
C.A.
Insured has 3 children covered under his 2-year-old family policy, ages 10, 17 and 18, all dependents. The 18 year old daughter has a baby out-of-wedlock. The baby would be covered until it was 18 months old, and then would be responsible for its own coverage. If the company offered a child-only policy, that would be one alternative.
C.A.
Louise is a widow and lives with her daughter, Pam, age 19. Louise has a family policy covering herself and her daughter, as she is the sole support of the daughter who is attending a local college. Pam, although unmarried, has a baby. She elects to keep the baby and the father is not to be involved by mutual consent. The baby is covered under the family policy until such time that Pam reaches the maximum age (typically 23) or graduates from college. Maternity costs would be covered only if the policy has such a provision. In most cases, only complications of pregnancy would be covered, and if she had a cesarean the delivery would be covered.
Note: If an applicant and his wife have a pregnant daughter living at home with them at time of application, the majority of insurers will not insure any member of the family.
C.A.
David Brey applied for a Major Medical policy, listing his wife, his 15 year-old daughter, and an adopted baby, Soo Chin, age 18 months. He has another daughter, Peggy, age 19, who is married and living away from home. After the policy had been in force for a year, Peggy and her husband file for divorce. Peggy is dropped from her husband’s insurance.
David and his wife felt that the domestic problems of his daughter was temporary, and they hoped that they would reconcile. Anticipating this reconciliation, David did not bother to add his daughter to the policy until Peggy became quite ill and was admitted to the hospital with a form of hepatitis. David filed a claim against his insurer, claiming Peggy as a dependent. (Continued)
(Continued from previous page) The insurer refused payment as (1) the daughter, Peggy had not been named on the application or added within the specified period of time as a dependent (30 days), and (2) she was not medically acceptable when the insurer was notified of her existence.
Adopted Children Foster Children
The Contract Holder is responsible for notifying YOUR INSURANCE COMPANY of the placement of an Adopted or Foster child in the residence of a Contract Holder within 30 days of such placement. If notice is received by YOUR INSURANCE COMPANY within this 30 day period, coverage for the Adopted or Foster child (other than an Adopted Newborn child) begins when the child is placed in the residence of the Insured, in compliance with State law and the Contract Holder will not be charged any additional Premium for the first 30 days of coverage.
Coverage for Adopted Newborn children will begin the earlier of: (a) the moment of birth, provided that a written agreement to Adopt such child has been entered into by the Contract Holder prior to the birth of such child and further provided that YOUR INSURANCE COMPANY receives notice before or within 30 days after the birth of the child; or (b) the date the Newborn child is placed in the residence of the Contract Holder in accordance with State law, provided YOUR INSURANCE COMPANY receives notice before or within 30 days after the date the child is so placed.
If YOUR INSURANCE COMPANY does not receive the notice of placement (for Adopted or Foster children) or birth (for Adopted Newborn children) within the 30 day period, the Adopted or Foster child will be added to the Contract Holder's Contract as of the date of placement (for Adopted or Foster children) or birth (for Adopted Newborn children) so long as any applicable Premium is paid back to the date of placement or birth, whichever is applicable.
In compliance with State law, YOUR INSURANCE COMPANY will waive the Pre-Existing Condition limitation for Adopted children; however, the Pre-Existing Condition limitation will apply to Foster children or children in other court-ordered custody.
There are provisions under consideration by some states, have been under consideration, or will be under consideration in the near future, to include a same-sex partner not related to the insured. However, at this time most proposed legislation pertains only to group insurance.
Also, some states treat common-law situations treat a common-law partner as a “spouse” and would be treated as such under the policy benefits. The appropriate state laws regarding common-law marriages should be carefully researched.
PERIOD OF CHILD ELIGIBILITY
Students
A Covered Dependent child(ren) may be covered to the end of the Calendar Year in which they reach the limiting age of 23 (Typical restrictive age, but may vary by state, insurer or policy), if attending a college or university which has been accredited by the State Board of Education, on a full-time basis (as defined by the school and this Contract). The child(ren)'s legal residence must be with you and the child(ren) must depend on you for support.
C.A.
A student who is attending a local college for a minimum period specified in the application, is considered a full-time student. Difficulties arise when a student fulfills the full-time requirement for the year, then at the beginning of the following year, at time of application, the student is working and even though he states that he will probably go back to school early enough to fulfill the time requirement for that year, there can be a question raised. If, after the required time has passed and the student has not gone back to school, the child can be dropped from the policy and be required to carry his own policy.
