Medicare - All chapters

Question 1

Fair credit reporting act

Answer 1

Federal law that regulates consumer reporting agencies and the use of consumer reports. Must comply with state law as well as fair credit reporting act. Purpose: ensure all reporting of credit is fair and accurate

Question 2

Consumer report

Answer 2

A credit report that relates to an individuals credit worthiness, reputation, or habits. Used to determine: eligibility for a loan, job, insurance, etc.

Question 3

Moral hazards

Answer 3

Drug or alcohol abuse

Question 4

Adverse action (consumer report)

Answer 4

Denial of coverage or an increased premium. Insurer must notify applicant of the name and address of consumer reporting agency

Question 5

Judgements & bankruptcies

Answer 5

Judgements = 7 years
Bankruptcies = 10 years

Question 6

1033 of USC (U.S Code)

Answer 6

Relates to those in Insurance who knowingly and with intent to deceive, make false statements, reports, or overvalue land, property in connection with Financial reports or documents to influence actions of Insurance official. Establish definitions and penalties for crimes. Example: Home Appraisal; they can not affect

Question 7

1034 of USC (U.S Code)

Answer 7

Sets civil Penalties and injunctions for violations of section 1033

Question 8

Exposure

Answer 8

The state of being subject to the possibility of a loss. Possibility of loss to a risk being caused by it’s surrounding. Being without protection to harsh situations (weather). Risk of loss = Exposure to loss

Question 9

Pure Risk

Answer 9

Loss or No loss. Example: Purchase a house - you could live in it with no issues or it could burn down. Insurance = Pure Risk

Question 10

Speculative Risk

Answer 10

possibility of a loss as well as the possibility of a gain. Example: Investing

Question 11

Producer –> Insurer Responsibilities

Answer 11

1. Loyalty
2. Obeying the instructions and acting in accord with directions received from Insurer
3. Acting with Care
4. Accounting for all money and property
5. Keeping the Insurer informed about all relevant matters

Question 12

Consideration

Answer 12

something of value must be given.

• Insureds: Application and Premium
• Insurer: promise to pay covered claim

Question 13

Individual Disability Income Policy

Answer 13

Provides coverage for lost income resulting from a disability. Disability will pay % of your missed income.
Disability = loss of time and function. (Do not cover medical expenses or rehab).

Question 14

Elimination Period (Waiting period)

Answer 14

Period oif time after onset of disabilities during which benefits are not paid (time deduct). Savings and Finances are used as determining factor.
0-14 days = Short Term
30- 1 year = Long term
Longer the elimination period - lower the premium

Question 15

Occupational Vs. Non-occupational Disabilities

Answer 15

Policies can provide coverage for disabilities resulting from occupational or non-occupational causes
(occupation = work)

Question 16

Qualifying for Disability Income Benefits

Answer 16

1. Inability to work ANY job - policies less likely to pay (most restrictive)
2. Inability to work at any job to which insured is suited by training, education, or experience - Can receive benefits
3. Inability to perform own job. Most likely to pay benefits (most liberal)

Question 17

Medical Reimbursement Benefit (Rider)

Answer 17

This rider provides medical reimbursement in the event of a disabling injury

Question 18

Waiver of Premium (Rider)

Answer 18

waives your premium if Insured is disabled

Question 19

Key Employee and Partner Policy

Answer 19

Pays a company for it’s loss from the disability of a key employee. Benefits are used to pay a replacement employee while the company continues to pay key employee

Question 20

Named Peril

Answer 20

Policies which list/name the specific perils insured against (example: Fire, wind, flood insurance would be named peril).

Question 21

Peril

Answer 21

Occurrence that causes loss (fire, flood, theft, windstorm, etc)

Question 22

Who is included in a contact?

Answer 22

1. Promisor (Insurer)

2. Promisee (Insured)

Question 23

Legal Purpose

Answer 23

All contracts must have a legal purpose

Question 24

Insured

Answer 24

Individual or entity which pays consideration to an insurance company in order to receive consideration (Benefits from the contract). Also known as the owner or policy holder)

Question 25

Apparent Authority

Answer 25

appearance of, or assumption of authority.

may cause applicants to believe producer has authority

Question 26

Express authority

Answer 26

Actual authority the insurer gives the producer in the contract

Question 27

Implied Authority

Answer 27

Is not specifically stated in producer clinic –> Is authority the public may reasonably believe agent to have

Question 28

Competent Parties

Answer 28

All parties alive, sane, and authorized to contract

Question 29

Time element

Answer 29

Time limit on contract… they cannot go on forever

Question 30

Insurer

Answer 30

Insurance company that issues an insurance policy and assumes the risk of potential losses suffered by the insured. Insurer pays consideration upon proof of loss

Question 31

Applicant

Answer 31

Life Insured who is responsible for filling out application

Question 32

1. Policy Owner

2. Insurance Producer

Answer 32

1. Person who pays the premium and has legal rights to the policy
2. Person required to be licensed under state to sell, solicit, or negotiate Insurance. (does not include a title Insurance agent)

Question 33

Policy

Answer 33

Written contact effecting Insurance

Question 34

Premiums

Answer 34

payments made to the insurer to keep the policy in force

Question 35

Open Peril

Answer 35

Provides comprehensive coverage by insuring against all direct loss (unless specifically excluded)

Question 36

Risk

Answer 36

Uncertainty with respect to a loss. Possibility that a loss may happen - you are taking a risk

Question 37

Is the consumer reporting agency required to reveal sources of information?

Answer 37

No; but, must investigate and remove any info that is not accurate, verifiable, or current.

Question 38

Information that can be found in reports? What is not found?

Answer 38

Includes: Credit limit, current debt, late payments, open accounts, delinquencies
Not included: Income of Individual

Question 39

Levels of coverage & what are they called?

Answer 39

Metallic Plans

1. Bronze
2. Silver
3. Gold
4. Platinum

Question 40

ACA Requirements (Affordable Care Act)

Answer 40

Mandatory acceptance and Insurance changes

1. accepts all applicants
2. covers specific list of conditions
3. charges the same rates regardless of pre-existing conditions or gender

Question 41

ACA

Answer 41

Affordable Care Act (Patient Protection Act)
Health Care Reform Law
Intention: improve quality of Insurance, make affordable, expand by lowering cost to insureds, thus reducing uninsured rate

Question 42

Domestic Insurer

Answer 42

Home office = same state as domestic insurer

Question 43

Foreign Insurer

Answer 43

Home office = different state of Insurer

formed under laws of any part of US

Question 44

Alien Insurer

Answer 44

Home office = another country

formed under laws of another country

Question 45

Fraud

Answer 45

Dishonest act. Intentional falsehood in order to deceive or take advantage of someone

Question 46

Utmost Good Faith

Answer 46

assumed all parties entered into contract in good faith and have disclosed all relevant facts.

where lack of good faith can be proven (fraudulent application –> Contract can be nullified).

