Disability Income Insurance Flashcards
(406 cards)
1
Q
Health insurance
A
Covers economic losses due to the perils of accidental injury and/or sickness
2
Q
What can health insurance also be known as
A
Disability insurance, accident and health (A and H) insurance or accident and sickness (A and S) insurance
3
Q
Accidental injury
A
Accidental bodily injury that is unintentional or unexpected
and sudden resulting from an accident (i.e heart attack would not be covered - this is an illness)
4
Q
Sickness
A
illness and disease that manifests itself after the policy is in force
5
Q
Disability income insurance
A
Provides benefits to replace income lost due to a disability caused by illness and/or accident
6
Q
Does disability insurance cover medical expenses
A
No, it is only there to replace loss of income
7
Q
Medical expense insurance policy
A
Covers hospital, surgical and other medical expenses
8
Q
Dental expense insurance policy
A
Covers the costs of dental exams and treatment that are excluded from medical expense coverage
9
Q
Long-term care insurance
A
Pays for expenses arising out of institutional and/or noninstitutional health and social services incurred by a person unable to perform some or all of the activities of daily living because of illness or disability
10
Q
Accidental death and dismemberment
A
Covers loss of life, limb or sight as a result of an accident, but not as a result of illness
11
Q
Besides monthly income (indemnity payments) what other benefits can disability cover
A
- Lump sum payments
- Rehab
- Medical reimbursement for nondisabling injury
- Periodic payments to cover loan payments
- Daily benefits paid while hospitalized
12
Q
What are the three types of disability income coverage
A
- Own occupation
- Any occupation for which the insured is reasonably suited
- Any occupation
13
Q
Define own occupation for disability
A
The insured would qualify for benefits if he were unable to perform the major duties of his own occupation
14
Q
Any occupation for disability
A
The insured can’t work at any gainful occupation
15
Q
Any occupation for which the insured is reasonably suited for disability
A
Benefits only pay if the insured is unable to perform the duties of any occupation for which he is reasonably suited by education, training or experience. (you will only get paid if you go from working as a CEO to working at mcdonalds)
16
Q
Define income replacement policies
A
Provide for replacement of a percentage of the insured’s lost income due to disability using the “any occupation” definition.
17
Q
When computing lost income, what will the insurer take into consideration
A
Other sources of income i.e. workers’ comp, part-time work, other disability policies.
18
Q
Define presumptive disability
A
The insurer will presume that a total loss of sight, hearing, speech or the use of two limbs is a total and permanent disability.
19
Q
How will the insurer pay in presumptive disability
A
The insurer will either pay a lump sum or a monthly income (even if the insured is still able to work)
20
Q
Define elective indemnity
A
Lump-sum payments
21
Q
Define partial disability
A
The insured is only able to perform some of his tasks, but not all of them
22
Q
How does partial disability pay
A
- Will only pay if the insured is first eligible for total disability
- Usually in an amount that is no more than 50% of the total disability benefit
- Generally limited to a benefit period of no more than six months
23
Q
How is residual disability calculated
A
It is based on a percentage of earnings lost and it is usually only paid if the income loss exceeds a certain percentage
24
Q
Define loss of earnings tests
A
The insured usually has to undergo a physical exam every 6 months to prove continued disability
25
Define indemnity for disability
monthly or weekly income paid to a disabled person
26
Generally, disability income policies cover what only
Total disabilities
27
Define peril in disability insurance
A cause of a loss due to an accident/sickness or an accident only
28
What two things go into a sickness peril
- The sickness or disease happened after the effective date
- There is usually a probationary period (illness will not be covered during probation, however, a disability will be covered)
29
Define occupational disability income coverage
Work related (most benefits are covered under workers comp) - you will receive something regardless if you are injured at work or not at work
30
Define non-occupational disability income coverage
Non- work related - if you are injured at work, you will receive nothing.
31
What are 7 policy exclusions (disability)
- War or military service
- Certain types of aviation accidents
- Illegal use of controlled substances
- Attempted suicide
- Intentionally self-inflicted injuries
- Injury incurred while committing a felony
- Occupational injury or illness
32
How long is a short-term disability policy
One year or less
33
How long is a long-term disability policy
Two years or more (you usually have to collect before a certain age)
34
What is the maximum benefit payment amount for disability
The policy will not pay more than the insured's prior income, it's usually 60 to 80 percent
35
Why does disability not pay so much
- Benefits are non taxable
| - Want to motivate the member to return to work
36
Define a deductible in the form of a waiting period
Sets a minimum period of time the disability must last before the insured is eligible for benefits
37
What are the two options if the member has a recurrent disability
- If the disability recurs within six months after the insured has returned to work, it will be considered part of the original claim
- If the disability recurs longer than six months after the insured has returned to work, then it is treated as a new claim
38
Define credit accident and health insurance
Form of disability income coverage that provides for the insurer to make loan payments to the creditor of a specific loan or other credit transaction while the insured is disabled.
39
Define hospital income insurance or hospital indemnity insurance
Disability income that pays a set daily benefit amount when the insured is confined to a hospital.
40
What are six types of riders that can be offered with disability
- Accidental death and dismemberment
- Waiver of premium provision
- Accident medical expense rider
- Future increase option rider
- Annual renewable term rider
- Cost-of-living adjustment rider
- Return of premium rider
41
Define accidental death and dismemberment rider for disability
The insurer would pay a lump sum and/or disability income benefits in the event of death or dismemberment resulting from an accident
42
Define a waiver of premium provision
The insured does not need to pay any premiums while he is totally and permanently disabled.
