Chapter 6: Types of Health Policies Flashcards
Basic hospital, surgical, and medical policies and the major medical policies are commonly grouped into what are referred to as ______.
Medical Expense Insurance (Hospital, Surgical, Medical)
______ provide benefits for the cost of medical care that results from accidents or sickness and are often referred to as first-dollar coverage because they usually do not require the insured to pay a deductible.
Medical Expense Insurance (Hospital, Surgical, Medical)
______ policies cover hospital room and board, and miscellaneous hospital expenses, such as lab and x-ray charges, medicines, use of operating room and supplies, while the insured is confined in a hospital.
Hospital Expense
Under basic hospital expense coverage, there is no deductible and the limits on ______ are set at a specified dollar amount per day up to a maximum number of days.
Room and Board
The ______, which normally has a separate limit, pays for other miscellaneous expenses associated with a hospital stay and can be expressed either as a multiple of the room and board charge or as a flat amount.
Miscellaneous Hospital Expenses
______ coverage is often referred to as Basic Physicians’ Nonsurgical Expense Coverage because it provides coverage for nonsurgical services a physician provides.
Basic Medical Expense Coverage
______ coverage is commonly written in conjunction with Hospital Expense policies and pay for the costs of surgeons’ services, whether the surgery is performed in or out of the hospital.
Basic Surgical Expense
Each surgical expense contract has a(n) ______ that lists the types of operations covered and their assigned dollar amounts. If an operation is not listed, the contract may pay for a comparable operation.
Surgical Schedule
When the ______ approach is used, each surgical procedure will be assigned a number of points that are relative to the number of points assigned to the maximum benefit.
Relative Value
______ policies offer a broad range of coverage under one policy and generally provide the following coverage:
- Comprehensive coverage for hospital expenses.
- Catastrophic medical expense protection.
- Benefits for prolonged injury or illness.
Major Medical Expense
There are two common types of major medical policies available: ______ policies and ______ policies.
- Supplemental Major Medical
2. Comprehensive Major Medical
______ policies are used to supplement the coverage payable under a basic medical expense policy.
Supplementary Major Medical
After the limits of the basic policy are exhausted, the insured must pay a(n) ______ before the major medical coverage will pay benefits. This is applied between the basic coverage and the major medical coverage.
Corridor Deductible
By means of the Health Maintenance Act of 1973, Congress strongly supported the growth of ______ in this country. The act forced employers with more than 25 employees to offer the ______ as an alternative to their regular health plans.
- Health Maintenance Organizations (HMOs)
2. HMO
The main goal of the HMO Act was to reduce the cost of health care by utilizing ______, which includes free annual check-ups for the entire family and free or low-cost immunizations.
Preventive Care
The HMO provides benefits in the form of ______ rather than in the form of reimbursement for the services of the physician or hospital. The HMO concept is unique in that it provides both the ______ and ______ for its members.
- Services
- Financing
- Patient Care
The ______ offers services to those living within specific geographic boundaries, such as county lines or city limits.
Health Maintenance Organizations (HMOs)
The ______ tries to limit costs by only providing care from physicians that meet their standards and are willing to provide care at a prenegotiated price.
Health Maintenance Organizations (HMOs)
HMO’s require ______ which is a specific part of the cost of care or a flat dollar amount that must be paid by the member.
Health Maintenance Organizations (HMOs)
HMOs operate on a(n) ______ basis: the HMO receives a flat amount each month attributed to each member, whether they see a physician or not. In essence, it is a prepaid medical plan.
Capitated
When an individual becomes a member of the HMO, they will choose their ______ or ______.
- Primary Care Physician (PCP)
2. Gatekeeper
In order for the HMO member to get to see a(n) ______, the primary care physician (gatekeeper) must refer the member.
Specialist
The ______ provides the member with inpatient hospital care, in or out of the service area.