Question 47

Warranty

Answer 47

Promise of what will be done

Opposite of warranty is a breach or voided contract

Question 48

Reasonable expectation

Answer 48

Each party should have reasonable expectations that the other is activing without attempt to conceal or deceive.

Question 49

What must insurers that use consumer reporting agencies comply with?

Answer 49

State Law and Fair Credit Reporting Act

Question 50

What are the five methods of handling risk? what do they mean? (STARR)

Answer 50

1. Avoidance: avoid / remove hazard
2. Retention: Doing nothing
3. Sharing: insurers share or pool loss
4. Reduction: reduce risk (alarm system)
5. Transfer: Shift to another party (purchasing Insurance)

Question 51

Fraternal Benefit Societies

Answer 51

an incorporated society, order, or supreme lodge formed and operated solely for it’s members. can provide death, annuity, endowment benefits, but not benefits relating to property or casualty loses).

Group of people getting Insurance

Question 52

Admitted vs. Non-admitted

Answer 52

Admitted: Insurer entitled to transact insurance in a state
Non-admitted: insurer or Insurance company not entitled to transact in a state
Insurers must be authorized and licensed in the state

Question 53

Total Disability

Answer 53

Inability to perform occupational functions. Person must first be “totally Disabled” prior to receiving partial or residual benefits. At work benefits are paid during the period of recover from total benefits.

Question 54

Residual Disability Benefit

Answer 54

Residual benefits pay for losses suffered by the insured AFTER recover. Usually, a portion reflecting the residual loss is paid (20% loss income). cannot make more on disability than they would working.

Question 55

Critical Illness

Answer 55

Provide a valued benefit - chosen by insured. When they are diagnosed with a covered illness. some cover more and some have restrictions, some iwll pay reoccurrence. (Cancer, stroke, heart attach, transplant, etc).

Question 56

Estoppel

Answer 56

Legal principle that states that the insurer must honor it’s representations when such representation has been relied on by the insured

Question 57

Hospital Indemnity Plans (AKA Hospital confinement Policy or Hospital Income Policy)

Answer 57

Pays a “valued” (fixed) amount per day to insured while they are in hospital.

• limited days
• Pays regardless of other coverage
• may pay “fixed” amount for other services
• May include outline of coverage
• Room and board - not less than 110.00 a day and for no less than 30 days

Question 58

Presumptive Disability

Answer 58

Some disabilities (loss of sight) are presumed to be total and permanent. Benefits are payable even if one can work.

Question 59

Elements of Insurable risk

Answer 59

1. Definite and definable
2. Accidental
3. Calculable
4. Create an economic Hardship
5. Insurance offered at reasonable cost
6. Must not be catastrophic
7. Law of large numbers

Question 60

Insurer –> producer responsibilities

Answer 60

1. Allow agent to act and fulfil the terms of his/her contract
2. recognize all previsions of contract
3. compensate producer in timely manner
4. communicate with producer about new product development, marketing, etc.

Question 61

Managed Care Plan (define and goals)

Answer 61

Health Care Program in which an organization (HMO/PPO) acts as intermediary between insured and health care provider. Insurers decide to take an active role in containing the costs of their insured medical cost - most will also pay for routine cost.
Goals:
1. arranging with providers to accept prearranged fees
2. Limit insured access to and choice of provider
3. encourages to use outpatient facilities rather than expensive in-patient facilities.

Question 62

HMO Structure

Answer 62

PCP: 1st person to see –> They send referral
Open Panel HMO: Providers practice independently and see both HMO and non-HMO.
IPA: Independent Practice Associates: List of providers supplied by HMO.
Close Panel Plan: Providers practice solely for benefit of HMO Members
Open-ended plan: Both open and closed can be open-ended. can use non-contracted doctor with reduce cost (ex. “snow Birds”).

Question 63

Point of Service Plans (POS)

Answer 63

Form of care less restrictive than close-panel HMO, but more restrictive than PPO. Members must choose PCP from a network. PCP is Point of Service and determines the services required and provides referrals. Member can choose OON, but at a much higher cost to patient.

Question 64

Preferred Provider Organization (PPO)

Answer 64

Sponsors and Health Care providers contract to treat plan members. small = Hospital and Doctor contract. Big = Network of providers.
Member can choose any provider; higher benefits if they use a preferred provider.
Provider Fee: PPO and Prov., reach agreement - will provide services for specific, contracted amount and in return; PPO refers patients to them. (“Fee for Service”).

Question 65

Health Maintenance Organization (HMO)

Answer 65

Provides pre-paid Health Insurance plans where members pay a flat, periodic pay (“copay”).
Providers: same organization provides services and healthcare coverage. Membership in HMO entitles subscribers to use of plan-contracted physicians, hospitals, and clinics. Must obtain referral.
coverage: Preventative care, covers all health care services and cop-payments (Kaiser).

Question 66

AD+D (Accidental Death and Dismemberment)

Answer 66

Valued / Fixed payment
Principle sum = 100% of Income for two “major” body parts
Capital Sum =
If death occurs within 365 days - considered the same accident
Flexible; can be a rider or it’s own plan
A.D.& D. requires a revocable named beneficiary. A.D.& D. does not have a coinsurance deductible.

Question 67

Mutual Companies

Answer 67

Controlled by [Policy Holders]. They vote for a board of directors who direct the affairs of the company.

Mutual companies are participating companies, therefore issue [Par or non-par policies].

Question 68

Morbidity Table

Answer 68

Graph / chart showing how many people are getting sick of what and at what age

Shows the occurrence of sickness as a mortality table shows the incident of occurrence of death

Question 69

Individual Disability Income Policy

Answer 69

% of loss of Income.

Provides coverage for lost income resulting from a disability. Disability income will pay a % of your loss of income.

Disability = loss of time and function (does not cover rehab or medical expenses).

Question 70

Payment

Basic Disability Income Insurance Plan

Answer 70

Disability income policies pay a monthly income on “valued basis” (“fixed). This is pre-set & determined payment.

