Chapter 15

Question 1

What is Actuarial Value?

Answer 1

This represents the minimum projected percentage of medical costs that are likely to be covered by a medical expense policy.

Question 2

What is the Affordable Care Act (ACA)?

Answer 2

This act was enacted to make health insurance more accessible and affordable. The ACA introduced mechanisms, including government mandates, subsidies, and insurance exchanges.

Question 3

What are Archer Medical Savings Accounts (MSAs)?

Answer 3

See Medical Savings Accounts.

Question 4

What do Basic Hospital Expense Policies cover?

Answer 4

These policies cover hospital room and board, miscellaneous hospital expenses (e.g., lab work, x-rays, medicines), the use of operating rooms, and supplies.

Question 5

What is Basic Hospital Expense Indemnity Basis?

Answer 5

This contract is a basic hospital policy that sets benefits on an indemnity basis (a fixed amount per day for room and board).

Question 6

What is Basic Hospital Expense Reimbursement or ‘Expenses-Incurred’ Basis?

Answer 6

This contract is a basic hospital policy that reimburses the insured for hospital costs up to a stated maximum benefit.

Question 7

What is Basic Medical Expense Insurance?

Answer 7

This is a health insurance policy that provides ‘first dollar’ benefits for specified (and limited) health care.

Question 8

What does Basic Physician Expense Insurance cover?

Answer 8

This policy provides coverage for non-surgical services that are provided by a physician.

Question 9

What do Basic Surgical Expense Policies pay for?

Answer 9

These policies pay for the costs of surgeons’ services, regardless of whether the surgery is performed in or out of the hospital. Coverage also includes anesthesiologist fees.

Question 10

What is a Benefit Period?

Answer 10

This is either the length of time benefits are paid following a loss or the policy period during which claims are counted against benefit and cost-sharing limits.

Question 11

What is a Bronze Plan?

Answer 11

As defined by the ACA, this is a metal tier plan that has an actuarial value that is projected to cover 60% of typical medical costs.

Question 12

What are Cafeteria Plans?

Answer 12

These are benefit arrangements that are developed for businesses in the United States so that they can offer a variety of employee benefits, including accident and health insurance, on a pretax basis.

Question 13

What is a Calendar Year Deductible?

Answer 13

This deductible is also referred to as a cumulative or all-cause deductible. With this deductible, the insured must meet the deductible amount only once during the benefit period.

Question 14

What is a Carryover Provision?

Answer 14

This provision applies when an insured has not yet met his deductible in the final three months of the policy year. The provision allows an insured to apply claims in the final three months to the following year’s deductible.

Question 15

What is a Certificate of Creditable Coverage?

Answer 15

Group plans must provide certificates of creditable coverage to affirm that coverage when participants change employers.

Question 16

What is Co-Insurance?

Answer 16

This is also referred to as a person’s ‘percentage participation’ in an insurance policy and is a characteristic of major medical insurance.

Question 17

What is a Common Accident or Sickness Deductible?

Answer 17

Some major medical plans include provisions which state that only one deductible must be satisfied when two or more insureds from the same family are injured in the same accident or suffer concurrently from the same illness.

Question 18

What is Comprehensive Major Medical Insurance?

Answer 18

This insurance combines coverage for basic expenses and major medical insurance within one policy.

Question 19

What is a Consumer Driven Health Plan?

Answer 19

This is a plan that has three elements— (1) It has a tax-advantaged (pre-tax) savings vehicle, (2) it has a corridor or integrated deductible, and (3) it has a qualifying high deductible insurance policy.

Question 20

What is a Conversion Factor (Relative Value Scale)?

Answer 20

This is the stated unit valuation (dollars-per-unit) which is used to determine the benefit for each procedure that’s covered by a basic surgical policy.

Question 21

What is a Corridor Deductible?

Answer 21

Insurers use a corridor deductible when a major medical contract supplements a basic ‘first-dollar’ coverage contract.

Question 22

What is a Cumulative or All-Cause Deductible?

Answer 22

See Calendar Year Deductible.

Question 23

What is a Deductible?

Answer 23

This is the amount of an expense or loss that’s paid by the insured before a health insurance policy begins to pay benefits.

Question 24

What are Essential Health Benefits (EHBs)?

Answer 24

These are a list of 10 coverages that do not have a lifetime or annual cap. The ACA defined these as necessary benefits for all major medical insurance.

Question 25

What is a Family Deductible?

Answer 25

This deductible limits the total amount that’s due from the entire covered family, regardless of whether individual deductibles are met.

Question 26

What is a Flat Deductible (Initial Deductible)?

Answer 26

This is a stated dollar amount that applies to a covered loss (e.g., $500). This deductible can be applied per occurrence, per insured, or per year.

Question 27

What are Flexible Spending Accounts (FSAs)?

Answer 27

These are tax-advantaged accounts that are set up through an employer’s cafeteria plan. FSAs allow employees to set aside a portion of their earnings for qualified medical expenses on a ‘use it or lose it’ basis.

