Policy Structure

Policy:  The legal document issued by the insurance company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract.

Contract:  An agreement between the insurer and the insurance company that provides a legally enforceable obligation to provide benefit payments for all premium amounts received. 

Certificate of Insurance:  A document issued to a member of a group insurance plan, outlining the insurance benefits and principal provisions of the policy.

Policy Maximums:  All policies have a lifetime maximum benefit limit. This is the maximum dollar amount that the insurance company will pay, during the lifetime of the policy. If your medical expenses were to reach the policy maximum amount, the policy would cease.  (Likewise, if the other stated maximums are reached, those specific benefits will be exhausted.)  All policy maximums are per person.

Temporary policies can range from $50,000 up to $1,000,000. The permanent policies offer $5,000,000 of coverage. Obviously, the larger the policy, the higher the premium. Take into consideration the countries you will be traveling to. If you are traveling to a country where medical expenses are higher, you will need a larger policy.

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Deductibles:  The amount of the loss which the insured is responsible to pay before benefits from the insurance company are payable.

All policies require you to "share" in the cost of your medical expenses by way of a deductible and co-payment. Your financial liability is the amount of money you are willing to pay, out of pocket, before your policy pays 100% for your medical services. First, you pay all of your deductible amount. For instance, if you have a $500 deductible, you pay the first $500 of medical expenses per year.

Your premium rates are relative to your financial liability. The larger the deductible, the lower the premiums. Policy deductibles can range from $100 to $2500. Generally, the premium for a $100 deductible plan is quite high, and may not be worth the premium expense. Likewise, the premium savings offered for a $2500 deductible is not worth accepting such a high liability. The most cost effective deductibles are usually the $500 or $1000.

NOTE: Be sure the deductible is applied "annually" or "per policy period", and not "per occurrence". If a temporary policy is purchased for eight months, then this is the policy period. If the policy will be renewed, the policy period is annual, based upon the effective date. A deductible that is applied per policy period means that the deductible is charged only once per year. All charges incurred for covered medical services are applied to the one deductible.

If the deductible is applied "per occurrence", you will have a separate deductible for each new medical incident. For example, if you break your leg and satisfy your deductible, any additional claims relating to your broken leg will be paid at 100%. But if you have a new illness or injury, you will have to pay another deductible first. If you had four separate medical situations during the policy period, you would have four deductibles to pay! Never buy a policy with a "per occurrence" deductible.

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Co-Payments:All policies require you to "share" in the cost of your medical expenses by way of a deductible and co-payment. Your financial liability is the amount of money you are willing to pay, out of pocket, before your policy pays 100% for your medical services.

After your deductible has been met, there is a co-payment amount to satisfy. This is most commonly 20%. As medical expenses are incurred, after your deductible has been met, you are responsible for 20% of these expenses, the insurance company pays the remaining 80%. This 80/20 payment percentage is applied to the next $5,000 of medical expenses incurred, after the deductible has been satisfied.  Based upon this formula, 20% of $5,000 is $1,000. Therefore, the maximum co-payment you will have is $1,000. With a $500 deductible, and a $1000 co-payment, your maximum liability is $1500. 

Occasionally you will see co-payment options. The 80/20 split is most common, but a 50/50 option is sometimes offered as a way to lower the premium. In this case, the 50/50 payment percentage is applied to the next $2,000 of medical expenses incurred, after the deductible has been satisfied. Based upon this formula, 50% of $2,000 is $1,000.  Therefore, the maximum co-payment you will have is $1,000. This is the same as an 80/20 plan, but you are paying a larger percentage of your medical expenses, initially. Again, the premium is lower because you are accepting a larger co-payment percentage.

NOTE: Some policies do not charge a co-payment for medical services rendered outside of the United States and/or Canada. In all other countries, your annual liability is your deductible only! This saves you up to $1000!

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Policy Period:  Essentially, a policy period represents the amount of time you have purchased insurance. In international insurance, policy periods can be as short as 15 days and as long as 12 months.  For example, if you complete an application and pay for 4 months of insurance, the policy period for that program will be 4 months. If it turns out that you require more than 4 months of insurance, you would have to complete another application and thus, a new policy period would begin.