Policies will pay %: 50%, 65%, 80%

Percentage is set per month - example: will pay 65% of your normal income

Question 71

Benefit Period

Short Term Disability
Long Term Disability

Answer 71

Total time insurer will pay benefits

Short Term: pay min of 26 weeks - up to 2 years
Long Term: min of 2 years - up to age 65 or 70. The longer the benefit period, higher the premium

Question 72

Benefit Structures

Answer 72

• Expense Incurred Basis: Payment to the insured is based off actual expenses incurred
• Pre-paid: Specific Health benefits are provided to subscribers in return for period pre-payment. Paid by service organization.
• Valued Basis: (“Indemnity”), Payment to insured is based off predetermined, specified amount - not related to expenses incurred

Question 73

Medical Expense Insurance (A.K.A: Accident and Health Insurance (A+H)

Answer 73

Provides coverage for medical expenses incurred by insurer for the following:

1. Acute care: Illness or Injury of abrupt onset and usually short duration
2. Chronic Care: Care for illness or injuries of long duration (I.E. Diabetes). Generally includes coverage for: Ambulance, in/out patient services, surgery, Dr.’s, Diagnostic Testing

Question 74

Return of Premium option (Rider)

Answer 74

Allows for % of paid premium to be refunded at end of pre-determined period (5 years, 10 years) if no claims were filed

Question 75

Cost of Living Adjustment (COLA) (Rider)

Answer 75

Provides adjustment to disability income payments based on Consumer Price Index (CPI). Automatic. Must have been receiving DI Benefits for 1 year prior to the increase.

Question 76

Future Increase Option (Guaranteed Insurability Option) (Rider)

Answer 76

Allows for future increases to policy income benefits as wage increases. Need to provide proof of higher income.

Question 77

Exclusions

Answer 77

Policies will limit or exclude benefits for certain adverse losses. Examples:

• Resulting from war
• Alcohol / Drug use
• Suicide attempt
• Undisclosed & pre-existing conditions
• Felony / incarcerated
• Pregnancy
• Active duty military

Question 78

Coordination with other Insurance

Answer 78

Disability income can be integrated with workers comp, SSI, Employer Insurance

Note: No Medicaid

Question 79

Hazard

Answer 79

Condition that increases the chance of a loss

Question 80

Probationary period

Answer 80

first few days of a policy during which benefits are not payable. Do not apply to accidents.

goals: reduce adverse selection

Question 81

Cancer and Specified Diseases

A.K.A: Dread Disease

Answer 81

Policies that cover only specific disease.

Benefits are valued and they vary. They can pay in one lump sum when diagnosed, or pay for specific expenses after the waiting period.

Other policies may coordinate benefits with the cancer policy

Question 82

Dental Expense

Answer 82

Often a rider to an individual or group disability Insurance. Typically have low limits and exclusions. (1000.00 a year) to compensate or high incident of adverse selection. Typically cover 50% of dental charges.

Question 83

Vision Care

Answer 83

May be a separate policy or rider to existing policy

Question 84

Recurrent disability

Answer 84

Has manifested after the insured has been back to work at least 6 months (after 6m - considered a new disability)

If returning within 6 months the insured would not be subject to a new elimination period

Question 85

Valued Basis (Indemnity)

Answer 85

Payment to the insured is based on a pre-determined, specified amount, not related to actual expenses incurred

Question 86

Pre-paid service

Answer 86

Health Benefits provided to subscribers in return for a period pre-payment. Provider is paid by the service organization (either as employer or contractor).

Question 87

Expense Incurred Basis

Answer 87

Reimbursement - Payment to the insured is based on the actual expenses incurred

Question 88

1. Insurance Sales Representative

2. Insurance company is ______

Answer 88

1. Agents / Producers
2. Principle

Principle employs or contracts with Producer

Question 89

Business Disability Buyout Policy

Answer 89

Provides a lump sum benefit which is used to “buy out” the business share of a disabled business partner

Question 90

Business overhead expense Policy

Answer 90

Provides benefits to pay certain business expenses when the insured is totally disabled. Allows business to continue for certain time period. Replacement income not paid to disabled insured.

Question 91

Group Disability Income Policy

Answer 91

Purchase through an employer - Sponsored disability plan

Premium: paid by employer - Tax Deductible
Benefits: Tax Deductible

if employer pays 60% –> 60% taxable

Question 92

Occupational Considerations

Answer 92

Higher risk occupation = higher premium

policies that exclude coverage for occupational injuries will have lower premiums

Question 93

Offer and Acceptance

Answer 93

Application = offer
Policy = acceptance
(when offer is issued as requested)

*if policy is issued other than requested then policy = offer and applicants acceptance would be premium payment

Question 94

Stock Companies

Answer 94

Stock insurer is an insured formed through sale of stock.
Owned by a stock holder.
Business to make profit for the stockholder.

Can issue “Par Policies” (provide policy dividends), or “non-par policies” (do not provide policy dividends)

Question 95

Concealment

Answer 95

Failure to disclose a material face

Concealment = misrepresentation

Question 96

Indemnity

Answer 96

to restore a victim for loss in whole or part by payment, repair, or replacement

Question 97

Representation / Misrepresentation

Answer 97

Statements in application

Representation: Statements considered to be true (not guaranteed). If false; can be voided or denied

Misrepresentation: Inaccurate statement, intentional or unintentional

Question 98

Partial Disability Benefit

Answer 98

Benefit paid reflecting an insured inability to perform some - but not all - job tasks. Usually 50% of benefits are payable.

It usually follows total disability. The insured must be under a physician’s care, and benefits are paid for up to 6 months.

Question 99

Physicians Care

Answer 99

Policy may require an insured to be under physician care in order to receive any benefits

Question 100

Relation of earnings to Insurance

Answer 100

cannot receive more in Benefits than they would be if they were working

(uniform optional provision)

Question 101

Continuous Disability

Answer 101

Should report every 6 months to the insurer

Question 102

Group Conversion

Answer 102

If employee becomes ineligible (after min of 3 months of work) –> they have 31 days to convert to an individual plan. During those 31 days –> Still covered by group policy if premium is paid.
Based on Age.
Dependents can still convert if employee was fired / death / divorce.
3 types: Basic Medical, Major Medical, & Supplemental Major Medical

Question 103

COBRA (Consolidated Omnibus Budget Reconciliation Act)

Answer 103

Federal Law for employers with more than 20 employee’s to offer continuation of group health benefits to employee’s who voluntary/involuntary leave.
Employer has 14 days to send & employee has 60 days to accept. Payment is due 45 days after acceptance.
coverage up to 18 months –> May extend 11 months if qualifying disability. Dependents can have coverage up to 36 months if death, separation, loss of child or if employee goes on Medicare.

Question 104

HIPAA (Health Insurance Portability and Accountability Act)

Answer 104

Federal Law. Cannot be denied coverage due to pre-existing condition.

• May impose 12 month pre-existing condition waiting period on conditions treated within 6 months to previous enrollment.
• must provide proof or prior “credible coverage”
• Prior coverage will be credited to pre-existing condition waiting period
• Continuous coverage; previous 63 days. ends on 64th day

Question 105

what are the two types of group Insurance?

Answer 105

1. Contributory: Employee contributes. 75% of the group must join to avoid adverse selection
2. Noncontributory: Employer pays 100% of premium. 100% of employee’s must join. Easier to install and administer if 75% wants coverage for dependents, it must be offered.

Question 106

Open Enrollment (OEP)

Answer 106

first 30 days to join group plan through your works insurance otherwise you may need to wait until Annual Enrollment.

