Health Review

Question 1

An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?

a) Deny any claims and cancel the policy
b) Deny paying a claim based on misrepresentation
c) Pay the full amount of a claim because the contestable period has ended
d) Adjust the claim benefit to reflect the insured’s true age

Answer 1

d) Adjust the claim benefit to reflect the insured’s true age

Question 2

Which of the following provisions is mandatory for health insurance policies?

a) Physical examination and autopsy
b) Recurrent disability
c) Unpaid premiums
d) Intoxicants and narcotics

Answer 2

a) Physical examination and autopsy

Question 3

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?

a) The group plan will pay a portion of the employee’s expenses.
b) The group plan will pay depending on the employee’s recovery.
c) The group plan will not pay because the employee was injured at work.
d) The group plan will pay.

Answer 3

c) The group plan will not pay because the employee was injured at work.

Because the employee’s injuries were work related, the group health policy would not respond. The insured would have to rely on worker’s compensation for coverage.

Question 4

What percentage of individually-owned disability income benefits is taxable?

a) 0%
b) 50%
c) 100%
d) Amount paid by insured

Answer 4

a) 0%

Premiums are paid with after tax dollars. Benefits are not income taxable.

Question 5

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization?

a) Provide medical services at a reduced cost
b) Provide medical services only from physicians in the network
c) Provide the subscriber a choice of physicians
d) Provide the subscriber a choice of hospitals

Answer 5

b) Provide medical services only from physicians in the network

A Preferred Provider Organization attempts to provide subscribers with a choice of health care provider while effecting some cost-savings by contracting with providers for such services.

Question 6

Which of the following is a required provision for group accident and health policies?

a) They must have a Coordination of Benefits (COB) provision.
b) They have optional coverage for treatment of mental illness.
c) They have a 45-day grace period.
d) Terminated employees may continue coverage in the group for up to 18 months.

Answer 6

d) Terminated employees may continue coverage in the group for up to 18 months.

Group Accident and Health policies must include a 31-day grace period. Treatment of mental illness is a mandatory coverage, but Coordination of Benefits is not, it is an optional provision. Terminated employees have a right to continue in group (COBRA) for up to 18 months or convert to an individual policy without the requirement of passing a physical exam.

Question 7

In all individual and small employer health benefit plans, how long is the grace period for persons receiving the federal advance payment tax credit?

a) 10 days
b) 30 days
c) 2 months
d) 3 months

Answer 7

d) 3 months

For persons receiving a subsidy under the federal act or the federal advance payment tax credit (APTC), all individual and small employer health benefit plans must contain a grace period of 3 months.

Question 8

When rating small employer group, small employer carriers may use all of the following factors EXCEPT

a) Gender.
b) Age of employees.
c) Geographic location.
d) Family composition.

Answer 8

a) Gender.

In Colorado long before the passage of the Affordable Care Act, gender is not an allowable rating factor in health insurance. That means premium rates cannot be higher or lower depending on the insured being a female or a male, unisex rates must be used.

Question 9

In order to get a nonresident license in this state, a producer must

a) Apply and pay a fee to a nonresident state that reciprocates.
b) Pass the nonresident state exam and satisfy their continuing education requirements.
c) Represent an agency located in this state.
d) Surrender their license in their state of residence.

Answer 9

a) Apply and pay a fee to a nonresident state that reciprocates.

A producer may apply for a nonresident license by showing that they are in good standing as a producer in their home state and by paying a fee, if the two states reciprocate.

Question 10

A licensee has met licensing qualifications for Life, Health, Property, and Casualty insurance. How many separate licenses will the Department of Insurance issue?

a) 1
b) 2
c) 3
d) 4

Answer 10

a) 1

An insurance producer may receive a single license that includes all of the lines of authority for which requirements have been met.

Question 11

Diabetic benefits provided under a health insurance policy are subject to

a) A 20% copay for all prescription drug costs exceeding $100.
b) An annual deductible of no more than $200.
c) The same annual deductibles and copayments established for all other covered benefits.
d) An annual deductible of no more than $800.

Answer 11

c) The same annual deductibles and copayments established for all other covered benefits.

The diabetic benefits provided are subject to the same annual deductibles or copayment established for all other covered benefits within a given policy.

