9.10 Medical Expense Benefits and Provisions
Medical expense plans include specific benefits and policy provisions that are established in accordance with federal and state regulations. These regulations may impose requirements, limitations, or standards that affect how coverage is structured and administered.
Where applicable, more detailed information regarding these regulatory requirements is addressed in the state law chapter.
Newborn Infant Coverage
Individual and group health insurance policies written on an expense-incurred basis that provide dependent coverage must include automatic coverage for a newborn child from the moment of birth. Similarly, adopted children are covered as of the date of placement for adoption.
This coverage includes injury and sickness, as well as the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities.
To continue coverage beyond the initial period, the insured must notify the insurer and pay any required premium within 30 to 31 days following the birth or adoption. If these requirements are not met, coverage will be limited to the first month only.
Dependent Child Coverage (Limiting Age Law)
Federal law requires that health insurance policies offering dependent coverage must allow eligible children to remain covered up to age 26 (i.e., through age 25).
This requirement applies to natural and adopted children, regardless of marital status or eligibility for coverage under another insurance plan. Additionally, there is no requirement for the dependent to be a full-time student in order to qualify for continued coverage.
Mental Illness and Substance Abuse
Coverage for mental health conditions and substance use disorders is generally subject to the same deductibles, coinsurance, and cost-sharing provisions that apply to physical illnesses.
Benefits are typically available on both an inpatient and outpatient basis, including treatment for alcohol use and chemical dependency. However, many plans may impose limitations on outpatient services, such as visit caps or reduced benefit levels.
Prescription Drugs
Prescription drug benefits are most commonly included in group health insurance plans, though some individual policies may also offer this coverage either as part of an integrated medical plan or as an optional add-on for an additional premium.
Cost-sharing for prescription medications is typically structured as a copayment (fixed dollar amount), a flat fee, or a percentage of the drug's cost (coinsurance), depending on the terms of the policy.
Maternity Benefits
Medical expense plans typically cover complications of pregnancy as they would any other illness. However, coverage for routine maternity and childbirth expenses may be limited or excluded, depending on the policy.
When maternity benefits are provided, plans generally allow for up to 96 hours of inpatient care following a cesarean (C-section) delivery and 48 hours following a normal (vaginal) delivery. Shorter hospital stays may be permitted if approved by the attending physician.
Quiz
1. A newborn child who is added to a health insurance policy as a dependent is covered from what point in time?
A. The date the insured notifies the insurer
B. The moment of birth
C. 30 days after birth
D. The date the first premium is paid
Correct Answer: B
Rationale: Individual and group health insurance policies that provide dependent coverage must include automatic coverage for a newborn child from the moment of birth. No prior notification or premium payment is required for the initial coverage to take effect.**
2. Which of the following is NOT a requirement for a dependent child to remain on a parent's health insurance policy until age 26?
A. The child must be a natural or adopted child
B. The child must be a full-time student
C. The child may be married
D. The child may have access to other coverage
Correct Answer: B
Rationale: Federal law does not require the dependent to be a full-time student to qualify for continued coverage. Eligible children may remain covered up to age 26 regardless of marital status or eligibility for coverage under another insurance plan.
3. What happens to newborn coverage if the insured fails to notify the insurer and pay the required premium within the required timeframe?
A. Coverage is retroactively denied from birth
B. Coverage continues indefinitely at no charge
C. Coverage is limited to the first month only
D. Coverage is extended to 60 days automatically
Correct Answer: C
Rationale: If the insured does not notify the insurer and pay any required premium within 30 to 31 days following the birth or adoption, coverage will be limited to the first month only. Timely notification is essential to continue coverage beyond the initial period.
4. Which of the following best describes how maternity benefits typically handle complications of pregnancy?
A. Complications of pregnancy are excluded from coverage
B. Complications of pregnancy are covered the same as any other illness
C. Complications of pregnancy require a separate rider
D. Complications of pregnancy are only covered under group plans
Correct Answer: B
Rationale: Medical expense plans typically cover complications of pregnancy as they would any other illness. However, routine maternity and childbirth expenses may be limited or excluded depending on the terms of the specific policy.
5. Under a medical expense plan, which of the following is true regarding inpatient and outpatient mental health benefits?
A. Mental health benefits are only available on an inpatient basis
B. Outpatient mental health benefits are always unlimited
C. Benefits are available on both an inpatient and outpatient basis, but outpatient services may have limitations
D. Mental health benefits are only covered if separate from the base policy
Correct Answer: C
Rationale: Mental health and substance use disorder benefits are typically available on both an inpatient and outpatient basis, including treatment for alcohol use and chemical dependency. However, many plans may impose limitations on outpatient services, such as visit caps or reduced benefit levels.