Health Maintenance Organizations (HMOs)
The the ______ system, the physicians are paid fees for their services rather than a salary, but the member is encouraged to visit approved member physicians that have previously agreed upon the fees to be charged. This encouragement comes in the form of benefits.
Preferred Provider Organization (PPO)
A(n) ______ is a group of physicians and hospitals that contract with employers, insurers, or third party organizations to provide medical care services at a reduced fee.
Preferred Provider Organization (PPO)
The ______ plan is merely a combination of HMO and PPO plans. Employees do not have to be locked into one plan or make a choice between the two plans. A different choice can be made every time a need arises for medical services.
Point-Of-Service (POS)
______ plans enter into contractual arrangements with health care providers who form a provider network. However, plan members do not have to use only in-network providers for their care.
Point-Of-Service (POS)
In a(n) ______ plan the individuals can visit an in-network provider at their discretion. If they decide to use an out-of-network physician then member copays, coinsurance, and deductibles may be substantially higher.
Point-Of-Service (POS)
In ______ plans, participants usually have access to a provider network that is controlled by a PCP. Plan members have an option to seek care outside the network, but at reduced coverage levels.
Point-Of-Service (POS)
In a(n) ______, the insured does not have to select a primary care physician. All network providers are considered “preferred,” and you can visit any of them, even specialists, without first seeing a primary care physician.
Preferred Provider Organization (PPO)
A(n) ______ is a form of cafeteria plan benefit funded by salary reduction and employer contributions. These benefits are subject to annual maximum and “use-or-lose” rule.
Flexible Spending Account (FSA)
There are 2 types of Flexible Spending Accounts: a(n) ______ for out-of-pocket health care expenses, and a(n) ______ (subject to annual contribution limits) to help pay for dependent’s care expenses.
- Health Care Account
2. Dependent Care Account
A(n) ______ is exempt from federal income taxes, Social Security (FICA) taxes and, in most cases, state income taxes.
Flexible Spending Account (FSA)
______ child and dependent care expenses must be for the care of one or more qualifying persons:
- A dependent who was under age ______ when the care was provided and who can be claimed as an exemption.
- A(n) ______ who was physically or mentally not able to care for himself or herself.
- A dependent who was physically or mentally not able to care for himself or herself and who can be claimed as an exemption.
- Flexible Spending Account (FSA)
- 13
- Spouse
The insured may only make changes to ______ benefits during open enrollment and possibly under certain circumstances known as ______ changes:
- Marital status
- Number of dependents
- Change in dependent eligibility
- Employment status affects eligibility
- Change in dependent care provider
- Family medical leave
- Flexible Spending Account (FSA)
2. Qualified Life Event
______ are often used in coordination with Medical Savings Accounts (MSAs), Health Savings Accounts (HSAs), or Health Reimbursement Accounts (HRAs). These feature higher annual deductibles and out-of-pocket limits than traditional health plans, which means lower premiums.
High-Deductible Health Plans (HDHPs)
______ are designed to help individuals save for qualified health expenses that they, their spouse, or their dependents incur. An individual who is covered by a high deductible health plan an make a tax-deductible contribution to a(n) ______, and use it to pay for out-of-pocket medical expenses.
Health Savings Accounts (HSAs)
To be eligible for a(n) ______, an individual must be covered by a HDHP, must not be covered by other health insurance, must not eligible for Medicare, and can’t be claimed as a dependent on someone else’s tax return.
Health Savings Accounts (HSAs)
HSAs are linked to high deductible insurance with established minimum deductibles (______ for singles and ______ for families in 2020). Current annual contribution limits are ______ for singles and ______ for families.
- $1,400 and $2,800
2. $3,550 and $7,100
______ is designed to replace lost income in the event of this contingency, and is a vital component of a comprehensive insurance program. It may be purchased individually or through an employer on a group basis.
Disability Income Insurance
______ is a waiting period that is imposed on the insured from the onset of disability until benefit payments commence, typically ranging from ______ days to ______ days. The purpose is to eliminate coverage for short-term disabilities in which the insured will be able to return to work in a relatively short period of time.
