Question 75

Benefits are provided on a capitation basis

Major medical expense policies typically do not provide benefits on a capitation basis; instead, they cover a wide range of medical expenses through other reimbursement methods. Capitation is a payment arrangement for health care service providers, which is not aligned with the structure of major medical expense policies.

A) The policy usually has a deductible and a high maximum benefit

This statement is true, as major medical expense policies are characterized by having a deductible that the insured must pay before coverage kicks in, along with a high maximum benefit limit to protect against catastrophic health expenses.

B) The policy usually contains a coinsurance provision

This statement is accurate, as major medical expense policies commonly include a coinsurance provision where the insured pays a percentage of the medical costs after the deductible has been met, sharing the financial burden with the insurer.

C) Coverage is provided for both inpatient and outpatient hospital expenses

This statement is also true, as major medical expense policies are designed to cover a broad spectrum of health care services, including both inpatient and outpatient hospital expenses, ensuring comprehensive medical coverage.

D) Benefits are provided on a capitation basis

This statement is incorrect. Major medical expense policies do not function on a capitation basis, which is more typical of managed care plans. Instead, these policies reimburse based on incurred medical expenses according to the terms of the policy.

Conclusion

The correct answer, D, is definitive because major medical expense policies do not operate on a capitation basis, which is a distinct payment model. The other options accurately reflect the characteristics of major medical expense policies, highlighting their structure in terms of deductibles, coinsurance, and the types of coverage provided.