Accident and Health Insurance: Life and Health Exam Topics

The accident and health chapter is wide rather than deep. It covers private medical plans, disability income, employer coverage, tax-favored accounts, and three government programs, and the exam likes to test where one ends and the next begins. This guide follows the ten units in CertFuel’s Accident & Health chapter, starting with health insurance cost sharing.

It covers general knowledge only. Your state’s mandated benefits, required policy provisions, and small-group rules come from your state’s candidate handbook. We’ve also left out dollar figures that reset every year, such as Medicare premiums and HSA contribution limits. Check the current numbers on the official sites before your exam if your state’s outline lists them.

How do deductibles, copays, and coinsurance work together?

Each cost answers a different question:

Term	Meaning
Premium	What you pay to keep coverage in force.
Deductible	The covered amount the member pays before the plan starts sharing costs.
Copayment	A fixed dollar amount for a specific service.
Coinsurance	A percentage split of the covered cost after the deductible.
Out-of-pocket maximum	A cap on the member’s counted cost sharing for covered care. Premiums and noncovered costs don’t count toward it.

Scenario. A member has $1,000 of covered charges, a $200 deductible, and 80/20 coinsurance. Subtract the deductible ($800 left), then apply the plan’s 80% share. The plan pays $640. The member pays the $200 deductible plus 20% of $800 ($160), or $360 total.

Don’t confuse the two maximums. A benefit maximum caps what the insurer pays. An out-of-pocket maximum caps what the member pays.

What is the difference between noncancelable and guaranteed renewable?

Both protect the policyholder’s right to keep an individual policy as long as premiums are paid. The difference is price. A noncancelable policy also locks in the premium schedule. A guaranteed renewable policy can have its premiums raised, but only for a whole class of policyholders, not one person. The Health Exclusions, Limits, and Renewability lesson covers the other renewal forms.

How do HMOs, PPOs, and POS plans differ?

These are common patterns, but the plan’s actual terms always control:

• HMO (health maintenance organization): usually emphasizes in-network care and may require a primary care physician and referrals to specialists, generally with an exception for emergencies.
• PPO (preferred provider organization): commonly allows direct access to specialists and may cover out-of-network care at a higher cost to the member.
• POS (point of service): combines network coordination with some out-of-network coverage.

Utilization review happens at three points. Preauthorization reviews care before it happens, concurrent review checks it while it’s ongoing, and retrospective review looks back after it’s finished. The Medical Expense Policies and Managed Care lesson compares basic and major medical coverage too.

Which plan pays first when someone has two?

Coordination of benefits uses the first rule that settles the order:

• A person’s own coverage as an employee generally pays before coverage as someone else’s dependent.
• For a child covered by both parents, the parent whose birthday (month and day) comes earlier in the year is generally primary. A court decree can change that.
• Active-employee coverage generally pays before retiree or continuation coverage.

The secondary plan then applies its own terms to what’s left. It doesn’t automatically pay every remaining balance.

Scenario. Ana (birthday March 4) and Ben (birthday July 22) both cover their son through work. Ana’s plan is primary for the son, regardless of which parent is older. Subrogation is a different idea: after paying a claim, the insurer seeks repayment from a third party who caused the loss. See the Coordination of Benefits and Claims lesson.

What are the key health policy provisions and claim steps?

The claim process follows a sequence, and each step has its own deadline in the contract: notice of claim, claim forms, proof of loss, time of payment, and payment to the proper payee. A legal-actions provision sets the earliest and latest times to sue.

Other provisions answer separate questions. The grace period keeps coverage in force for a short time after a missed premium. Reinstatement restores a lapsed policy under stated requirements. A time limit on certain defenses restricts challenges to nonfraudulent misstatements after a stated period. A change of occupation clause can adjust benefits or premiums if the insured moves to a more or less hazardous job.

Exact periods vary by state law and contract, so learn the purpose of each provision here and the numbers from your state material. The Health Claims and Contract Provisions lesson covers the full list.

How does disability income insurance decide who gets paid?

Everything starts with the policy’s definition of disability:

Definition	Test
Own occupation	Can’t perform the material duties of the insured’s own occupation.
Any occupation	Can’t perform any job suited to the insured’s education, training, or experience.
Partial	Can work, but with reduced duties or hours.
Residual	Earnings are reduced because of the disability, paid by an income-loss formula.
Recurrent	The same or a related condition returns within a stated interval.

The elimination period is the wait before benefits start. The benefit period caps how long they’re paid. Income benefits and a waiver-of-premium rider can have different waiting periods.

Scenario. A surgeon injures a hand and can’t operate but could teach. Under an own-occupation definition, the surgeon is disabled. Under an any-occupation definition, teaching may mean no benefit. Some policies switch from the first test to the second after a set time.

Taxes follow the premium. Benefits from employer-paid or pretax premiums are generally taxable. Benefits from premiums the employee paid with after-tax money are generally not. IRS Publication 525 covers both cases. The Disability Definitions and Work Capacity lesson goes further.

How do AD&D and workers’ compensation fit in?

Accidental death and dismemberment (AD&D) pays scheduled amounts for specified accidental losses: death, or loss of a limb or sight, as the policy lists them. The principal sum is the base amount, and partial losses pay a stated share of it. The actual medical bill doesn’t set the benefit.

