Individual Health Insurance

By Hans K. Leida, Erica S. Baird and William F. Bluhm · ACTEX Learning · 2026

Study guides: Exam CP-321, Exam GH-101

A textbook on the individual health insurance market, now in its third edition, updated with developments since the rollout of the Affordable Care Act and with updated and expanded material on other topics such as Medicaid Managed Care. ACTEX Learning describes it as covering the history of the individual marketplace, the products currently available, the role of regulation and government health policy, and all aspects of the development and management of the business.

On the syllabus

• Exam CP-321 — Chapter 2, The Products, Sections 2.7-2.9 (Outcomes 1b, 1c); Chapter 4, Managing Antiselection, Sections 4.1-4.5 (2e); Chapter 6, Reserves and Liabilities (3a-3g).
• Exam GH-101 — Outcomes 2b, 2c, 2d; study note GH101-100-26, Chapter 5 (Setting Premium Rates) of Individual Health Insurance, Leida, Hans, 3rd Edition, 2026.

Acknowledgments

Preface to the Third Edition

About the Authors

1 Introduction

• 1.1 The Individual Health Insurance Marketplace
  • 1.1.1 What Is Individual Health Insurance?
  • 1.1.2 History
  • 1.1.3 The Players
  • 1.1.4 Distribution Channels
• 1.2 Regulation
• 1.3 Health Policy: Handling Selection Effects and External Shocks

2 The Products

• 2.1 Major Medical Coverage
  • 2.1.1 Deductibles
  • 2.1.2 Coinsurance
  • 2.1.3 Copays
  • 2.1.4 Out-of-Pocket Limits
  • 2.1.5 Maximum Limits
  • 2.1.6 Internal Limits
  • 2.1.7 Formularies
  • 2.1.8 Variations on a Theme – Related Products
  • 2.1.9 ACA Restrictions on Plan Design
  • 2.1.10 Networks
  • 2.1.11 PPO Products
  • 2.1.12 Measuring and Choosing Providers
  • 2.1.13 Measuring and Choosing Networks
• 2.2 Limited Benefit Medical Coverages
  • 2.2.1 Hospital Indemnity Plans
  • 2.2.2 Accident-Only Coverage
  • 2.2.3 Specified Disease and Critical Illness
• 2.3 Group Conversion Coverage
• 2.4 Medicare Supplement Coverage
• 2.5 Medicare Advantage and Part D Plans
  • 2.5.1 Benefits
  • 2.5.2 Enrollment
  • 2.5.3 Funding for Medicare Advantage and Part D
  • 2.5.4 Bid Process
  • 2.5.5 Regulatory Environment
• 2.6 Medicaid Managed Care
  • 2.6.1 Benefits
  • 2.6.2 Enrollment
  • 2.6.3 Rate Setting
  • 2.6.4 Funding
• 2.7 Disability Income Coverage
  • 2.7.1 Renewability
  • 2.7.2 Lost Income vs. Indemnity
  • 2.7.3 Elimination Period
  • 2.7.4 Benefit Period
  • 2.7.5 Definition of Occupation
  • 2.7.6 Total vs. Partial vs. Residual
  • 2.7.7 Recurring Disabilities
  • 2.7.8 Cost of Living Adjustments
  • 2.7.9 Social Insurance Supplements
  • 2.7.10 Group Wraparound Policies
  • 2.7.11 Waiver of Premium Provisions
• 2.8 Business Protection Coverage
  • 2.8.1 Business Purpose of the Insurance
  • 2.8.2 Key Person Coverage
  • 2.8.3 Disability Buyout Coverage
  • 2.8.4 Business Overhead Expense
• 2.9 Long-Term Care Coverage
  • 2.9.1 Benefit Triggers
  • 2.9.2 Activities of Daily Living
  • 2.9.3 Cognitive Impairment
  • 2.9.4 Elimination Period
  • 2.9.5 Types of LTC Plans
  • 2.9.6 Covered Services
  • 2.9.7 Alternate Plan of Care
  • 2.9.8 Benefit Limit
  • 2.9.9 Inflation Protection
  • 2.9.10 Nonforfeiture Benefits
  • 2.9.11 Ancillary Plan Features
  • 2.9.12 Rate Increases
  • 2.9.13 Combination Products
• 2.10 Dental Coverage
  • 2.10.1 Multiple Treatment Options
  • 2.10.2 Accumulated Untreated Conditions
  • 2.10.3 External Antiselection
  • 2.10.4 Pediatric Dental Coverage Under the ACA
  • 2.10.5 Conclusion

