Chapter 11: Medical Expense Insurance

Question 1

____ _____ ____ are all the health insurance plans, other than disability income, that cover the cost of medical care.

Answer 1

Medical Expense Plans

Question 2

TF: Where disability income policies are designed to insure only a working individual, medical expense plans are designed to cover an individual or a family.

Answer 2

True

Question 3

TF: Medical expense policies may strictly cover accidents or may cover both accidents and sickness.
Medical expense policies are available as individual and group plans.
Most medical expense plans have deductibles and coinsurance, requiring the insured to share in the cost of medical care.
Benefits from medical expense plans are not taxed.

Answer 3

True

Question 4

Three methods by which medical expense policies may pay benefits?

Answer 4

Reimbursement (expense-occurred) – the policyholder is reimbursed for the cost of medical care;
Service basis – providers are paid directly by the insurer; or
Indemnity basis – the policy pays a fixed amount regardless of the cost of medical care.

Question 5

______ (expense-occured) - The policyholder is paid back for the cost of medical care

Answer 5

Reimbursement

Question 6

___ ___ - Providers are paid directly by the insurer

Answer 6

Service Basis

Question 7

____ ____ - the policy pays a fixed amount regardless of the cost of medical care

Answer 7

Indemnity Basis

Question 8

________ are family members to whom coverage is extended.

Answer 8

Dependents

Question 9

TF: Coverage of dependent children must continue until age nineteen (19), or if the dependent child is unable to be employed due to mental or physical impairments and is dependent on the policy owner for support, there is no age limit and coverage will continue.

Answer 9

True

Question 10

Two types of medical expense policies?

Answer 10

Basic
Major Medical

Question 11

Difference between basic and Major Medical policies?

Answer 11

Basic provides certain types of medical care, whereas MM plans can be a supplement to basic plans, OR they provide comprehensive care in a standalone plan. (comprehensive = broader coverage)

Question 12

Please note, base plans and major medical plans are outdated in the modern insurance market. ____ ____ plans have essentially replaced those plans.

Answer 12

Managed Care

Question 13

the three base plans for medical expense insurance?

Answer 13

Hospital expense,
Surgical expense, and
Physicians’ nonsurgical expense.

Question 14

TF: First-dollar Coverage = No Deductible or Coinsurance

Answer 14

True

Question 15

_____ ____ ____ covers costs an insured incurs while confined to a hospital, including room and board, nursing care, X-rays, laboratory fees, operating and treatment room, oxygen, blood, medications, and general anesthesia.

Answer 15

Basic Hospital Expense

Question 16

Two categories of Basic Hospital Expense?

Answer 16

Room/Board
Miscellaneous Expense

Question 17

What is the room and board benefit?

Answer 17

The room and board benefit is stated as a dollar amount per day of confinement, up to a maximum number of days.

Some policies will pay the actual cost of a semi-private room, rather than specify a dollar amount per day.
The benefit may be paid on a reimbursement or indemnity basis.
The maximum number of days can range anywhere from 30 to 365 days.

Question 18

The _______ or ancillary benefit covers all other costs aside from room and board. The miscellaneous benefit is stated as a multiple of the daily room and board limit.

Answer 18

Miscellaneous

Question 19

TF: Tom and Linda’s son is hospitalized. The basic hospital plan has a limit of $300 per day for a maximum of 45 days for each period of hospital confinement. The plan pays 10 times the daily room and board rate for ancillary expenses.

This means the plan will pay a maximum of $13,500 ($300 × 45 days) for room and board and $3,000 ($300 × 10) for ancillary expenses for a 45-day period of continuous hospital confinement.

The plan’s total benefit per period of confinement is $16,500 ($13,500 + $3,000).

Answer 19

True

Question 20

What is covered by the basic surgical expense plan? 3 things:

Answer 20

Surgeon fees,

Anesthesia, and

Post-surgery recovery.

Question 21

TF: This list of surgical procedures is referred to as a schedule. The most complex procedures are assigned the highest dollar benefit, while the least complex have the lowest.

