Chapter 15: Texas Rules for Accident/Health Only

Question 1

Newborns must be covered from the moment of birth. If an additional premium is required by the insurer, then the insured must notify the insurer within ____ days of the date of birth in order to have the newborn’s coverage extend beyond the ___ (same)-day period.

Answer 1

31

Question 2

Coverage for ____ _____ (drug and alcohol treatment) is mandatory. Coverage for drug and alcohol treatment may not be less favorable than coverage for physical illness under the plan and is subject to the same durational and dollar limits, deductibles, and coinsurance as physical illness under the plan.

Answer 2

Chemical Dependency

Question 3

TF: Group plans may set durational and dollar limits for coverage of drug and alcohol treatment that are less favorable than coverage for physical illness if those limits are sufficient to provide appropriate care and treatment.

Answer 3

true

Question 4

TF: Medicare Supplement policies provide coverage designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare. Medicare Supplement policies cover costs not paid by Medicare, such as deductibles, coinsurance, and actual charges.

Answer 4

True

Question 5

A Medicare Supplement policy may not limit or exclude benefits for losses incurred more than months prior to the coverage effective date.

Answer 5

6

Question 6

TF: The basis for benefits for losses resulting from sickness may not differ from that of losses resulting from accidents. Cost-sharing provisions must automatically update with changes to Medicare. Policies must be guaranteed renewable and may not be terminated other than for nonpayment, material misrepresentation or fraud.

Answer 6

True

Question 7

TF: A Medicare Supplement policy cannot terminate coverage of a spouse solely because of the occurrence of an event specified for termination of the insured’s coverage, other than for nonpayment of premium.

Answer 7

True

Question 8

TF;If a Medicare Supplement policy is terminated by a group policyholder and is not replaced, the issuer must offer individual Medicare Supplement policies that provide continuation of the benefits contained in the original group policy or that otherwise meet the Texas Medicare Supplement policy requirements.

Answer 8

True

Question 9

TF Medicare Supplement policies must include renewal or continuation provisions that detail the issuer’s right to change premiums and any automatic increases at renewal based on the policyholder’s age.

Answer 9

True

Question 10

The policy must disclose that the policyholder may return the policy for any reason within ___ days for a full refund of premiums less any claims.

Answer 10

30

Question 11

Insurers must send notice to each policyholder at least ____ days prior to the annual effective date of coverage. The notice must state any changes or modifications in Medicare benefits, coverage, and premiums.

Answer 11

30

Question 12

____: The application for a Medicare Supplement policy must include questions to determine whether the applicant has another policy and whether the new policy is intended to replace the old policy.

Answer 12

Replacement

Question 13

TF: replacement - If the new policy is replacing an old policy, the insurer must notify the insured that by replacing and terminating the old policy when entering into the new policy may result in pre-existing conditions may not be fully covered under the new policy. Both the applicant and the agent must sign the form.

Answer 13

True

Question 14

_____ _____: insurer of Medicare Supplement policies may not deny or limit coverage, or discriminate in pricing, for any eligible person who is seeking enrollment with the application for a Medicare Supplement policy based on health status or claims experience. Eligible persons are those individuals who meet the following requirements:

Apply to enroll under the policy at least within 63 days after the date of the termination of enrollment in an existing plan; and
Submit evidence of the date of termination or disenrollment with the application for a Medicare Supplement policy.

Answer 14

Guaranteed Issue

Question 15

Advertisements for Medicare Supplement insurance or benefits must be submitted to the department for review no later than ____ days prior to their first use.

Answer 15

60

Question 16

_____: Knowingly making any misleading representation or incomplete or fraudulent statements regarding any insurance policies to induce the purchase of insurance.

Answer 16

Twisting

Question 17

____ ____ ____: Inducing the purchase of insurance through force, fright, threat, or undue pressure.

Cold Lead Advertising

Failing to disclose the purpose of the marketing in solicitation of insurance.

Answer 17

High Pressure Tactics

Question 18

_______: Misrepresenting a fact in selling or offering to sell a long-term care insurance policy.

Answer 18

Misrepresentation

Question 19

TF: Any sale of a Medicare Supplement policy that will provide an individual more than one Medicare Supplement policy or certificate is prohibited and illegal.

