Chapter 15 - Leo

Question 1

Define Individual Medical Expense Insurance

Answer 1

Insurance that protects and individual or family for covered medical expenses because of sickness or injury.

Question 2

Define Major Medical Insurance

Answer 2

Health insurance designed to pay a large portion of the covered expenses of a catastrophic illness or injury

Question 3

Define Copayment

Answer 3

Flat amount that the insured must pay for certain benefits, such as office visit or prescription drug.

Question 4

Define Annual Out-of-Pocket (stop-loss) Limit

Answer 4

Provision in medical expense policies by which 100% of covered medical expenses in excess of the deductible are paid after the insured incurs a certain annual amount of out-of-pocket expenses.

Question 5

Define Preferred Provider Organization (PPO)

Answer 5

A manged care plan that contracts with health-care providers to provide certain medical services to the plan members at discounted fees. To encourage patients to use PPO providers, deductibles and coinsurance charges are reduced.

Question 6

Define Health Savings Account

Answer 6

A tax-exempt or custodial account established exclusively for the purpose of paying qualified medical expenses of the account beneficiary who is covered under a high-deductible health insurance plan.

Question 7

Define Long-term Care Insurance

Answer 7

A form of health insurance that pays a daily benefit for medical or custodial care received in a nursing facility or hospital. Home health benefits may also be provided.

Question 8

Define Benefit Triggers

Answer 8

Requirements that determine whether the insured is chronically ill and eligible for benefits.

Question 9

Define Activities of Daily Living (ADLs)

Answer 9

Eating
Bathing
Dressing
Transferring from a bed to a chair
Using the toilet
Maintaining continence.

Used to determine if a person is chronically ill.

Question 10

Define Elimination Period

Answer 10

Waiting period in health insurance during which benefits are not paid. Also a period of time that must be met before disability benefits are payable.

Question 11

Define Disability-income Insurance

Answer 11

Insurance that provides income payments when the insured is unable to work because of sickness or injury.

Question 12

Define Total Disability

Answer 12

A term that varies by insurers and type of policy. In individual disability income policies, total disability can be defined as (1) inability to perform the material and substantial duties of your regular occupation; or (2) inability to perform the duties of any occupation for which you are reasonably fitted by education, training, and experience; or (3) inability to perform the duties of any gainful occupation; or (4) loss-of-income test. In many waiver-of-premium provisions in life insurance, total disability means that, because of disease or bodily injury, the insured cannot do any of the essential duties of his or her job, or any job for which he of she is suited based on schooling, training, or experience.

Question 13

Define Partial Disability

Answer 13

Inability of the insured to perform one or more important duties of his or her occupation.

Question 14

Define Residual Disability

Answer 14

Residual disability means that a proportionate disability-income benefit is paid to an insured whose earned income is reduced because of an accident or illness.

Question 15

Define Waiver-of-Premium Provision

Answer 15

Benefit that can be added to a life insurance policy providing for waiver of all premiums coming due during a period of total disability of the insured.

Question 16

Define Guaranteed Renewable Policy

Answer 16

Continuance provision of a health insurance policy under which the company guarantees to renew the policy to a stated age, and whose renewal is at the insured’s option. Premiums can be increased for broad classes of insureds.

Question 17

Define Noncancellable Policy

Answer 17

Continuance provision in a health insurance policy stipulating that the policy cannot be canceled, that the renewal is guaranteed to a stated age, and that the premium rates cannot be increased.

Question 18

Define Conditionally Renewable Policy

Answer 18

The policyholder can renew the policy until a specific age;however; the insurer has the right to decline renewal under conditions specified in the contract.

Question 19

Define Nonrenewable

Answer 19

When a contact cannot be renewed.

Question 20

Define Guaranteed Issue

Answer 20

A term used to describe applicants for health insurance; coverage for medical expense insurance us guaranteed, and applicants cannot be turned down regardless of their medical conditions.

Question 21

Define Grace Period

Answer 21

Period of time during which a policy can pay an overdue

Question 22

Define Reinstatement Provision

Answer 22

Contractual provision in a life insurance policy that allows the insured to reinstate a lapsed policy by payment of premium either with or without an application.

Question 23

Define Time Limit on Certain Defenses

Answer 23

Provision in an individual health insurance policy that prohibits the company from canceling the policy or denying a claim on the basis of a preexisting condition or misstatement in the application after the policy has been in force for two or three years, except for fraudulent misstatements. Modified by the Affordable Care Act.

Question 24

What characteristics are found in most individual medical expense policies? 6

Answer 24

• Major medical benefits
• Broad range of benefits
• Calendar-year deductible
• Coinsurance and copayments
• Annual out-of-pocket limits
• Exclusions

Question 25

What is usually included under a broad range of benefits?

Answer 25

• Inpatient hospital benefits
• Outpatient benefits
• Physician benefits
• Preventive services
• Outpatient prescription drugs

Question 26

What does a manged care plan provide?

Answer 26

Covered medical services to the members in a cost effective manner, with heavy emphasis on cost control.

Question 27

What is the requirement for someone to own an HSA?

Answer 27

The beneficiary must be covered under a high deductible health plan to cover catastrophic medical bills.

Question 28

Who can make contributions to an HSA?

Answer 28

By the beneficiaries, their employers, and family members.

Question 29

What do proponents argue HSAs can do?

Answer 29

Help keep health care costs down because consumers will be more sensitive to costs, will avoid unnecessary services, and will shop around

Question 30

What do critics say will result from HSAs?

Answer 30

They will encourage insureds to forego preventative care.

Question 31

What are the three main forms of LTC plans? 3

Answer 31

• A facility-only plan
• A home health care policy
• A comprehensive policy

Question 32

What is the difference between reimbursement policies and per diem policies?

Answer 32

Reimbursement policies reimburse actual charges where per diem pays their daily limit even if the actual charges are less than the daily limit.

Question 33

In a qualified LTC plan, what must be met to receive benefits?

Answer 33

Benefit trigger

Question 34

What are the benefit triggers that you must meet two of to receive benefits from an LTC plan?

Answer 34

Either:

• The insured is unable to perform a certain number of activities of daily living, or
• The insured needs substantial supervision to be protected against threats to health and safety because of a severe cognitive impairment.

Question 35

In a nontax-qualified LTC plan, what must be met to receive benefits?

Answer 35

A medical necessity trigger

Question 36

What is a medical necessity trigger?

Answer 36

If a doctor certifies that long-term care is needed even if the insured does not meet any of the benefit triggers described earlier.

Question 37

What are LTC partnership programs?

Answer 37

Programs some states have put together designed to reduce Medicaid expenditures by eliminating or reducing incentives of some people to rely on Medicaid to pay for long-term care.

Question 38

What incentive is used to encourage people to purchase private partnership policies?

Answer 38

Part of all of their assets are protected from the Medicaid spend-down requirements.

Question 39

How are partial disability benefits different than total disability benefits?

Answer 39

They are paid at a reduced rate for a shorter period.