Health and Accident Basics Flashcards
Mary is an employee who is covered with a disability income policy through her employer. She pays for the portion of the premium attributable to the cost of residual disability benefits, while her employer pays for the remainder. What are the tax implications of this policy?
Premiums paid by the employer are NOT tax-deductible
Residual benefits will be received income tax-free
Residual benefits will be taxable to Mary
Premiums paid by Mary are tax-deductible
“Residual benefits will be received income tax-free”. Because the EMPLOYEE pays for the portion of the disability income premium attributable to the cost of residual disability benefits, any residual benefits will be received income tax-free.
Julie is an employee with a group health plan that contains the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place?
Out-of-pocket expenses are higher when a second surgical opinion is obtained as opposed to having only one
Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one
The second surgical opinion must always be accepted by the insured
Mandatory second surgical opinions are required when emergency surgery is needed
Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one”. Under the Mandatory Second Surgical Opinion provision, an employee typically will pay more out-of-pocket expenses for surgeries for which only one opinion was obtained.
Which of the following are used by most insurers when determining the premiums for large groups?
Group rating
Experience rating
Area rating
Large number rating
The correct answer is “Experience rating”. When determining the premiums for a large groups, most insurance companies use experience rating.
Which statement is true regarding hospital preadmission certification for emergency situations?
Notification is required to be given after insured is admitted to the hospital
Notification is not required for emergency situations
Insured cannot be admitted without preadmission certification
Notification is required to be given before insured is admitted to the hospital
The correct answer is “Notification is required to be given after insured is admitted to the hospital”. Hospital preadmission certification typically requires notification be given after the patient is admitted to the hospital for an emergency situation. For nonemergency situations, notification is to be given BEFORE admission.
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
Producer
Fiduciary
Underwriter
Insurer
The producer is responsible for providing the insurance applicant with privacy notices.
Which of the following best describes the tax treatment of medical expense policies for the self-employed?
7.5% of medical expense plan premiums are tax deductible
50% of medical expense plan premiums are tax deductible
100% of medical expense plan premiums are tax deductible
0% of medical expense plan premiums are tax deductible
Most self-employed taxpayers can deduct health insurance premiums.
A disability income insurance policy was recently issued with a rating. What does this mean?
Policy will have a longer waiting period
Policy will have specific illnesses excluded from coverage
Policyowner will be charged an additional premium
Policyowner will be charged a reduced premium
A rating on a disability income insurance policy means that an additional premium will be charged.
An accident and health plan that typically covers ONLY the services of approved providers is called a(n)
Major medical plan
POS plan
PPO plan
HMO plan
An HMO plan normally covers ONLY the services of approved providers.
Which of the following health plans pay benefits on a pre-paid service basis?
Medicaid
HMO
Medicare
Group medical expense plans
Health Maintenance Organizations (HMO’s) are contracted on a pre-paid service basis, NOT a fee-for-service or reimbursement basis. They offer a wide range of health care services for member subscribers. For a fixed periodic premium , the subscriber is entitled to medical services of certain physicians and hospitals contracted that work with the HMO. HMO’s are pre-paid medical service plans.
How does an underwriter take into account an applicant’s marital status?
When determining if an applicant is insurable
When determining who is eligible for dependent coverage
When determining if a rating will be placed on a policy
When determining if a policy will be issued
An insurer may take an applicant’s marital status into account when determining who is eligible for dependent coverage.
Which statement is true about a permanent disability under workers compensation coverage?
Employee is expected to return to work within 6 months
Coverage excludes nonoccupational injuries
Coverage includes nonoccupational injuries
Employee is expected to make a full recovery
Workers compensation only covers work-related injuries and illnesses.
Reductions in coverage are one feature of _______ in Health insurance policies.
cost containment
the insuring clause
optional provisions
mandatory provisions
In Health insurance policies, reductions in coverage is one feature of cost containment.
Why might it be beneficial for an employee to purchase private disability income insurance for workplace injuries when he/she is already covered by worker’s compensation?
Worker’s compensation benefits are taxable and additional coverage needs to be purchased to offset the tax
The benefits arising from a worker’s compensation claim could be inadequate to replace the loss of income
Worker’s compensation claims require a lengthy elimination period before benefits are paid
Loss of income that results from a workplace injury is not covered by worker’s compensation
The benefits arising from a worker’s compensation claim could be inadequate to replace the loss of income, which would justify purchasing a private disability income policy. (remember, workers comp benefits are generally not taxable)
In what situation could an insurance policy’s coverage be modified?
Applicant is a substandard risk
Applicant is a standard risk
Applicant is uninsurable
Applicant is a preferred risk
An insurance policy’s coverage can be modified if the applicant is a substandard risk.
In what situation would disability income insurance premiums be a deductible expense?
Parent paying for a child’s individual disability policy
Individual paying for his/her own individual disability policy
Corporation paying for group disability income coverage for its employees
Partnership paying for group disability income coverage for the partners
The correct answer is “Corporation paying for group disability income coverage for its employees”. Premiums for group disability income insurance policies are tax deductible by the corporation.
Lamont has a point-of-service plan and is seeking to obtain health services outside the network. What will likely be the end result?
Increase in premiums
Higher out-of-pocket costs
Reduction in care given
Denial of specialized services
Point-of-service plans allow insureds to obtain health services outside the network in exchange for paying higher out-of-pocket costs.
The disability income policy most likely to have been issued on a substandard basis is
Non-cancelable with a health condition exclusion rider
Conditionally renewable
Non-cancelable with a 60-day elimination period
Guaranteed renewable with an inflation rider
The correct answer is “Non-cancelable with a health condition exclusion rider”. A non-cancelable disability income policy with a health condition exclusion rider would be considered a substandard issued policy because of the exclusion rider.