Question 12

A carrier that fails to pay, deny, or settle a claim within the allotted time periods will be liable for the covered benefits and, in addition, will pay to the insured

a) A flat penalty of $350.
b) Interest at the rate of 20% annually.
c) Interest at the rate of 8% annually.
d) A flat penalty of $100.

Answer 12

b) Interest at the rate of 20% annually.

A carrier that fails to pay, deny, or settle a clean claim within the allotted time periods will be liable for the covered benefit and, in addition, will pay to the insured or health care provider, with proper assignment, interest at the rate of 20% annually on the total amount ultimately allowed on the claim.

Question 13

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?
A) The principal amount in a lump sum
B) The capital amount in monthly installments
C) The principal amount in monthly installments
D) The capital amount in a lump sum

Answer 13

D) The capital amount in a lump sum

Accidental Death and Dismemberment policies pay a capital amount (a percentage of the principal amount) for the loss of one limb or loss of sight in one eye. The principal amount is paid for death or often for the loss of 2 limbs or loss of sight in both eyes. Benefits are paid in a lump sum.

Question 14

Most LTC plans have which of the following features?
A)	No elimination period
B)	Variable premiums
C)	Open enrollment
D)	Guaranteed renewability

Answer 14

D) Guaranteed renewability

The benefit amount payable under most LTC policies is usually a specific amount per day, and some policies pay the actual charge incurred per day. Most LTC policies are also guaranteed renewable; however, insurers do have the right to increase the premiums.

Question 15

In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?
A)	Half
B)	None
C)	Corridor
D)	Full

Answer 15

C) Corridor

The basic expense policy will provide coverage on a first-dollar basis (no deductible). After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits. The corridor deductible derives its name from the fact that it is applied between the basic coverage and the major medical coverage.

Question 16

What is the purpose of COBRA?
A) To provide coverage for the dependents
B) To provide health coverage for people with low income
C) To protect the insureds against insolvent insurers
D) To provide continuation of coverage for terminated employees

Answer 16

D) To provide continuation of coverage for terminated employees

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.

Question 17

All of the following are the most common variations in a Long-Term Care policy EXCEPT
A) Number of home health visits covered.
B) Number of family dependents.
C) The amount paid for nursing home care.
D) Number of days of confinement covered.

Answer 17

B) Number of family dependents.

Long-Term Care policies can vary in the number of days of confinement covered, the number of home health visits covered, the amount paid for nursing home care, and other contract provisions.

Question 18

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured’s accidental death?
A) Refund of premiums
B) Principal sum
C) Capital sum
D) Double the amount of the death benefit

Answer 18

B) Principal sum

Accidental Death and Dismemberment coverage only pays for accidental losses and is thus considered a pure form of accident insurance. The principal sum is paid for accidental death. In case of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum.

Question 19

In all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?
A)	5
B)	10
C)	12
D)	15

Answer 19

B) 10

Question 20

A Medicare supplement policy may deny a claim for a loss caused by a pre-existing condition within what maximum time period from the effective date of coverage?
A)	30 days
B)	2 months
C)	3 months
D)	6 months

Answer 20

D) 6 months

A Medicare supplement policy may not deny a claim for losses incurred more than 6 months from the effective date of coverage for a pre-existing condition.

Question 21

Which of the following is not a purpose of the Long-Term Care Act?
A)	Protect applicants
B)	Promote public interest
C)	Establish standards
D)	Make LTC insurance affordable

Answer 21

D) Make LTC insurance affordable

Question 22

Rating factors DO NOT reflect differences due to the nature of the groups assumed to select particular health plans. Rating factors DO produce premiums for identical groups that differ only by
A) The number of employees.
B) The general health of the company’s employees.
C) The type of coverage in the plan.
D) The amount of the plan design.

Answer 22

D) The amount of the plan design.

Rating factors produce premiums for identical groups that differ only by the plan design amount. A small employer carrier will treat all health benefit plans issued or renewed in the same calendar month as having the same rating period.

Question 23

What is the maximum age for qualifying for a catastrophic plan?
A)	26
B)	30
C)	45
D)	62

Answer 23

B) 30

Young adults under age 30 and individuals who cannot obtain affordable coverage (have a hardship exemption) may be able to purchase individual catastrophic plans that cover essential benefits.

