Final Exam Open Responses

Question 1

List 4 goals of the Affordable Care Act

Answer 1

• Improve availability of care
• Provide substantial subsidies to reduce cost
• Contain provisions to lower costs
• Establish healthcare exchanges

Question 2

List the 4 major problems with the U.S Healthcare delivery system

Answer 2

• High healthcare expenditures
• Large number of uninsured in the population
• Considerable waste and inefficiency
• Harmful insurer practices

Question 3

Long term care insurance policies can cover a wide range of services including:

Answer 3

• Nursing home care
• Home healthcare
• Respite care for a caregiver
• Hospice care
• Personal care in the home
• Services in assisted living facilities, adult day daycare centers, and other community services

Question 4

List and describe four types of Health Maintenance Organization delivery systems:

Answer 4

• Staff Model: Physicians are employees of the HMO and are paid a salary or a salary and an incentive bonus to hold down costs.
• Group model: Physicians are employees of another group that has a contract with the HMO.
• Network model: The HMO contracts with two or more independent group practices.
• Individual practice association (IPA): An open panel of physicians who work out of their own offices and treat HMO members at reduced fees, on a fee-for-service basis.

Question 5

Describe what uninsured motorists coverage is. Include in your answer 2 advantages to this coverage, and 3 possible defects.

Answer 5

This coverage has the injured person’s insurer pay the accident victim in the case of an uninsured motorist, such as a(n):
- Uninsured motorist
- Hit-and-run driver
- Driver whose insurance company is insolvent.

Advantages to this coverage:
- Motorists have protection against the uninsured from their own policy.
- Claim settlement is faster and more efficient than suing the uninsured using a tort liability lawsuit.

Defects:
- Coverage may be limited unless higher limits purchased.
- Liability of the uninsured motorist must be demonstrated.
- Property damage is usually not covered.

Question 6

Describe what Collision Coverage (Coverage D) covers in an auto policy. Include in your answer who pays you if (a) you are at fault, and (b) the other driver is at fault.

Answer 6

Collision Coverage covers damage to your auto from collisions, rollovers, and damage from other vehicles when you are parked.
- Your insurer will pay regardless of who is at fault.
- If you are at fault, this is a loss for your company.
- If another driver is at fault, your company will pay you and then collect from the other driver’s company. You agree to subrogate the claim to your insurer.

Question 7

Comprehensive Coverage covers damage from:

Answer 7

• Theft
• Vandalism
• Fire
• Explosions
• Hail

Question 8

Regarding Homeowners insurance, briefly Coverage A and Coverage B, including what each is intended to cover

Answer 8

• Coverage A: Covers the dwelling on the residence premises and any structure attached to the dwelling
  - Included: Materials intended for construction
  - Excluded: Land
• Coverage B: Insures other structures on the residence premises. Amount of coverage based on the amount of insurance in coverage A
  - Includes: Detached garage, tool shed, and horse slate
  - Excludes: Structures rented out or used for business

Question 9

Regarding the Personal Liability Coverage (Coverage E) in a homeowner’s contract, describe briefly what this coverage is and at least 4 features of this coverage

Answer 9

Coverage E: Protects the insured when a claim or suit is brought because of bodily injury or property damage allegedly caused by an insured’s negligence

• This coverage is broad
• The policy contains a per-occurrence limit
• An occurrence is defined as an accident which results in bodily injury or property damage during the policy period
• The insurer provides a legal defense, even if the suit is frivolous or fraudulent

Question 10

List the seven fundamentals of group insurance

Answer 10

• Group medical expense insurance is an employee benefit that pays the cost of hospital care, physicians’ and surgeons’ fees, and related medical expense
• There is one master contract between company and insurer
• Group insurance costs less than individual insurance
• Employer shares in some of the cost
• One master contract leads to lower administrative costs
• Individual evidence of insurability is not needed
• Experience rating is used in pricing