Chapter 9: Other Health Insurance Concepts

Question 1

If an individual health insurance policy provides a death benefit, the policyowner will be able to designate a(n) ______ and change the ______ unless designation is irrevocable. The power to change the ______ is provided in the ______ provision.

Answer 1

1. Beneficiary
2. Beneficiary
3. Beneficiary
4. Change of Beneficiary

Question 2

The Affordable Care Act mandates that every insurer that offers health insurance policies that provide coverage for dependent children of the insured must provide that coverage for the children up to the age of ______.

Answer 2

26

Question 3

In regard to insurance premiums, ______ refers to the frequency the policyowner pays the premium.

Answer 3

Mode

Question 4

An insurance policy’s rates are based on the assumption that the premium will be paid ______, however, the premium may also be paid ______, ______, or ______.

Answer 4

1. Annually
2. Semi-Annually
3. Quarterly
4. Monthly

Question 5

The purpose of the ______ provision, found only in group health plans, is to avoid duplication of benefit payments and overinsurance when an individual is covered under multiple group health insurance plans.

Answer 5

Coordination of Benefits (COB)

Question 6

The coordination of benefits (COB) provision establishes which plan is the ______ plan, or the plan that is responsible for providing the full benefit amounts as it specifies.

Answer 6

Primary

Question 7

Once the primary plan has paid its full promised benefit, the insured submits the claim to the ______, or ______, provider for any additional benefits payable (including deductibles and coinsurance).

Answer 7

1. Secondary

2. Excess

Question 8

Health insurance, including disability insurance, can be written on a(n) ______ or a(n) ______ basis.

Answer 8

1. Occupational

2. Nonoccupational

Question 9

______ coverage provides benefits for illness, injury, or disability resulting from accidents or sicknesses that occur on or off the job.

Answer 9

Occupational

Question 10

______ coverage only covers claims that result from accidents or sicknesses occurring off the job.

Answer 10

Nonoccupational

Question 11

While many individual health policies are written on an occupational or nonoccupational basis, most group plans are ______ only.

Answer 11

Nonoccupational

Question 12

Some disability policies define ______ relatively strictly such as the ______ definition, similar to Social Security, which requires the insured to be unable to perform any occupation for which he or she is reasonably suited by reason of education, training, or experience.

Answer 12

1. Total Disability

2. Any Occupation

Question 13

Some disability policies define ______ more liberally as the “inability to perform the duties of one’s ______.” As would be expected, this definition of disability makes it easier to qualify for benefits.

Answer 13

1. Total Disability

2. Own Occupation

Question 14

______ is often defined as the inability to perform one or more of the regular duties of one’s own occupation or the inability to work on a full-time basis, which results in a decrease in the individual’s income. The partial benefit is typically ______ of the total benefit.

Answer 14

1. Partial Disability

2. 50%

Question 15

______ is generally expressed in a policy provision that specifies the period of time (usually within ______), during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.

Answer 15

1. Recurrent Disability

2. 3-6 Months

Question 16

______ is the type of disability income policy that provides benefits for loss of income when a person returns to work after a total disability, but is still not able to work as long or at the same level he/she worked before becoming disabled. It covers the ______ between what was earned before and after the disability.

Answer 16

1. Residual Disability

2. Gap

Question 17

Any medical expense plan that attempts to contain costs by controlling the behavior of participants is considered a(n) ______ program.

Answer 17

Managed Care

Question 18

A true ______ plan should have 5 basic characteristics:

1. Controlled access of providers
2. Comprehensive case management
3. Preventive care
4. Risk sharing
5. High quality care

Answer 18

Managed Care

Question 19

Workers Compensation is a benefit offered and regulated by the ______, and will vary to some degree from state to state.

Answer 19

States

Question 20

To be eligible for ______ benefits, the worker must work in an occupation covered by ______ and have had an accident or sickness that is work related.

Answer 20

Workers Compensation

Question 21

______ laws provide four types of benefits:

1. Medical Benefits
2. Income Benefits
3. Death Benefits
4. Rehabilitation Benefits

Answer 21

Workers Compensation

Question 22

______ is the legal process by which an insurance company seeks recovery of the amount paid to the insured from a third party who may have caused the loss. Through ______, the insured cannot collect twice.

Answer 22

Subrogation

Question 23

Premium payments on personally owned disability income policies are ______ by the individual.

Disability income benefits are received ______ by the individual.

Answer 23

1. Nondeductible

2. Income Tax Free

Question 24

In ______ insurance policies, the law permits deductions for unreimbursed expenses in excess of ______ of the ______.

