fundamentals of insurance

Question 1

what is a beneficiary?

Answer 1

holder of insurance, covered by contract and eligible to receive benefits

Question 2

what are the two insurance contracts?

Answer 2

1. insurance company and contract holder (patients)

2. insurance company and providers (docs, therapists, etc)

Question 3

t/f: insurance provides a stable source of income for health care providers

Answer 3

true

Question 4

moral hazard

Answer 4

having opportunity to buy insurance and choosing not too

Question 5

what are two services that insurance companies will not pay for?

Answer 5

elective cosmetic surgery, durable medical equipment

Question 6

What is the criteria set by sponsor of insurance called?

Answer 6

eligibility requirements

Question 7

t/f: insurers can refuse people who want to be insured

Answer 7

false, Obamacare requires anyone who wants health insurance access to it.

Question 8

what is a covered event?

what events are typically excluded?

Answer 8

medical illness or injuries diagnosed by a credentialed doctor
civil disturbances, self inflicted injuries, war

Question 9

how are work related injuries covered?

Answer 9

by worker’s comp

Question 10

what are covered services?

Answer 10

must be reasonable, necessary, acceptable

what the insurance company decides they will cover

Question 11

what are two types of cost limits?

Answer 11

Beneficiary cost limit- out of pocket max for pat

Provider cost limit- fee schedule, negotiated rates, limitations of visits

Question 12

what type of insurance is most typically a benefit of employment?

Answer 12

private insurance aka commercial insurance

Question 13

where is self insurance common?

Answer 13

in labor unions, have their own funds and are exempt from state regulations

Question 14

what are the methods of cost sharing and how do they work?

Answer 14

Indemnity insurance- beneficiary pays in full and gets reimbursed by insurance company
Service Benefit Plans- plans list eligible providers who are paid directly from insurance. there is a fee schedule for rates of services

Question 15

T/F: you can have long term care coverage as part of your health insurance.

Answer 15

false. long term care needs its own policy. LTC is getting more popular as the population ages

Question 16

What are the three parts of workers comp?

Answer 16

health care insurance
disability benefits (paid 2/3 of income while unable to work)
vocational rehab- trains for a job you can do, if no longer able to perform current job

Question 17

t/f: workers comp is state specific

Answer 17

true

Question 18

what right do workers give up in exchange for workers comp?

Answer 18

the right to sue employer for negligence.

Question 19

what body is responsible for regulation of insurance?

Answer 19

the state, but subject to federal regulation

Question 20

t/f: insurance companies need to be licensed where they sell insurance products

Answer 20

true

Question 21

What does ERISA stand for?

Why was it established?

Answer 21

Employee Retirement Income Security Act of 1974

To prevent embezzlement of people’s retirement funds

Question 22

What act amended ERISA, and what did it add?

Answer 22

HIPAA, stops employers from discriminating against employees on the basis of health or pre-existing conditions.

Question 23

What does COBRA stand for and what does it do?

Answer 23

Consolidated Budget Reconciliation Act
allows a person to continue purchasing insurance they had with an employer at full cost, even if no longer working at that employer

Question 24

What is insurance?

Answer 24

financial mechanism that shares and disperses risk of financial loss due to occurrence of an adverse event
improves financial stability of individuals and organizations