Question 107

Probationary Employment Period

Answer 107

Time period before group Insurance is offered to it’s employer

Question 108

Adverse Selection (Anti-Selection)

Answer 108

Not in favor of Insurance company.
Tendency that high risk people want insurance more than low risk.
Insuring = higher premium

Question 109

Experience rating vs. Community rating

Answer 109

Experience: Premiums are calculated using actual losses for group
Community Premium: Premium calculated using losses in geographic area without adjustment for losses by group or individual

Experience: Group/people
Community: Geographic area

Question 110

Group Insurance

Answer 110

Homogeneous group: Written on group of people whose main purpose is other than that or obtaining Insurance

underwriting is done on group as a whole rather than individually. Average ages, gender, and common risk determines premium

Question 111

HSA (Health Savings Account)

Answer 111

Must have HDHP, cannot have any other medical coverage or be dependent.
Contributions:
- If made by individual; Deductible
- If made by employer; not income, deductible to employer.

Limit set by IRS yearly. Can be made to tax deadline of following year. Withdrawal to pay qualified medical expenses that are not covered by HDHP = Tax Free.
Nonqualified are subject to taxation and 20% penalty

Question 112

HDHP (High Deductible Health Plan)

Answer 112

High deductible and max OOP Expenses

Deductible minimum and contribution limits are decided yearly by IRS

Question 113

HRA (Health Reimbursement Arrangement)

Answer 113

Employee sponsored.
may be offered in conjunction with other employee provided benefits.
must be used by qualifying employee - not used with other insurance
employer contribution only - no limit - up to them
Tax free. can “carry over” at discretion of employer

Question 114

FSA (Flexible Spending Arrangement)

Answer 114

• Employee sponsored; “Cafeteria Plan”
• Employer and employee contribute
• Voluntary contributions not subject to income tax
• unused contributions are forfeighted at end of year - Use it or lose it
• use money towards qualified expenses (set/fixed amount).

Question 115

Medical Expense Insurance (Tax favored Health Plans)

CDHP (consumer Driven Health Plans)

Answer 115

Brought by employer/employee/consumers to get freedom in selection of health insurance plans and utilization of $$ allocated for health insurance

Allows insured greater provider choice and flexibility in controlling cost, rather than relying on managed care plan.

Insured pays for 1st Medical expenses in policy year (deductible or max OOP) –> CDHP used to cover and pay unreimbursed OOP

Question 116

MM Policies (Major Medical)

Answer 116

Covers large catastrophic losses.

Policies are characterized by high limits - at least 1 million lifetime. or no limits with high deductibles (1000.00 or more)

Question 117

Provisions that may affect cost of MM (major Medical) Insurance

Answer 117

Deductible amount that must be paid to insurer before insurer will cover.
Considered flat or initial. Can be per occurrence or per year. Usually has family maximum.
Co-Insurance: portion of medical bills the insured is obligated to pay (typically 80/20).
Stop Loss: Max OOP protects insured. up to 12 months - 12th month starts on January 1st on policy anniversary date

Question 118

Provisions that affect MM Insurance

Answer 118

Maximum benefit: Max an insurer will pay out in one year or over lifetime of a policy. Policies often contain inside limits (e.g., $ limit on particular procedure)

Question 119

Employer Group Plans

Answer 119

Under federal law, employer HMO must allow new employee’s to enroll at least 1x a year. employers may offer a choice of group plans (PPO, HMO, Medical Expenses, etc.).

Question 120

Long Term Care (LTC)

Answer 120

Designed to help defray the cost of extended care confinement by providing daily indemnity benefits (100, 150, 200) with benefit period that extend from 1-10 years. Includes group and supplemental Plans and individual policies.

Individual: sold to individuals; individual health, gender, age, personal characteristics

LTC policies are guaranteed renewable and require a minimum benefit period of one year (12 months). A waiver of premium rider is optional and would require additional premiums to be paid.

group: Offered through employers - may be less expensive. All must comply with state regulations

Question 121

Medicare Supplement Plans

Answer 121

Private Insurers offer Medicare supplement insurance policies. Medicare leaves a # of coverage gaps due to deductibles.

Medicare Supplement Plans (“Medigap”) is used to fill holes in coverage of Medicare part A and B. Insured must be covered under both A and B before they can get supplement plan

Question 122

Responsibilities to the applicant / Insured

Answer 122

1. Accurately assess individuals need for Insurance, type, policy, and riders
2. Explain conditions and requirements
3. Solicit applications and accept premiums
4. Provide timely service

Question 123

Subrogation

Answer 123

If insurer pays claim for losses suffered due to negligence of another - Insurer has the right to attempt to recoup the loss. The insurer can sue the negligent party on behalf of their insured, of the insurer can collect from the insured if he receives a settlement directly

Question 124

Workers Compensation

Answer 124

Provides benefits for individuals who suffered job-related injuries or illness.

*monopolistic: Insurance purchased from the state

Question 125

Managed Care

Answer 125

Covered under Medical Expense Insurance

Question 126

Non-Duplication and Coordination of Benefits (COB)

Answer 126

Group: One must be primary and one secondary. Secondary is used to pay left over expense from Primary. Concept of 100% indemnity. Duplication not allowed. If both parents commercial insurance - Parent DOB determines Primary.

Individual: Prevents excess benefits. Insurer limits either total liability or for certain coverage

Question 127

Modes of Premium Payments

Answer 127

Refers to the frequency of premium payment. Weekly, Monthly, quarterly, annually.

Automatic check withdrawals = Monthly

Question 128

Primary and Contingent Beneficiaries

Answer 128

Beneficiary: Person(s) / Legal Entity to which proceeds are paid in the event of insureds death.

Primary: 1st person (spouse). Must outlive insured.

Contingent: child / 2nd choice. Receives if primary does not outlive the insured

Question 129

Dependent children Benefits

Answer 129

Continuance of benefits required for kids who reach “limiting age” and are incapable of self-sustaining employment because of physical or mental handicap and are dependent on INS subscriber.
may not cancel except for non-payment of premium. Insured has 31 days to provide insurer with proof of incapacity of dependent. Proof required only annually after 2 year period.

Question 130

Owners Rights

Answer 130

Owner has all legal rights to the policy.
Owner may be other than insured, but must have insurable interest.
Owners rights include: Pay Premium, assigning benefits to providers, changing beneficiaries, reinstating the policy.
Owner rights are restricted if there is an irrevocable beneficiary.

Question 131

Mandatory Policy Provisions

Answer 131

Developed by NAID are found in all individual disability Insurance policies and benefit the insured

Question 132

Entire contract

Answer 132

The Insurance contract, attached application and attached endorsements constitute the entire contact. The company cannot refer to other documents. an Insurer can insert provision that states that no policy changes are valid, unless approved by an executive officer of the insurer

Question 133

Time limit on certain defenses

Answer 133

(*incontestability clause). Within the first 2 years, an insurer can contest a policy for any material or misrepresentation. After 2 years, an insurer can contest a policy on the basis of fraudulent misrepresentation (identity) only.