Handicapped Children
Coverage of a Covered Dependent child(ren) will not terminate upon attainment of the limiting age for dependent children specified in this Contract, if the child is and continues to be both;
• incapable of self-sustaining employment by reason of mental retardation or physical handicap; and
• chiefly dependent upon you for support and maintenance.
(NOTE: Most policies contain an explanation as to meeting the requirements as shown above. Policy wording may be similar to: If a claim is denied under this Contract because the child has attained the limiting age for dependent children, the burden is on the Contract Holder to establish that the child meets and continues to meet the criteria for extended eligibility. For handicapped child(ren), proof of such dependency (written documentation from your Physician) will be required. The handicap or retardation must have commenced prior to reaching the limiting age, as previously defined, and the child must have been covered under the Contract when he/she reaches the limiting age.)
C.A.
Roger Minor has a Major Medical Policy covering himself, his wife, his daughter age 13, and a son, William, age 19 whom resides at home. William is retarded to the point to where he cannot read nor write, and will never be self-sufficient but has no other health problems. Rogers’ policy has an age limitation of 23.
When William reached age 23, Roger neglected to ask for continuation of coverage, as the agent knew that his son was retarded so Roger assumed that the insurance company knew it also. This situation continued until William was 25, when he fell and broke an arm and shoulder. The insurance company denied the claim as William had reached (and passed) the limiting age.
Roger obtained a letter from the family physician, stating that William was not self-sufficient. He also submitted psychological tests that William had had throughout the years. Since Roger had continued paying the premium for coverage including William, and William was insured prior to age 23, the insurer added William to the policy and covered his medical costs.
ADDING A DEPENDENT
Each eligible dependent who was;
• named on the original application;
• Medically Acceptable; and
• paid the Premium
is covered by this Contract.
Please notify us if a Newborn, Adopted, Foster child or child in other court-ordered custody is to be added to your existing Contract for coverage which is acceptable to us and you pay an additional Premium for coverage to be provided to the new dependent(s). (see above). There is an additional Premium for each dependent added to your Contract.
If other eligible dependents were not named on the application, they can become covered when you file a medical application.
(Note that the dependent to be added is subject to the medical underwriting requirements of the company. Of course, in those situations where the policy is guaranteed issue, {such as COBRA Continuation} or in many states, for Group Coverage only, the addition of dependents is only a bookkeeping entry, depending upon the insurer and the jurisdiction)
All dependents except those listed below added to your Contract after the Effective Date of coverage will be subject to the Pre-Existing Condition clause contained in this Contract:
• Adopted child or Adopted Newborn child;
• Natural Newborn child.
Note: Newlyweds should make application to add their spouse within 60 days prior to, or as soon as possible after, marriage.
TERMINATION OF DEPENDENT'S COVERAGE
Adopted Children
If the Adopted Newborn child is not ultimately placed in the residence of the Contract Holder, there shall be no coverage for the Adopted Newborn under this Contract. It is the responsibility of the Contract Holder to notify YOUR INSURANCE COMPANY within (typically) 10 calendar days if the Adopted Newborn is not placed in the home.
For all children covered as Adopted children, if the final decree of Adoption is not issued, coverage shall not be continued for the proposed Adopted child under this Contract. Proof of final Adoption must be submitted to YOUR INSURANCE COMPANY. It is the responsibility of the Contract Holder to notify YOUR INSURANCE COMPANY if the Adoption does not take place. Upon receipt of this notification, YOUR INSURANCE COMPANY will terminate the coverage of the child on the first billing date following our receipt of your written notice.
FOSTER CHILDREN
If the Contract Holder's status as a Foster parent is terminated, coverage shall not be continued for any Foster Child under this Contract. It is the responsibility of the Contract Holder to notify YOUR INSURANCE COMPANY that the Foster Child is no longer in the Contract Holder's care. Upon receipt of this notification, YOUR INSURANCE COMPANY will terminate the coverage of the child on the first billing date following our receipt of your written notice.
NATURAL CHILDREN
The Contract Holder may terminate the coverage of a child born to them by submitting a change application to YOUR INSURANCE COMPANY. The Effective Date of such termination shall be the first billing date following our receipt of your change application.
C.A.
The Stinsons adopted a baby on a private basis after being childless for many years. They applied for adoption of the child when the mother who had agreed to the adoption presented the newborn to them by the Stinsons. They notified their insurance company and the baby was covered under their Major Medical plan.