3 Policy Forms

• 3.1 Development of a Policy Form
  • 3.1.1 Expertise Needed
  • 3.1.2 Feedback Loop
  • 3.1.3 Elements of Product Design
• 3.2 Elements of a Policy Form
  • 3.2.1 Face Page
  • 3.2.2 Table of Contents
  • 3.2.3 Schedule Page
  • 3.2.4 Definitions
  • 3.2.5 Premiums and Reinstatement
  • 3.2.6 Benefit Provisions
  • 3.2.7 Exclusions and Limitations
  • 3.2.8 Other Provisions
• 3.3 NAIC Policy Form Models
  • 3.3.1 The Uniform Individual Accident and Sickness Policy Provision Law (UPPL)
• 3.4 HIPAA's Continuation Requirements

4 Managing Antiselection

• 4.1 The Three Faces of Antiselection
• 4.2 Underwriting the Individual Risk (External Antiselection)
  • 4.2.1 Underwriting Tools
  • 4.2.2 Analysis Of The Information
  • 4.2.3 Underwriting Actions
  • 4.2.4 HIPAA and Privacy
• 4.3 Changes in Plan (Internal Antiselection)
  • 4.3.1 The Buy-Down Effect
  • 4.3.2 Modeling and Managing Internal Antiselection
• 4.4 Antiselection Upon Lapse (CAST/Durational Antiselection)
• 4.5 Modeling Antiselection
  • 4.5.1 The Partition Model
  • 4.5.2 Projecting the Model
  • 4.5.3 The Future
• 4.6 Antiselection under the Affordable Care Act
  • 4.6.1 Coverage Mandates and Premium Subsidies
  • 4.6.2 Aligning Rules On and Off Exchanges
  • 4.6.3 Open Enrollment Periods
  • 4.6.4 Minimum Benefit Levels
  • 4.6.5 The Three R’s
  • 4.6.6 The Future

5 Setting Premium Rates

• 5.1 The Rate Setting Process
• 5.2 Rate Structures Used Today
  • 5.2.1 Age
  • 5.2.2 Duration
  • 5.2.3 Gender, Marital, and Parental Status
  • 5.2.4 Occupation
  • 5.2.5 Geographic Area
  • 5.2.6 Other Factors
• 5.3 Manual Rating
  • 5.3.1 Tabular Method
  • 5.3.2 Cost Models and Claim Probability Distributions
  • 5.3.3 Simulation
• 5.4 Rerating
  • 5.4.1 Step 1: Gather Experience
  • 5.4.2 Step 2: Restate Experience
  • 5.4.3 Step 3: Project Past Results to the Future
  • 5.4.4 Step 4: Compare the Projection Against Desired Results
  • 5.4.5 Step 5: Apply Regulatory and Management Adjustments
• 5.5 Turning Claim Costs into Gross Premiums
  • 5.5.1 Block Rating (Short Time Horizon) Approach
  • 5.5.2 Asset Share Approach

6 Reserves and Liabilities

• 6.1 Types and Uses of Reserves and Liabilities
  • 6.1.1 Reserve vs. Liability
  • 6.1.2 Types of Reserves
• 6.2 Premium Reserves
  • 6.2.1 Unearned Premiums
  • 6.2.2 NAIC Requirements for Unearned Premium Reserves
  • 6.2.3 Premium Paid in Advance
  • 6.2.4 Premium Due and Unpaid
• 6.3 Policy Reserves
  • 6.3.1 The Theory
  • 6.3.2 Complications and Variations to the Reserve Formula
  • 6.3.3 Purchase GAAP
  • 6.3.4 Pre-funding Trends
  • 6.3.5 To Hold or Not to Hold
  • 6.3.6 Rate Increases
  • 6.3.7 Reserve Bases
  • 6.3.8 Policy Reserves and Experience Monitoring
• 6.4 Claim Reserves
  • 6.4.1 1. Triangulation Method
  • 6.4.2 2. Claim Cost Method
  • 6.4.3 3. Tabular Methods
  • 6.4.4 4. Predictive Modeling Methods
  • 6.4.5 5. Average Size Claim Method
  • 6.4.6 6. Formula Method
  • 6.4.7 7. Seriatim Case Reserves
  • 6.4.8 Why So Many Methods?
  • 6.4.9 Other Considerations
• 6.5 Deficiency and Other Reserves
  • 6.5.1 Other Reserves
  • 6.5.2 Time Periods
  • 6.5.3 Miscellaneous Reserves
• 6.6 Reserve Bases
• 6.7 Governing Documents
  • 6.7.1 U.S. Statutory Governing Documents
  • 6.7.2 Canadian Governing Documents
  • 6.7.3 U.S. GAAP Governing Documents
  • 6.7.4 Tax Governing Documents
  • 6.7.5 Actuarial Governing Documents

7 Financial Reporting and Solvency

• 7.1 Financial Reporting
  • 7.1.1 Notable Portions of the Orange Annual Statement Blank
  • 7.1.2 Notable Portions of the Blue Annual Statement Blank
• 7.2 Solvency Testing
  • 7.2.1 The Theory
  • 7.2.2 Using the Formula
• 7.3 Results of the Calculation

