Insurance Terminology You Need To Know: Part II

Welcome to part two of our series on insurance terminology. Some of these definitions are common knowledge, while others might be more obscure. If you’re a new buyer, then you’ll want to know what you’re getting yourself into before you make any final decisions. That’s where we come in. Here are a few more terms to know before exercising your purchasing power!

What is an allowed amount?

The allowed amount is the highest dollar amount that an insurance company will ever pay. Here’s an example of the world’s worst healthcare plan: 75% coinsurance, $9,900 deductible, with a $25 allowed amount. This scam means the highest amount the company would pay is $25, and only after you’ve paid the $9,900 deductible. Plus, you’ll have paid another $75 to obtain their $25 via coinsurance. Whoops! Buyer beware.

What is a condition?

In healthcare, a condition is the illness or disease covered or not covered by insurance. Be wary of insurance contracts that don’t cover common health problems like heart disease or cancer. They might serve for a broken leg, but nothing else. 

What is a copayment? 

Many insurance contracts involve some sort of a copayment when you use a particular service. Let’s say you need to visit the doctor for a health problem you recently noticed. The plan might note that the deductible is irrelevant for this service, but that there is a $25 copay. That means the visit is covered by insurance, and all you’ll have to pay is the $25. Not too shabby.

What is a covered charge?

Covered charges are exactly what they sound like: they’re charges made to the insurance provider for covered services. This is of particular relevance to those who might be traveling, because they’re more likely to need the healthcare services of an out-of-network establishment. Most insurance providers will place a strict limit on the covered charges when venturing out-of-network.

What Is Divorce Insurance?

Divorce insurance is something that many married couples “Google search” for when tying the knot — and no wonder, because 9 out of 10 people will marry by the time they reach age 50 and up to half of those couples will inevitably divorce. But unfortunately divorce insurance doesn’t actually exist. There was a sort of divorce insurance “test” back in 2010, but big shock: it didn’t work out for the insurer. The theory was simple enough. Married couples can experience financial upset during divorce, so why not offer them a backup plan?

Probably the biggest problem with the actual “divorce insurance” concept is that there are already fail-safe measures that can be preemptively taken by couples if they want to protect their financial interests against divorce. But even those measures are scrutinized and stigmatized because marriage is supposed to be a lifetime vow — a commitment. Take the prenup, for example: the legal contract can stipulate what would happen should divorce take place, and is signed before the marriage licenses are obtained.

The difference between a prenup and the doomed divorce insurance was simple enough, though. A prenup is an agreement between two committed partners, while divorce insurance was an agreement between a business and just one of those assumedly committed partners.

But the problems with divorce insurance are equally obvious. Do you think an insurance company willingly pays out a settlement unless forced? Not a chance. When you’re in a car accident between two or more parties, the insurance company literally sends out highly qualified and well paid individuals to make sure the story you provide is the right one. If you were the cause of the accident, don’t expect to get anything that isn’t owed.

But how do you make an agreement that basically says “if you divorce this person, you’ll receive this benefit”? The coverage basically becomes about what would happen under set conditions, just like any other insurance. Your spouse cheated on you and you want a divorce? Great. Your divorce insurance benefit should pay up. But first you need to provide beyond any shadow of a doubt that your spouse actually cheated. Any footage of that event? Hint: you’re probably breaking a half-dozen laws by having footage of that event, much less sharing it.

So you can see why the coverage options were likely doomed from the beginning.

But there’s probably no replacement for a traditional divorce attorney. Looking for one? You can visit website of any local attorney you choose, and most will always offer a free consultation to see if you’re a good match.

An attorney can also help relevant parties come to a marriage settlement, which is typically an agreement made to iron out details of who pays what (think alimony or child support) after marriage. The might also include more immediate concerns like assets, child custody, child visitation rights, etc. It’s always a good idea to know what you want out of a marriage — and what you want out of a divorce.