Question 134

Grace Period

Answer 134

Extends coverage past the due date. If the insured is injured during the grace period, the company pays benefits, less premium and interest.

Based on how Premium is paid: (Policy can have longer grace periods)

7 days of grace if premium is paid weekly
10 days of grace if premium is paid monthly
31 days of grace if premium is paid over monthly

Question 135

Reinstatement

Answer 135

If the policy lapses because the insured fails to pay premiums, the policy can be reinstated by paying back premiums, interest, and proving insurability.

if the insurer accepts the premium (with no requirement for a reinstatement application), reinstatement is approved.

If the insurer does not respond within 45 days, it is deemed approved and fully reinstated.

a reinstated policy does not cover illness in the first 10 days of reinstatement (waiting period)

Premiums paid for reinstatement are applied to the period for which premiums have not been paid, but cannot be applied to any period more than 60 days prior to reinstatement.

Question 136

Notice of Claim

Answer 136

Insured has 20 days (as soon as reasonably possible) to inform company of a loss

Question 137

Claim Forms

Answer 137

Insurer has 15 days to provide claim forms to Insured

Question 138

Proof of Loss

Answer 138

Insured has 90 days from date of injury to provide proof of a loss. If the insured is incapacitated, there is an extension of up to 1 year from the date proof is otherwise required

Question 139

Time Payment of Claims

Answer 139

Claims must be paid immediately to insured upon receipt of proof of loss.

Payments for disability income may be made no less frequently than monthly (30 days)

Question 140

Legal Actions

Answer 140

If insurer fails to pay a claim, insured may file a lawsuit 60 days following proof of loss.

Insured may not sue the insurer after 3 years from the date of proof of loss.

Question 141

Physical Examination and Autopsy

Answer 141

Allows Insurer to examine the insured as often as reasonably required at the insurer’s expense. At death the insurer may perform an autopsy (unless prohibited by law)

Question 142

Change of Beneficiary

Answer 142

If a Death Benefit is provided, the owner must be allowed to change the beneficiary (unless beneficiary is irrevocable).

Question 143

misstatement of Age

Answer 143

Benefits are provided, as they would have been purchased with the premium paid, had age been stated correctly.

Question 144

Optional Policy Provisions

Answer 144

Insurance policies do not need to include these Provisions. However, if a policy contains a provision pertaining to one of these subjects, that provision must comply with the minimum standards as designed by the NAIC and State Laws. 
Previsions include: 
- Change of Occupation
- Other Insurance with this Insurer
- Insurance with other insurers
- Relation of Insurance to Earnings
- Unpaid Premiums
- Cancellation
- Conformity with state statues
- Illegal Occupation

Question 145

Insuring Clause

Answer 145

Portion of the Insurance contract in which the insurer agrees to indemnify the insured against certain losses, subject to limitations and exclusions

Question 146

Free Look (Right to Examine)

Answer 146

After the issuance and delivery of a policy, the insurer must provide time for the insured to read the full contract.

If the insured returns the policy within 10 days , for any reason, the entire initial premium must be refunded within 30 days.

the free look provision must be clearly stated on policy

Question 147

Consideration (prov. and Clauses)

Answer 147

Portion of the insurance contract which specifies the amount to be paid by the insured, in exchange for the insurer’s promise to indemnify certain losses.

Question 148

Probationary Period

Answer 148

refers to the first few days of health policy where illness is not covered. This protects against adverse selection and preexisting conditions. In the case of an accident, there is no probationary period

Question 149

Elimination Period

Answer 149

a Time deductible that lowers premiums.

Eliminates payments during the first 30, 60, 90, or 365 days after a disability

Question 150

Recurrent Disability

Answer 150

considered the same disability unless the insured has been back to work 6 months or more (Disability Income).

*For recurrent disability - no new elimination period

Question 151

Waiver of Premium

Answer 151

Insurer waives premium if owner/insured becomes disabled. May have 6 month waiting period, after which premiums are refunded.

Physician certification of disability and length of disability required.

if this is not a provision, the insurer might offer it as a rider.

Question 152

Exclusions:

(Major Medical policies often limit their coverage in these ways):

Answer 152

• Excess Charges: Insurer will only pay based on reasonable and customary charges for physicians in the same geographic area providing the same type of service.
• Unnecessary Hospital Room Charges: Use of TV and Phones are generally excluded from coverage
• Extended Care Facilities, home health care and Custodial: policies usually cover only rehab services; long term care policies cover extended care facilities
• Hospice Benefits: for terminally ill patients, if included, may be limited
• Dental, Vision, and Hearing Care: Many policies do not offer benefits for dental, vision, or hearing. Those that offer benefits limit benefits and may contain 50/50 coinsurance.
• Work Related Injuries: Usually medical expenses from occupational injuries or sicknesses due to ‘on the job’ activities are covered by workers comp, when available. workers comp is primary.
• Automobile injuries: Benefits are sometimes excluded or reduced when auto insurance coverage is available
• Intentionally self -inflicted injuries
• Elective and Cosmetic Surgery

Question 153

Eligible Expenses

Answer 153

Policy must list all services and expenses that are covered

Question 154

Preexisting conditions:

Answer 154

Excludes coverage for a health condition that existed prior to purchasing the policy. Exclusion is temporary. After a stated period of time, the condition is covered.

Question 155

Coinsurance

Answer 155

in Health Insurance, a provision that the insured and the insurance company will share covered losses in agreed proportion. The preferred term is “percentage participation”.

Question 156

Deductibles

Answer 156

The amount of loss for which the insured is financially responsible before the insurer will provide coverage

Question 157

Copayments:

Answer 157

A Specific dollar amount the policy owner must pay for a service

Question 158

Pre-Auth and prior approval requirements

Answer 158

(A.K.A Prospective review, pre-cert review). This is a “Utilization Management” Technique.

Insurers can require insureds to have some, expensive, medical procedures approved before they are undertaken. Approval is provided by the insurer, gatekeeper, or PCP. For emergencies, approval is required within 24 hours of service.

Question 159

Usual, reasonable, and customary (URC) Charges

Answer 159

Insurer determines the amount payable for a service based on the usual, reasonable and customary charges in a given geographic area.

Question 160

Lifetime, Annual, or per cause maximum benefit Limits

Answer 160

Most policies have policy limits. Limits help keep insurer losses down. Some limits are established through state or federal Legislation and all policies must comply. Limits can be:

• Lifetime: E.g.; 1,000,000 limit of coverage on a major medical policy
• Annual: e.g.; 1,500 per year limit on dental policy
• Per Cause: e.g.; 30,000 per disability on a disability income policy

Question 161

Guaranteed Insurability

Answer 161

Allows insured to purchase additional benefits at a future date without additional evidence of insurability, such as a higher medical expense benefit limit.