If your travel time is open ended, be sure to buy a temporary policy that is renewable. With a renewal option, the policy period is annual, based upon the effective date.

Coverage Provided

Benefits:  Monetary sum payable by the insurance company to a claimant, assignee, or beneficiary. 

Schedule of Benefits: Outlines the coverage provided per policy section. States what services are covered, and how they will be paid.  Keep your eyes open for benefit limitations.

Benefit Limitations: The maximum dollar amount that will be paid for a particular benefit. There are annual limitations, and lifetime limits.  Be aware of all lifetime maximums. Decide if they are adequate for your coverage needs.

Reasonable and Customary Charges: A charge for health care, which is consistent with the going rate or charge in a certain geographical area, for identical or similar services.

Most medical insurance offered in the U.S. utilizes either PPO (Preferred Provider Organization), or HMO (Health Maintenance Organization) networks. Doctors who participate in the network, sign a provider contract with the insurance company, that dictates the dollar amount that will be paid for every medical procedure. Providers must accept this amount from the insurance company as payment in full.  This gives the insurance company the ability to control costs and claim dollars spent.

Obviously, global provider networks are not possible, therefore, international medical plans can not control costs through provider payment contracts. Instead, insurance companies pay claims according to the "Reasonable and Customary", or "Usual, Customary and Reasonable - UCR" charges. Because the cost of medical care  varies from zip code, to region, to country, independent organizations tract the cost of medical care. These UCR guidelines are updated regularly to reflect the most current costs for medical services, in each U.S. zip code, or country.

If a doctor bills an amount, in excess of what most doctors regularly charge for the same procedure, in that area, the insurance company will question if the excess amount charged is medically necessary.  For instance, if a routine surgery develops complications, the surgeon will probably charge for his additional time, as well as, for any additional procedures. The insurance company will research the additional charges, and should pay them upon proof of medical necessity.

If there is no reason why a doctor over charged above the UCR guideline, the insurance company will not pay for the excess amount.  It is up to the insured to get the doctor to correct his billing, or negotiate the amount charged above UCR.

Your policy may require pre-authorization for medical procedures, surgeries, or hospitalizations. This is to verify what procedures will be done, for what reason, and how much will be charged. If your policy does not require pre-authorization, it is a good idea to do this research yourself. This way you can discuss, and resolve, any billing discrepancies prior to the date of service. Try to protect yourself against unexpected out of pocket expenses.

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Reimbursements:

Free Look Period: Usually, insurance policies offer a "free look period". What this means is that when you receive your policy, you have a period of time to look it over. If you were to find something about the policy that you won't accept you can return it for a full premium refund. Certificate Wording Online

Integrity: Look for it when making your insurance purchase. Many people use blind faith when buying insurance, and get very bitter when things don't go well at claim time. Consumer apathy also breeds agent dishonesty. My success depends upon my client's satisfaction which generates my referral business. Insurance is a very legitimate need, there is no reason why it can not be handled with integrity! There is no such thing as a perfect insurance company or policy, but if you understand how your coverage works, you can then make the most of it. And as your agent, I am always here to help.

Limitations and Exclusions

Policy Exclusions:  The specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments. The exclusions are not meant to keep the policy holder from obtaining the medically necessary care that may be needed.  They are there to protect the insurance company from having to pay a claim that it should not be obligated to pay, and the exclusions define the boundaries of their claim payment obligations.

Investigational, Experimental, or for Research purposes:  A common exclusion is for "Charges incurred for surgeries or treatments which are Investigational, Experimental, or for Research purposes:"  This is often misunderstood. Insureds are concerned that medical procedures, used to render a diagnosis, will not be covered as they were used to investigate the reason for symptoms.

What this exclusion means is that the policy will not pay for procedures that are not approved, and legal for use, to treat medical illnesses & injuries. In other words, new procedures that are in an experimental stage to find out if they will prove to be a legitimate medical service to treat a medical condition. For instance, when a new drug is developed it must go through years of investigation and experiments before it is proven safe for humans, and then approved for use. Mexico is known for its use of experimental procedures, which are usually never covered. In most countries, it is illegal to use any procedure or drug that has not been approved. If you wanted to participate in a research project for a new procedure, before it is approved, the policy would not pay for any of these research procedures. You would have to purposely volunteer to become a part of a research project, and then accept any medical and financial consequences. 