Check out some of the coverage when divorce insurance was first offered:

Insurance Terminology You Need To Know: Part I

Anyone buying or selling insurance for the first time will quickly realize the extensive amount of jargon associated with the industry. It’s not always self-explanatory, either. Do you know what the repatriation of remains is? What is an FSA? Or an HMO? HRA? …HSA? No matter how fluent you might be with the lingo, sometimes it helps to brush up on the really complicated terms. Here are a few of the most common in the first part of our series on insurance terminology.

What is a benefit period?

This is the exact period of time during which a particular plan will cover a particular person. A benefit period that lasts for three months might begin February 5 and run through October 5. That means the coverage is still good on both of those days — and every day in between. For health insurance plans, the coverage is usually good for one year, but keep your eye on the specific dates. 

What is coinsurance?

Many people who have never purchased an insurance plan might mistakenly assume this is some type of shared insurance between two people. But it’s not. This is shared payment between you and your insurance provider. Coinsurance is usually provided as a percentage of the amount owed. It usually kicks in after the deductible has been paid. 

What is a deductible?
This is probably the most important new term you need to learn! The deductible is the amount you pay for a service (usually healthcare) before an insurer will pay a dime for specific services. Before purchasing a plan, pay close attention. Cheaper plans usually have higher deductibles, which can be terrible if you don’t have much money in your wallet. For example, a $5,000 deductible means that if you are diagnosed with a life-threatening form of cancer, you would have to pay $5,000 before your insurer helps out. And don’t forget — you might still be paying a lot in coinsurance.

How Are Employers Covered By Business Insurance?

Insurance was a scheme devised to help people protect themselves from risky ventures. While we might not think of owning a vehicle as a “risky venture,” tens of thousands of people die in wrecks each year — and that makes it a fair risk for personal injury or financial loss. And there are many different types of insurance ranging from pet insurance to business insurance. There is no greater risk than starting a new business. It’s hard work. Success is not always guaranteed. So why should business owners insure themselves, and what does business insurance cover?

Business insurance usually consists of general protections to guard against natural disaster, property damage, lawsuits, and “shrink” (which is profit loss due to product damage or theft). It comes down to liability. In many cases the business owner is liable — but can buy insurance to offset those liabilities. 

Depending on the type of business insurance, the owner might have legal or financial options if an employee reports discrimination in the workplace. In order to maintain coverage, an owner would likely be asked to exceed state and federal regulations on discrimination by offering extensive training courses and workshops designed to further mitigate the risk of these types of reports by employees. 

Many entrepreneurs will purchase a Business Owner’s Policy (or BOP). These policies combine several different types of coverage, including property protection, general liability, and business income protection. BOPs are popular because they represent a deal — entrepreneurs can save money on one type of coverage by combining it with many other types of coverage. The more protected, the more you stand to save if the worst happens (and the less you spend on the insurance itself).

A BOP will help protect an owner against other claims as well, frivolous or not. Sooner or later, a customer will likely report sustaining an injury in your store. This is an inevitable consequence of running a business. If you need to fight the claim in court, the business coverage will help offset the costs of hiring a lawyer and making a case. The same type of coverage protects against customer claims that you falsely advertised a product or service.

Many business owners will want business income insurance, which will protect against losses sustained due to closure. The reasons for such a closure might include natural disaster, theft, or another kind of unforeseen damage. 

If your business involves greater-than-normal bookkeeping (if you own a law firm, for example), then you will likely want to obtain professional liability insurance to protect against a client who makes the claim that a small clerical error cost him money. The important thing to remember is this: making a mistake is all that is necessary for a costly lawsuit. It doesn’t mean you did something wrong. These suits can still be costly if you don’t have the appropriate insurance.

Workers’ compensation insurance — not to be confused with actual workers compensation — is insurance that guards against losses incurred because an injured employee can’t work (because they’re out on workers comp and cannot be easily replaced!).

Could A Conservative-Dominated Supreme Court Destroy Health Insurance For Millions?