- Elimination Period
2. 30 to 180 days
______ is another type of waiting period that is imposed under some disability income policies. It does not replace the elimination period, but is in addition to it, often ______ to ______ days from the policy issue date during which benefits will not be paid for illness-related disabilities.
- Probationary Period
2. 10 to 30
______ refers to the length of time over which the monthly disability benefit payments will last for each disability after the elimination period has been satisfied. Most policies offer increments of ______, ______, ______, and to ______. Some plans offer ______ benefits.
- Benefit Period
- 1 Year, 2 Year, 5 Years
- Age 65
- Lifetime
______ means the damage to the body is unexpected and unintended.
Accidental Bodily Injury
______ indicates that the cause of the accident must be unexpected and unintended.
Accidental Means
A policy that uses the accidental ______ definition will provide broader coverage than a policy that uses the accidental ______ definition.
- Bodily Injury
2. Means
______ or ______ is defined as either a sickness or disease contracted after the policy has been in force for at least ______; or a sickness or disease that first manifests itself after the policy is in force.
- Sickness or Illness
2. 30 Days
______ is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.
Presumptive Disability
The amount of monthly benefit that is payable under most disability income policies is based on a percentage of the insured’s past earnings. The ______ are the maximum benefits the insurer is willing to accept for an individual risk; commonly to roughly ______ of the insured’s average earning for the period of two years prior.
- Benefit Limits
2. 66%
______ or ______ are used to supplement or replace benefits that might be payable under Social Security Disability. These provide for the payment of income benefits generally in three different situations:
- When the insured is eligible for SS benefits but before the benefits begin.
- If the insured has been denied coverage under SS.
- When the amount payable under SS is less than the amount payable under the rider.
- Social Insurance Supplement (SIS)
2. Social Security Riders
The three types of disability income policies used for businesses are ______, ______, and ______.
- Business Overhead Expense
- Key Person Disability
- Disability Buy-Sell Insurance
______ insurance is a unique type of policy that is sold to small business owners who must continue to meet overhead expenses such as rent, utilities, employee salaries, installment purchases, leased equipment, etc., following a disability.
Business Overhead Expense (BOE)
The ______ specifies who will purchase a disabled partner’s interest and legally obligates that person or party to purchase such interest upon disability. A provision for the contingency of disability can be added to a(n) ______ to eliminate the need for two separate agreements.
- Disability Buyout Agreement
2. Buy-Sell Agreement
______ is purchased by the employer on the chance of disability of a key employee, to protect the business of potential loss of business income as well as the expense of hiring and training a replacement.
Key Person Disability
______ disability plans usually specify the benefits based on a percentage of the worker’s income, while ______ disability policies usually specify a flat amount.
- Group
2. Individual
______ disability plans usually provide maximum benefit periods of 13 to 52 weeks (with 26 weeks being the mot common), with weekly benefits of 50% to 100% of the individual’s income.
______ disability plans have maximum benefit periods of 6 months to 2 years.
- Short-Term Group
2. Individual Short-Term
______ disability plans provide maximum benefit periods of more than 2 years, with monthly benefits usually limited to 60% of the individual’s income.
Group Long-Term
______ disability plans have minimum participation requirements. Usually, the employee must have worked for 30 to 90 days before becoming eligible for coverage.
Group
______ disability plans usually make benefits supplemental to any benefits received under workers compensation.
Group
Some ______ disability plans limit coverage to only nonoccupational disabilities.
Group
______ coverage only pays for accidental losses and is thus considered a pure form of accident insurance.
Accidental Death and Dismemberment (AD&D)
The ______ is paid for accidental death (when caused by the accident within ______ days) and is usually equal to the amount of coverage under the insurance contract, or the face amount. In case of loss of sight or accidental dismemberment, a percentage of that ______ will be paid b the policy, often referred to as the ______ and varying according to the severity of the injury.