Question 162

Multiple Indemnity (double, triple)

Answer 162

Term rider added to a disability insurance policy. Rider pays an additional amount (higher benefit) for emergency room expense or at-home recovery

Question 163

Renewable Clause

Answer 163

Policies must disclose renewability. Policies can only use what terms to comply with the stated provisions? (These provisions will not apply to group Insurance.

1. non-cancelable
2. Guaranteed Renewable
3. Conditionally renewable
4. Optionally renewable
5. Cancelable
6. Period of time for renewal

Question 164

Non-Cancelable

Answer 164

Insured has the right to keep the policy in force regardless of health until a specified age. Policy can only be cancelled for non-payment or premiums up to a specified age (50 or 65). Premiums stated in the policy cannot be increased.

Question 165

Guaranteed Renewable

Answer 165

Insured has the right to keep the policy in force without proof of Insurability. Policy can only be cancelled for non-payment of premiums up to a specified age (65 in a medical expense policy). Premiums may increase for entire class.

Question 166

Conditionally renewable

Answer 166

Insured has the right to renew the policy if certain conditions specified in the contract are met.
Conditions may be related to age or employment.
45 day notice required to non-renew.

Question 167

Optionally Renewable

Answer 167

The Insurer has the right to non-renew the policy at the anniversary date or at the premium due date (by class)
45 day notice required to non-renew

Question 168

Cancelable

Answer 168

Insurer may cancel the policy with 5 day notice.

Unused premium must be refunded.

Question 169

Period of time for renewal

Answer 169

Policy has no renewal option. No notice is required. Also known as “short term medical”

Question 170

Completing the Application and Obtaining Necessary Signatures

Health Insurance application (“App” for short)

Answer 170

The Application contains general information about the applicant such as high or her person information, health information, family history, occupation, hobbies).

1. Applicant should be made aware of consequences of falsifying information on the application.
2. Changes: must be initialed by the applicant
3. Signatures: Application must be signed by the insured, owner, and producer
4. Premiums with the application: producer must give the applicant a receipt for premium
5. Warranty: Statement guaranteed to be true
6. Representation: Statement thought to be true, made by the applicant
7. concealment: is the intention to withhold information
8. Questions: on the application must be clear and precise

Question 171

Insurability

Answer 171

Determination by an insurer as to whether a person is insurable or not, based on certain requirements; e.g., health characteristics, family history, lab test results, etc. Insurers require persons desiring insurance to meet certain conditions.

Producer must advise an applicant of sources of information. These are the Medical Information Bureau (MIB), the application, the producers report, the attending PCP report, medical exams, lab reports, results of questionnaires, and/or investigative consumer (Credit) reports.

Question 172

Medical Information Bureau (MIB)

Answer 172

Non-profit trade organization that maintains medical information on health insurance applicants to protect current policy holders from fraud and concealment. Info is only between Insurance companies. MIB Does not include actions taken by insurers nor amounts of INS requested.

Question 173

Insurers cannot refuse coverage based solely on the MIB report… MIB procedures require _____?

Answer 173

• Written Notice to the applicant that the insurer may report health findings to the MIB
• Permission by the applicant to disclose information to member companies
• Upon written request, information contained n MIB files, must be disclosed to the applicant through the applicants Physician

Question 174

Fair Credit Reporting Act Requirements

Answer 174

Insurer must inform the applicant:

• Consumer report may be required and the scope of that investigation
• The name and Address of the investigating agency
• If application was turned down because of the credit investigation
• that he is able to obtain a copy of the report and have the opportunity to refute any information

This insures confidentiality and helps in underwriting accuracy but does not guarantee it. Insurer has 30 days to notify the customer of denial of coverage if denial of coverage is based on report.

Question 175

Investigative Consumer Report

Answer 175

(A.K.A Inspection Report)

may be a form of comprehensive credit report, triggered due to the face amount applied for, or due to an adverse credit score.
Used to determine an applicants personal characteristics and possibly “moral hazards”.

Question 176

Initial Premium Payment and Receipt and Consequences of the Receipt

Answer 176

Producers receiving an initial premium at time of application must provide the applicant with:

• Premium receipt identifying the insurer to whom the coverage is applied
• Brief description of the coverage applied for
• statement that the receipt does not indicate an acceptance of risk by the insurer (coverage is not binding or conditional).

Question 177

Submitting Application (& initial premium if collected) to company for underwriting

Underwriting criteria:

Answer 177

Insurers often use age, gender, medical history, occupation, and other factors to determine rates. State laws usually restrict what specific criteria insurers can use.

Question 178

Information needed for submitting an application

Answer 178

• Application
• Producer’s Statement
• Attending physician’s Statement- sometimes an insurer requires a statement from the attending physician to explain a special medical condition
• Medical examinations and/or lab tests
• Credit Report and Inspection Report
• Medical Information Bureau
• Supplements to application

Question 179

Classifications of Risks

Answer 179

• Standard: “Average” risk - Risk is not abnormally high or low
• Preferred: Lower risk; applicant has a lower than normal risk of disability. Premiums are comparatively low
• Extra (substandard): High Risk; Applicant has a high potential of needing medical services. Premiums are comparatively high (rated policy)
• Declined: Excessively high risk; risk of disability is so high that an insurer is unwilling to offer coverage. Often, insurers will exclude a certain peril or injury from coverage rather than decline.

Question 180

Policy Delivery and Review

Answer 180

If producer delivers, delivery must be timely. can be mailed or in person. Producer may not store the policy for the insured. States will often require additional documents to be delivered with the policy.

Effective Date of Coverage: Coverage cannot begin until the correct initial premium has been paid and the risk (offer from applicant) is accepted by the insurer. Coverage typically begins upon policy issue or the 1st day of the following month

Question 181

Explaining Policy and it’s Provisions, riders, Exclusions, and Ratings to Clients

Answer 181

Producer should review the policy provisions, riders, exclusions, and ratings with the policy owner

Question 182

Replacement

Answer 182

Applications must solicit information about existing Accident and Health Insurance on the proposed insured.
If the applicant indicates a desire to terminate an existing policy, the producer must provide a disclosure form, also known as “replacement form”. Disclosure form explains possible consequences of terminating an existing policy.
Producer must submit a copy of the disclosure form, signed by the applicant and the producer, with an application.