Therefore... medically approved procedures, like biopsies, that are used to investigate if a person has cancer, are certainly covered by the policy. Another example... if the doctor didn't know what was wrong with you, and he had to do an investigational surgery to go in an look around. He is investigating the reason for your medical symptoms, and the surgery performed is an approved, legitimate procedure.

Ambulance: Check the policy benefits, and the limitations or exclusions, to determine how ground ambulance transportation is covered. Some policies will only pay for an ambulance if the trip results in an inpatient hospital admission. Find out if the ambulance cost would be covered if you were taken to an emergency room, treated and released.                                                 Top

Private Rooms: In general, most all of the hospitals here in the US have semi-private rooms. All insurance policies cover what is the most common and usual way for the patient to get the care they need. Insurance is based upon covering what is medically necessary. It would be hard to get a doctor to prove that having a private room would aid in the healing process. It would be a request based upon personal comfort, just as other personal comfort items would not be covered such as phone calls, premium cable TV etc.

Intensive Care: Now in the case of intensive care, these rooms are always private and, of course much more expensive, due to the increased medical care required to treat the serious medical situations that require intensive care. In this case, the policy will pay the usual and customary intensive care rates instead of the average semi-private room rates. A very important point here is that most policies have a limit on what they will pay for intensive care. It will say 2x or 3x times the semi-private room rate. What this means is that... in a hypothetical example... if the policy will pay $600 per day for a semi-private room, then it will only pay $1200 or $1800 for intensive care. If the hospital charges more than this, you will pay the difference out of pocket. Therefore, a policy that has a limit could leave you with out of pocket expenses.

Organ Transplants: Organ transplants are very expensive procedures. Especially because, in most cases, you have to pay for all the donor expenses in addition to the surgical and medical expenses to transplant the organ into your body. Too many insurance companies (including U.S. companies) limit organ transplants because they can be so expensive. $200,000 to $300,000, or more, is not uncommon for a typical transplant. Not to mention the cost of the follow-up care.

OffShore Carriers: Simply, not a U.S. insurance company. In the U.S., offshore carriers are more risky as to their financial stability and their ability to pay claims, because they are not subject to the strict U.S. rating systems. There are no guarantees with offshore carriers to pay claims. Especially you must rely on the insurance company to reimburse you. U.S. companies, with high ratings, have the financial strength to offer a guarantee of a claim payment. A high financial rating proves that there is money to pay claims.  Also, the policy is a legal contract that would be upheld in a court of law, or legal arbitration, if the claim wasn't paid.

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Definitions of Policy Terms

Amendment:  A formal document revising the provisions of an insurance policy. Usually, signed jointly by an insurance company officer and the policy owner or his authorized representative.

Application:  A signed statement of facts made by a person applying for insurance. The application is used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.

Benefit Period:  The period of time which an insurance company pays benefits to the named insured or dependents.

Benefits:  Monetary sum payable by the insurance company to a claimant, assignee, or beneficiary.

Certificate of Insurance:  A document issued to a member of a group insurance plan, outlining the insurance benefits and principal provisions of the policy.

Claim:  A request by the insured for indemnification by the insurance company for a loss that is a covered benefit.

Contract:  An agreement between the insurer and the insurance company that provides a legally enforceable obligation to provide benefit payments for all premium amounts received.

Co-pay:  An arrangement where the insured pays a specified amount for various services and the health carrier pays the remaining charges.

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Deductible:  The amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.

Effective Date:  The date on which the insurance under a policy will begin.

Endorsement:  An amendment of an insurance policy that alters the provisions of the contract. Be sure to keep all endorsements received with your policy.

Exclusions:  The specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments.

Grace Period:  The specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection of the policy continues.  The grace period for payment of medical insurance premiums is 30 days.

Health Insurance:  Insurance against financial losses resulting from sickness or accidental bodily injury.

Hospice:  A health care facility providing medical care and support services for terminally ill persons.

