Ch. 3 health

Question 1

Hospital expense policies

Answer 1

cover hospital room and board, miscellaneous hospital expenses (such as lab and x- ray charges), medicines, use of operating room, and supplies. These expenses are covered while the insured is confined in a hospital. There is no deductible and the limits on room and board are set at a specified dollar amount per day up to a maximum number of days

Question 2

Basic surgical expense

Answer 2

specifically covers the costs associated with surgical procedures

Question 3

Basic physicians expense

Answer 3

covers the costs associated with physician services

Question 4

Coinsurance

Answer 4

the principle under which the company insures only part of the potential loss, the policyowners paying the other part. For instance, in a major medical policy, the company may agree to pay % of the insured expenses, with the insured to pay the other %

Question 5

Stop-loss

Answer 5

a safeguard that limits the amount an individual or employer has to pay out-of-pocket for covered expenses. It kicks in once a certain threshold of expenses is reached

Question 6

Pre-existing conditions

Answer 6

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 7

Limited risk policies

Answer 7

provide a variety of benefits for a specific disease such as cancer or heart disease. Benefits are usually paid as a scheduled, fixed-dollar amount for specified perils or medical procedures such as hospital confinement or chemotherapy

Question 8

Basic medical expense insurance

Answer 8

a health insurance policy that provides “first dollar” benefits for specified (and limited) health care, such as hospitalization, surgery, or physician services. Characterized by limited benefit periods and relatively low coverage limits

Question 9

Major medical expense policy

Answer 9

a health insurance policy that provides broad coverage and high benefits for hospitalization, surgery, and physician services. Characterized by deductibles and coinsurance cost sharing

Question 10

Deductible

Answer 10

an amount of expense or loss to be paid by the insured before a health insurance policy starts paying benefits

Question 11

Flat deductible

Answer 11

a stated dollar amount that applies to a covered loss (e.g. $500). This deductible is applied per occurrence, per insured individual. Sometimes referred to as an “initial deductible”

Question 12

Corridor deductible

Answer 12

when a major medical policy is supplementing basic coverage that contains no deductible, the corridor deductible is not applied until the basic coverage has been exhausted

For example, if the corridor deductible is $50,000, the insured pays the first $50,000 of expenses, and the insurance coverage begins after that amount is reached

Question 13

Integrated deductible

Answer 13

a feature in health insurance plans where the deductible amounts for different types of coverage (like medical and prescription drugs) are combined into a single deductible

Question 14

Per-cause deductible

Answer 14

the insured must satisfy a deductible for each accident or illness

Question 15

All-cause deductible

Answer 15

the insured only has to meet the deductible amount once during the benefit period

Question 16

Carryover provision

Answer 16

allows an insured to defer current health charges to the following year’s deductible instead of the current year’s deductible

Question 17

Health savings accounts (HSA)

Answer 17

tax-advantaged medical savings accounts 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 18

Health reimbursement arrangements

Answer 18

employer-funded and employer-established, tax-advantaged health benefit plans that reimburse employees for out-of-pocket medical expenses and individual health insurance premiums. Unused amounts may be carried forward for reimbursement in future years. Reimbursements may be tax-free if the employee paid for qualified medical expenses or a qualified medical plan

Question 19

Medical savings accounts (MSA’s)

Answer 19

created to help employees of small employers, as well as self- employed individuals, pay for their medical care expenses. MSA’s are tax-free accounts set up with financial institution such as banks and insurance companies. Qualified medical savings accounts are available for employers with no more than 50 employees

Question 20

Flexible savings accounts or flexible spending accounts

Answer 20

tax-advantaged accounts that can be set up through a cafeteria plan of an employer. An FSA allows an employee to set aside a portion of earnings to pay for qualified medical expenses (such as prescription medication) as established in the cafeteria plan

Question 21

Hospital indemnity policies/ Fixed rate policy

Answer 21

forms of health insurance providing a stipulated daily, weekly, or monthly indemnity during hospital confinement; payable on an unallocated basis without regard to actual hospital expense

Question 22

Limited benefit policies

Answer 22

restrict benefits to specified accidents or diseases, such as travel policies, dread disease policies, ticket policies, and so forth

Question 23

Critical illness policies

Answer 23

an insurance product in which the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed and survives a specific illness. Policy owners must survive the illness for a specific amount of time, usually 30 to 90 days

Question 24

Hospital room and board benefits

Answer 24

cover expenses for occupancy of the room and bed, general nursing care, food and beverages, and personal hygiene items. These limits may not provide for the full amount of hospital room and board charges incurred by the insured. For example, if the hospital expense benefit was $200 per day and the hospital actually charged $400 per day, the insured would be responsible for the additional $200 per day

Question 25

Surgical expense policies

Answer 25

commonly written in conjunction with hospital expense policies. These policies pay for the costs of surgeons’ services, whether the surgery is performed in or out of the hospital. Coverage includes surgeon’s fees, anesthesiologist, and the operating room

Question 26

Under the surgical schedule approach…

Answer 26

every surgical procedure is assigned a dollar amount by the insurer.

Question 27

Relative value approach

Answer 27

similar to the surgical schedule method. The difference is that instead of a flat dollar amount being assigned to every surgical procedure, a specified set of units is assigned

Question 28

Under the usual, customary, and reasonable approach (UCR)

Answer 28

the surgical expense is compared to what is deemed reasonable and customary for the geographical part of the country where the surgery was performed

Question 29

Comprehensive major medical

Answer 29

combines the features of basic expense coverage and major medical coverage, sold as one policy. Cover practically all medical expenses, hospital, physicians, surgical, nursing, drugs, laboratory tests, etc.

Question 30

What are the 2 common types of medical policies

Answer 30

Supplemental major medical policies
Comprehensive major medical policies

Question 31

Supplementary major medical policy

Answer 31

Used to supplement the coverage payable under a basic medical expense policy. Will provide coverage for expenses that were not covered by the basic policy

Question 32

Comprehensive major medical policy

Answer 32

A combo of basic expense coverage and major medical coverage, sold as one policy. Covers practically all medical expenses

Question 33

Dental expense insurance

Answer 33

Form of medical insurance that covers the treatment, care, and prevention of dental disease and injury to the insured’s teeth. Uniquely, this insurance also covers teeth cleaning and fluoride treatment

Question 34

Common accident deductible

Question 35

Family maximum deductible

Question 36

Individual deductible