Question 24

The benefits available to newborn children must include coverage for injury or sickness, and all medically necessary care and treatment for how many days of the newborn's life?
A)	First 21 days
B)	First 31 days
C)	First 90 days
D)	First 14 days

Answer 24

B) First 31 days

The benefits available to newborn children must consist of coverage of injury or sickness, including all medically necessary care and treatment of medically diagnosed congenital defects and birth abnormalities for the first 31 days of the newborn’s life.

Question 25

Insurers must provide health insurance claim forms within how many days?
A)	5
B)	7
C)	15
D)	20

Answer 25

C) 15

After receiving notice of claim from the insured (within 20 days from the date of loss), an insurer must provide claim forms within 15 days of the notice, so that the insured can submit proof of loss (within 90 days of the loss).

Question 26

Long-term care coverage may be available as any of the following options EXCEPT

a) Individual long-term care.
b) Endorsement to a life policy.
c) Endorsement to a health policy.
d) Group long-term care.

Answer 26

c) Endorsement to a health policy.

Long-term care insurance policies may be purchased on an individual or group basis, or as an endorsement to a life insurance policy.

Question 27

What is the purpose of coinsurance provisions?

a) To help the insurance company to prevent overutilization of the policy
b) To have the insured pay premiums to more than one company.
c) To ensure payment to the doctors and hospitals
d) To share liability among different insurance companies

Answer 27

a) To help the insurance company to prevent overutilization of the policy

Question 28

What is the period of coverage for events such as death or divorce under COBRA?

a) 31 days
b) 12 months
c) 36 months
d) 60 days

Answer 28

c) 36 months

The maximum period of coverage under COBRA is 36 months, in the event of the covered employee’s death or divorce.

Question 29

What is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan?

a) A low monthly premium
b) Low cost deductibles
c) Diagnostic and preventive care
d) A broad coverage area

Answer 29

c) Diagnostic and preventive care

Dental expense insurance is a form of medical expense health insurance that covers the treatment, care and prevention of dental disease and injury to the insured’s teeth. An important feature of a dental insurance plan which is typically not found in a medical expense insurance plan is the inclusion of diagnostic and preventive care (teeth cleaning, fluoride treatment, etc.).

Question 30

Which statement accurately describes group disability income insurance?

a) In long-term plans, monthly benefits are limited to 75% of the insured’s income.
b) There are no participation requirements for employees.
c) Short-term plans provide benefits for up to 1 year.
d) The extent of benefits is determined by the insured’s income.

Answer 30

d) The extent of benefits is determined by the insured’s income.

Group plans usually specify the benefits based on a percentage of the worker’s income. Group long-term plans provide monthly benefits usually limited to 60% of the individual’s income.

Question 31

How long is an open enrollment period for Medicare supplement policies?

a) 6 months
b) 1 year
c) 30 days
d) 90 days

Answer 31

a) 6 months

An open enrollment period is a 6-month period that guarantees the applicants the right to buy Medigap once they first sign up for Medicare Part B.

Question 32

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?

a) Adhesion
b) Personal
c) Unilateral
d) Conditional

Answer 32

d) Conditional

A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies which put the burden of condition on either the insurer or the policyowner.

Question 33

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured’s loss of earnings after recovery from a disability?

a) Income replacement
b) Residual disability
c) Recurrent disability
d) Partial disability

Answer 33

b) Residual disability

A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.

Question 34

What document describes an insured’s medical history, including diagnoses and treatments?

a) Individual Medical Summary
b) Comprehensive Medical History
c) Attending Physician’s Statement
d) Physician’s Review

Answer 34

c) Attending Physician’s Statement

An Attending Physician’s Statement (APS) is the best way for an underwriter to evaluate an insured’s medical history. The report includes past diagnoses, treatments, length of recovery time, and prognoses.

Question 35

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?

a) 90 days after the effective policy date
b) 6 months after the effective policy date
c) 1 year after the effective policy date
d) As long as the policy is in force

Answer 35

d) As long as the policy is in force

An insurer can contest a fraudulent misstatement as long as the policy is in force. No other statement or misstatement made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years.

Question 36

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

a) 7 days
b) 10 days
c) 31 days
d) 60 days

Answer 36

b) 10 days

The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

Question 37

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?

a) They are taxed as income.
b) They are tax deductible.
c) They are considered after-tax contributions.
d) They are not deductible.

Answer 37

b) They are tax deductible.