43
Define accident medical expense rider
- Pays to cover medical expenses
| - Reimburse for taking time off work
44
Define future increase option rider
Allows the insured to buy additional coverage without proof of insurability (premium based on the insured's attained age at the time of the purchase)
45
Define annual renewable term rider
Allows the insured to renew the policy each year up to a certain age without evidence of insurability (showing how healthy or unhealthy you are) , but at a premium that can increase
46
Define return of premium
- Returns a percentage of the premium (usually 80%) at certain intervals (usually every 10 years), less any claims paid during that interval
- Also allows the refunded premium to earn interest if left with the insurer and can by used to pay for future premiums
47
To qualify for Social Security benefits, a person must:
- Meet definition of disabled (very strict)
- Have disability insured status or special insured status
- Have a disability that is expected to last 12 months or end in death
- Complete a five month waiting period before benefits are payable (be disabled for more than five months)
48
Define disability insured for SS
You qualify by working a certain period of time (usually 20 hours in a 40 hour work week)
49
Define special insured status for SS
Applies to certain persons disabled before age 31
50
Will SS be decreased if the member is also getting workers comp
Yes
51
Define a social insurance rider
Used to add coverage equal to an amount that the insured could be expected to receive in disability benefits from a social insurance program (if you don't qualify to earn your SS, you can use the rider that acts like an SS)
52
Define additional monthly benefit (AMB)
Adds income during the first year of disability, because it usually takes a year before Social Security pays benefits.
53
Would an employee be tax for the amount of disability premium that his employer paid for his group disability
No - the employee would not be taxed
54
Would the employee be taxed for their premium that they paid for their disability coverage
No - the employee would not be taxed
55
Would the employee be taxed on benefits received from group disability
Yes
56
Define buy-sell agreement
For co-owners - an agreement that they will purchase the interest of another owner at a prearranged price if an event occurs, such as disability of one owner.
57
Define a cross-purchase arrangement
Each co-owner owns a disability buyout policy on each of the other co-owners and is paid the income necessary to buy out the interest of the disabled partner
58
Define an entity plan
The partnership or corporation owns disability buyout policies on each co-owner and is paid the funds to buy out the disabled owner's interest
59
Define key employee disability insurance
Provide income to a key employee to cover the cost of hiring and training a replacement if that key employee becomes disabled
60
Define accidental death and dismemberment coverage
Covers loss of life, limb or sight as a result of an accident
61
What kind of policy is an AD&D policy?
Valued policy
62
Define valued policy
It will pay a specified amount of money if there is a loss instead of paying the amount of the actual loss
63
Define principal sum (face value)
The amount paid if there is an accident within the policy period that causes the insured to die within a specified period after the accident (YOU DIE)
64
Define capital sum
The amount payable for dismemberment losses (YOU HAVE SOMETHING CUT OFF)
65
What if you lose sight in one eye
You only get one half of the principal sum
66
What if you lose sight in both eyes
You get all of the principal sum
67
Define dismemberment
- Total loss of sight
| - Severance of a limb at or above a major joint
68
Is a heart attack covered under AD&D
NO - it has to be from an accident. A heart attack is an illness/disease
69
After primary beneficiary, who is next to receive the benefits
The contingent beneficiary
70
Who is 4th in line to receive benefits
The person's estate
71
If the beneficiary is irrevocable, can the policyholder change the beneficiary
No - the beneficiary would have to change it
72
Provide an example of private insurance
Moda - we issue commercial insurance (not group)
73
What four types of insurances does the government provide
- Social Security
- Medicare
- Tricare
- Medicaid
74
Define limited insurance
Covers only specific things - like cancer only
75
Define comprehensive insurance
Covers multiple exposures
76
Define fee-for-service
The insured pays premiums, and the insurer pays the providers for the services performed
77
Define prepaid
HMOs - charge for services in advance and then cover services (Keizer) - no coinsurance
78
Define benefit schedule
Lists the amount to be paid for each treatment
79
Define coverage for usual, customary and reasonable (UCR)
They do not specify an amount to be paid - it provides benefits up to the reasonable and customary amount charged by physicians for the service in the area.
80
Define master policy
Group insurance - issued to a group sponsor to insure individual members of the group.
81
Define absolute schedule
Maximum dollar amount to be paid for a procedure
82
Define relative value
Assigns a value to a procedure (like 80% coinsurance)
83
Define unit factor in relative value
Is expressed as a dollar amount and based on geographic area
84
What are 7 examples of limited coverage policies
- Accident
- Blanket
- Vision care
- Prescription drugs
- Specified disease
- Credit disability
- Hospital indemnity
85
Define blanket policy
Group policy purchased by an entity (I am covered my trimet when I ride the max)
86
Define diagnostic dental care
Routine diagnostic procedures - oral exams and x-rays
87
Define preventive dental care
Teeth cleaning and fluoride treatment
88
Define restorative dental care
Used to restore the use of teeth - fillings, inlays and crowns
89
Define oral surgery
Teeth extraction - surgical treatment of diseases or injuries
90
Define endodontics
Treatment of diseases of the dental pulp within the teeth - root canal
91
Define periodontics
Treatment of the gyms and other supporting structures
92
Define prosthodontics
Replacement of missing teeth and structures using artificial devices - bridgework and dentures
93
Define a scheduled (or basic) dental plan
Lists all services to be covered and how much they will be covered up to a maximum amount (low cost and low coverage option)
94
Define nonscheduled (comprehensive) dental plan
Covers expenses on a usual, customary and reasonable (UCR) basis - with deductibles and coinsurance
95
What are the three different levels in a nonscheduled dental plan
1. Diagnostic and preventive
2. Basic restorative
3. Major restorative
96
Where does periodontics fall in the levels
Level 2 - basic restorative
97
How does a combination plan cover dental
Usually diagnostic and preventive are UCR and other services are on a schedule
98
What to remember for COBRA and dental
Dental coverage is not normally available on an individual basis, it usually will not include a conversion privilege.