Answer 19

True

Question 20

An insurer may not deny or limit any Medicare Supplement policy, nor discriminate in the pricing of the policy because of health status or claims experience prior to or during the ___-____ period beginning with the first day of the month an individual is enrolled for benefits under Medicare Part B.

Answer 20

six-month

Question 21

An insurer may only pay a commission to a producer who sells Medicare Supplement policies if the compensation paid in the first policy year is no more than _____ of the compensation paid for selling or servicing the policy in the second year of coverage.

Answer 21

200%

Question 22

A Medicare Supplement individual or group policy may not be issued for delivery unless the individual or group policy can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders in the form of aggregated benefits (not including anticipated refunds or credits) provided under the individual or group policy, on the basis of incurred claims experience or health care expenses where coverage is provided by an HMO on a service, rather than reimbursement, basis and earned premiums for the applicable period, not including any changes in additional reserves, and in accordance with generally accepted actuarial principles and practices:

At least _____ of the aggregate amount of premiums earned in the case of group policies; or
At least ____ of the aggregate amount of premiums earned in the case of individual policies.

Answer 22

75%
65%

Question 23

On or before March 1 of each year, every Medicare Supplement policy issuer in Texas must report to the Department the policy number and date of issuance for every individual resident of Texas for whom the insurer has more than ____ Medicare Supplement policy in force.

Answer 23

one

Question 24

TF: Medicare Supplement policies may not be issued in Texas unless the policy form has been filed and approved by the Commissioner. In addition, premium rates must also be filed with the Commissioner.

Answer 24

True

Question 25

Medical examinations and lab tests related to HIV may not be performed without consent of the _____ of the test.

Answer 25

subject

Question 26

Long-term care benefit plans are policies or provisions intended to provide individuals eligible based on cognitive impairment or inability to perform daily tasks coverage for medical and personal care services for no less than ____ consecutive months.

Answer 26

12

Question 27

TF: Long-term care plans may not cancel, deny, refuse to renew, or otherwise terminate coverage based on the age or deterioration of physical and mental health of the insured.

Answer 27

True

Question 28

Limitations for ___-____ ____ must appear as a separate paragraph of the policy or certificate labeled as “Pre-existing Condition Limitations.”

Answer 28

Pre-existing conditions

Question 29

TF: Insurers may not exclude, deny, or reduce coverage based on age, deterioration of health, Alzheimer’s disease or dementia, or prior institutionalization.

Answer 29

True

Question 30

TF; Only the following may be excluded from coverage:

Pre-existing conditions or disease;
Mental or nervous disorders;
Alcoholism and drug addiction;
Illnesses resulting from war, illegal activities, armed services, self-inflicted injuries, and aviation;
Treatments provided in government facilities; and
Treatments paid by Medicare, Medicaid, Workers’ Compensation insurance.

Answer 30

True

Question 31

TF: Long-term care insurance policies must include the following disclosures:

Renewability provision clearly stated on the first page of the policy the duration of the policy and renewability and any limitations for renewability;
Definitions of terms such as usual and customary or reasonable and customary;
Pre-existing conditions limitations;
Applicant’s right to return the policy for any reason within 30 days of delivery for full refund of premiums;
Limitations or conditions of eligibility;
Nonforfeiture provision, if any;
Claim denial provision;
Statement as to whether the plan is a qualified plan with the IRS; and
Provision to provide notice of premium rate increases no later than 45 days prior to the effect date of the increase.

Answer 31

True

Question 32

_______: The application for a long-term care policy must include questions to determine whether the applicant has another policy and whether the new policy is intended to replace the old policy. If the new policy is replacing an old policy, the insurer must notify the insured that by replacing and terminating the old policy when entering into the new policy, pre-existing conditions may not be fully covered under the new policy. Both the applicant and the agent must sign the form.

Answer 32

Replacement

Question 33

Insurers must offer the insured at the time of purchase the option to purchase additional inflation protection, which at the least provides an annual increase in benefit levels at a rate of no less than _____, allows the insured to increase benefit levels without proof of insurability or health status, or a specified percentage of actual reasonable charges below the maximum indemnity amount.

Answer 33

5%

Question 34

TF: Insurers must provide a provision for nonforfeiture benefits that must provide for a benefit available in the event of a default in the payment of any premiums. The nonforfeiture benefit must be reduced paid-up, extended term, or shortened benefit period coverage.