The type of health insurance in which underwriting procedures are the most restrictive is
Employer-paid
Individual
Group
Accidental
Underwriting procedures are likely to be most restrictive for individual health plans.
To which of the following group plans do HIPAA rules NOT apply?
Disability income
HMOs
PPOs
Major Medical
HIPAA rules apply to all of these types of group plans EXCEPT disability income plans.
What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?
No pre-existing condition exclusions
Increase in surgical procedures
Higher employee retention
Containment of the employer’s premium cost
An employer normally can expect a mandatory second surgical opinion option to contain the employer’s cost of the group medical plan.
When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must
seek a second opinion for emergency surgery
seek a second opinion for specified elective surgeries
cover the cost of the second opinion
seek a second opinion for all surgeries
A mandatory second surgical opinion provision typically requires the insured to seek a second opinion for surgeries that are on a list of elective surgeries.
Which of the following situations would a medical exam NOT be required for an individual health insurance applicant?
Applicant has no prior health insurance
Applicant was recently hospitalized
Applicant’s family members have a history of cancer
Applicant has not had a physical exam in a number of years
Medical examinations are often required for individual health insurance applicants for all of these reasons EXCEPT the applicant has a family history of cancer.
Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?
Limited benefit
Point-of-service
Medicare Supplement
HMO
A point-of-service-plan allows an insured to choose either a network or an out-of-network provider at the time care is needed.
Who must sign a rider attached to a health insurance policy in order for it to be valid?
Producer only
Insurance company underwriter
Insured and producer
Insured only
To be valid, a rider attached to a health insurance policy must be signed by the insured and the producer.
A MET third-party administrator may NOT perform which of the following functions?
Underwriting the plan
Marketing the plan
Insuring the plan
Claims processing
Third-party administrators are not responsible for marketing a MET plan
Bert’s spouse passed away recently. Bert was covered under his spouse’s group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage?
Maximum of 50%
Maximum of 100%
No maximum
Maximum of 102%
Under COBRA, no more than 102% of the active-employee cost may be passed on to a surviving spouse for continued coverage.
An organization that requires healthcare services to be provided by a network of physicians and hospitals is known as a(n)
POS
HMO
HDHP
PPO
The correct answer is “HMO”. An organization that requires healthcare services to be provided by a network of physicians and hospitals is called an HMO
Federally qualified HMO’s must offer
custodial care
dental coverage
urgent care
family planning services
Federally qualified HMO’s must offer family planning services.
Fee-for-service is a method of administering health insurance benefit payments in which
the cost of each service is scheduled
the insurer is reimbursed directly
the cost of each service is bundled into one payment
the insurer pays for services through a voucher system
Fee-for-service (FFS) is a payment model where services are unbundled and paid for separately according to a schedule laid out in the policy
Lamont has a point-of-service plan and is seeking to obtain health services outside the network. What will likely be the end result?
Reduction in care given
Denial of specialized services
Higher out-of-pocket costs
Increase in premiums
Point-of-service plans allow insureds to obtain health services outside the network in exchange for paying higher out-of-pocket costs. ow does a POS plan work?
You choose a primary care provider (PCP) from the plan’s network
You can see your PCP or an in-network specialist without a referral
You can see an out-of-network provider without a referral, but you’ll pay more
Your PCP can refer you to in-network specialists
You can use the plan for emergencies, whether in or out-of-network
What is a major difference between private commercial insurers and HMO’s?
A private commercial insurer typically has fewer health provider choices
An HMO pays claims on a fee-for-service basis
An HMO combines medical care delivery and funding in one organization
A private commercial insurer only offers individual coverage
A major difference between HMO’s and private commercial accident and health insurers is that HMO’s combine medical care delivery and funding in one organization.
What is normally the consequence for NOT obtaining preadmission certification prior to receiving inpatient medical care?
A cancellation of coverage
A delay in the payment of benefits
A taxation of benefits
A reduction in benefits
Failure to obtain a preadmission certification in non-emergency situations reduces or eliminates the health care provider’s obligation to pay for services rendered
Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?
A pregnant woman is entitled to sick-leave under the same guidelines as any other type of disability
Pregnancy must be covered under medical benefits the same as any other illness
Abortion complications are covered if the woman’s life is in danger
Post-termination extensions of medical benefits must apply equally to pregnancy
All of these guidelines apply under the pregnancy provisions of the Civil Rights Act EXCEPT “Post-termination extensions of medical benefits must apply equally to pregnancy”
Which of the following health plans pay benefits on a pre-paid service basis?
Medicaid
HMO
Group medical expense plans
Medicare
Health Maintenance Organizations (HMO’s) are contracted on a pre-paid service basis, NOT a fee-for-service or reimbursement basis. They offer a wide range of health care services for member subscribers. For a fixed periodic premium , the subscriber is entitled to medical services of certain physicians and hospitals contracted that work with the HMO. HMO’s are pre-paid medical service plans.
Which of the following types of health insurers is characterized by a limited choice of providers?
Blue Cross / Blue Shield
Authorized insurance company
Health maintenance organization
Commercial insurance company
Health maintenance organizations (HMO’s) are characterized by a limited choice of providers.
Which of these is a typical result of a concurrent review?
The insured’s premiums usually increase
The length of time spent in the hospital is monitored
The coinsurance is waived
The deductible amount is increased
A typical result of a concurrent review is that the length of stay in the hospital is monitored
Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?
Medicare Supplement
Point-of-service
Limited benefit
HMO
A point-of-service-plan allows an insured to choose either a network or an out-of-network provider at the time care is needed.