99
What does CDHP stand for
Consumer driven health plan
100
What does HDHP stand for
High deductible health plan
101
How does a CDHP work
- Member does not make a copayment or pay coinsurance at the time that they receive care
- Provider sends claim to insurance
- Insurance tells provider the correct amount to charge the member
- Member pays bill from HRA or HSA
102
On HDHP how do they calculate the family limits
Usually these are twice the amount of single coverage
103
What two things make up an HSA
- Funds accumulate without a limit
- Contributions by an individual are tax deductible, and those made by an employer are not included in the individual's taxable income
104
Is there a limit on how much you can put into your HSA
Yes - up to the annual max contribution or the deductible (which ever is less)
105
What 5 things can you use your HSA to pay for
- Deductible
- Copays
- Prescriptions
- Long-term care insurance
- Premiums for COBRA while unemployed
106
Can you use your HSA dollars for other things (like a vaca) if you are under 65
Yes, however, they are taxable and subject to a 20% penalty
107
Can you use your HSA dollars for other things if you are over the age of 65
Yes, however, taxes will apply (there is no penalty)
108
What does HRA stand for
Health reimbursement account
109
What 5 things make up an HRA
- Only the employer contributes
- Withdrawals are tax free for qualified expenses
- Unused credit maybe carried over without limits
- Credits do not earn interest and are forfeited if the health plans are switched
- HRA is administered by the health plan or the employer
110
What is the biggest difference between an HSA and an HRA
An HSA is portable, an HRA stays with the employer
111
Are distributions from an HSA taxable
No
112
Define per-cause limit for medical
Limits the amount the insurer will pay for any one cause of claim (injury or illness)
113
Define cumulative deductible
Applied to all injuries or illnesses during the calendar year
114
Define carry over provision
Carrying over the amount paid in the last quarter towards your deducible to the following plan year
115
Define a per-cause deductible
Deductible would have to be satisfied during a specified accumulation period for each separate illness or injury before expenses for that condition are covered.
116
Define common accident/common sickness provision
If more than one insured member of a family in injured in the same accident or has the same illness, only one deductible needs to be satisfied.
117
Define a flat deductible
Initial deductible that must be satisfied before benefits are payable
118
Define a corridor deductible
In supplemental policies - a deductible will apply after basic coverage is used up, and before major benefits are applied
119
Define integrated deductible
Equal to the greater of the limits of the basic plan benefits or a specified deductible amount (depends on how much is covered under basic) page 257
120
Define stop-loss
Limit on the amount for which the insured is responsible on a per-claim or per-year basis (OOP)
121
When is Medicare the primary payor (3)
When secondary is:
- Individual policy
- Medicare supplement
- Medicare carve-out
122
When is Medicare the secondary payor
When primary coverage is:
- Employer has at least 20 employees, the member is 65 and elects to stay covered under employer
- Employer has at least 100 employees, the member is not 65, but qualifies for Medicare due to disability
- Employee qualifies for Medicare due to kidney failure - Medicare is secondary for the first 30 months
123
Where can you not get coverage
Costa Rica
124
What are 3 instances where care can be obtained outside the US
- The member is in the US when the emergency occurs and a Canadian/Mexican hospital is closer
- The member lives in the US and a Canadian/Mexican hospital is closer
- The member is traveling between Alaska and another state and a Canadian hospital is closer
125
When is enrollment for Medicare Part A automatic (2)
- Member is 65 and has been receiving SS or Railroad Retirement benefits before age 65
- Member has been receiving SS or Railroad Retirement disability for 24 months
(for purposes of the test - think of enrollment as automatic)
126
Can you enroll in Medicare early
Yes, you just have to pay premiums
127
Define initial enrollment period (IEP)
Seven-month period starting three months before the month of the person's 65th birthday and ending three months after that birthday
128
When is the Special Enrollment Period (SEP)
Member can enrollment in Part A or B at an eight-month period that begins when employment ends or coverage under the group health plan ends (whichever comes first)
129
What 4 things does Part A cover
- Semiprivate room
- Regular nursing
- Intensive care
- Drugs and lab tests
130
Will Part A cover a private room
Only if it is medically necessary
131
Define a benefit period in Part A
Person is eligible for coverage up to 90 days, when they first enter the hospital and when they leave hospital
132
What if a patient re-enters the hospital at 60 days
There is no additional deductible
133
Does Part A have a deductible and coinsurance
Yes
134
When does coinsurance kick in
During days 61 through 90 (after 60 days)
135
What if the member's hospital stay lasts more than 90 days
The member can use 60 of his reserve days
136
When will the member be responsible for entire cost
After 150 days (that means they used up their 90 days and 60 reserve days
137
What is the number of days that you are remitted back to the hospital that it is considered the same benefit period
If you are remitted within 60 days of discharge
138
Define diagnosis related group (DRG)
Groupings of conditions with a separate fee listed for each
139
Under Part A, how are hospitals payed
Prospective payment system
140
Define prospective payment system
The hospital is paid based on the DRG, regardless of the length of stay or the actual cost of treatment
141
What three 3 do quality improvement organizations look for
- Was care reasonable and necessary
- Met quality standards
- Was delivered in an appropriate setting
142
What 4 things define a skilled nursing facility
- Provide skilled care under doctor
- Has doctor available for emergency care
- Provides 24 hour nursing care
- Has at least one full-time registered nurse on staff
143
For Part A to pay for a skilled nursing facility what must apply
The patient must be admitted to the facility within 30 days after a stay in a hospital of at least 3 days
144
How many days under SNF
100 days
145
What about cost share under SNF
No deductible - coinsurance for days 21-100
146
Is there a limit on the number of days that Part A will pay for home health
No - unlimited number
147
What are the limits for part-time home health care
Care is provided no more than six days per week and no more than three consecutive weeks
148
Does Part A cover custodial care (homemaker/household services)
No - this is not considered medical care
149
When is hospice care covered
When a patient has less than six months to live
150
What is the cost share for hospice care
None
151
Is respite care covered in a hospice
Yes - up to 5 consecutive days
152
Basically what does Part B cover
Non-hospital
153
Is Part B automatic
No - it is voluntary, but it will be provided with Part A unless specifically declined
154
Similarly to Part A, when can a member enroll in Part B
- Initial 7 month window
- Open enrollment
