Health Insurance Study Questions

Question 1

Define accidental bodily injury.

Answer 1

accidental bodily injury is an unforeseen and unintended injury that resulted from an accident rather than a sickness.

Question 2

what are the 2 types of insurance included in the term “health insurance”?

Answer 2

one type provides coverage for expenses related to health care, and the second is designed to provide payments for “loss of income”

Question 3

describe the difference between limited and comprehensive policies.

Answer 3

Limited health insurance policies only cover specific accidents or diseases. a comprehensive plan would cover all sickness or accidents that are not specifically exclused.

Question 4

when is an outline of coverage not required to be delivered at the time of application?

Answer 4

an outline of coverage must be delivered at the time of application or upon delivery of the policy, except in the case of direct response sales because the insurer does not have an opportunity to provide the outline of coverage at the time of application.

Question 5

who is the field underwriter?

Answer 5

the agent

Question 6

in a replacement situation, how long must the current policy remain in force?

Answer 6

the current policy may not be cancelled before the new policy is issued so there is no gap in coverage.

Question 7

what does Errors and Omissions insurance provide?

Answer 7

E & O provides protection against situations that may result in providing inadequate coverage or failure to maintain and service coverage.

Question 8

what is included in the entire contract?

Answer 8

the entire contract provision states that the health insurance policy, together with a copy of the signed application and any attached endorsements, constitutes the entire contract.

Question 9

who has the authority to change a policy provision?

Answer 9

only an executive officer of the company, not an agent, has authority to make any changes to the policy.

Question 10

what are the grace periods for an individual policy?

Answer 10

In most cases the grace period can be not less than 7 days for weekly pay policyes (inudustrial policies), 10 days for monthly pay policies, and 31 days for all other modes.

Question 11

if a premium has not been paid by the end of the grace period, what will happen to the policy?

Answer 11

coverage will continue in force during the grace period

Question 12

which provision states to whom the claims are to be paid?

Answer 12

the payment of claims provision specifies to whom claims payments are to be made.

Question 13

in what way could changing to a more dangerous occupation affect a person’s insurance policy?

Answer 13

if the insured makes a change to a more hazardous occupation, upon claim, benefits will be reduced to that which premiums paid would have purchased assuming the more hazardous occupation.

Question 14

If the insured misstates his/her age, how will benefits be paid?

Answer 14

if the insured misstated his or her age at the time of the application, the benefits paid will be those, which the premium paid, that would have been purchased at the correct age.

Question 15

what does other insurance with this insurer provision try to protect against?

Answer 15

this provision provides for a pro rata benefit reduction and return of premium in the event of multiple policies with the same company when the benefits exceed a stated amount.

Question 16

what does the insurance with other insurers provision protect against?

Answer 16

if the insured has 2 or more policies from different companies that provide benefits on an expense-incurred basis and the policies cover the same expenses, and if the insurance companies were not notified that the other coverage existed, then each insurer will pay a proportionate share of any claim.

Question 17

what is identified in the insuring clause?

Answer 17

it identifies the insured and the insurance company

Question 18

where is the consideration clause usually located in the policy?

Answer 18

it is usually located on the first page of the policy.

Question 19

what is the difference between a guaranteed renewable and noncancellable policy?

Answer 19

the guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date.

Question 20

once a disability policy is paying a claim, how long will it pay?

Answer 20

disability income insurance is designed to provide a reasonable and predetermined income to a disabled party for a set period of time subject to a “time deductible” termed an elimination period.

Question 21

what is the difference between own occupation and any occupation?

Answer 21

a policy that has an “any occupation” provision will only provide benefits when the insured is unable to perform any occupation for which they are suited by reason of education, training, or experience. “own occupation” is the more liberal definition and therefore provides a better benefit for the insured.

Question 22

how long does an elimination period usually last?

Answer 22

the elimination periods found in most policies range from 30 days to 180 days.

Question 23

if an insured is disabled and has the waiver of premium benefit, generally what happens to the premiums paid during the waiting period?

Answer 23

this benefit allows the insured, when disabled, to forego paying the premiums once he/she qualifies for benefits.

Question 24

what is the difference between occupational and nonoccupational coverage?

Answer 24

occupational coverage provides benefits for disabilities resulting from accidents or sicknesses that occur on or off the job. nonoccupational coverage, on the other hand, only covers disabilities that result from accidents or sicknesses occurring off the job.

Question 25

what is residual disability?

Answer 25

residual disability 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.

Question 26

what provision can reduce the disability benefit based upon the insured's current income?

Answer 26

the relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months.

Question 27

what is the purpose of a buy-sell agreement?

Answer 27

the buy-sell agreement specifies how the business will pass between owners when one of the owners dies or becomes disabled.

