Chapter 7 Review (Health): Underwriting and Policy Issue Flashcards
If the information in the medical section warrants further investigation into the applicant’s medical conditions, the underwriter may need an
attending physician statement (APS).
Information from the MIB (Medical Information Bureau) helps insurance companies from adverse selection by applicants, as it detects
misrepresentations, helps identify fraudulent information, controls the cost of insurance, and helps underwriters evaluate risk.
An insurance company would NOT notify the MIB if an application is _____.
declined
Besides outright rejection, there are three techniques commonly used by insurers in issuing health insurance policies to _____ _____:
o Attaching an exclusion (or impairment) rider or waiver to a policy
o Charging an extra premium
o Limiting the type of policy or coverage issued
substandard risks
The insurance company will NEVER alter the PROVISIONS of an insurance policy
due to risk
if the insured changes to a less hazardous job, the insurer will return any excess unearned premium under the
Change of occupation provision
Men show a _____ rate of disability than women, except at the upper ages
lower
Women are sometimes required to undergo more expensive testing like a
Pap test, which is used for detecting cervical cancer
Women have a _____ life expectancy than men
longer
A producer may be the beneficiary of an applicant’s policy if the producer has _____ _____ on an insured.
insurable interest
Whereas mortality rates show the average number of persons within a larger group of people who can be expected to die within a given year at a given age, _____ rates show the expected incidence of sickness or disability within a given group during a given period of time.
morbidity
The most practical way to estimate the cost of future claims is to rely on _____ _____ based on past claims experience
claims tables
- _____ _____ have been constructed for hospital expenses based on the amounts paid out in the past for the same types of expenses
- _____ _____ have also been developed for surgical benefits, covering various kinds of surgery based on past experience
Experience tables
This concept requires health insurance providers to offer health insurance policies within a given geographical area at the same price to all individual or group plans without medical underwriting, regardless of their health status.
Community Rating
The policy feature that permits the policyowner to select the timing of premium payments
Premium Mode (Mode of Premium Provision)
- For health insurance, _____ _____ options include
o Annual
o semi-annual
o quarterly
o Monthly
premium payment
Unlike life insurance, there is no _____ _____ option for health insurance policies
“single-pay”
The _____ _____ denotes that coverage will be effective once the applicant proves to be insurable either on the date the application was signed or the date of the medical exam–whichever is later.
conditional receipt
Under a _____ _____, coverage is guaranteed until the insurer formally rejects the application
binding receipt
Happens when the insurer “approves” the application, they are _____ _____ _____
“issuing the policy”
Premium taxation:
- When premiums are paid before your paycheck is taxed or removed from your taxable income when you file taxes
- The Benefits __________ (because you are already saving taxes on the premiums)
will be taxed
Premium taxation:
- When premiums are paid after your paycheck is taxed and are not removed from your taxable income
- The benefits of the policy would be _____ _____.
tax free
Premiums paid for personal disability income insurance are __________ by the individual insured, but the disability benefits are __________ to the recipient
not deductible
tax-free
When a group disability income insurance plan is paid for entirely by the employer and benefits are paid directly to individual employees who qualify, the premiums are deductible by the employer. The benefits, in turn, are _____ to the recipient
taxable
If an employee contributes to any portion of the premium, her benefit will be received tax-free in ________________.
proportion to the premium contributed
Incurred medical expenses that are reimbursed by insurance may ____________.
not be deducted from an individual’s federal income tax
Incurred medical expenses that are not reimbursed by insurance may only be deducted to the extent they exceed _____ of the insured’s adjusted gross income (AGI)
7.5%
For self-employed individuals, _____ of their health insurance premium is tax deductible (as of 2003)
100%
A higher deductible will help __________.
limit claims
In an effort to reduce unnecessary surgical operations, many health policies today contain a provision requiring the insured to obtain a second opinion before receiving _____ _____.
This approach for cost management is known as:
elective surgery
Mandatory Second Opinions
To control hospital claims and prevent unnecessary medical costs, many policies today require policy owners to obtain approval from the insurer before entering a hospital for elective surgeries.
This form of cost management is known as:
Precertification Review
A pre-hospitalization authorization program (pre-certification) determines whether the requested treatment is ____________.
medically necessary
Pre-admission, pre-hospitalization, and pre-certification are all common names used for this particular type of managed care
Precertification Review
Pre-admission testing, also known as pre-admission certification, usually involves evaluating an individual’s overall health __________________.
prior to being hospitalized for surgery
Preadmission testing helps control health care costs primarily by reducing ___________________.
the length of hospitalization
- A health insurance company’s opportunity to review a request for medical treatment to confirm that the plan provides coverage for your medical services
- Health care is reviewed as it is being provided
- Involves monitoring the appropriateness of the care, the setting, and the length of time spent in the hospital
- This ongoing review is directed at keeping costs as low as possible and maintaining effectiveness of care by determining if the recommended treatment is appropriate
This form of cost management is known as:
Concurrent (Utilization) Review
The advances in medicine now permit many surgical procedures to be performed on an outpatient basis where once an overnight hospital stay was required these outpatient procedures are commonly referred to as ______________.
ambulatory surgery
- _____ _____ is sometimes referred to as Utilization Review.
- _____ _____ involves a specialist within the insurance company, such as a registered nurse, who reviews a potentially large claim as it develops to discuss treatment alternatives with the insured.
- The purpose of _____ ______ is to let the insurer take an active role in the management of what could potentially become a very expensive claim.
- Most of these services are performed on a prospective basis, a concurrent basis, a retrospective basis or a combination of all three.
Case management
A _____ _____ involves analyzing a case before admission to determine what type of treatment is necessary.
prospective review
_____ _____ involves the monitoring of a hospital stay by a nurse while a patient is in the hospital to determine when they will be released, if they require home health care or if a transfer to another facility such as a hospice center is warranted.
Concurrent review
_____ _____ involves an analysis of care, after the fact, to determine if it was necessary and appropriate. The purpose of this review is not to deny claims but to monitor trends regarding treatment so that future actions may be taken to reduce or eliminate unnecessary health care costs, especially in high cost areas.
Retrospective review
A _____ _____ _____ plan allows the insured to choose either an in-network or an out-of-network provider at the time care is needed.
point-of-service
With Point-of-Service plans, all care is coordinated by the insured’s _____ _____ _____, which includes referrals to specialists
primary care physician
P is self-employed and owns an individual disability income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax?
$0.