This question has been propelled to the top of the list ever since Trump and McConnell fought to ram through a new Supreme Court nominee weeks ago: Will a 6-3 conservative-led Supreme Court fight to abolish the Affordable Care Act (ACA)? Depending on whether or not you support Obamacare, you might not like the answer. Truth be told, the ACA has been attacked for years, and many GOP government officials have made their distaste for the law very well known.

The moment that Trump made his nomination of Barrett, healthcare stocks began to react volatilely. 

Jefferies health care analyst Brian Tanquilut had warned: “It sounds like the Republicans are really gonna push for a Supreme Court nominee approval before the new administration (and) the fear is that the ACA will be probably repealed. I’m not sure that’s necessarily the case, but obviously that’s the fear that’s been baked into the stocks right now.”

Regardless of the outcome of the election, things were never going to get less uncertain than they are right now. There is a small amount of good news. During Obama’s time in office, the GOP members of the Senate made dozens of votes to repeal and replace Obamacare knowing they didn’t have enough votes to get anything done), but once Trump made it into office, and they might have been able to make waves, they stopped holding votes. In other words, it might all have been for show in order to retain the appeal of their constituents.

Unfortunately, that doesn’t mean a conservative-led Supreme Court won’t do what a conservative-led Senate wasn’t willing to do themselves. But Professor Nicholas Bagley of the University of Michigan Law School acknowledges that the balance of power is shifting so much that no one really knows what will happen.

He said, “If the case gets argued in front of a new Supreme Court with a new justice, the center of gravity and the court will no longer be with Chief Justice Roberts, who has turned away too much stronger challenges to the law. It’ll be with the other conservative justices.” 

Democrats need to start winning over “purple” states like Texas if they want to cement their chances of winning state, local, and federal elections over the long-term — as doing so is the only way to ensure that civil rights and well-liked healthcare programs (like the ACA) stay in place for years to come. Even should Democrats continue winning elections, though, the Supreme Court is still lopsided in favor of conservative voices, which means that the ACA remains in a state of constant peril for years to come.

Texas Senator John Cornyn made his opposition to the ACA clear weeks ago during a press conference at City Hall in Dallas, even though he admitted that he favored coverage based on preexisting conditions. To keep the ACA safe, officials like him need to continue to be kept away from higher office.

A ruling five years ago upheld many core tenets of the ACA:

What Would Happen To Insurance Rates If Obamacare Is Overturned?

The death of Ruth Bader Ginsberg means that new Supreme Court nominee Amy Coney Barrett will likely be seated before Election Day, providing the highest authority in the land with an overwhelmingly conservative 6-3 advantage — providing Republicans with the ability to overturn important historical benchmarks in our country such as marriage equality, Roe v. Wade, or even the Affordable Care Act (ACA).

This is why Democrats are in such an uproar. Majority Leader Mitch McConnell (Republican, Kentucky) said that the GOP has no expectation that the new Supreme Court will overturn the ACA — even though their Republican commander-in-chief is leading the charge to repeal the ACA through legal action expected to reach the Supreme Court. They say they want to “repeal and replace,” which is a talking point they’ve used for years and years — even without putting forth an actual replacement.

Should the ACA be repealed, it is expected that nearly 30 million people will lose their insurance. Also attached to the law are stipulations that all insurers, both public and private, are required to provide insurance to those with preexisting conditions. The repeal of the ACA means that insurers can remove those with preexisting conditions from their plans. Over a million people would also lose their jobs as less money is spent by consumers who would need to decide between insurance and other basic necessities like food or rent.

Insurance companies would also be able to take insurance away from countless 20-somethings, who under the ACA can stay on their parents’ plants until age 26. 

Because of these added benefits, insurance rates went up after the law was implemented — but most of the rate of growth was already expected by industry analysts looking at skyrocketing costs over the years. If the ACA goes away, a temporary lull in rising costs could be expected — but only at the cost of the benefits it provided.

Do Employers Have Insurance For Sexual Harassment And Sexual Assault?