- Special 8 month window following termination of group coverage
155
What are 6 categories that Part B covers
- Physician and surgeon services
- Outpatient
- ER
- Home health not covered by Part A
- Ambulance
- Devices (braces, pacemakers)
156
Is there cost sharing for Part B
Yes - there is a deductible and coinsurance
157
What is the coinsurance rate for Part B
Medicare will pay 80% of allowable charges
158
How do they determine the allowable charges (permissible amount)
- Based on a fee schedule, adjusted geographically, known as the Medicare approved amount
- Are not based on the usual and customary charges
159
What plans are considered traditional Medicare plans
Part A and Part B
160
What is another word for Medicare Part C
Medicare Advantage
161
What types of things does Part C cover
- Long-term care, custodial care, dentures, dental, glasses, hearing aids, drugs
162
What is another word for Medicare Part D
Medicare Prescription Drug Coverage
163
Under Part D, what do they not base the premium on
The member's health condition or the number of prescriptions needed
164
When can a person enroll in Part D
- Initial
| - Open
165
What is required for Part D to be creditable
The average payments that the Plan pays for the drugs is the same payment or a larger payment than the standard Medicare drug coverage
166
What if a person's Part D is non-creditable
They may pay a late enrollment penalty if they decide to purchase Part D to go along with their group coverage
167
How do participating providers pay claims for Medicare
- They agree not to charge more than the Medicare approved amount
- They are paid directly by Medicare (except for deductibles and coinsurance)
- Not allowed to charge patient anything else
168
How do nonparticipating providers pay claims for Medicare
- They accept patients on a case by case basis
| - They can charge up to 115% of Medicare
169
What is the difference between the Medicare approved amount and what the actual charge is called
Excess charge or balance billing
170
How does the patent pay for a nonparticipating provider
Patient pays the entire charge and is then reimbursed by Medicare
171
Who handles Medicare claims and payment for Part A
Intermediaries
172
Who handles Medicare claims for Part B and D
Carriers
173
Who handles Medicare claims for Part C
Insurance company
174
What are two qualifying events to change Medicare Advantage plans under the special enrollment period
- Moving out of the service area
| - Changing nursing homes
175
How is blood covered under Part A and Part B
- Member pays full cost for first three pints
- Member will not be charged if hospital receives the blood at no charge from the blood bank
- This requirement is once per calendar year for both Part A and Part B
176
What does a Medicare supplement plan cover
- Deductibles
- Coinsurance
- Charges above Medicare limits
- Costs for uncovered services
177
What does OBRA stand for
Omnibus Budget Reconciliation Act
178
What does OBRA do
Sets requirements for Medicare supplement insurance
179
How long is the open enrollment period for Medicare supplement
Six month window after a member turns 65 and is enrolled in Part B or becomes enrolled in Part B regardless of age
180
To be eligible for a Medicare supplement policy, the member needs to be enrolled in what
Both Part A and Part B
181
What are the plan names of Medicare supplement policies
Plans A-N
182
What is the difference between the Medicare supplement policies
Each policy offers the same benefits and covered, regardless of the insurer selling the policy, the only difference is the premium
183
All insurance companies selling Medicare Supplement policies are required to make what plan available
Plan A "core plan"
184
If an insurance company offers Medicare Supplement policy, what must they also offer
They must also offer either Plan C or Plan F
185
What are the core benefits that are required to be offered in Plan A
- Medicare Part A coinsurance
- Additional 365 days of hospital covered, paid 100%
- Medicare Part B coinsurance/copayment
- Reasonable cost for the first three pints of blood
- Part A hospice coinsurance/copayment
186
Which plans are considered catastrophic
Plans M and N (deductibles, premiums less)
187
What does ADLs stand for
Activities of Daily Living
188
When does Medicare cover nursing care
- Only after hospitalization
- Only in a SNF setting
- Only for 100 days
189
What does long term care insurance cover
- SNFs
| - Rehab
190
Is there a waiting period (elimination period) with long term care insurance
Yes, typically there is a waiting period of service days, versus calendar.
191
Define a calendar day waiting period
Begins on the first day of LTC service and counts consecutive days until the waiting period has been satisfied
192
Define service day waiting period
One day of service may equal one day of the waiting period, or a certain number of service days per week may count for seven days of the waiting period.
193
What are two interesting exclusions under LTC
- Coverage for mental illness or nervous disorders without a demonstrable organic cause (Alzheimer's would be covered, because you can show an organic cause)
- Assistance needed in less than three activities of daily living
194
Who administers Medicaid
State government
195
Do Medicare and Medicaid cover custodial care
No
196
Who is offered LTC under group policies
The employee, and sometimes their spouse
197
What is the policy owner responsible for
- Applying for coverage
- Keeping the policy in force
- Paying premiums
198
What are the 5 master policy provisions
- Explain eligibility requirements
- Establish when coverage is effective for an individual
- State the minimum number of persons and percentage of the group which must be covered
- Establish coverage limits for members
- Cite the duties of the master policy owner
199
What does each insured family get as evidence of coverage
A certificate of insurance
200
When comparing individual to group contracts, generally group contracts have:
- Higher maximums
- Broader benefits
- Fewer exclusions
- Less stringent underwriting
201
Define the birthday rule
When a dependent is covered under both parents, the parent who has the earliest birth day (month/day) will be primary
202
What are three examples of employment-related groups
- Individual employer groups
- Multiple employer trusts (MET)
- Multiple employer welfare arrangements (MEWA)
203
Define a trust
Provides group benefits to employees of two or more employers within a specific industry
204
Define MET (multiple employer trusts)
It is a type of MEWA that is fully insured and organized as a trust (smaller)
205
What three things does an association have to have in order to provide insurance
- Have to be in existence for at least one year
- Have a constitution and bylaws
- Have been organized other than the purpose of obtaining insurance
206
Define stop-loss insurance
Covers loses in excess of a specified amount
207
If you are self insured, what do you need
You need enough assets or stop loss insurance in the even that you have any major losses
208
With group coverage, what 4 things does the underwriter take into consideration
- Who is eligible to form the group
- Geographic area
- Composition of the group (age and gender)
- Percentage of eligible members participating
209
Define a contributory plan
Members pay part of the premium
210
How many eligible members must participate in a contributory plan?