- Principal Sum
- 90 Days
- Principal Sum
- Capital Sum
The ______ defines the specific risk in which accidental death or dismemberment benefits will be paid. For example, the policy may be a Travel Accident Policy which only covers losses occurred during travel.
Limited Risk Policy
The ______ will cover unusual types of risks that are not normally covered under AD&D policies. It covers only the specific hazard or risk identified in the policy, such as a racecar driver test-driving a new car.
Special Risk Policy
______ policies, which can be marketed in the form of individual policies, group policies, or as riders to life insurance policies, provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility.
Long-Term Care
Long-term care policies must provide coverage for at least ______ in a setting other than an acute care unit of a hospital.
12 Consecutive Months
Long-term care policies usually include a(n) ______, ranging from 0 to 365 days, similar to those found in disability income policies.
Elimination (Waiting) Period
Long-term care policies also define the ______ for how long coverage applies, after the elimination period. This period of time is usually ______ to ______, with a few policies offering lifetime coverage.
- Benefit Period
2. 2 to 5 Years
The benefit amount payable under most LTC policies is usually a specific ______ amount per day, regardless of the actual cost of care.
Fixed Dollar
Most LTC policies are also ______; however, insurers do have the right to increase the premiums.
Guaranteed Renewable
The following are ______ or actions in long-term care policies:
- Cancel, nonrenewal or otherwise terminate a LTC policy on the grounds of the insured’s age or the deterioration of mental or physical condition.
- Establish a new waiting period when coverage is converted or replaced within the same company, except for increased benefits voluntary selected by the insured.
- Cover only skilled nursing care, or provide significantly more coverage for skilled care than lower levels of care.
Prohibited Provisions
Long-term care policies may have the following ______:
- Pre-existing conditions or diseases.
- Mental and nervous disorders or disease.
- Alcoholism and drug addiction.
- Treatment or illness caused by war, participation in criminal activities, or attempted suicide.
- Treatment payable by the government, Medicare, workers compensation, or similar coverage.
Exclusions
Generally, long-term care policies will cover 3 levels of care: ______ care, ______ care, and ______ care. In addition to these levels of care, the long-term care policy may provide coverage for ______ care, ______ care, ______ care, or ______ care, all of which can be received at home.
- Skilled Nursing
- Intermediate
- Custodial
- Home Health
- Adult Day
- Hospice
- Respite
______ is daily nursing and rehabilitative care that can only be provided by medical personnel, under the direction of a physician. Care that can be given by nonprofessional staff is not considered ______.
Skilled Care
______ is occasional nursing or rehabilitative care provided for stable conditions that require daily medical assistance on a less frequent basis than skilled nursing care.
Intermediate Care
______ is care for meeting personal needs such as assistance in eating, dressing, or bathing, which can be provided by nonmedical personnel, such as relatives or home health care workers.
Custodial Care
______ is care provided by a skilled nursing or other professional services in one’s home and might include physical therapy, occupational therapy, speech therapy, and medical services by a social worker.
Home Health Care
______ is provided in the insured’s home under a planned program established by his or her attending physician and must be provided by a long-term care facility, a home health care agency, or a hospital.
Home Convalescent Care
______ is provided while the insured resides in a retirement community or a residential care facility for the elderly (RCFE).
Residential Care
______ is care provided for functionally impaired adults on less than a 24-hour basis and could be provided by a neighborhood recreation center or a community center.
Adult Day Care
______ is designed to provide relief to the family caregiver, and can include a service such as someone coming to the home while the caregiver takes a nap or goes out for a while.
Respite Care
______ long-term care insurance is the most common LTC in the private market. The advantages include state regulation of LTC plans, guaranteed renewability, and the ability to customize the plan to the individual’s own needs.
Individual
______ LTC offers lower rates and less underwriting, allowing someone who might be denied individual coverage to enroll in open enrollment periods.
Group
In order to qualify for group coverage, the group must be formed for a purpose other than obtaining ______.