Thanks in part to the ever-present #MeToo movement, the number of public cases against high-profile defendants accused of sexual harassment or sexual assault has grown exponentially over the past few years. Perhaps this is why we have received so many inquiries from readers who want to know whether or not large companies and corporations can buy insurance to protect themselves from the unwanted sexual advancements of their employees.

The answer is yes.

This will leave a foul taste in some people’s mouths, but for anything that can affect a business’s profits there is an insurance clause to cover it. There are a few different types of insurance that covers claims for sexual harassment or assault, such as an employment practices liability insurance policy (EPLI). Another possible avenue of protection is basic liability policy for directors and officers (D&O).

Not every claim will result in compensation — because the facts matter. Allegations of harassment or assault must meet the definitions provided by the Equal Employment Opportunity Commission (EEOC). According to this definition, sexual harassment is indicative of “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when this conduct explicitly or implicitly affects an individual’s employment, unreasonable interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment.”

We should make a few aspects of such a case clear based on this definition. First, the harassment or assault must be proved by factual evidence. Mere allegations are not enough. 

Vice President Marie-France Gelot of Lockton Northeast wrote, “Whether or not a claimant is able to actually make a case proving that sexual harassment occurred, the reality is that the bulk of liability faced by companies accused of such conduct is not generated after a jury trial. It is generated by attorneys’ fees in litigation, win or lose. In the current environment, this is a critical point; any perceived harassment can result in six-figure liability for a company, regardless of whether a judge or jury would ultimately find the harassment unlawful.”

That means that companies still pick up insurance simply based on the fact that a mere allegation can cost many hundreds of thousands of dollars — even if actual evidence of misconduct does not exist. This is in part due to the fact that any lawsuit will likely involve attorney’s fees for the other side, and a sexual abuse attorney can be pricey for a victim. 

Those seeking insurance — or those seeking damages for sexual harassment or assault — should remain keenly aware that the national conversation on this type of abuse is ongoing and that rapid-fire changes to laws in jurisdictions around the country and the world remain constant. That means that insurance adjusters are more likely than not to continue adjusting policies to reduce the possibility of collection from either side (because insurance only works properly if insurance companies cover aspects of everyday life that don’t often result in a good case). 

Gelot confirmed as much when she said, “It remains to be seen if EPLI insurers will react to the momentous changes occurring in the national conversation on sexual harassment in the workplace by limiting the scope of the coverage or making it more expensive.”

Insurance Rates Poised To Skyrocket In 2021

New York-based insurance companies wish in hike premium rates on average of 11.7 percent for the 2021 year. Why? Because they say costs are growing due to the coronavirus outbreak. These projections were made public by the Department of Financial Services recently. Government authorities have yet to make a public comment to address growing concerns about already skyrocketing costs, especially since an increasing number of residents are uninsured after losing jobs.

One Manhattan-based insurer wants to increase rates a whopping 19 percent.

Shockingly, the rate hikes were called “reasonable and fair” by the New York Health Plan Association. According to the group, rate hikes would correspond to rising health care costs, most of which were do to COVID-19, a disease which has already resulted in 24,000 NY fatalities — nearly the number of deaths in a typical flu season, nation-wide. 

NYHPA President Eric Linzer said, “From the outset and throughout the continuing coronavirus crisis, New York’s health plans have made extraordinary efforts to meet the needs of consumers, businesses and our health care partners. This has included waiving copayments and cost sharing for COVID-19 testing, telehealth services and mental health services for essential workers, and providing cash advances and other support to hospitals, physician practices and others in the delivery system to address the financial uncertainty they’re facing.”

Nothing, as they say, comes free. The services recently offered without cost are the basis for most of the expected rate hikes in 2021. In 2019, eight companies with a public IPO made over $21 billion — which constituted a massive 31 percent increase in profit over the previous year. Basically, no one should believe that these companies actually need to increase their rates.

Do you believe you were taken advantage of by a health care company during the coronavirus crisis? Did you lose coverage at the most inopportune time? Insurance litigators want to hear your story — and we might want to build your case. You deserve compensation more than they do. Don’t forget it.

What Happens If You Don’t Have Insurance While In Quarantine?

