Chapter 1: Health + Accident

Question 1

What are the three categories of health insurance?

Answer 1

• Medical Expense Insurance
• Disability income Insurance
• Accidental death and dismemberment insurance

Question 2

Five types of renewability provisions in health insurance

Answer 2

• Cancellable
• Optionally Renewable
• Conditionally renewable
• Guaranteed renewable
• Noncancelable

Question 3

Define subrogation

Answer 3

The right of the insurer to pursue a third party that caused an insurance loss to the insured

Aka recover payment made to the insured from the negligent party

Question 4

Name two benefits of group health insurance coverage

Answer 4

• Less out of pocket cost

- Guaranteed coverage when no longer working for same job because of conversion factor built into policy

Question 5

Benefits of a business providing health insurance to employees:

Answer 5

• Morale and Productivity
• Helps employees pay for needed benefits that would otherwise come out of pocket (therefore decrease wage increase demands)
• Plans keep employer at competitive position in hiring and retaining employees
• Employer can obtain tax deductions

Question 6

Cafeteria Plans

Answer 6

Employees can pick and choose from a menu of benefits that tailors to their specific needs

• Called a 125 plan, not taxable
• S-Corp Owner with a greater than 2% share cannot participate in a 125 plan

Question 7

Business Overhead Expense Insurance

Answer 7

Designed to reimburse a business for expenses and payroll in the event the owner becomes disabled

• Premiums are not taxed but benefits when paid are treated as taxable income

Question 8

Disability buy-sell Plans

Answer 8

• Sets forth terms for selling and buying a partners or stock owners share of a business in the event of a disability
• Proceeds are tax free

Question 9

Key Person Disability Insurance

Answer 9

• Pays a monthly benefit to a business to cover expenses for additional help or outside services when an essential person is disabled
• Premiums are not tax deductible so benefits are tax free

Question 10

Contracts for Group Health Insurance

Answer 10

• Between insurance company and employer
• Employer Receives master policy
• Employees receive certificates of insurance
• Enrollment periods (time in which employees can sign up for insurance)

Question 11

Individual Eligibility

Answer 11

• Minimum of one to three months employment
• Full-Time Employment
• People age 65 and over should be offered same health benefits as younger employees

Question 12

Noncontributory

Answer 12

Employer pays the entire premium

• Require 100% participation by members

Question 13

Contributory

Answer 13

Employee pays portion of premium

Requires 75% participation by members

Question 14

three characteristics that determine health insurance premiums for group

Answer 14

• Size of group
• Claim experience with previous insurers
• Ages of group members

Question 15

Shared funding arrangement

Answer 15

Employer can self-fund health care expenses up to a certain limit then insurance company assumes risk

Question 16

Minimum premium arrangement

Answer 16

Employer self-insures the normal claims up to a given amount (insurance company pays the difference)

Question 17

Retrospective Premium Arrangement

Answer 17

The insurer agrees to collect provisional premium but may collect additional premiums or make a premium refund at the end of the year based on actual losses

Question 18

Self-Funding Arrangement

Answer 18

Large employers may elect to fully self-fund

Question 19

Health Insurance Portability and Accountability Act (HIPPA)

Answer 19

Ability to transfer or continue health insurance coverage for millions if American workers and families when they change or lose a job

Question 20

HIPAA Privacy Rule

Answer 20

Provides federal protection for an individuals health information and rights to that information

Question 21

HIPAA Security Rule

Answer 21

Provides technical safeguards to assure the confidentiality, integrity and availability of electronic protected health information

Question 22

COBRA Continuation of Benefits

Answer 22

Requires employers with 20 or more employees to continue group medical coverage for terminated workers for up to 18 months

• Employee dies: 36 months of coverage for dependents

Question 23

Blanket Health Benefits

Answer 23

Insurance that covers a group that may have been exposed to the same risk

No certificates issued like other plans

Question 24

Franchise Health Plans

Answer 24

Coverage to members of an association or professional society

Question 25

Credit Accident and Health Plans

Answer 25

Help the insured pay off a loan in the event that they become disable due to an accident or sickness

Question 26

Non-occupational Health Plans

Answer 26

A policy that DOES NOT cover injuries sustained while at work because those injuries are covered by workers compensation

Question 27

Health Savings Accounts (HSAs)

Answer 27

Tax favored account for accumulating funds to cover medical expenses

• Ages under 65
• Tax free
• Only for certain qualified expenses

Question 28

Taxation of Group Health Insurance

Answer 28

• Employers can take a tax deduction for premiums paid
• Medical Benefits are not taxable income
• Disability benefits are taxable

Question 29

Coordination of Benefits

Answer 29

Coordination of Benefits is the provision that applies when an enrollee is covered by two health plans at the same time. The provision is designed so that the payments of both plans do not exceed 100% of the allowed charges