8 Forecasting and Modeling

• 8.1 Purpose and Uses of Models
  • 8.1.1 Deterministic vs. Stochastic
• 8.2 Characteristics of a Good Model
• 8.3 Building a Model
  • 8.3.1 Step 1: Choosing the Basic Structure of the Model
  • 8.3.2 Step 2: Choosing Model Inputs and Outputs
  • 8.3.3 Step 3: Choosing Assumptions and Building a Prototype Projection
  • 8.3.4 Step 4: Extending the Prototype
  • 8.3.5 Step 5: Validating the Model
  • 8.3.6 Step 6: Documenting the Model
  • 8.3.7 Step 7: Designing Output and Communicating Results
• 8.4 Choice of Assumptions
  • 8.4.1 Lapse Assumptions
  • 8.4.2 Mortality
  • 8.4.3 Claim Costs
  • 8.4.4 Expense Assumptions
  • 8.4.5 Profit Assumptions
  • 8.4.6 Model Office Assumptions
  • 8.4.7 Coverage-specific Assumptions Related to the ACA
• 8.5 Predictive Models

9 Regulation

• 9.1 Rate Regulation in General
  • 9.1.1 Authority
  • 9.1.2 Jurisdiction
  • 9.1.3 Hearings
• 9.2 Reasonableness Standards
  • 9.2.1 Loss Ratios as a Metric
  • 9.2.2 Defining Loss Ratios
  • 9.2.3 Credibility
  • 9.2.4 Minimum Anticipated Loss Ratios
  • 9.2.5 Discount Rates
  • 9.2.6 Policy Reserves
  • 9.2.7 State Level Loss Ratio Guarantees
  • 9.2.8 Minimum Loss Ratios at Renewal
  • 9.2.9 Federal Minimum Loss Ratio Requirements Under the ACA
  • 9.2.10 Other Reasonableness Measures
  • 9.2.11 Medicare Supplement Rate Regulation
  • 9.2.12 Long-term Care Insurance Model Regulation
  • 9.2.13 Group Health Insurance Mandatory Conversion Privilege Model Act
• 9.3 Other Regulatory Restrictions
  • 9.3.1 Other Rating Restrictions
  • 9.3.2 Underwriting Restrictions and Enrollment Periods
• 9.4 Required Information in Rate Filings
  • 9.4.1 Rate Filing Requirements Under the ACA
  • 9.4.2 Actuarial Memoranda
  • 9.4.3 Market Reform: Past, Present, and Future

10 Other Insurer Functions

• 10.1 Sales and Marketing
  • 10.1.1 Compensation
• 10.2 Policy Administration and Services
• 10.3 Claim Administration
  • 10.3.1 Receipt of the Claim
  • 10.3.2 Verifying Coverage and Proof of Loss
  • 10.3.3 Evaluating the Claim Against Policy Provisions
  • 10.3.4 DI and LTC
  • 10.3.5 Medicare Supplement
  • 10.3.6 The End of the Process
• 10.4 Other Functions

11 Managing the Business

• 11.1 Strategic Context
• 11.2 Management Information
• 11.3 Baseline Analysis
  • 11.3.1 ``Expected’’ Results
  • 11.3.2 Reporting Cadence and Process
• 11.4 Confidence Intervals
• 11.5 Managing Capital and Risk
• 11.6 The Life Cycle of Underwritten Medical Insurance
  • 11.6.1 The Characteristics
  • 11.6.2 The Market Implications
  • 11.6.3 Cohort Grouping
  • 11.6.4 Durational Rating
  • 11.6.5 What Happens to a Closed Block?
  • 11.6.6 Other Implications
  • 11.6.7 Managing the Product Cycle
  • 11.6.8 Changes Under the Affordable Care Act
• 11.7 Risk Prediction and Risk Adjustment
• 11.8 The Product Development and Management Processes
• 11.9 In Summary

Index

Sources

• Individual Health Insurance, 3rd Edition, sample pages (ACTEX Learning) — the book itself: title page, authors, copyright year, the full table of contents with its section numbers (matched to the PDF's bookmarks, 39 pages, sha256 041c488d2ac6d29f…) and the preface; the divisions and sections above are copied from it
• Individual Health Insurance, 3rd Edition (ACTEX Learning) — the publisher's description, the authors and the printed edition's ISBN
• CP 321 Syllabus, Nov 2026/Jul 2027 (SOA) — the citation (3rd Edition, 2026) and the chapters and sections assigned
• GH 101 Intro Study Note, November 2026 (SOA) — the study-note code GH101-100-26 and its title (Chapter 5 of Individual Health Insurance, Third Edition)
• GH 101 Syllabus, Nov 2026/Mar 2027/Jul 2027 (SOA) — the citation (Chapter 5 of Individual Health Insurance, Leida, 3rd Edition, 2026) and the learning outcomes