75%
211
Define a noncontributory plan
Members do not pay any of the premium
212
How many eligible members must participate in a noncontributory plan
100%
213
Define persistency factors and how it pertains to an insurer
Persistency refers to keeping coverage in force - an insurer would prefer to insure a group that does not move insurers frequently
214
What is the group premium based on
Experience rating (based on the claims experience from the group)
215
What does experience rating take into account
- The average age of the group members
- The coverage limits and deductibles
- Occupational hazard
216
Define the doctrine of comity
The policy must conform only to the laws of the state
217
If you change your insurance carrier, can you transfer over coinsurance and deductibles
Yes you can
218
Under changing insurance carriers, define no loss - no gain
Prohibits the new carrier from denying benefits to group members who have existing claims with another carrier
219
Under changing insurance carriers, define extension of benefits
If a person is hospitalized on the date of termination and then is replaced by a new plan, they are granted an extension
220
How many days does a terminated employee have to elect COBRA coverage
60 days
221
How much will a COBRA member pay
100% of the premium
| 2% admin costs
222
What are the reasons for 18 months of COBRA coverage
- Reduction of hours
- Termination of employment
- Layoff
223
What is the reason for 29 months of COBRA coverage
Disabled
224
What are the reasons for 36 months of COBRA (for dependents only)
- Employee died
- Divorce
- Medicare
- Aged off
225
What are four reasons when COBRA does not apply
- Termination is due to member not paying premiums
- An employee obtains other coverage under a group policy
- Becomes eligible for Medicare
- Employer terminates group plan
226
What is the purpose of HIPAA
Make group health insurance more accessible and portable, by allowing individuals who have changed jobs to obtain new group health coverage without having to satisfy a new pre-existing conditions provision and/or a new probationary period
227
HIPAA does not apply to these 13 plans
- Plans with fewer than two members
- Government plans
- LTC
- Medicare supplement
- Limited dental
- Limited vision
- Specific dread disease insurance
- Disability income insurance
- Hospital indemnity insurance
- Accident insurance
- Workers' comp
- Automobile medical payments insurance
- Credit-only insurance
228
Under HIPAA, a group health plan may not discriminate based upon: (6)
- Health status
- Health history
- Genetic information
- Disability
- Mental illness
- Claims experience
229
Under HIPAA, define the pre-existing conditions limitation
Coverage must be guaranteed issue but may be subject to a maximum 12-month pre-existing conditions limitation after enrollment (18 months for late enrollees)
230
Can you reduce the pre-existing conditions limitation
Yes, it can be reduced by showing the length of prior "creditable coverage" as long as the enrollee obtains new coverage within 63 days after termination
231
When would a pre-existing limitation be applied
If the member should have received treatment within 6 months prior to the enrollment (you can just wait to get treatment under a new plan) - this excludes pregnant people
232
What does the Patient Protection and Affordable Care Act (PPACA) do for dependents
It requires that dependent coverage must be available until a child reaches the age of 26.
233
If I'm a rider on a the max, what type of insurance am I covered under
Blanket insurance
234
Define reimbursement in commercial insurance
The insurer will reimburse the insured for all or a percentage of the actual medical expenses he has paid
235
Define HMO
Provides health care services to participants on a prepaid basis
236
Define closed panel HMO
Own doctors who treat only HMO members (staff model)
237
Define open panel HMO
Contract doctors to provide services
238
What must every participant in an HMO do
They must choose their PCP
239
What is the purpose of a PCP in an HMO
Gatekeeper
240
Do HMOs have deductibles and coinsurance
No
241
What kind of payment does HMOs have
They have a copayment
242
Define a point-of-service (POS) plan
Allows participant to seek treatment within an HMO or PPO network
243
How does POS plan work
If you go to an HMO, then HMO rules take over (copayment), if you go to a PPO provider, then the PPO rules take over (deductibles, coinsurance, etc.)
244
What are HMOs, PPO, and POS plans all an example of
Managed care
245
What are three characteristics of managed care
- Cost-control techniques
- Sharing of financial risk between provider and consumer
- Management of health care services
246
What are 4 examples of cost control techniques
- Sharing cost (deductibles, coinsurance, exclusions and limitations)
- Requiring a PCP
- Provide alternative benefits before providing the most costly benefits
- Preventative care
247
What is precertification also known as
Preauth
248
Define concurrent review
Hospital stay review - monitoring length of stay and what alternatives may be used
249
Is their a time limit for medical benefits under workers comp
No - it stays with you forever and there is no dollar limit
250
What 4 things does workers comp usually cover
- Medical
- Disability
- Death or survivor benefits
- Rehab benefits
251
What is a characteristic of uniform provisions
They have language that is word for word from the state statutes or the commissioner has approved other language that is at least as favorable as the statutory wording
252
Define the entire contract and changes provision
The entire contract is made up of the policy and endorsements (only changes can be made from an executive officer of the insurer - the producer cannot make any changes)
253
What can a policy owner do under a change of beneficiary provision
- Surrender or assign the policy
- Change the beneficiary
- Make policy changes
254
What is the time limit on certain defenses provision
Only fraudulent misstatements in the application may be used to void the policy or to deny a claim more than two years from the effective date (does not apply to the misstatement of age, occupation or other insurance)
255
Define the incontestable provision
You cannot deny benefits after the policy has been effective for two years (i.e. you failed to disclose a pre-existing heart condition, and you have a heart attack 6 months later, your coverage would then be denied)
256
How long is the grace period for health insurance
10 days
257
How long is the grace period for LTM and Medicare supplement
31 days
258
What are two options under reinstatement provision (lapse in paying premiums)
- Reinstate automatically (no app needed)
| - Upon approval of an application or 45 days after the receiving the application
259
Under the reinstatement provision, when would coverage be effective
Coverage would be immediate for accidental injury and 10 day probationary period for a sickness
260
Under notice of claim provision, when does a claim need to be submitted
Within 20 days
261
Under disability income benefit, what is the requirement to show disability
The insured may be required to give notice of continuance of the disability every six months
262
How many days does the insurer have after receiving the claim notice to give the insured proof of loss forms to file
15 days
263
Can an insurer examine the insured as often as reasonably required while a claim is pending, and perform an autopsy? What provision is this called?
Physical examination and autopsy provision
264
What are two types of payments under the time of payment of claims provision
- Periodic payments (at least monthly)
| - Immediately
265
What happens under the facility of payments provision
The insurer may pay an amount to a relative of a beneficiary who is a minor or legally incapacitated
266
What happens under the assignment of payments clause
The insurer pays the provider directly for services
267
What happens under the legal actions provision
The insured may not sue the insurer for collection of a claim earlier than 60 days or later than 3 years from the time proof of loss was submitted
268
What provisions protect the insurer
Uniform optional provisions
269
What happens under a misstatement of age provision
If the insured's age is misstated, the insurer may not void the policy or deny coverage, but if a claim is submitted, they may base payment on the amount of coverage the premium paid would have purchased has the correct age been given.