Question 183

Contract Law

Answer 183

Contract of Insurance is a written instrument between an insured and an insurance company, specifying the coverage and consideration to be paid by the insured (premiums) and the insurer (settlement)

Question 184

Elements of Contract

Answer 184

1. The names of the parties to the contract. The insurer’s name shall be clearly shown in the policy
2. The subject of the INS, the Risk (Perils) Insured against, and conditions (if any) pertaining to the coverage
3. effective date of coverage and coverage period
4. Entire contract needs to consist of the policy provisions, application, any riders, and/or endorsements to the policy

Question 185

Insurable Interest:

Answer 185

When a 3rd party would suffer financially or emotionally upon loss or injury of the other party being insured. One has unlimited insurable interest in themselves

Question 186

Warranties

Answer 186

Statements guaranteed to be true (usually found in the insurance contract or policy)

Question 187

Representations

Answer 187

Statements believed to be true (usually found in the insurance application)

Question 188

Unique Aspects of the Health contract:

Answer 188

1. Conditional: limits the rights provided by the contract. even when a loss is suffered, certain conditions must be met before the contract can be legally enforced.
2. Unilateral: Type of contract in which only one of the contracting parties is under an enforceable obligation
3. Adhesion: One party draws up the contract in it’s entirety and presents it to the other party on a “take it or leave it” basis
   receiving party does not have the option of negotiating, revising, or deleting any part of the document.

Question 189

Social Security (Funded/program)

Answer 189

Social Security = Government Insurance
Program funded by Medicare Taxes and OASDI (Old Age Survivor Disability INS).
Benefits include: Disability Income (SSDI), Retirement, Medicare, and Survivor Benefits.

Question 190

Social Security Benefits

Answer 190

Calculated based on a workers Average Indexed Monthly Earnings (AIME) and the Primary Insurance Amount (PIA).

PIA is the amount equal to the workers full retirement benefits at the normal retirement age. Benefits payable to workers, their spouses, and children are expressed as a % of workers PIA.

Worker must have paid into Social Security for 40 quarters to be fully insured or 6 of the last 13 quarters to be currently insured. If fully insured, he is eligible for all four benefits.

if a person is currently insured, he is eligible for only survivor benefits and Medicare. One must be fully insured for retirement and Disability Income.

Question 191

Retirement

Answer 191

Social Security is a basic retirement income plan designed to supplement personal savings and employee retirement benefits.

At the Normal Retirement Age (NRA), the Insured receives full benefits (100% of PIA). The NRA is increasing from age 65 (prior to 2003) to age 67 (after 2026).

An Insured may begin receiving benefits as young as age 62 (less than 100% of PIA) and as old as 70 (more than 100% of PIA). Insured can continue to work while receiving Benefits but benefits can be reduced prior to NRA if earned income exceeds exempt income.

Question 192

Survivor Benefits

Answer 192

upon death, a surviving spouse (or minor child) receives a small lump sum ($225.00).

Monthly Benefits can be received by:

• Children until age 18 (19 if in school).
• Disabled children of any age if they were disabled prior to their age 22.
• Widow or widower that is either a minimum of age 60 or is caring for children under age 16.

Question 193

Social Security Disability Income (SSDI)

Answer 193

Administered by Social Security Administration.

• Qualification: To qualify for disability income benefits, a person must be “fully insured” (paid into SS for 40 quarters) and currently working.
• Disability Defined: a disability has lasted, or is expected to last, one year or until death. It is a severe mental or physical condition that prevents a person for working.
• Waiting Period: Person must be disable for 5 months before benefits will be paid. Payments begin the 6th full month after the date of the disability.
• Benefits: Based on workers Average Indexed Monthly Earnings (AIME) and the PIA. If workers comp is paying, the amount of any workers comp payment is subtracted from the SSDI Benefit.

Question 194

Medicare: Administration

Answer 194

Administered by the centers for Medicare and Medicaid Services, Medicare is Federally Run and funded by payroll taxes

Question 195

Medicare: Eligibility

Answer 195

The Individual must be currently or fully insured and meet one of the following requirements:

1. be 65, or a dependent over the age of 65 (e.g., non working spouse)
2. Have been receiving SSDI for 2 years
3. Have permanent Kidney Failure
4. Amyotrophic Lateral Sclerosis (ALS, or Lou Gehrigs Disease) - Benefits Automatically begin upon receipt of SSDI Benefits.

Question 196

Diagnosis Related Groups (DRG):

Answer 196

Identifies payment for each type of case and fees allowed within a region

Question 197

Foreign Travel

Answer 197

Medicare does not provide coverage outside of the U.S. or it’s territories. On rare occasions there are exceptions to this (e.g., when a foreign hospital is closer than a US Hospital)

Question 198

Primary, Secondary Payer:

Answer 198

Medicare acts as the secondary insurance policy when a Medicare recipient is still working for a qualifying employer and is covered by a group insurance plan after age 65 (Coordination of Benefits).

Question 199

How many parts or Medicare are there? What are they?

Answer 199

• Part A: Hospital Insurance
• Part B: Physician Care
• Part C: Medicare Advantage
• Part D: Prescription Drug Plans

Question 200

Medicare Part A: Hospital Insurance

Answer 200

Most people who qualify for social security or railroad retirement benefits automatically qualify for Medicare part A at age 65 (an enrollment form must be submitted to Medicare)

Question 201

Initial Enrollment Period

Answer 201

When you are first eligible for Medicare. This is a 7 month period that begins 3 months before age 65, includes the month turning age 65, and ends 3 months after the month the recipient turns age 65.

Question 202

General Enrollment Period

Answer 202

Between January 1st and March 31st each year. Coverage will begin July 1st.

Question 203

Premiums

Answer 203

There is no monthly premium for eligible individuals (“fully insured”). If an individual is not eligible for Medicare at age 65, they may pay premiums for Medicare Coverage.

Question 204

Part A: coverage Includes (Part 1)

Answer 204

All reasonable covered inpatient hospital expenses (after deductible) for 60 days. after 60 days (61-90), there is a coinsurance paid by patient.
New benefit period begins when the patient has been out of the hospital for 60 days.
Benefits for 1-60 or 61-90 days are restored with each new benefit period.

Question 205

Part A: Coverage Includes (Part 2)

Answer 205

Hospice Care: Care and support for terminally ill and their family. Dr. must certify that the patient is expected to live 6 months or less.

Skilled nursing Facility (SNF) Care: 100 days of medically necessary Post Hospital inpatient “convalescence” care (after deductible). first 20 days are covered in full after deductible, days 21-100 have coinsurance amount to be paid by the patient.
must be: Medicare approved, 24 hour nurse, daily records, pursuant to law, skilled nursing care under supervision of physician.

Post Hospital Home Health Care: E.g., RN’s, Therapists. Patient must be “homebound”.

Question 206

Medicare Part B: Physician Care

Answer 206

Voluntary, supplementary medical plan. Part B covers physician services and medically necessary services and supplies, along with diabetes management and some other preventative services.

Premiums: Government pays about 3/4 of the monthly premium. Recipient pays 1/4 of premium. Nonpayment of premium could result in higher premium.