Answer 34

True

Question 35

TF: An outline of coverage is required to be delivered for individual AND group long-term care policies, as long as the information is included in the enrollment materials.

Answer 35

false - not required for group

Question 36

Long-term care insurance policy must provide a long-term care _____ _____ developed by the NAIC. An agent must deliver the ____ _____ (same)before presenting an application or enrollment form. Insurers must provide the ____ ____(same) with any application or enrollment form.

Answer 36

Shopper’s Guide

Question 37

Pre-existing conditions are conditions for which medical advice, diagnosis, care, or treatment was recommended or received within no more than ____ months before the date of the enrollment of the policy.

Answer 37

6

Question 38

A long-term care insurance policy may not be terminated for nonpayment of premium unless the insurer notifies the insured and the designated additional person of the lapse or termination of the policy’s coverage ____ ____ prior to the effective date of lapse or termination.

Answer 38

30 days

Question 39

TF: A policy may not be referred to or use the term “guaranteed renewability” unless the policyholder has the right to continue coverage by timely payment of premiums, the policy cannot be unilaterally changed other than rates on a class basis, and cannot be terminated except by cancellation by the policyholder.

Answer 39

True

Question 40

A small employer is an employer who employed between ____ and ____ eligible employees on business days during the preceding calendar year and employs at least 2 eligible employees on the first day of the plan year.

Answer 40

2 and 50

Question 41

A new employee may not be denied coverage if the application for coverage is received by the small employer carrier within at least ____ days after the date on which the employment begins or on completion of an established waiting period. A late enrollee can be excluded from coverage until the next annual open enrollment period and may be subject to a ___ month pre-existing condition provision

Answer 41

31
12

Question 42

Coverage is available under a small employer health benefit plan if at least _____ of a small employer’s eligible employees elect to be covered, except for employers with only two eligible employees.

Answer 42

75%

Question 43

The initial enrollment period for insureds must be at least ____ days, with an annual ____-day open enrollment period.

Answer 43

31
31

Question 44

Small employers may establish a waiting period, not to exceed ___ ___ from the first day of employment, during which a new employee is not eligible for coverage.

Answer 44

90 days

Question 45

____ of ____ may not contain language that is misleading. In addition, an insurance certificate must include a plain statement of each health, accident, or other benefit under the certificate and the terms under which each benefit is paid.

Answer 45

Certificates of Coverage

Question 46

An insurance certificate must provide that a certificate in force for ____ years becomes incontestable, except for nonpayment of premiums, on the second anniversary date of the policy, if the insured does not die before that date.

Answer 46

2

Question 47

TF: The PPACA requires most Americans to have insurance. Every state is required to create a Small Business Health Options Program, also called SHOP exchange, designed to help small employers access affordable insurance for their employees.

Answer 47

True

Question 48

Some of the costs will be offset by tax credits and subsidies available to families with incomes between ____ and _____ of the poverty level. The tax credits can be applied toward the premiums of programs in the health benefit exchanges.

Answer 48

133% and 400%

Question 49

States have the option of defining “small employers” as businesses with up to ____ employees.

Answer 49

100

Question 50

While the law does not expressly require small employers to provide insurance to their employees, those with over 50 employees would likely have to cover at least ____ of the premium to avoid a potential penalty.

Answer 50

60%

Question 51

The law provides that employers with 50 or more employees are subject to a penalty if they fail to offer insurance to their employees, if the employees must pay more than ____ of their income for insurance, or if an employer-sponsored plan fails to cover _____ of the plan and any employees receive premium assistance tax credits.

Answer 51

9.5%
60%

Question 52

Employers with fewer than 25 employees must pay at least ____ of the premiums in order to be eligible for the small business tax credit.

Answer 52

50%

Question 53

The new laws provide small employers with not more than 25 employees and average annual wages of less than $50,000 with tax credits to help purchase health insurance. The tax credits were provided in 2 phases, one before the establishment of the new exchanges and one after they were established. The first phase (2010-2013) provided a tax credit of up to ____ of the employer’s contribution toward insurance, if the employer contributed approximately _____ of the total premium cost. In the second phase (2014 or later), the tax credit is available to eligible small businesses that purchase coverage through state exchanges and contribute at least ____ of total premium cost. The credit is only available for the first ____ years through the exchange.