After several months, the natural mother changed her mind and after a hearing, she was awarded the custody of her baby.
Just as it was the responsibility of the Stinsons to add the baby to their policy, it is their responsibility to notify the insurance company of the change.
CONTRACT CHANGES
Entire Contract
The Entire Contract provision is for legal purposes, but is very important as to the action of an agent in changing any provision of the contract.
This Contract, with the application and attached papers, is the entire contract between you and YOUR INSURANCE COMPANY. No change in this Contract will be effective until approved by an officer of YOUR INSURANCE COMPANY. No agent may change this Contract or waive any of its provisions.
YOUR INSURANCE COMPANY may amend or replace this Contract with a new Contract at any time.
The terms of this Contract cannot be changed unless we agree in writing to the change and must be approved by one of our executive officers. Any change will be issued as a new Contract, or a Rider, or as an Endorsement to this Contract. If we make a change in the terms of this Contract, we will notify the Contract Holder in writing at the Contract Holder's last address shown in our records, at least 30 days in advance.
CHANGE IN BENEFIT COVERAGE
With most companies offering a typical Major Medical policy, the increasing/decreasing of benefits refers to the Deductible &/or Coinsurance percentages. The basic rule, as spelled out more specifically below, is that if the insurer is going to be more at risk, then a full application may be needed. If the insurer’s risk is going to be less, then most will allow a change by simply requesting the change. This provision may vary by company or policy.
Should you wish to change your current enrollment option to increase benefits, you may apply for a change on your Anniversary Date only.
When requesting a change in coverage, you must:
• submit a medical history application no later than 60 days prior to your Anniversary Date; and
• receive approval from us.
You will receive full credit for continuous coverage under the previous option if approved by us for a change in coverage.
If you wish to decrease your benefits or have any questions regarding a change in your present coverage, please contact your agent or your local YOUR INSURANCE COMPANY office.
C.A.
The insurance agent for the Jacksons offered three deductibles when they applied for a Major Medical policy - $250, $500 or $1,000. They elected the $500 deductible.
Two years later, after having three children, they felt that since children seem to have more medical bills, they would be better with a lower deductible. Therefore, they notified their insurer that they wanted to change to the $250 deductible. The insurance company required evidence of good health before they would accept the change. The agent explained that this was to avoid anti-selection, as if a person was diagnosed with a serious illness, they could otherwise get a lower deductible and end up paying less money for the treatment.
Later, as the children got older, and Mr. Jackson’s business grew, they felt that they could easily afford to pay a higher deductible, so they requested that the deductible be increased to $1,000. This, in effect, decreased the benefits, therefore the insurance company granted their request with no evidence of insurability.
IDENTIFICATION CARD
We will provide you with an identification card. Your identification card will be issued in your name and you or any of your Covered Dependents may use this card.
PREMIUM PAYMENT
Your Contract will not be in force until your application for coverage has been submitted, is Medically Acceptable to us, and we have received your first Premium payment. All subsequent Premium payments are payable in advance or within the Grace Period. The amount of your initial (usually monthly) Premium is indicated on the front cover of this document. Failure on our part, for whatever reasons, to provide you with a Notice of Payment Due does not justify your non-payment of Premiums. It is your responsibility to submit the indicated Premium by the end of the Grace Period or to notify us that a billing was not received.
(Note: This provision is typical, although some jurisdictions may require the receipt of a billing notice before a policy can be cancelled, however that is rare. This is frequently a problem where an insured doesn’t pay the premium and makes claims during this period, and uses the lack of a renewal notice as an excuse.)
Your Premium will automatically change if you change Risk Classes, or if the number of individuals under your Contract changes. For example, your Premium will change if you move to a different geographical area, or if you change benefit plans. Additionally, your Premium may increase each year on your Contract Anniversary Date due to the increase in your age and your covered spouse's age (depending upon the contract. Some policies may not increase at all, others may be “step-rated”, i.e. increases occur every stated period of time, such as 5 years).
C.A.
When Kenneth Lowe took out a Major Medical policy, his agent commented that his premiums were low because he lived in Albemarle County. Six months later Lowe was transferred to Hillsborough County. He did not notify his insurance company, and when some medical services were needed, he continued with his family doctor in Albemarle County.