Question 28

what is the purpose of key person disability insurance?

Answer 28

the key person's economic value to the business is determined in terms of potential loss of business income which could occur as well as the expense of hiring and training a replacement for the key person.

Question 29

with key person insurance, who pays the premium, who is the beneficiary and the insured?

Answer 29

the contract is owned by the business, so the premium is paid by the business, and the business is the beneficiary. the key employee would be the insured.

Question 30

in regards to social security, what does the term "fully insured" mean?

Answer 30

it refers to someone who has earned 40 quarters of coverage, and is therefore entitled to receive Social Security retirement, Medicare, and survivor benefits.

Question 31

How is the Social Security definition of disability different from that in most disability income policies?

Answer 31

Disability, under Social Security, is defined as the inability to engage in any substantially gainful activity by reason of a medically determinable physical or mental impairment that has lasted or is expected to last 12 months or result in early death. This definition is not as liberal as most definitions of disability found in policies marketed through insurance companies.

Question 32

what policy covers an employee that is hurt on the job?

Answer 32

workers compensation

Question 33

what are usual, reasonable and customary charges based on?

Answer 33

Usual/reasonable and customary means that the insurance company will pay an amount for a given procedure based upon the average charge for that procedure in that specific geographic area.

Question 34

what is the difference between insureds and subscribers?

Answer 34

insureds are people covered by insurance, and who usually receive health insurance benefits. Subscribers (also referred to as participants or members) are people who sign up for pre-paid health plans such as HMOs.

Question 35

why do HMOs encourage members to get regular check ups?

Answer 35

in this way the HMO hopes to catch disease in its earliest stages when treatment has the greatest chance for success.

Question 36

explain the gatekeeper concept

Answer 36

the member's primary care physician serves as a gatekeeper, who helps keep the member away from the higher priced specialists unless it is truly necessary.

Question 37

how do PPOs differ from HMOs?

Answer 37

Preferred Provider Organizations (PPOs) have traditionally offered a greater selection of providers compared to HMOs.

Question 38

what is another name for prospective review

Answer 38

precertification provision

Question 39

what is the purpose of concurrent review?

Answer 39

under the concurrent review process, the insurance company will monitor the insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned.

Question 40

when dependents reach their limiting age, they may be covered under an individual policy if they apply within how many days?

Answer 40

31

Question 41

what are the eligibility requirements for coverage through the health insurance marketplace?

Answer 41

be a U.S. citizen or lawful resident, live in the United States, and not be incarcerated.

Question 42

Under the PPACA, what is the limiting age for coverage of children of the insured?

Answer 42

26 years old

Question 43

what is included in preventive care benefits?

Answer 43

preventive care includes routine checkups, screenings, and counseling to prevent health problems.

Question 44

in group health insurance, what does the employee receive which shows the amount of coverage?

Answer 44

a certificate of insurance

Question 45

what types of groups are eligible for group insurance?

Answer 45

employers sponsored, and association sponsered.

Question 46

how many people must an association group have in order to purchase insurance?

Answer 46

100 members

Question 47

according to the coordination of benefits (COB) provision, if both parents have coverage where they are employed, under whom will the children be covered?

Answer 47

if both parents name their children as dependents under their group policies, the order of payment will usually be determined by the birthday rule: the coverage of the parent whose birthday is earliest in the year will be considered primary.

Question 48

under COBRA, when are dependents covered and for how long?

Answer 48

the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event. for any of these qualifying events, coverage is extended up to 18 months.

Question 49

what are the coverage continuation requirements for group health policies issued in South Carolina?

Answer 49

coverage must be provided to an employee who has been insured continuously under the group policy for at least 6 months for the fractional month remaining, plus 6 additional months. an employee cannot continue coverage under the group plan if the employee becomes eligible for another group coverage that provides similar benefits, or becomes eligible for Medicare.

Question 50

what is the definition of a small employer?

Answer 50

a small employer is one that employed at least 2 and not more than 50 eligible employees during the preceeding calendar year.

Question 51

what is the purpose of a Health Savings Account?

Answer 51

Health Savings Accounts are designed to help individuals save for qualified health expenses that they, their spouse, or their dependents incur.

Question 52

Define prosthodontics

Answer 52

prosthodontics means the replacement of missing teeth with artificial devices like bridgework or dentures

Question 53

Describe the difference between scheduled and nonscheduled plans

Answer 53

with non-scheduled plans, benefits are paid on a reasonable and customary basis and are subject to deductibles and coinsurance.