Group Health Insurance
With a(n) ______, the employer (a partnership, corporation, or a sole proprietorship) provides group coverage to its employees. Group health insurance may also be either contributory or noncontributory.
Employer-Sponsored Group
A(n) ______ (alumni or professional) can buy group insurance for its members. The group must have at least 100 members, be organized for a reason other than buying insurance, have been active for at least two years, have a constitution, by-laws, and must hold at least annual meetings.
Association Group
The actual group health insurance policy, called a(n) ______, is issued t to the group sponsor, while the individual insureds are issued ______ as proof of their coverage.
- Master Contract
2. Certificates of Insurance
Underwriting of ______ is unique in that when a group policy is written every eligible member of the group must be covered regardless of physical condition, age, sex, or occupation. Cost of the policy will vary by ratio of ______ and the ______ of the group.
- Group Health Insurance Policies
- Males to Females
- Average Age
The group health insurance underwriting process is designed to avoid adverse selection by the following requirements:
- The insurance must be ______ to the group. The group cannot have been formed for the sole purpose of purchasing insurance.
- There should be a(n) ______ of persons through the group, with the older or unhealthy individuals being replaced by younger and healthier individuals.
- The ______ of the group: insurers do not want to write risks that frequently change insurers.
- A method of ______ that prevents the individual selection of benefits.
- How ______ are selected: employees are usually full-time only and meet minimum service requirements.
- Whether the group is ______ or ______.
- The ______ and ______ of the group, as well as the industry the group is involved in.
- The ______ of the group.
- Incidental
- Steady Flow
- Persistency
- Selecting Benefits
- Eligible Participants
- Contributory or Noncontributory
- Size and Composition
- Prior Claims Experience
______ contracts are issued to cover the applicant and usually dependents. Most are issued guaranteed renewable, so the underwriting to determine insurability is completed with care.
Individual Health Insurance
______ underwriting can be less restrictive than with individual contracts in part because the yearly renewable term contract under which the insurance is written contemplates annual revaluation of the risk and adoption of remedial measures if the initial evaluation proved to be incorrect.
Group Health Insurance
The ______ requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
______ for COBRA include the following:
- Voluntary termination of employment.
- Termination of employment for reasons other than gross misconduct.
- Employment status change: from full time to part time.
Qualifying Events
For any COBRA qualifying events, coverage is extended up to ______ and the employee must exercise extension of benefits within ______ of separation from employment. For events such as death of the employee, divorce or legal separation, the period is ______ for dependents.
- 18 Months
- 60 Days
- 36 Months
COBRA benefits apply to group ______ insurance, not group ______ insurance.
- Health
2. Life
______ insurance plans are designed to provide temporary coverage for people in transition (those between jobs or early retirees), and are available for terms from one month up to 11 months, depending on the state.
Short-Term Medical
______ policies are limited policies that provide coverage for death, dismemberment, disability, or hospital and medical care resulting from an accident. It will only pay for losses resulting from accidents and not sickness.
Accident-Only
A(n) ______ policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnoses (and survival) of any of the illnesses covered by the policy.
Critical Illness
______ cover only one illness: cancer, and pay a lump-sum cash benefit when the insured is first diagnosed with cancer. It is a supplemental policy intended to fill in the gap between the insured’s traditional health coverage and the additional costs associated with being diagnosed with the illness.
Cancer Policies
A(n) ______ policy provides a specific amount on a daily, weekly, or monthly basis while the insured is confined to a hospital. Payment is unrelated to the medical expense incurred, but based only on the number of days confined in a hospital.
Hospital Indemnity
______ insurance is a form of medical expense health insurance that covers the treatment, care, and prevention of dental disease and injury to the insured’s teeth.
Dental Expense
Pediatric dental coverage is an essential health benefit under the Affordable Care Act that ______ as part of a health plan or as a stand-alone plan for children 18 or younger.