An individual covered by a high deductible health plan can make a tax-deductible contribution to an HSA and use it to pay for out-of-pocket medical expenses.

Question 38

Insurers may change which of the following on a guaranteed renewable health insurance policy?

a) Individual rates
b) No changes are permitted.
c) Rates by class
d) Coverage

Answer 38

c) Rates by class

On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy.

Question 39

Which of the following is NOT an exclusion in medical expense insurance policies?

a) Military duty
b) Self-inflicted injuries
c) Routine dental care
d) Coverage for dependents

Answer 39

d) Coverage for dependents

Most medical expense policies will not cover expenses for dental care, self-inflicted injuries, or injuries incurred as a result of military service (among other exclusions). Most policies include coverage for dependents.

Question 40

An insurer who willfully violates a single provision of an unfair trade practice regulation may be fined

a) $3,000
b) $10,000
c) $15,000
d) $30,000

Answer 40

d) $30,000

In Colorado, an insurer who knew or reasonably should have known it was in violation could be fined up to $30,000 for each violation, not to exceed an aggregate of $750,000 annually.

Question 41

Long-term care coverage may be sold in all of the various ways EXCEPT

a) As a part of a Medicare supplement policy by the use of an endorsement.
b) Group long-term care.
c) Individual long-term care.
d) As a part of a life insurance policy through the use of an endorsement.

Answer 41

a) As a part of a Medicare supplement policy by the use of an endorsement.

Medicare supplement policies supplement the benefits provided by Medicare.

Question 42

Which of the following is a specific service for which an insurance producer is NOT allowed to charge a fee to the applicant or policyholder?

a) Qualified retirement plan design for which the producer receives a commission from the insurer
b) Investment counseling for which the producer does not receive a commission from the insurer
c) Estate planning for which the producer does not receive a commission from the insurer
d) Risk management services for which the producer does not receive a commission from the insurer

Answer 42

a) Qualified retirement plan design for which the producer receives a commission from the insurer

A producer is prohibited from charging a separate fee for any service if the producer receives a commission for it from the insurance company. Insurance producers may charge fees for specific services which are beyond the scope of services pertaining to insurance policies, including risk management services, financial planning, investment counseling, and similar.

Question 43

In accident and health policies issued in this state, an insured must submit proof of loss within how many days?

a) 15 days
b) 20 days
c) 60 days
d) 90 days

Answer 43

d) 90 days

An insured is required to submit proof of loss within 90 days of such loss.

Question 44

Which of the following is NOT required to be covered by sickness and accident insurance policies issued in the state of Colorado?

a) A mom’s broken arm
b) A child born to a customer
c) A customer diagnosed as bipolar
d) A teen’s cervical cancer vaccine

Answer 44

a) A mom’s broken arm

Coverage for newborns, mental illness and cervical cancer vaccines are among the coverages required to be a part of sickness and accident insurance policies issued in the state of Colorado.

Question 45

When a producer’s license is terminated, the producer must remit the license to the Commissioner within how many days?

a) 15
b) 30
c) 5
d) 10

Answer 45

a) 15

Question 46

A producer’s appointment with an insurer has been terminated. Under what circumstances can the producer sue the insurer or the Commissioner for information provided during producer investigation?

a) In the absence of reliable information about the producer
b) If no regulatory enforcement agencies are involved
c) Under no circumstances
d) If the termination was a result of willful and malicious behavior

Answer 46

d) If the termination was a result of willful and malicious behavior

In the absence of willful and wanton behavior, an insurer, its authorized representative, a producer, the Commissioner, or an organization of which the Commissioner is a member and that compiles the information and makes it available to other Commissioners or regulatory or law enforcement agencies will not be subject to civil liability.

Question 47

What is the maximum civil penalty per violation if an unauthorized entity violates the Commissioner’s cease and desist order?

a) $1,000
b) $5,000
c) $10,000
d) $25,000

Answer 47

d) $25,000

The Commissioner may take the following actions against an unauthorized insurer that violated a cease and desist order: impose a civil penalty of $25,000 per violation, or direct the entity to make complete restitution to all parties affected by the violation, or both.

Question 48

The Time Limit on Certain Defenses provision is the same as which of the following?
A Grace period
B Reinstatement
C Free look
D Incontestability

Answer 48

D Incontestability