Answer 53

35%
50%
50%
2 years

Question 54

The PPACA provides immediate valuable tax credits to small employers to ease the cost of providing health care coverage to employees. If a business meets all three of the below factors, it is a small employer and is entitled to receive a tax credit of up to _____ of its contribution to employees’ health care insurance costs beginning this taxable year:

Have 25 or less full-time equivalent employees for the taxable year – To determine the amount of full-time equivalent employees your business has to divide the total number of hours worked by the employees during the taxable year by 2,080. If the result is 25 or less, the requirement is satisfied;
Pay employees less than $50,000 average annual wages – To determine if employees earn less than $50,000 average annual wages, divide the total amount of wages paid to the employees during the taxable year by the number of full-time equivalent employees (i.e., the result in #1 above). If the result is $50,000 or less, the requirement is satisfied; and
Pay at least 50% of each employee’s health care insurance premium. – Employers with 10 or less full-time equivalent employees, who pay $25,000 average annual wages or less, receive the total 35% tax credit. The tax credit is reduced for every full-time equivalent employee employed over 10 and every dollar of average annual wages paid over $25,000.

Answer 54

35%

Question 55

Tax-exempt small employers receive up to a ____ tax credit, rather than a 35% credit, of the cost of employee health care insurance contributions, or if lesser, receive a tax credit in the amount of total income tax and Medicare tax withholdings and Medicare tax paid during the calendar year of which the taxable year begins.

Answer 55

25%

Question 56

Premium credits are available to those with an income that exceeds _____ percent of the federal poverty level (FPL), but does not exceed ____ percent of the FPL. PPACA then provides for lawfully present noncitizens who are at or below ____ of the FPL and who are not eligible for Medicaid to obtain premium credits. Non-aged citizens and legal permanent residents at or below _____ of the FPL will be eligible for Medicaid, and therefore ineligible for premium credits.

Answer 56

100%
400%
100%
133%

Question 57

According to the legislation, an employer’s coverage is not “affordable” when the employee’s contribution toward the employer’s lowest-cost self-only premiums would exceed _____ of household income.

Answer 57

9.5%

Question 58

Since 2014, businesses with 50 or more full-time employees or full-time equivalents face potential employer mandate penalties. In this context, a full-time employee (FTE) is one who works ____ hours per month or more. In counting toward 50, each ____ (same) hours per month of part-time labor comprises an FTE.

Answer 58

120

Question 59

TF: If a business does not provide insurance and if one or more employees receive federal insurance subsidies, the business will pay $2,000 per employee (minus the first 30). So a non-providing business with 50 employees, one of whom is subsidized, would pay $40,000 = $2,000 × (50 – 30).

Answer 59

true

Question 60

TF: If a business does provide insurance, and if one or more employees receive insurance subsidies, the business will pay $3,000 per subsidized employee or $2,000 per employee (minus the first 30) – whichever is less. So a providing business with one subsidized employee would be fined $3,000. With 14 or more subsidized employees (above the tipping point for the formula), the penalty for a 50-employee firm would be $40,000.

Answer 60

True

Question 61

Essential Health Benefits (EHB). EHB includes the following treatments:

Ambulatory patient services;
Emergency services;
Hospitalization;
Maternity and newborn care;
Mental health and substance use disorder services;
Prescription drugs;
Rehabilitative and habilitative services and devices;
Laboratory services;
Preventive and wellness services and chronic disease management; and
Pediatric services, including oral and vision care.

Answer 61

True

Question 62

All new health care plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance. This rule is effective for health plans beginning on or after September 23, 2010. Other covered preventive services include:

Alcohol misuse screening and counseling;
Blood pressure and cholesterol screening for adults of certain ages or high-risk;
Depression screening for adults;
Diabetes screening for adults with high blood pressure and obesity screening and diet counseling;
HIV screening; and
Immunizations.

Answer 62

True

Question 63

Long-term care policies are required to offer inflation protection which provides an annual increase in benefit levels of at least what percent?
Select one:
a. 5%
b. 7%
c. 9%
d. 3%

Answer 63

A

Question 64

What is the maximum tax credit for a tax-exempt small business as provided by the Patient Protection and Affordable Care Act?
Select one:
a. 20%
b. 25%
c. 35%
d. 50%

Answer 64

25% (because tax exempt)

Question 65

When are insurers required to send notice of changes in Medicare premiums to each Medicare supplement policyholder?
Select one:
a. At least 15 days prior to annual effective date of coverage
b. At least 25 days prior to annual effective date of coverage
c. At least 30 days prior to annual effective date of coverage
d. At least 45 days prior to annual effective date of coverage

Answer 65

C

Question 66

Which of the following is NOT a feature of the Patient Protection and Affordable Care Act?
Select one:
a. The premium tax credit is always paid to the individual as soon as they pay their premium.
b. Older Americans will receive larger tax credits for larger premiums.
c. The premium tax credit is fixed based on a benchmark plan.
d. The premium tax credit is fully refundable.