Must Be Available
______ may be packaged or integrated with other health insurance benefits like major medical.
Dental Expense
Some employers provide ______ and ______ group health insurance to their employees to cover eye examinations and eyeglasses, or hearing aids on a limited basis.
Vision and Hearing
______ disability does not go away (such as loss of a limb).
Permanent
______ disability policies have shorter elimination periods than ______ disability policies.
- Short-Term
2. Long-Term
______ paid by the insured on an individual disability income policy are not tax deductible, but any benefits received would be received ______.
- Premiums
2. Tax Free
A(n) ______ disability policy may be written to cover passengers on a common carrier, an employee group, a student group, a debtor group, or a sports team. ______ policies do not require individual applications, nor are certificates of insurance issued to those covered.
Blanket
______ insurance will cover the ongoing business expenses of a self-employed person, such as rent or salaries, while the self-employed person is disabled.
Business Overhead
______ insurance indemnifies the business for the loss of services of a key employee due to disability.
Key Person Disability
On a(n) ______ policy, loss of eyesight due to an accident is covered. Loss of hearing is not covered.
Accidental Death & Dismemberment (AD&D)
On an AD&D policy, loss of a limb is ______ but loss of the use of a limb is ______ .
- Covered
2. Not Covered (since that would not be considered dismemberment)
______ policies (like AD&D) only cover limited perils and amounts.
Limited Health Insurance
______ plans cover in-hospital only. There is no deductible or coinsurance.
Base
When calculating how much the company will pay on a claim, always subtract the ______ first, and then apply the ______ percentage.
- Deductible
2. Coinsurance
______ policies cover both accident and sickness.
Medical Expense
______ policies provide first dollar coverage without a deductible.
Basic Medical Expense
______ excludes war, self-inflicted injury, and cosmetic surgery.
Health Insurance
______ underwriters may discriminate based on an applicant’s health history.
Health Insurance
A(n) ______ policy will pay a claim up to the policy limit. They are the only health insurance policies that may use a relative value schedule.
Surgical Expense
______ and ______ policies have both deductibles and coinsurance requirements.
- Major Medical
2. Medicare Part B
The stop loss feature on a(n) ______ policy applies after the insured first pays the deductible.
Major Medical
POS plans, HMOs, and PPOs are all types of ______.
Managed Care
______ may not be formed just to buy insurance. They must exist for another reason.
Groups
______ usually does not have a probationary period and has little underwriting. ______ rates are usually lower than individual rates since the cost of administration is much lower.
- Group Health Insurance
2. Group
Experience rating is used on ______ and is based on past claims experience.
Group Health
______ (a federal regulation applying to group medical expense policies) allows an employee to continue group coverage for 18 months in case he or she quits or is released from employment.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
Under ______, the family of a deceased or disabled employee may continue group coverage for another 36 months.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
______ policies cover skilled nursing, intermediate care, and custodial care.
Long-Term Care (LTC)
______ coverage includes home health care, adult day care, and hospice care.
Optional Long-Term Care (LTC)
A person who cannot perform the ______ needs a long-term care policy.
Activities of Daily Living (ADLs)
______ include eating, bathing, dressing, toileting, continence, and mobility.
Activities of Daily Living (ADLs)
______ insurance will pay if an insured dies in a common carrier (commercial aircraft).
Travel Accident
Dental and vision insurance may be a(n) ______ plan, ______ policy, or offered as a(n) ______ policy.
- Family
- Individual
- Group
______ and ______ insurance may require the insured to go to an in-network dentist or eye doctor to receive maximum benefits.
Dental and Vision
Vision and dental insurance may have a(n) ______ and/or ______ amounts, as well as annual ______ amounts.
- Deductible
- Coinsurance
- Annual Maximum
______ plans pay the benefits directly to the insured.
Critical Illness
______ are short-term health insurance plans purchased to fulfill temporary needs (6 months or less). They are often used to cover gaps in insurance between jobs.
Interim Policies
