Managed care
In terms of using such a plan, unlike an HMO plan, which has a copayment cost share feature (a nominal payment generally paid at the time of service), a PPO generally does not have a copayment but offers a deductible and a coinsurance feature. The deductible must be paid in full before any benefits are provided. After the deductible is met, the coinsurance benefits apply. If the PPO plan is an 80% coinsurance plan with a $1,000 deductible, the patient pays 100% of the allowed provider fee up to $1,000. The insurer will pay 80% of the other fees, and the patient will pay the remaining 20%. Charges above the allowed amount are not payable by the patient or insurer but written off as a discount by the physician.
International Life Assurance Society
Under any reserve methodology for life insurance policies, the actuarial liability under the policy is equal to the present value of the amounts expected to be paid on account of the policy, offset by the present value of the amounts expected to be received from the policyholder via future premium payments. The amounts expected to be paid by the company include not just the contracted benefits themselves, but also the expenses that will be incurred in servicing the policy, as well as any dividends that will be paid to the policyholder in future years. The entire calculation is intended to quantify the amount of assets that need to be held "in reserve" for payment of those future benefits, expenses and dividends. Under the "net premium" variation used by Wright, there is no explicit estimate of future expenses and dividends. Instead, the first portion of the calculation (i.e., the present value of amounts expected to be paid by the company) reflects only the contracted benefits, and does not reflect any expenses or dividends that are also expected to be paid. This "error" is corrected in the second portion of the calculation, wherein the offset portion of the calculation uses a theoretical "net" premium that is typically much lower than the premium actually being paid by the policyholder. By offsetting a smaller amount for the present value of the expected future premiums, the future expenses and dividends are taken into account, albeit in an indirect manner.