Answer 66

A

Question 67

When must every Medicare Supplement policy issuer in Texas report everyone the insurer has more than one Medicare supplement policy in force?
Select one:
a. 1-Jan
b. 1-Mar
c. 15-Apr
d. 31-Dec

Answer 67

B

Question 68

The Patient Protection and Affordable Care Act is sometimes referred to as:
Select one:
a. Federal Healthcare
b. Obamacare
c. National Health Insurance
d. Romneycare

Answer 68

B

Question 69

In Texas, what is the minimum coverage period for long-term care policies?
Select one:
a. 12 months
b. 18 months
c. 24 months
d. 36 months

Answer 69

A

Question 70

What document contains long-term care insurance policy benefits, exclusions and limitations?
Select one:
a. Policy summary
b. Outline of coverage
c. Illustration
d. Notice regarding replacement

Answer 70

B

Question 71

In Texas, an applicant may return a long-term care policy for a full-refund within how many days?
Select one:
a. 10 days
b. 15 days
c. 21 days
d. 30 days

Answer 71

D

Question 72

Which of the following helps cover costs not paid by Medicare, such as deductibles, coinsurance, and actual charges?
Select one:
a. Medicaid
b. Long-term care
c. Medicare Savings Program
d. Medicare Supplement policies

Answer 72

D

Question 73

If an additional premium is required by the insurer for newborn child coverage, when must the insured be notified by the insurer?
Select one:
a. Within 24 hours of the date of birth
b. Within 15 days of the date of birth
c. Within 31 days of the date of birth
d. Within 41 days of the date of birth

Answer 73

C

Question 74

What provision must automatically update with changes to Medicare?
Select one:
a. Guaranteed issue
b. Renewability
c. Cost-sharing
d. Free look

Answer 74

C

Question 75

What is the maximum penalty specified by the Patient Protection and Affordable Care Act for each subsidized employee for eligible businesses that do provide health insurance?
Select one:
a. $1,000
b. $2,000
c. $3,000
d. $5,000

Answer 75

C

Question 76

The standards for marketing long-term care policies prohibit all the following, EXCEPT:
Select one:
a. High pressure tactics
b. Representation
c. Cold lead advertising
d. Twisting

Answer 76

B

Question 77

Which type of plans can set dollar limits for drug treatment that are less favorable than coverage for physical illness?
Select one:
a. Individual plans
b. Group plans
c. Both individual and group plans
d. None of the above

Answer 77

B

Question 78

The annual open enrollment period for insureds in a small group health benefit plan must be at least:
Select one:
a. 21 days
b. 30 days
c. 31 days
d. 45 days

Answer 78

C

Question 79

What describes the failure to disclose the purpose of marketing is for solicitation of insurance?
Select one:
a. Cold lead advertising
b. Misrepresentation
c. High pressure tactics
d. Twisting

Answer 79

A

Question 80

For group health insurance in Texas, which of the following best defines a small employer?
Select one:
a. 2-25 employees
b. 2-50 employees
c. 25-50 employees
d. 25-100 employees

Answer 80

B

Question 81

Which of the following best describes the maximum permitted compensation arrangement for agents selling Medicare supplement policies in Texas?
Select one:
a. First-year commissions cannot exceed100% of the commission for selling or servicing the policy in the first renewal year.
b. First-year commissions cannot exceed 200% of the commission for selling or servicing the policy in the first renewal year.
c. Second-year commissions cannot exceed 400% of the commission for selling or servicing the policy in the first renewal year.
d. Third-year commissions cannot exceed 300% of the commission for selling or servicing the policy in the second renewal year.

Answer 81

B

Question 82

How many days in advance must an insurer notify an insured prior to the lapse of a long-term care policy?
Select one:
a. 15 days
b. 21 days
c. 30 days
d. 31 days

Answer 82

C