There is a small amount of good news that has come out in the last few weeks: if you get tested for COVID-19, the disease caused by the novel coronavirus, you won’t be charged. However, if you test positive — it’s bad news whether you have insurance or not. Those with insurance can expect to pay thousands in out-of-pocket premiums, deductibles, copay, etc. Those without insurance can expect to pay tens of thousands in medical costs.

In other words, failing to procure insurance during this dangerous viral outbreak could cost you your livelihood. With millions of Americans already filing for unemployment benefits, we can expect that the number of insured will plummet. If you haven’t already started to see the economic cost of COVID-19, then you will soon.

There’s another small piece of almost-good news. President Trump is considering opening Obamacare applications during the outbreak. Although he’s doing this even as his administration sends the ACA to the Supreme Court to rule on whether or not the law is constitutional. He’s doing everything in his power to dismantle one of the greatest financial remedies to this crisis. 

It’s almost as if the world is screaming for him to stop.

Coupled with the news that President Trump wants to lift restrictions for travel and businesses as soon as possible, and it’s not difficult to see the writing on the wall: America is in for a world of hurt.

There are few legal remedies available to you when you cannot afford insurance in this time of crisis, whether it be health, home, or car insurance. Do your best to find coverage. If you can’t, then apply for unemployment and wait for the government to send you a check or two. Give a qualified insurance or employment lawyer a call to see if there are any obvious legal resolutions for your individual situation.

Did your boss fire you because you were sick?

Did someone purposely infect you with the virus?

Do you blame your employer for failing to take the right safety precautions?

Were you forced to work while sick?

All of these provide you with limited options for compensation, but at least they exist. There will be tens of thousands — or potentially even millions — of lawsuits in the coming months and years due to the coronavirus outbreak and the likely global recession that follows. We will do everything in our power to make you whole again. But first we need to hear your story!

Insurance Litigation Expected To Surge Because Of Coronavirus

Many victims of coronavirus have been subjected to isolated treatment — and not always by choice. More often, quarantine situations are mandatory actions as a matter of course. But survivors of the novel sickness have begun to receive their bills. And when you were forced into isolated treatment, you might not actually expect a bill. This has left a lot of people asking whether or not insurance will cover treatment.

And for those of us who practice insurance law, different questions arise: will the number of new insurance cases skyrocket because people receive bills for treatment they didn’t actually want. 

Keep this in mind: the American system of medicine is steeped in choice. If you need treatment, you choose to go get it. Don’t have the money? Don’t want to risk a big bill? Many people avoid the hospital. But when someone screams “coronavirus” they don’t have a choice. They receive treatment whether they like it or not. Those who don’t have enough insurance are still subject to the insane costs of long-term care. That means new lawsuits are coming.

And that’s just health insurance!

A shocking number of Americans have already canceled international travel plans because of the spread of the virus, which is quickly spiraling out of control. Many didn’t have a choice in the matter, because of increased travel restrictions and bans to and from places like China. That means that people will also have questions and concerns about whether travel insurance will cover their broken travel plans. 

Most coverage isn’t absolute. That’s the point of insurance, after all. You’re paying a third-party to protect you from something, but that third party has only one job, really: to tell you no when you come calling.

That’s why it’s so important to read up on the insurance plan you want to buy. If you don’t see the word “pandemic” in the insurance agreement, you might be out of luck.

What’s covered? Generally, you won’t be covered by your travel insurance when the airline decides to cancel one of their flights. Usually, though, an airline will reimburse you whenever they remove a flight from the roster. It pays to check. Reimbursement might not include travel booked on the other end of the flight, though.

If you’re the one choosing to cancel your trip, then you’re almost never covered.

However, if you contract the virus or some other sickness, you’re almost always covered. If you’re put in quarantine, then you’re almost always covered — even if you never come down with the sickness. 

All insurance plans have limits and exclusions, so discuss them with the provider whenever something gets in the way of travel plans. All else aside, you might benefit from calling an insurance lawyer for help.