Question 28

What is a Flexible Spending Arrangement?

Answer 28

This is the official name for an FSA; however, ‘flexible spending account’ is more commonly used. See Flexible Spending Accounts (FSAs).

Question 29

What is First Dollar Coverage?

Answer 29

This refers to insurance policies that pay for claims without imposing a deductible.

Question 30

What is a Gold Plan?

Answer 30

As defined by the ACA, this is a metal tier plan that has an actuarial value that is projected to cover 80% of typical medical costs.

Question 31

What is a Health Insurance Exchange?

Answer 31

This is a federal website that allows consumers to check their eligibility for government assistance programs.

Question 32

What is the Health Insurance Portability and Accountability Act (HIPAA)?

Answer 32

This is a federal statute that provides employees with the ability to change jobs while continuing health insurance coverage for themselves and their families.

Question 33

What is the HIPAA Privacy Rule?

Answer 33

This rule provides federal protections for an individual’s health information and gives patients various rights with respect to that information.

Question 34

What are Health Reimbursement Accounts (HRAs)?

Answer 34

These are employer-funded and employer-established, tax-advantaged health benefit plans that reimburse employees for out-of-pocket medical expenses and individual health insurance premiums.

Question 35

What are Health Savings Accounts (HSAs)?

Answer 35

These are tax-advantaged medical savings accounts that are available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP).

Question 36

What is a High Deductible Health Plan (HDHP)?

Answer 36

This is a major medical policy that makes the cost of basic expenses the insured’s responsibility.

Question 37

What is an Impairment Rider?

Answer 37

Insurers add an impairment rider to health insurance policies that permanently exclude claims related to a health-related condition that’s disclosed by the insured during the application process.

Question 38

What is an Initial Deductible?

Answer 38

See Flat Deductible.

Question 39

What are Inside Limits?

Answer 39

See Internal Limits.

Question 40

What is an Integrated Deductible?

Answer 40

Insurers use this type of deductible when a major medical plan is packaged with basic coverages.

Question 41

What are Internal Limits (Inside Limits)?

Answer 41

These are annual limits on coverage for specific, covered services.

Question 42

What is a Look-Back Period?

Answer 42

This is the defined period immediately preceding the beginning of coverage during which an insurer can identify a health concern as a pre-existing condition.

Question 43

What is Major Medical (Expense) Insurance?

Answer 43

These contracts offer high maximum benefits and broad coverage under one policy.

Question 44

What is a Major Medical Expense Policy?

Answer 44

This is a health insurance policy that provides broad coverage and high benefits for hospitalization, surgery, and physician services.

Question 45

What are Medical Savings Accounts (MSAs)?

Answer 45

These accounts are created to help the employees of small employers pay for their medical care expenses.

Question 46

What are Metal Tiers for Major Medical Insurance?

Answer 46

The ACA requires health insurers to offer plans within health insurance exchanges that conform to the distinct levels of coverage.

Question 47

What are Non-Scheduled Plans?

Answer 47

See Usual, Customary, and Reasonable.

Question 48

What is an Out-of-Pocket Maximum?

Answer 48

This is the most that an insured must pay for covered services in a single plan year.

Question 49

What is the Patient Protection and Affordable Care Act (PPACA)?

Answer 49

See the Affordable Care Act (ACA).

Question 50

What is a Per-Cause (or Occurrence) Deductible?

Answer 50

With this deductible, the insured must satisfy a deductible for each accident or illness.

Question 51

What is a Platinum Plan?

Answer 51

As defined by the ACA, this metal tier plan has an actuarial value that’s projected to cover 90% of typical medical costs.

Question 52

What is Portability in health insurance?

Answer 52

This describes the ability to retain a group benefit after a person leaves the original group for other employment.

Question 53

What is a Pre-Existing Condition?

Answer 53

This is a health condition that exists prior to the inception of insurance coverage.

Question 54

What is a Pre-Existing Condition Exclusion?

Answer 54

The ACA disallows pre-existing condition exclusions in qualifying policies, but they still exist in other contracts.

Question 55

What is the Relative Value (Approach) Scale?

Answer 55

This approach is used in basic surgical insurance to establish benefits for covered procedures.

Question 56

What is a Silver Plan?

Answer 56

As defined by the ACA, this metal tier plan has an actuarial value that’s projected to cover 70% of typical medical costs.

Question 57

What is Stop-Loss?

Answer 57

Traditionally, this is the maximum amount of co-insurance that’s paid by an insured for one year.

Question 58

What are Supplemental Major Medical Policies?

Answer 58

These policies are used to supplement the coverage that’s payable under a basic medical expense policy.

Question 59

What are Tiered Plans?

Answer 59

See Metal Tier Plans.

Question 60

What are Usual, Customary, and Reasonable (UCR) (Non-Scheduled Plans)?

Answer 60

Plans that use this approach compare expenses to what’s deemed reasonable and customary for the geographical region of the country in which the service was performed.