Ch. 1 Health

Question 1

Health insurance

Answer 1

general way of describing insurance against loss through sickness or accidental bodily injury. It is also called accident and health, accident and sickness, sickness and accident, or disability insurance. It is important to remember the general term “health insurance” applies to many different types of insurance, not just the medical insurance that pays for doctor and hospital visits

Question 2

Disability (income) insurance

Answer 2

a form of insurance that insures the beneficiary’s earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work

Question 3

Medical expense insurance

Answer 3

pays benefits for nonsurgical doctors’ fees commonly rendered in a hospital; sometimes pays for home and office calls (standard health care insurance)

Question 4

Interim coverage

Answer 4

a short-term policy purchased on an interim basis typically when in between jobs or waiting for a new policy to start

Question 5

Renewability provisons

Answer 5

define the rights of the insurer to cancel the policy at different points during the life of the policy

Question 6

What are the 5 principal renewability classifications

Answer 6

cancellable, optionally renewable, conditionally renewable, guaranteed renewable, and noncancellable

Question 7

Cancellable policies

Answer 7

allows the insurer to cancel or terminate the policy at any time. This type of renewability is prohibited in most states

Question 8

Optionally renewable policies

Answer 8

give the insurer the option to terminate the policy on a date specified in the contract. If the insurer decides to renew (not cancel) the policy, they also have the option (and usually choose to) increase the premiums on the anniversary date

Question 9

Conditionally renewable

Answer 9

policies give the insurer the option to terminate the policy only in the event of one or more conditions stated in the contract. Typically, these conditions are age-related

Question 10

Guaranteed renewable policies

Answer 10

specify that the policy MUST be renewed (usually until the insured reaches a specified age). However, the insurer still has the option (and usually choose to) increase the premiums on the anniversary date

Question 11

Noncancellable policies

Answer 11

state the policy cannot be cancelled nor can its premium rates be increased under any circumstances. Disability policies are the most common noncancellable (noncan) policies

Question 12

Nonrenewable policies

Answer 12

are for predetermined terms of a year or less (typically short-term health insurance) and are considered temporary

Question 13

Cafeteria plans

Answer 13

a flexible benefits program offered by employers that allows employees to choose from a range of benefits to suit their individual needs. Employees are given a set amount of money or credits to allocate towards various benefits, such as health insurance, dental coverage, retirement plans, and other perks

Question 14

Business continuation plans

Answer 14

provide a way to help a business continue in the event an owner or key employee dies or in the event of a disabling sickness or injury

Question 15

Business overhead expense insurance

Answer 15

is a form of disability income coverage designed to pay necessary business overhead expenses, such as rent, should the insured business owner become disabled. Overhead expenses include such things as rent or mortgage payments, utilities, telephones, leased equipment, employees’ salaries, and the like

Question 16

Disability buy-sell plans (disability buy-out agreement)

Answer 16

a financial arrangement designed to protect a business in the event that an owner or key employee becomes disabled and is unable to work. It involves purchasing disability insurance that provides funds to buy out the disabled individual’s share of the business. This ensures that the business can continue to operate smoothly, and the disabled owner or their estate receives fair compensation for their ownership stake

Question 17

Coordination of benefits

Answer 17

designed to prevent duplication of group insurance benefits

Question 18

Enrollment period

Answer 18

the limited period of time during which all members may sign up for a group plan

Question 19

Enrollment card

Answer 19

must be completed and signed by a new employee during the open enrollment period to enroll in group insurance

Question 20

Waiting period

Answer 20

a period of time (often 12 months) beginning with your effective date during which your health insurance plan does not provide benefits for pre-existing conditions. This period may be reduced or waived based on any prior health care coverage you had before applying for your new health insurance plan

Question 21

Probationary period

Answer 21

a set time frame during which new employees or policyholders must wait before they can access certain benefits or coverage. often used to manage costs and ensure that coverage is provided to individuals who are likely to remain with the company for a longer term

Question 22

Health insurance portability and accountability act (HIPPA)

Answer 22

provides the ability to transfer and continue health insurance coverage for millions of American workers and their families when they change or lose their jobs

Question 23

Conversion privilege

Answer 23

allows policyholders to switch from a group health insurance plan to an individual policy without undergoing a new medical exam or proving insurability

Question 24

Preexisting conditions

Answer 24

an illness or medical condition that existed before a policy’s effective date; usually excluded from coverage, through the policy’s standard provisions or by waiver

Question 25

Creditable coverage

Answer 25

previous coverage under another insurance plan when there has not been a break in coverage of 63 days. An individual’s waiting period for pre-existing conditions is reduced or eliminated altogether when he or she has creditable coverage

Question 26

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Answer 26

federal legislation which extends group health coverage to terminated employees and/or their families at the individual’s expense, for up to 18 months. COBRA coverage may be extended beyond 18 months in certain circumstances. COBRA rules typically apply when an employee loses coverage through loss of employment (except in cases of gross misconduct) or due to a reduction in work hours

Question 27

Nonoccupational coverage

Answer 27

refers to insurance that provides benefits for injuries or illnesses that are not related to work or occupational activities

Question 28

Health savings accounts

Answer 28

a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit

Question 29

Accidental means

Answer 29

coverage that provides benefits when an injury or illness results from an accident caused by unforeseen or unintended events. For example, if an individual sustains an injury while engaging in a risky activity like skydiving, the insurance would cover the injury only if it was caused by an accident and not by a pre-existing condition or negligence

Question 30

Accidental results

Answer 30

coverage that provides benefits specifically for injuries or damages caused by accidents. This type of coverage is designed to address medical expenses, treatments, and other costs resulting from unexpected and unintentional injuries, such as those from falls, car accidents, or other unforeseen events

Question 31

Limited risk policies

Answer 31

provides coverage for specific kinds of accidents or illnesses, such as injuries received as a result of travel accidents or medical expenses stemming from a specified disease

Question 32

Special risk policy

Answer 32

covers unusual hazards normally not covered under ordinary accident and health insurance. An actress who insures her legs for $1 million or a pilot test-flying an experimental airplane who obtains a policy covering his life while flying that particular plane are both purchasing special risk policies

Question 33

reimbursement plans

Answer 33

arrangements where the insured pays for medical expenses out of pocket and then submits a claim to the insurance company for reimbursement. Once the claim is approved, the insurer reimburses the insured for the covered expenses, up to the policy limits

Question 34

What are the 3 basic categories of health coverage?

Answer 34

Medical expense insurance, disability income insurance, accidental death & dismemberment insurance

Question 35

What are the 3 types of disability income policies used for business?

Answer 35

Disability buy-sell, business overhead expense insurance, disability buy-out

Question 36

Maternity benefits

Answer 36

Any policy of health insurance that provides coverage for maternity care must also cover the services of certified nurse-midwives, and services of licensed birth centers

Question 37

Subrogation

Answer 37

The reimbursement of benefits for the treatment of a beneficiary’s injuries caused by a third party