270
What happens under a change of occupation provision
If the insured changes their job to either more hazardous or less hazardous, then the insurer can pay the claim based on what the higher premium should have been or return any excess premium
271
What happens under the unpaid premium provision
The insurer can deduct from a claim payment any unpaid premium due
272
Under cancellation provision, how many days notice must the insurer give
30 days notice, and they must state the reason(s) for the cancellation
273
If the insurer cancels the policy, how are premiums returned
On a pro-rata basis
274
If the insured cancels the policy, how are premiums returned
On a short-rate basis (less than a prorated amount)
275
What happens under a relation of earnings to insurance clause
The insurer will prorate disability income benefits when the insured is covered by more than one policy so that total benefits do not exceed the insured's lost monthly earnings
276
What happens under the other insurance in this insurer provision
The insured will not be able to receive duplicate benefits by having more than one policy with the same insurer.
277
What happens under the subrogation clause
The insurer can recover the cost of the insured's medical care (make whoever hurt them pay the bills)
278
Under a free-look provision, once an applicant receives a policy, how many days do they have to return it?
10 days (taking something back to the store that you didn't like)
279
What happens under the consideration clause
It indicates the policy is being issued on the basis of the insured's premium and application
280
What happens under an impairment rider (pre-existing conditions)
Excludes coverage for a loss from a specified disease or condition
281
What happens under a noncancelable policy
The insured can renew the policy to a certain age without proof of insurability, and the insurer has not right to change any policy provisions or the premium rate
282
What happens under a guaranteed renewable
Same thing as a noncancelable policy, however, the insurer is allowed to change the premium rate as long as they do it for an entire insured class and not just the member
283
What happens under conditionally renewable
The insurer can refuse to renew the policy for certain reasons (class or geographical considerations)
284
What happens under optionally renewable
The insured has the right to renew the policy but only with the insurer's consent
285
What happens under a cancelable policy
The insurer has the right to cancel the policy at any time
286
What happens under a term policy
The policy expires at the end of a specified term, without the right of renewal
287
Are disability premiums tax deductible
No
288
A person deduct the amount of his medical premiums and his unreimbursed medical expenses if they are in excess of what percent of his adjusted gross income (only when premiums are paid by the insured - not group coverage)
7.5%
289
For LTC policies, are premiums and other unreimbursed medical expenses deductible? What percentage does their totals have to exceed for adjusted gross
7.5% - also based on age
290
Can sole proprietors and partners deduct 100% of premiums paid?
Yes, however, they may not deduct more than the amount of their earned income for the year and benefits are only taxable if they exceed expenses. Also, expenses and premiums that are in excess of 7.5% of their gross income is deductible
291
Are medical expense benefits taxable
Only if they exceed the amount of medical expenses incurred
292
Are benefits from group accidental death and dismemberment taxable
No, they are tax free
293
Are benefits from buy-sell policy tax free
Yes, or they are made to the disabled party
294
Are benefits from LTC policy tax free
Yes, indemnity benefits are only taxed if they exceed a daily limit set by the IRS
295
Are HSA contributions taxed
No they are on a "pre-tax" basis
296
Are HRA contributions taxed
No they are funded only through the employer and are not subject to tax
297
Can an employer deduct HSA and HRA contributions
Yes
298
Are withdrawals from an HSA or HRA to pay for medical expenses taxable
No
299
If you withdrawal from your HSA/HRA to pay for non-medical expenses, what are the tax rules
The money is subject to ordinary income tax rates, and if you are under 65 you will also have to pay an additional 20% tax
300
What are the taxes for disability income insurance fully paid by the employer
Benefits received would be taxable to the employee
301
What are the taxes for disability income insurance fully paid by the employee
Benefits received would be tax-free to the employee
302
What are the taxes for disability income insurance that is paid half by the employer and half by the employee
Only the benefits received from the employer portion would be taxable
303
What are the taxes for key employee and disability buy-out where the employee is the beneficiary
- Premiums are not tax deductible
| - Benefits are not taxable
304
What are the taxes for group benefits
- Tax deduction for employer for premiums contributed
- Employee not taxed on premium paid by the employer
- Benefits not taxed unless they exceed expenses for treatment
305
What does a health insurance application contain for underwriting to review
- Medical history
| - Agent's report
306
Define attending physician's statement
A physician will complete the medical history section if there is a reason to investigate the history that was provided
307
What does the agent's report contain 5
- How long and how well he has known the applicant and the insured
- Details of any business arrangement connected with the insurance company
- How premiums will be paid
- What the insurance is to be used for
- Opinion on the applicant and insured's character and financial status
308
Define a conditional receipt
Coverage will be effective either the day of the receipt or the day of any required medical exam, whichever is later. (only if the applicant is approved for standard rates)
309
Define unconditional binding receipt
Provide immediate coverage whether the application is approved or rejected (if denied, coverage will end on the date of the denial)
310
Define approval receipt
No coverage provided until the applicant is approved
311
If a policy is written on a medical basis, what is required
A medical exam
312
What is a great source of information that stores member medical information
The MIB (Medical Information Bureau) - you can use this to see what member's have disclosed about their health to other insurers
313
What can insurers use to determine claim costs and the premiums need to cover those costs
Morbidity tables (shows your probability of becoming disabled based on your age or sex)
314
When setting a rate, what does the insurer want the rate to be
- Adequate
- Reasonable
- Equitable
315
What is a law called
Oregon Revised Statues (ORS)
316
Who makes laws
Legislature
317
What is a rule called
Oregon Administrative Rule (OAR)
318
Who makes a rule
The department of Consumer and Business Services (the Insurance Commissioner)
319
Who authorizes insurance producers to do business
The insurance commissioner
320
How often must the Directed (commissioner) examine and audit every authorized insurer
At least once every five years
321
After the examiner has completed his examination, when does he have to submit his report
Within 60 days of the exam
322
After the examinee has reviewed the report, how many days do they have to request a hearing
30 days from the mailing date of the report
323
Define a cease-and-desist order
A person can continue business, but they have to stop the violation
324
How many days does a producer have to request a hearing on a cease-and-desist order
20 days
325
When must the director schedule a hearing on a cease-and-desist order
Within 30 days of the alleged violator requesting a hearing
326
How much notice must the director give for when and where the hearing will be held
7 days
327
What are 5 major events that may cause the director to take disciplinary action
- Forging another person's name on an insurance application or related document
- Using fraudulent, coercive or dishonest practices or demonstrating incompetence, untrustworthiness or financial irresponsibility while conducting business
- Knowingly accepting insurance business from an individual who is not licensed
- Violating any insurance law, rule, subpoena or order of the director or of the insurance commissioner of another state, Mexico or Canada.
