Basic vs major medical, the deductible zoo, coinsurance math, ACA essentials, and the HSA/HRA/FSA family.
Before you read — prime your brain
Take a shot at these. Being wrong here is the point — it primes you for the answers, which are all in this lesson.
A deductible that must be satisfied only once per year, regardless of the number of illnesses, is a
Noted — the answer comes up in this lesson.
An insured has a $500 deductible and 80/20 coinsurance. He incurs $1,500 in covered expenses. The INSURER pays
Noted — the answer comes up in this lesson.
Under the ACA, children may remain on a parent's health plan until age
Noted — the answer comes up in this lesson.
Primed. Read on — then finish the lesson to see how you did.
This chapter is the exam's math playground: deductible-plus-coinsurance calculations, corridor-vs-integrated scenarios, and stop-loss caps. Around the math sit two frameworks — basic (first-dollar, listed, limited) versus major medical (deductible, comprehensive, capped out-of-pocket) — and the ACA rules that shape every modern policy. Work every calculation card until the arithmetic is automatic.
Basic Medical Expense: Hospital · Surgical · Physician
[2]–[3.3]
Basic medical expense insurance pays first-dollar (no deductible) but only for listed services at modest limits. Basic hospital covers what the hospital bills — room & board on an indemnity basis, lab, medicines, the operating room — the THINGS, not the practitioners. Basic surgical pays surgeons and anesthesiologists via a dollar schedule, a relative value scale (units × conversion factor), or UCR. Basic physician covers non-surgical visits and is never sold alone. Nearly all policies share the same exclusions: cosmetic, experimental, government facilities, and anything workers' comp owns.
Basic hospital covers the operating ROOM; basic surgical covers the SURGEON. Sorting the bill by who sent it answers half the questions.
Check yourself
A basic hospital expense policy would cover which of the following?
How sure are you?
Basic hospital covers what the hospital bills — rooms, supplies, the operating theater, nursing staff. Surgeons/anesthesiologists → basic surgical; house calls → basic physician.
Check yourself
Which concept does this describe? Pays surgeons' fees (in OR out of hospital) plus anesthesiologist costs. Benefit approaches: surgical schedule (flat dollar amount per procedure) · relative value scale (units × conversion factor) · UCR (non-scheduled).
Major medical shifts early costs to the insured through deductibles: calendar-year (once per period, with a 3-month carryover provision), flat, per-cause (each illness restarts it), common accident (one deductible for a shared family accident), and the family maximum (2–3× individual, satisfiable by pooled claims). The paired stars: the corridor deductible (insured pays the full gap between basic and major medical) versus the integrated deductible (basic-policy payments credit toward the deductible) — the John scenario swings from $3,000 to $1,000 on that one word.
Corridor = you walk the gap yourself. Integrated = basic insurance walks most of it for you. Read the question's deductible type before touching the math.
Check yourself
A deductible that must be satisfied only once per year, regardless of the number of illnesses, is a
How sure are you?
Calendar-year/cumulative/all-cause — one deductible per benefit period. Per-cause resets with each illness or accident.
Check yourself
A deductible that lies between basic first-dollar coverage and major medical coverage is called a(n)
How sure are you?
The corridor is the gap the insured crosses after basic benefits are exhausted and before major medical begins.
Major medical is comprehensive, open-peril, UCR-based catastrophic protection — supplemental (atop a basic plan) or comprehensive (one combined policy). After the deductible, coinsurance splits costs insurer/insured (80/20; the insurer must pay ≥50% to be insurance). The stop-loss / out-of-pocket maximum caps the insured's yearly share (deductible + coinsurance + copays — never premiums), after which the insurer pays 100%. Internal limits survive only on non-essential benefits.
Exam math ritual: insured's share first (deductible + their coinsurance %), then subtract from the bill for the insurer's share. Apply stop-loss last.
Check yourself
Which concept does this describe? Comprehensive, high-limit coverage against catastrophic costs on an open-peril basis (covered unless excluded), built on the UCR standard with deductibles, coinsurance, and an out-of-pocket maximum. ACA-qualified versions provide minimum essential coverage and unlimited essential health benefits. Two flavors: supplemental (sits atop a basic plan, corridor deductible between) and comprehensive (one policy combining both).
How sure are you?
Check yourself
An insured has a $500 deductible and 80/20 coinsurance. He incurs $1,500 in covered expenses. The INSURER pays
The ACA rebuilt major medical: guaranteed issue, no caps on the 10 essential health benefits, free preventive care, dependents to 26, the 50-employee employer mandate, subsidies to 400% FPL, and exchange plans in metal tiers (Bronze 60 → Platinum 90). Enrollment = annual OEP + special periods after qualifying events. Grandfathered plans and 'skinny' MEC plans are the exceptions to know. HIPAA's pre-existing framework still matters off-ACA: 6-month look-back, 12/18-month exclusion caps, creditable coverage credit.
Metal tiers change the SPLIT (60/70/80/90), never the benefit list. And pediatric — not adult — dental/vision is essential.
Check yourself
Under the ACA, children may remain on a parent's health plan until age
How sure are you?
26 — married or single, student or not. Aging out is then a COBRA qualifying event worth up to 36 months of continuation.
Check yourself
Which of the following is one of the ACA's 10 essential health benefits?
How sure are you?
PEDIATRIC oral and vision care is essential; ADULT dental/vision are optional add-ons — the exam's favorite EHB trick.
A consumer-driven health plan stacks a tax-advantaged account + a deductible gap + an HDHP. The HSA is the star: individually owned, portable, triple-tax-advantaged, requires an HDHP, 20% penalty on non-qualified use. The HRA is employer-funded and stays behind at job change; the FSA (via a §125 cafeteria plan) is use-it-or-lose-it and can't coexist with an HSA; the Archer MSA is the grandfathered small-employer ancestor. Taxation: benefits never taxable; employees deduct above 7.5% AGI; the self-employed deduct 100% of premiums.
Sort the accounts by two questions: Whose money is it? (HSA=yours · HRA=employer's · FSA=yours but expiring) and Does it survive a job change? (only the HSA).
Check yourself
Which concept does this describe? IRC §125 arrangement letting employees pick benefits from a menu pre-tax — including health insurance and FSAs. Sole proprietors, partners, and more-than-2% S-corp shareholders can't participate (C-corp shareholders can).
How sure are you?
Check yourself
To contribute to a health savings account, an individual must
How sure are you?
HSA requires a qualifying HDHP, no other medical coverage, NOT on Medicare, and not being claimed as a dependent.
Close your eyes for a moment, then write everything you remember from this chapter — rules, numbers, traps. Recalling first is worth more than rereading.
Recall captured. Compare it against the summary below.
Corridor = you walk the gap yourself. Integrated = basic insurance walks most of it for you. Read the question's deductible type before touching the math.
Sort the accounts by two questions: Whose money is it? (HSA=yours · HRA=employer's · FSA=yours but expiring) and Does it survive a job change? (only the HSA).
Lesson completion
Lesson complete — every check passed from memory. Your pretest answers above are now revealed.