Workers’ compensation provides statutory benefits for qualifying work-related injury or illness under the governing program. A private disability policy may exclude occupational losses or offset a named workers’ compensation payment, but only as its contract states. The Disability, AD&D, and Workers’ Compensation lesson sorts out which trigger applies.

How does COBRA continuation coverage work?

COBRA lets people keep group health coverage after a qualifying event, generally paying the full cost themselves. It generally applies to private employers with at least 20 employees and to state and local government plans. The Department of Labor’s Employee’s Guide to Health Benefits Under COBRA sets out the federal rules:

Rule	Federal requirement
Coverage length	Up to 18, 29, or 36 months, depending on the qualifying event.
18 months	Termination of employment (other than gross misconduct) or reduced hours.
29 months	An 11-month disability extension of the 18-month period, when its conditions are met.
36 months	Events such as the employee’s death, divorce or legal separation, or a child losing dependent status.
Election window	At least 60 days, from the later of the election notice or the date coverage would end.
First payment	At least 45 days after electing.
Later payments	A minimum 30-day grace period for each.
Premium cap	Up to 102% of the plan’s cost, or up to 150% during the disability extension months.

Each qualified beneficiary has an independent right to elect. COBRA doesn’t require new evidence of insurability. The Group Contracts and Continuation Coverage lesson covers how coverage can end early.

On the individual market, HealthCare.gov states that Marketplace plans can’t refuse coverage, charge more, or refuse to pay for essential health benefits because of a pre-existing condition. Limited-benefit products such as short-term medical can follow different rules.

How do HSAs, FSAs, and HRAs differ?

Account	Who funds it	Who owns it
Health Savings Account (HSA)	The individual, the employer, or others	The individual. It moves with them, and unused money carries forward.
Health Flexible Spending Arrangement (FSA)	Employee salary reduction, possibly with employer money	The employer’s plan. Unused amounts can be forfeited, subject to plan carryover or grace-period rules.
Health Reimbursement Arrangement (HRA)	The employer only	The employer’s plan.

To make new HSA contributions, a person generally needs qualifying high-deductible coverage, no disqualifying other coverage, no Medicare enrollment, and can’t be claimed as someone else’s dependent. Distributions for qualified medical expenses can be tax-free. Nonqualified distributions are taxable and generally face an additional 20% tax, which doesn’t apply after the owner turns 65, becomes disabled, or dies. IRS Publication 969 has the rules and the current limits. See the Health Savings and Reimbursement Accounts lesson.

What do Medicare Parts A, B, C, and D cover?

Medicare.gov describes the four parts:

• Part A (hospital insurance): inpatient hospital care, skilled nursing facility care, hospice, and home health care.
• Part B (medical insurance): doctors’ services, outpatient care, durable medical equipment, and many preventive services.
• Part C (Medicare Advantage): private plans approved by Medicare that bundle Parts A and B and usually Part D.
• Part D: prescription drug coverage, either as a stand-alone plan with Original Medicare or inside a Medicare Advantage plan.

Medigap policies help pay costs Original Medicare leaves behind, such as deductibles and coinsurance. You can only buy one if you have Original Medicare. Each policy covers one person, and where letter standardization applies, plans with the same letter offer the same basic benefits even though premiums differ. The Medigap Open Enrollment Period is the six months starting the first month a person is 65 or older and enrolled in Part B. Outside it, an insurer may be able to use medical underwriting.

The Medicare and Medigap lesson covers the details.

How are Medicaid and Social Security disability different?

Medicaid is a joint federal and state program. Federal law requires states to cover certain groups, and states can choose to cover others, so eligibility and benefits vary by state (Medicaid.gov eligibility policy). For someone with both programs, Medicare generally pays first for Medicare-covered services, and Medicaid pays last.

Social Security Disability Insurance (SSDI) requires enough covered work and a disability expected to last at least 12 months or result in death (SSA eligibility). After approval, there’s generally a five-full-month waiting period from the disability onset date before benefits begin (SSA approval process). Supplemental Security Income (SSI) is needs-based instead. A private insurer’s disability decision doesn’t decide SSDI eligibility. See the Medicaid and Social Security lesson.

What triggers long-term care benefits?

Long-term care insurance pays for help with daily living, whether at home, in assisted living, or in a nursing facility. For a tax-qualified contract, 26 U.S.C. 7702B requires a licensed health care practitioner to certify that the person either can’t perform at least two of six activities of daily living without substantial assistance for at least 90 days, or needs substantial supervision because of severe cognitive impairment. The six activities are eating, toileting, transferring, bathing, dressing, and continence. Tax-qualified contracts must also be guaranteed renewable.

The 90-day expected need isn’t the same as the elimination period, which is the unpaid wait after eligibility begins. Benefits can be paid on an expense-incurred basis (the lower of actual cost or the policy limit), an indemnity basis (a stated amount when covered care is received), or a cash basis (the stated benefit once eligible). The Long-Term Care Insurance lesson and the Supplemental Health Policies lesson cover dental, vision, critical illness, and hospital indemnity coverage too.

How should you study the health chapter?

Group the topics by who pays: private medical plans, disability and accident coverage, employer group rules, tax-favored accounts, and government programs. Most wrong answers on the health side borrow a rule from the neighboring group.

If contracts and underwriting still feel shaky, start with the Shared Foundations guide. Then use the flashcards, the cheat sheet, and the Accident & Health videos. If you’re only testing for the health line, our life vs. health license guide explains how the exams split. The study guide shows how to fit this chapter into a plan.