- Conviction of a felony or misdemeanor involving dishonesty or breach of trust or an offense punishable by death or imprisonment under the law
328
What is the maximum for a civil penalty (fine) by a company
$10,000
329
What is the maximum for a civil penalty (fine) by an individual agent
$1,000/fine
330
Define a second penalty
It would be the amount that the violator profited from (i.e. they would have to pay back the money that they made illegally)
331
Who are all civil penalties paid too
General fund of the State Treasury
332
How many days does a person have to apply for a hearing on any civil penalty
20 days
333
How many days does a person have to pay a penalty before the order is recorded with the county clerk
10 days
334
What is the criminal penalty for an individual who files information that is false or misleading
Imprisonment in a county jail for up to 1 year or a fine of up to $1,000
335
What is the criminal penalty for a corporation who files information that is false or misleading
$10,000
336
What does the Oregon Life and Health Guaranty Association do
Pays claims for impaired and insolvent life and health insurers
337
Who does the Oregon Life and Health Guaranty Association operate under
The Director
338
Who are members of the Association
All life and health insurers must be members
339
What is the max that the Association will pay for life insurance death benefits, disability insurance benefits and LTC benefits
$300,00
340
What is the max that the Association will pay for cash surrender
$100,000
341
What is the max that the Association will pay for health insurance
$500,000
342
What is the max that the Association will pay for present value annuity benefits
$100,000
343
What is the total amount payable for any one individual policies (except for health insurance)
$300,000
344
What is the total amount payable for any one policyowner
$5,000,000 (Association is not going to pay more than this amount for claims)
345
Each association may assess its members up to what percentage of premiums collected in a calendar year to cover expenses and pay claims
2%
346
Members may offset what percentage of an annual assessment against their premium and/or corporate excise tax liabilities for each of the next 5 calendar years
20%
347
What are 5 requirements for individual producer licensing
- Have a residence or place of business in Oregon
- Be 18 years or older
- Submit an application to the Director on the Uniform Application produced by the National Association of Insurance Commissioners (NAIC)
- Pay exam and license fees
- Complete pre-licensing education and pass exam
348
What are 3 requirements for an insurance agency producer license
- Submit an application to the Director on the Uniform Application produced by the National Association of Insurance Commissioners (NAIC)
- Pay all fees
- Have a licensed producer
349
Can a consultant receive commission
No, they are only there to offer advice - they are paid on an hourly fee
350
Besides submitting an application and paying the fees, what other two things are required to become a licensed consultant
- Have an errors and omissions insurance policy that provides at least $500,000 in coverage for claims
- Have at least 5 years of experience
351
When does an adjuster not need a license
When they are adjusting claims only for an insurer and is employed by that insurer.
352
Define attorney in fact
The Director of a nonresident licensing state (oregon) will be the producer's attorney of fact, effective on the date the nonresident producer license is issued, and any legal action can be taken against him.
353
How many days does a nonresident producer who moves to another state or a resident producer who moves to another state have to file a change of address with the Director
30 days
354
What are 4 reasons that a Director may issue a temporary producer license
- To a surviving spouse or court-appointed representative of a licensed producer who dies or becomes mentally or physically disabled
- To a member or employee of a licensed business when that business's producer dies or is disabled
- To the designee of a licensed producer entering active duty
- At anytime that the public interest would be best served doing so
355
How many days and/or months may a temporary license not exceed
180 days (you cannot exceed this - doesn't matter the reason)
356
How many years after a policy has been terminated (expired) must a producer keep a record of that policy
For 3 years (keep it at your place of business)
357
What are reasons that a producer would need to notify a director before doing business (2)
- If they are doing business under any name other than their legal name
- If they are changing, deleting, or adding an assumed business name in connection with business under the license
358
A producer has to notify the Director within 30 days after:
- Change of address or telephone number for their business
- Opening or closing of their business location
- Change of residence if a resident producer
- Ending your affiliation with a business
- Administrative action taken against you
- Criminal prosecution taken against you (notify the director of the pretrial hearing date)
359
A licensed consultant or adjuster must notify the Director within 30 days after:
- If they are changing, deleting, or adding an assumed business name in connection with business under the license (note this is different than producer - they have to notify before doing business)
- Change of address or telephone number for their business
- Opening or closing of their business location
360
When does a producer license expire
Every two years on the last day of the licensee's birth month
361
An individual producer may reinstate his license within how many months after it has expired, also, what are the requirements
Within 12 months
- Pay twice the unpaid renewal fee
- Satisfy any continuing education requirements
362
For each licensee renewal period, how many hours of coursework is required
24 hours
363
How many hours and what specific type of coursework must you have
- 3 credit hours in Oregon statutes and administrative rules
| - 3 credit hours in professional ethics
364
How many days after a producer completes a course must a continuing education provider issue a certificate of completion
Within 15 days
365
Where does a producer put all of his premiums
In a trust account that is separate from all other business and personal funds (they cannot commingle)
366
Where must these trust accounts be located
In Oregon (unless the Director gives written permission to the producer to keep the account in another state)
367
What are three reasons that a producer may commingle premiums with other funds
- Purpose of paying bank charges
- Advancing premiums or establishing reserves for paying return premiums
- Meeting contingencies that may arise in the course of receiving and transmitting premiums
368
When must a producer make required deposits after funds are received
Within 7 days
369
When must a producer pay premium funds owed to an insured after receipt
Within 30 days
370
How long must a producer keep records available
Three years following the date of the policy expiration
371
What is an agent of the insurer
A licensed insurance producer (never an agent of the insured)
372
To act as an agent of an insurer, what must the producer be:
- Appointed agent of the insurer
- Affiliated with a producer who is an appointed agent of the insurer (works for the producer, who works for the insurance company)