Answer 21

True

Question 22

TF: For surgical procedures not listed on the schedule, the plan will indemnify the insured based on the absolute or relative value of the surgical procedure. Basic surgical plans today typically do not cover the full cost of surgery. Plan limits range anywhere from $500 to $5,000

Answer 22

True

Question 23

Example: David needs surgery to repair his broken femur. He is insured under his parents’ basic surgical expense plan. The plan covers $2,000 for his surgery.

This is the _____ value of femur surgery. Even if the actual cost of the surgery is $20,000, the plan will pay a maximum of $2,000.

A few months later, David slips on the ice and breaks his ankle. Ankle surgery is not scheduled, but the insurer specifies that ankle surgery is 25% as complex as femur surgery, so the plan will pay a maximum of $500 to repair David’s ankle.

This is the ______ value of ankle surgery.

Answer 23

Absolute
Relative

Question 24

TF: Basic medical covers nonsurgical physician’s fees for accidental injury or sickness. Basic medical plans usually have a dollar maximum benefit per visit, such as $25 per visit, and a maximum number of visits per year.

Answer 24

True

Question 25

Two types of additional base plans one can purchase?

Answer 25

Nurses’ expense benefits – private duty-nursing care based on the patient’s care plan.
Convalescent care facility benefits – a daily benefit for confinement in a skilled nursing facility center for recovery after discharge from a hospital.

Question 26

TF: Base plan exclusions consist of:
Pre-existing conditions
Elective cosmetic surgery
Infertility services
Eye glasses and contact lenses
Dental expenses, unless resulting from an accidental injury
Substance abuse

Answer 26

True

Question 27

Which is not a characteristic of basic medical plans?
Select one:
a. Coinsurance
b. First-dollar coverage
c. Dollar maximum benefit per visit
d. Low limits for catastrophic coverage

Answer 27

A

Question 28

TF: Base plans provide first-dollar coverage, which means they do not have coinsurance or deductibles.

Answer 28

True

Question 29

How is the miscellaneous expenses coverage under basic hospital medical expenses paid?
Select one:
a. A fraction of the room and board benefit
b. A multiple of the room and board benefit
c.  the room and board benefit
d. None of the above

Answer 29

B

Question 30

All of the following are covered costs under a basic hospital plan, EXCEPT:
Select one:
a. Room and board
b. Infertility treatment
c. General anesthesia
d. Medications

Answer 30

B

Question 31

Which of the following plans covers non - surgical physician’s fees?

Select one:
a. Basic hospital
b. Basic medical
c. Basic surgical
d. All base plans

Answer 31

B

Question 32

Which of the following medical plans has essentially replaced the outdated base plans?
Select one:
a. Major medical
b. Comprehensive
c. Managed care
d. Limited policies

Answer 32

C

Question 33

Which term correctly describes a nonscheduled plan of charges for basic surgical plans?
Select one:
a. Usual, customary and reasonable
b. Relative value
c. Absolute value
d. None of the above

Answer 33

A

Question 34

Which of the following is true regarding taxation of medical expense plans?
Select one:
a. Benefits are only taxable for individual policies.
b. Benefits are only taxable for group policies.
c. Benefits are not taxed.
d. Benefits are taxable as ordinary income.

Answer 34

C

Question 35

All of the following are ways medical expense policies pay benefits, EXCEPT:
Select one:
a. Reimbursement
b. Service basis
c. Indemnity
d. Valued

Answer 35

D

Question 36

Which basic plan covers costs an insured incurs while confined to a hospital, including room and board, nursing care, X-rays, lab fees, operating and treatment room, oxygen, blood, medications and general anesthesia?
Select one:
a. Medical
b. Hospital
c. Surgical
d. Medical, hospital and surgical

Answer 36

B

Question 37

What type of insurance plan covers medical care costs, such as physician’s fees, surgical fees, and prescription drugs?
Select one:
a. Life insurance
b. Medical expense insurance
c. Property insurance
d. Disability income insurance

Answer 37

B