Question 54

describe the difference between basic and major dental services

Answer 54

basic services such as fillings, oral surgery, periodontics, and endodontics may require the insured to pay a deductible or 20% of the balance (the insurer would pay the other 80%). major services like inlays, crowns, dentures and orthodontics, could either have large deductibles or pay around 50% for services provided.

Question 55

name at least 3 common exclusions in dental plans

Answer 55

cosmetic services (unless required by an accident), replacement of lost dentures, and oral hygiene instruction. Review the list in the text for other examples.

Question 56

In dental coverage, how many visits is the limit for preventive care?

Answer 56

Routine exams and cleaning are generally limited to once every 6 months

Question 57

To prevent adverse selection, late enrollees for dental insurance may get what type of benefits?

Answer 57

There may be a limitation on benefits for late enrollees where benefits may be reduced for the first year

Question 58

To whom is Medicare available?

Answer 58

Medicare is a federal medical expense insurance program for people age 65 and older even if the individual continues to work

Question 59

What does Medicare part A cover?

Answer 59

Medicare part A helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care, and hospice care

Question 60

What is the initial enrollment period for Medicare part A?

Answer 60

Initial enrollment period is when an individual first becomes eligible for Medicare (3 months before turning age 65 to 3 months after the month of birth)

Question 61

How is part B of Medicare funded?

Answer 61

Part B is funded by monthly premiums and from the general revenues of the federal government.

Question 62

Who is eligible for part B of Medicare?

Answer 62

Part B is optional and offered to everyone who enrolls in part A.

Question 63

When is the general enrollment period for Medicare part B?

Answer 63

January 1 thru March 31 every year

Question 64

What is excluded from coverage under Medicare part B?

Answer 64

Medicare part B does not cover private duty nursing, skilled nursing home care costs over 100 days per benefit period, or intermediate nursing home care. Please review the complete list of exclusions above.

Question 65

Who provides primary coverage if an individual who is eligible for Medicare is still under an employer plan?

Answer 65

Employer plans continue to be primary coverage, and Medicare is secondary coverage.

Question 66

What is the purpose of Medicare supplement plans?

Answer 66

Medicare supplement plans, referred to as Medigap, are policies issued by private insurance companies that are designed to fill in some of the gaps in Medicare.

Question 67

Which Medicare supplement plan must be offered in all plans?

Answer 67

Plan A must be offered by any insurer marketing Medigap plans, while plans B-N are optional.

Question 68

What must be included on the first page of a replacement policy?

Answer 68

The first page of the policy must contain the “notice to buyer: this policy may not cover all of your medical expenses”

Question 69

What is the maximum allowed first-year commission for the sale of a Medicare supplement policy?

Answer 69

200% of the renewal commission

Question 70

How long is the free-look period for Medicare supplement policies?

Answer 70

30 days

Question 71

What is the difference between Medicare SELECT and other Medicare policies?

Answer 71

A Medicare SELECT policy is a policy that contains restricted network provisions. Because of this requirement, the premium for a Medicare SELECT policy is usually lower than for one of the other plans.

Question 72

What is the purpose of Medicaid?

Answer 72

Medicaid is a federal and state funded program for those whose I come and resources are insufficient to meet the cost of necessary medical care.

Question 73

What is included under the definition of Activities of Daily Living?

Answer 73

ADLs include mobility or transferring, bathing, dressing, toileting, continence, and eating.

Question 74

Before a long-term care policy will be issued to an applicant age 80 or older, what must the insurer obtain?

Answer 74

The insurer must obtain a report of physical examination, an assessment of functional capacity, an attending physicians statement, and copies of medical records.

Question 75

What are the residency and medical/rate requirements for the South Carolina health insurance pool?

Answer 75

The applicant must have been a resident of South Carolina for at least 30 days. In addition to proof of residence, the applicant must provide proof of a refusal by an insurer to issue the insurance for health reasons and received notice that the current rate for comparable health insurance is greater than 150% of the Pool rate.

Question 76

How is the taxation of insurance benefits determined?

Answer 76

Taxation of insurance benefits is often determined by whether or not the premiums were taxed.

Question 77

How are personally-owned disability benefits received by the individual taxed?

Answer 77

Disability income benefits are received income tax free by the individual.

Question 78

Under what circumstances are medical expenses paid by the individual policyholder tax deductible?

Answer 78

The benefits are deductible as a medical expense if the expenses exceed a certain percentage of the insured’s adjusted gross income, and if the insured itemizes these deductions on his/her tax return.

Question 79

How are LTC policy premiums and benefits taxed?

Answer 79

LTC premiums are tax deductible, benefits are tax free, up to the maximum daily cost

Question 80

For sole proprietors and partners, what percentage of the cost of a medical plan is deductible?

Answer 80

Sole proprietors and partners may deduct 100% of the cost of a medical expense plan.