373
What is required for a notice of termination when an insurer terminates a producer
- The notice must be given at least 90 days prior to the effective date of the termination
- The notice must specify the termination date and the reason for the termination
374
How many days does a producer have to terminate an appointment
A producer can terminate an appointment at any time - to do so, they need to give written notice to the Director and the insurer within 30 days after the effective date of termination. Example - terminate 1/1 notify Director and insurer by 1/30
375
If an insurer terminates an appointment, employment, contract or other insurance business relationship due to a producer violating the Code, then when must that insurer notify the Director and the producer
Notify the Director within 30 days after the effective date of the termination, and then notify the producer within 15 days of notifying the Director (that same producer also has 30 days to provide written comments to the Director)
376
When must an insurer respond or pay a claim after receipt
Within 30 days
377
When must an insurer respond to the Director regarding a claim inquiry
Within 21 days
378
When must an insurer respond to all other communications regarding a claim inquiry (basically anyone asking about a claim that is not the Director)
Within 30 days
379
When receiving notification of claim from a first party claimant, when must an insurer provide necessary claim forms, instructions and assistance with the claim
Within 30 days
380
When must an insurer investigate a claim when it is being questioned
Within 45 days
381
When must an insurer affirm or deny coverage or notify the claimant of the need for more time after receiving the proof of loss statements from a first party claimant
Within 30 days
382
When must the insurer give the claimant written notification of the reason more time is needed for investigation
Within 45 days from the date of the initial notification and every 45 days after
383
If an insurer fails to acknowledge a notification of a claim or pay the claim within 30 days after receipt, they may be guilty of what
Unfair claim settlement practice
384
An insurer must maintain required capitalization, define capitalization
- The minimum combined paid-up capital (money raised through the sale of stock) and surplus (assets in excess of liabilities)
* *or
- the minimum surplus required of an insurer without capital stock
385
How much capital/surplus do most insurers need
$2,500,000
386
How much capital/surplus do most workers' comp insurers need
$5,000,000
387
What will the Director take into account when determining the amount that an insurer will need
- Insurer's size
- Diversification of lines of business
- Number and size of risks insured on each line
- Geographical dispersion of risk
- Reinsurance
- Investment portfolio, reserves and earnings
388
The size of risk an insurer may keep on any one subject of insurance (i.e. all the properties insured by an insurer that are subject to loss from the same occurrence) is generally limited to what percent of the insurer's surplus to policyholders
10%
389
Define actuarial principles
Those based on expectations of loss due to death, disability or other types of claims (how an insurer may discriminate in underwriting rates)
390
Can an insurer discriminate between risks of essentially the same degree of hazard
No
391
Except in the case of life and health insurance, an insurer cannot restrict availability of insurance based on:
- Age, sex, marital status, race, color, creed, national origin, ancestry or occupation (unless occupation increases the hazard)
- change of insurer, occupation or domicile (unless frequency increases the hazard)
- Previous rejection, cancellation or non-renewal of a policy
- Lack of previous insurance
392
What should you apply underwriting rates based solely on what
- Individual being over 65 years old
* *or
- Individual's physical handicap (i.e. blindness)
393
If an insured or prospective insured is a victim of domestic violence, it is prohibited for an insurer to: (6)
- deny, cancel or refuse to issue or renew a policy
- demand or require a greater premium
- designate domestic violence as a pre-existing condition
- Exclude or limit coverage for losses or deny a claim
- Fix any lower rate for, or discriminate in the fees or commissions for the producer
- Allow the fact that an insured or prospective insured is or has been a victim of domestic violence to be used as a factor in underwriting
394
If the Director believes that an insurer is unfairly discriminating, how many days is the insurer given to correct the situation
10 days
395
When must a licensee provide a consumer a clear and conspicuous notice of personal information practices
- No later than the date on which the licensee provides one or more insurance products or services to the consumer for personal use (usually the date of application)
- Within a reasonable time after the date the customer relationship has been established
396
When must a licensee provide its privacy and practices notice
At least annually (every 12 months)
397
Three things about the privacy notice
- Must be in writing and clear and conspicuous
- May be provided electronically if the recipient agrees
- Must include personal information that applies to the licensee and to the individuals whom the licensee sends the notice, such as:
- What kinds of personal information it collects
- What kinds of information it discloses
(basically has to tell you what it does with that information
398
In determining whether the privacy notice is in compliance with the law, the Director will consider definitions and terms used in what (2)
- Gramm-Leach-Bliley Act
| - Privacy of Consumer Financial and Health Information Regulation
399
When would a producer not have to send out privacy notices
- If they already comply with the requirements
* *and
- They do not disclose any information that would warrant a privacy notice (basically they don't give out any information)
400
All inducements must be what
Plainly expressed in the policy
401
What is considered an illegal inducement
A rebate (kickback to a purchaser - you can't give a broker or client extra money or benefit for picking you)
402
What are unlawful rebates
Commissions received by the producer on excessive personal or controlled insurance
403
What are unlawful premiums for life or health insurance
If the premiums on controlled insurance are two times the amount of premiums collected on noncontrolled
404
What are unlawful premiums for all other types of insurance (not health and life)
Controlled premiums may not be more than noncontrolled premiums
405
What is considered controlled (personal) insurance
- Covers someone related to the producer either by blood or by marriage to the second degree
- A group of employees under a group policy under the producer's employer (moda employee)
- Person controlling a majority of the voting stock or interest in the producer's employer
- Person owning an interest in an association or partnership if the producer's employer is the association or partnership
- If the producer is a corporation, a person controlling the majority of voting stock or a controlling interest in the producer or a corporation making consolidated tax returns with the producer
406
Define twisting and why it is illegal
Twisting is when a producer talks his client into replacing a policy without fully explaining all of the terms of the replacement policy