Hospital Miscellaneous Services: Any services other than room and board (and general nursing services) provided by a hospital during hospital confinement. Included are such items as: X- ray examinations, laboratory tests, medicines, surgical dressings, anesthetics (including the administration of), and use of operating room.

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In-Patient:  A patient admitted to a hospital or other medical facility.

Insurability:  The accepting of the insurer an applicant for insurance.

Insurable Risk:  The conditions that make a risk insurable are: (1) It must be accidental, (2) The loss must be defined, (3) The peril insured against must produce a definite loss and hardship not under the control of the insured, (4) There must be a large number of exposures subject to the same perils, (5) The loss must be calculable and the cost of insuring must be economically feasible, (6) The peril must be unlikely to affect all insureds simultaneously, and (7) The loss produced by a risk must be definite and have a potential to be financially serious.

Insurance:  A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (called a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions in a contract.

Insurance Company: An organization chartered to operate as an insurer.

Insurance Commissioner:  The top insurance regulatory official in a state.

Insured:   A person or organization, covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy.

Insurer:  The party to the insurance contract who promises to pay losses or benefits, or any corporation engaged primarily in the business of furnishing insurance to the public.

Lapse:  The termination of an insurance policy due to non-payment of premium(s).

Lapsed Policy:  A policy terminated for non-payment of premiums.

Major Medical Insurance:  Health insurance that provides benefits for major illness and injury. Usually characterized by a large benefit maximum ranging up to $5,000,000.00. This insurance, above an initial deductible, reimburses the major part of charges for hospital, doctor, private nurses, medical appliances, prescribed out-of-hospital treatment, drugs, and medicines.

Managed Care:  A health care system that delivers appropriate health care services to covered individuals by arrangements with selected providers.

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Occurrence:  An event that results in a loss that is insured.

Out-of-Pocket Limit:  The maximum coinsurance an individual is required to pay, after which an insurer will pay 100% of any covered expenses up to the policy limit.

Outpatient:  A patient who is not a bed patient and does not need to be hospitalized for treatment.

Policy:  The legal document issued by the insurance company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract.

Policy Term:  The period of time for which an insurance policy provides coverage.

Pre-Admission Certification:  The process in which a health care professional evaluates an attending physician's request for a patient's admission to a hospital to evaluate whether or not inpatient care is necessary.

Preexisting Condition:  A physical and / or mental condition of an insured which first manifested itself prior to the effective date of a policy.

Preferred Provider Organization (PPO): An arrangement whereby a third-party payer contracts with a group of medical care providers who furnish medical services at lower than usual fees in return for prompt payment and a certain volume of patients.

Premiums:  The sum paid by a policyholder to keep their insurance policy in force.

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Reasonable and Customary Charge: A charge for health care, which is consistent with the going rate or charge in a certain geographical area, for identical or similar services.

Reimbursement:  Payment of the expenses actually incurred as a loss covered by the policy.

Reinstatement:  The resumption of coverage under a insurance policy which lapsed.

Renewal:  A continuance of insurance under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.

Rescission:  Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance.

Rider:  A document which amends an insurance policy or certificate. It may increase or decrease benefits, waive the condition of coverage or in any other way amend the original contract.

Substandard Insurance:  Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.

Substandard Risk:  An individual, who, because of poor health history or physical limitations, does not measure up to the qualification of a standard risk.

Surgical Schedule:  A list of maximum amounts payable by the policy for various types of surgery, with the amount based on the severity of the operation.

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Underwriter:  A company employee who decides whether or not the company should assume a particular risk.

Underwriting:  The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.

Waiver:  An agreement attached to a insurance policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.

Temporary coverage, for two weeks or up to three years, while traveling outside your home country. Comprehensive medical benefits are available from $50,000 to $5,000,000, and offer high limits for emergency evacuation expenses. Quick and convenient issue of the temporary plans!  Applications can be submitted online, by telephone, fax or email. Permanent policies are available for use while traveling or residing anywhere in the world, including in your home country!

Could you use a virtual house call?... How about a real house call in your hotel room?... Get the latest global medical information for your destination country from a Travel Clinic. Be prepared for medical situations by checking your destination city, or country, for the names of physicians and clinics.