Term Life Insurance Q&A
- Why should I choose BeyondQuotes?
- Which companies do we represent?
- Is BeyondQuotes licensed where I live?
- Is my information confidential?
- Do you only offer rate quotes?
- How do we choose which companies to represent?
- How much Term Life Insurance do I need?
- What are "level" policies?
- What should be the term length?
- Is it worth insuring my spouse on my policy?
- Can you explain the difference between Term and Whole Life plans?
- I suffer form a pre-existing condition. Can I still be insured?
Applying for a Policy
- How do I apply for Term Life Insurance?
- How do I find the best value plan for my needs?
- What is the waiting period between applying and coverage?
Health Insurance Glossary
Community Rating comes in two varieties: Pure and Adjusted. Adjusted Community Rating means that the rates charged by insurance companies may vary by one or more variables such as age, gender, or health status. In Oregon, for example rates may not vary according to health status or gender, but they can vary by age. Pure Community Rating Means that rate for individual and family health coverage are the same for everyone regardless of factors like age, gender, etc.
Comments: Definition of Adjusted Community Rating
Creditable coverage is a term that came in to circulation in connection with health insurance after the Heatlh Insurance Privacy and Accountability Act was passed in to law in 1996. Without creditable coverage, a health insurance company can "look back" in to someone's health history, and exclude coverage for pre-existing conditions for a certain length of time. So, for example, if John Smith had knee surgery 4 months prior to joining a group health insurance plan, and he did not have prior creditable coverage, his new company would have the right to exclude coverage for any and all health care services needed to treat any and all conditions related to his surgery for a certain duration of time. If, on the other hand, he had surgery 4 months prior to switching companies, and if he had had continuous coverage recognized as being "creditable" , 24 months prior to switching, then whatever pre-existing exclusion periods his new plan might impose would have to be reduced by at least 24 months for conditions relating to his knee. In understanding how creditable coverage works, however, it is important to keep in mind that in switching from one plan to the next, there cannot be a gap of coverage greater than 63 days. Additionally, some states do not require an insurance company to recognize creditable coverage if one is coming from an individual plan or a self-insured plan offered by a large company.
Comments: Definition of Creditable Coverage
The legitimate definition of ‘Elimination rider” states that an applicant may lose the protection for a certain health condition. Elimination riders may be permanent or for certain durations according to either insurance company choice, state law, or a combination thereof.
ERISA stands for the Employee Retirement Income Security Act and is a set of federal law passed in 1974 intended to set consistent standards for the protection of employee benefits. This law is mainly designed to prevent abuse of pension funds, but is mostly silent on benefits. This effectively means that employers are free to do as they wish with respect to raising premium contributions amounts. Anyone who received benefits through a self-insured employer is especially vulnerable.
An exclusion period is the amount of time a company is permitted under state or federal law to exclude coverage for a pre-existing condition. Exclusion periods are always going to be 12 months or fewer for group health insurance. For individual policies, exclusion periods can be anywhere from six months to forever.
FMLA stands for the Family and Medical Leave Act, and it is a federal law which protects the benefits of employees who need to take time off of work to care for family members in the event of illness. The law also has several provisions which are explained in greater depth under the "Learn" menu at the top of the page.
Group health insurance is the most common form of guaranteed issue health insurance, but some states offer guaranteed issue plans on the individual market as well. Those who have become eligible for HIPAA are also entitled to guaranteed issue plans.
It is important to keep in mind, however, that just because a plan is guaranteed issue; it doesn't mean that there aren't certain requirements that must be fulfilled before one is offered. In the case of group health insurance, there may be waiting periods of up to 90 days, and in the case of HIPAA eligibility, often one must exhaust very costly COBRA benefits.