Answer 24

1. Medical Expense
2. 7.5%
3. Adjusted Gross Income (AGI)

Question 25

Premiums paid the employer for disability income insurance for its employees are ______ as a business expense and are not considered as ______ to the employee.

Answer 25

1. Deductible

2. Taxable Income

Question 26

Benefits receives by an employee that are attributable to employer contributions are fully ______ to the employee as income.

Answer 26

Taxable

Question 27

______: The employer pays the entire cost of the disability insurance premium, so the income benefits are included in the employee’s gross income and taxed as ordinary income.

Answer 27

Noncontributory

Question 28

______: The employee pays the entire cost of the disability insurance premium, so the income benefits are received income tax free by the employee.

Answer 28

Fully Contributory

Question 29

______: The cost of disability insurance is paid partially by the employer and partially by the employee. The portion paid by the employee is received income tax free and the portion paid by the employer is included in the employee’s gross income and taxed as ordinary income.

Answer 29

Partially Contributory

Question 30

______ group plans usually have a benefit period of less than 2 years. It is common in this type of disability income plans to place a maximum dollar amount on the benefit that will be provided regardless of earnings, and to have an elimination period (except for disability resulting from accidents).

Answer 30

Short-Term Disability (STD)

Question 31

______ group plans usually pay benefits for 2 years or longer.

Answer 31

Long-Term Disability (LTD)

Question 32

______ and ______ may deduct 100% of the cost of a medical expense plan provided to them and their families because they are considered self-employed individuals, not employees.

Answer 32

1. Sole Proprietors

2. Partners

Question 33

For group medical and dental expense insurance, any premium paid by the employer is ______ as a business expense. However, any premiums provided by the employee are only ______ to a certain extent, based on a certain percentage of the insured’s adjusted gross income.

Answer 33

Deductible

Question 34

Most people who itemize their deductions can claim ______ for unreimbursed medical expenses (those that are not covered by health insurance) that exceed ______ of their adjusted gross income (AGI).

Answer 34

1. Deductions

2. 10% or 7.5% if over age 65

Question 35

Key person disability income premiums are ______ to the business. The benefits are received ______ by the business.

Answer 35

1. Nondeductible

2. Income Tax Free

Question 36

______ insurance is sold to small business owners to reimburse them for the overhead expenses after a disability. The premiums paid are ______ to the business. The benefits are ______ to the business as received.

Answer 36

1. Business Overhead Expense (BOE)
2. Tax Deductible
3. Taxable

Question 37

In a disability buy-sell policy, whether a cross purchase or entity, the premiums are ______ to the business. The benefits are received ______ by the business.

Answer 37

1. Nondeductible

2. Income Tax Free

Question 38

A(n) ______ is an old injury that comes back within a certain time period (usually ______). The waiting period does not apply in the instance of reoccurrence, since it is the same injury.

Answer 38

Recurrent Disability

Question 39

If a policy has ______ coverage, it would pay the difference between what the insured used to make before the disability and what the insured can make currently.

Answer 39

Residual Disability

Question 40

Health policies cover ______ from the moment of birth.

Answer 40

Newborns

Question 41

The ______ mode of payment is the most inexpensive.

Answer 41

Annual

Question 42

The ______ provision in a medical expense policy states that if the insured has two group policies, one is primary and one is excess.

Answer 42

Coordination of Benefits (COB)

Question 43

______ coverage covers both on- and off-the-job injuries for those not covered by workers compensation. ______ coverage covers off-the-job injuries only for those covered by workers compensation on the job.

Answer 43

1. Occupational

2. Nonoccupational

Question 44

______ is mandatory on-the-job coverage for sickness, disability, or death.

Answer 44

Workers Compensation

Question 45

______ allows the insurance company to sue the negligent party to recover damages they have paid out.

Answer 45

Subrogation

Question 46

Premiums for individual disability income or AD&D policies ARE / ARE NOT tax deductible.

Answer 46

ARE NOT

Question 47

Premiums paid by an individual on a medical expense policy may be ______ if they exceed a certain percentage of that individual’s income.

Answer 47

Tax Deductible

Question 48

Premiums paid by an employer on a group health policy such as medical expense ARE / ARE NOT tax deductible, since this is a fringe benefit to the employees.

Answer 48

ARE

Question 49

AD&D benefits paid to a beneficiary ARE / ARE NOT taxable. They are treated in the same way as life insurance proceeds.

Answer 49

ARE NOT

Question 50

If the employer deducts the premium on a group policy, benefits ARE / ARE NOT taxable.

Answer 50

ARE