Soon the premium notices were returned to the company with notation “moved - address unknown.” Lowe had a habit of paying premiums only when he received a premium notice so
the policy lapsed and the Grace Period expired. Shortly thereafter, he fell off a ladder at home and was admitted to the hospital. The insurance company refused to pay. In an effort to save a few dollars every month, he discovered that he was responsible for a sizable medical bill.
If we accept Premium for coverage for a Covered Dependent for a period extending beyond the date, age, or event specified for termination of such Covered Dependent, then coverage for such a Covered Dependent shall continue during the Grace Period for which an identifiable Premium was accepted, except if such acceptance resulted from a misstatement of Age or residence. Additionally, if we accept a Premium, which is paid on an annual or semi-annual basis by an Insured for coverage extending beyond an Insured's 65th birthday, and such Insured's coverage is terminated, we will refund any unearned Premium.
APPLICATION MISSTATEMENTS
If any information relevant to determining your Risk Class has been misstated on the application, the Premium amount owed under this Contract will be what the Premium would have been had you given the correct information on the application. If such misstatement causes YOUR INSURANCE COMPANY to accept premiums for a time period that we would not have accepted Premium for if the correct information had been stated, our only liability will be the return of any unearned Premium. YOUR INSURANCE COMPANY will not provide any coverage for that time period. This right is in addition to any other rights YOUR INSURANCE COMPANY may have under this Contract and applicable laws.
C.A.
Albert applied for an insurance policy and gave his date of birth to the agent as 1/1/59. The agent erroneously wrote down his date of birth as 1/1/53. The applicant did not check his policy or review a copy of the application for 5 years when he was comparing his present policy with that of another company. The difference in premium was nearly $500 over the 5 year period. Upon notification and submission of a copy of the birth certificate, the insurance company refunded the amount overcharged.
GRACE PERIOD
After your first Premium payment, you will be entitled to a Grace Period for all subsequent Premium payments. This means that if a Premium is not paid on or before the date it is due, it may be paid during the thirty-one-(31) day Grace Period. During the thirty-one (31) day Grace Period this Contract will remain in force.
The Grace Period will not apply if, at least 45 days before the Premium due date, we delivered or mailed to your last address shown in our records written notice of our intent to terminate your Contract. Additionally, the Grace Period will not apply if you notify us that you are canceling your Contract. Coverage will end on the last day of the month through which you paid Premiums.
If payment of the required Premium is not received within the Grace Period, this Contract is automatically terminated as of the end of the Grace Period.
C.A.
The Grace Period on most policies is 31 days from the due date, which is usually on the day of the month that the policy was issued. If an insured forgets about the due premium, and personally delivers it to the agent on the last day of the Grace Period, the premium is considered to have been paid. Therefore, if this situation arises, it is wise for the policyholder to get a dated receipt from the agent, or the local office of the insurance company.
If an insured misses the deadline, the insurance company may, at their discretion, continue the coverage. If too much time has elapsed, as stated in the reinstatement provision of the policy, the insurance company may require a physical examination or other proof of good health in order to reinstate the policy. In many states, there are regulations that limits the amount of time that a company can continue a lapsed policy, or issue a new plan.
PREMIUM ADJUSTMENTS
From time to time, Rate adjustments for Preferred Patient Contract Holders may be necessary. In the event of a Rate adjustment, we will mail a written notice to the Contract Holder at least 45 days prior to the Effective Date of the new Rate.
POLICYHOLDER REQUIREMENTS
Companies frequently have a special section of the policy that pertains as to what the duties and obligations of the policyholders are, as opposed to the duties and obligations of the insurance company. The following provision wording continues in the “easy-to-read” style required by most states.
DEDUCTIBLE REQUIREMENT
This provision assumes that the plan has a Deductible. Some policies have a “one-time” deductible, i.e. once the deductible is satisfied, it never has to be satisfied again. Other policies have a “per-occurrence “ provision whereby each occurrence or each hospital admission, requires a separate deductible. For ease of discussion, the annual deductible provision is used as it is the most prevalent
Under this Contract, the maximum Deductible amount per Insured, as specified on the Schedule of Benefits, must be satisfied before our reimbursement of covered services begins for the Insured.
INDIVIDUAL CARRY OVER PROVISION
This provision varies by company and by policy, and frequently is not included in polices of this type. It is used here for discussion purposes.
Any charges we apply toward an Insured's Deductible requirement for covered services received during the last three months of the preceding Calendar Year will be carried over to reduce that individual's Deductible requirement amount for the next Calendar Year.
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