Some states have high risk pools available to those who are unable to obtain coverage through any other means. Though these plans often receive state subsidy, they are generally are unconnected to state or federal assistance programs. Rather, they were set up, in many cases to comply with federal law which mandates that insurance be available to individuals, who are eligible for HIPAA, and to some extent, to provide coverage to individuals who have fallen through the cracks of the health care system. Most benefits available through a state risk pool are provided and administered by a large company, (often Blue Cross) and while they can cost a great deal more than plans that are available to healthy individuals, they are not substantially different in what they cover. Different states have different rules for joining their high-risk pool. Some may impose residency restrictions, while others may first require the exhaustion of COBRA benefits.
Comments: Definition of High-Risk Pool.
HIPAA stands for the Health Insurance Privacy and Accountability Act. This raft of legislation was passed during the Clinton administration and was designed to accomplish five major goals:
- Ensure continuity of benefits when an employee goes from one employer t the next. This means that if someone switches jobs, a new employer preexisting conditions must be covered if they were covered by the old employer.
- Restrict to only twelve months the amount of time preexisting conditions can be excluded from coverage if they were not covered by a prior employer
- Mandate that states make coverage available, without exclusions for preexisting conditions, to those who have exhausted their COBRA benefits.
- Set privacy requirements for health care providers and insurance companies
- Prohibit hiring discrimination on the basis of pre-existing conditions.
Not all states implement their HIPAA requirements in the same way. When a person has exhausted COBRA benefits and has met certain other criteria, that person is said to be eligible for HIPAA. States are required by federal law to make health coverage available to that individual. In some states, that might mean joining the state risk pool, and in others it might mean getting a HIPAA eligible plan through a private insurance company. It is important to understand that in many states, insurance companies are free to charge as much as they wish for those who are eligible for HIPAA. Those states who offer their risk pool for those who are eligible for HIPAA often have set limits on how much they will charge (usually 200% of a comparable plan on the open market). Generally speaking, to be eligible for HIPAA, one must:
- Had continuous "creditable coverage" for 18 months without a break in coverage of more than 63 days
- Had their last day of coverage through a group plan
- The applicant cannot apply for health coverage benefits through any other group plan, Medicare, or Medicaid.
- Be without health coverage
- Be without coverage for reasons other than failure to pay premiums or fraud
- Have exhausted COBRA benefits if they were offered
If COBRA was not offered to you, you are eligible for HIPAA from the day you lose your coverage (provided you've had continuous coverage for 18 months). You might not have been offered COBRA if:
- You end employment (or it is ended for you) and your employer has fewer than 20 employees.
- The insurance company used by your employer goes out of business
- Your employer stops offering health insurance coverage
A pre-existing condition is one that existed before the application was submitted. If one is accepted for either an individual or family health plan, most states set a limit on how far back an insurance company can "look back", and for how long they are allowed to exclude coverage for. For example, in Oregon, the look back period is 24 months, and the maximum exclusion period is 6 months. At the same time, insurance companies in Oregon can consider five years worth of health history before making an offer of coverage. So, for example, you may very well be declined for coverage in Oregon for a knee surgery you may have had three years ago. If the company decides to accept you despite this surgery, however, because it occurred more than two years ago, it cannot be excluded from coverage for six months. Additionally, your exclusion period may be reduced in a 1:1 ratio by the length of time you can prove you had "creditable coverage". Different states define creditable coverage differently. In some states, stand-alone plans are not considered to be creditable coverage. Those who have benefits through a plan of self-insurance usually do not accumulate creditable coverage. With group insurance (the kind you get through your employer), the maximum exclusion period can never be any longer than 12 months, and the look back is almost never any more than 24 months. Important things to remember are that if you willfully conceal information on your application concerning pre-existing conditions, there is an excellent chance that your policy will be rescinded when you go to make a large claim. Insurance companies expend tremendous resources on underwriting to make sure you're eligible for insurance, but they will expend even more resources doing what's called post claims underwriting. Be very cautious of any agent who advises you to be anything but forthright on a health insurance application.
In some states, insurance companies are allowed to charge people more for their health plan based on their assessment of condition. A rating restriction is a state imposed limit on how much extra health insurance company may charge.
Comments: Definition of Term Rating Restrictions.