Recipient pays: Calendar year deductible, 20% of Medicare allowable charges, Excess over allowable charges. If a health care provider accepts assignment of the claim, patient is not required to pay.

Question 207

Medicare Part C - Medicare Advantage Plan (Formally Medicare+Choice)

Answer 207

Health Care Plan options (from Part A and B) approved by Medicare and offered through private companies to provide coverage for Medicare recipients. includes all services of Medicare A and B, plus supplemental coverage to fill caps.

Plans resemble managed care plans which may include a ‘network’ of providers and specialists (HMO, POS, PPO, etc). Provides all medical care to Medicare recipients in exchange for the Medicare premium, plus additional cost.

Plans may include supplemental payments to pay coinsurances and other non-covered expenses as well as Medicare approved expenses. These may also offer prescription drug coverage (through D). Plans usually eliminate need for Medicare Supplement Policy.

Question 208

Medicare Part D: Prescription Drug Plans

Answer 208

Medicare subsidizes private programs that offer drug assistance coverage to Medicare recipients. Enrollee’s pay a monthly premium. Individuals who do not enroll in a Medicare Drug plan when first eligible, may have to pay a penalty for choosing to join later (higher monthly cost).

Question 209

Medicaid

Answer 209

Medicaid is a welfare program enacted by the US congress in 1965. The Federal Government sets the minimum guidelines and the states may add to the coverage.

Program ran by government.

Provides Health Benefits for people of all ages that meet income and asset requirements.

Question 210

Disability Insurance

Answer 210

No policy of individual insurance shall be delivered or issued for delivery in this state unless an outline of coverage is furnished.

All policies must state: “Read your Policy carefully - this outline of coverage provides a very brief description of the important features of your policy”.

Question 211

What must the outline of coverage include?

Answer 211

• Statement identifying the applicable category of coverage with a description of principal benefits and coverage provided.
• Statement of exceptions, reductions, and limitations
• Statement of renewal provision, including any right by the insurer to change future premiums
• Statement that the outline is a summary of the policy issued. Policy should be consulted to determine governing contractual provisions

Question 212

Disclosure for Fixed Payment Insurance Policies

Answer 212

Includes: Individual “Illness-triggered” fixed payments insurance, hospital confinement fixed payment insurance or other fixed payment insurance. Insurers must issue policies with a standard disclosure form. Must include: Insurer’s name and address and Statement “Important info about coverage…” & “this coverage is not comprehensive health care insurance and will not cover the cost…”.

HDHP’s: if you are covered under HDHP and have HSA, before you purchase this policy, you should check with your tax advisor to be sure you will continue to be eligible to have HSA.

Replacement: Applications must have question to elicit information as to weather the insurance to be issued is intended to replace any other disability Insurance. If replacing policy, client must receive notice regarding replacement disclosure statement.

Question 213

Medicare Health Insurance Act Purpose

Answer 213

Regulates the selling of Medicare supplement insurance. States must comply with the Act but can regulate further. Sets minimum guidelines for all policies to provide uniformity and clarity to purchaser.

Medicare Supplemental Insurance is sold through private insurers and must cover all the “basic Benefits” as stated in this regulation.

Question 214

Medicare Supplement Health Insurance Act Definitions

Answer 214

• Applicant: Person seeking to obtain an individual Medigap Policy for Insurance benefits
• Certificate and Certificate form: Issued to employer sponsored Medigap Plan, indicating proof of coverage
• Issuer: Insurance company, fraternal benefit society, health care service contractor, HMO, or any other entity delivering or issuing for delivery Medicare supplement policies or certificates.
• Health Care Expense Costs: Expenses of a health maintenance organization or health care service contractor associated with the delivery of health care benefits to insureds (losses incurred).
• Policy: contractual and unilateral agreement or contract issued by any issuer. Policy form is the form on which the policy is delivered or issued.
• Premium: Amounts charged as consideration for a medicare supplement insurance policy and it’s renewal. Earned Premium is the premium received by the issuer applied towards insurance coverage.
  Replacement: any transaction where new Medicare Supplement coverage is being purchased with knowledge that the existing plan will be replaced.

Question 215

Outline of Coverage / Disclosure

Answer 215

Private Insurers offer Medicare supplement insurance policies (“Medigap Insurance”). These Policies fill the coverage gaps in Medicare A and B. Must be eligible for Medicare, enrolled in part A and have purchased part B before they can buy Medicare Supplement policy

Question 216

In OUtline of Coverage / Disclosure, Insurers and Producers ____?

Answer 216

1. May not claim that the government approves a medigap policy
2. may not claim that other insurances (which are not medigap) contain medicare supplement benefits
3. Must give an outline of coverage prior to or at the time of application which clearly states type of coverage being offered.

Question 217

Buyers Guide

Answer 217

Replacing Insurer must give a form of replacement notice. This gives pertinent information about replacement. Replacing insurer must waive preexisting conditions, waiting periods, probationary periods and elimination periods. Replacing insurer may only charge a Standard Rate (community-rated), with no evidence of insurability required.

Question 218

Pre-existing conditions

Answer 218

No Medicare supplement insurer shall deny an “eligible person” issuance of Medigap coverage if applied for within 63 days of termination or prior coverage.
an “Eligible” person is anyone who qualifies for Medicare and has been on a previous Medicare Advantage Plan (Part C), Group Health Plan, Employer Welfare plan or otherwise.
The replacing insurer must waive preexisting conditions, waiting periods, probationary periods, and elimination periods

Question 219

Regulations

Answer 219

Insurers and producers are responsible to assure suitability in offering Medigap Insurance.

Statements and Questions:

1. Do you have another Medicare supplement policy
2. Do you have any other health insurance coverage
3. If you are currently on Medicare part C., you do not need a medicare supplement plan
4. You may be eligible for benefits under Medicaid. If so, do not need Medigap coverage
5. Counseling Services may be available to assist in your purchase of Medicap (SHIBA - Statewide Health Insurance Benefit Advisors)

Prohibited: twisting / pressure / advertising

Regulations: must offer coverage A, file new policy forms with the commissioner within 30 days of change

Question 220

Application Responsibilities

Answer 220

Anytime a medicare supplement insurer requires a person’s Medical history as a condition of insuring, the medical history must be completed by the applicant, relative, legal guardian, or PCP.

Question 221

Free Look

Answer 221

Insurers allow a 30 day return of policy refund or free look

Question 222

Guarantee Issue

Answer 222

Insurers must guarantee renewability except for non-payment of premium or material misrepresentation and may not use waivers to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.
Open Enrollment: Insurers cannot deny of limit coverage to individuals who apply for coverage within 6 months from their 65th Birthday
Insurers must allow replacement of policies issued before 6/1/2010 to be replaced by plans post 2010 without evidence of insurability, including coverage A and “high deductible Plans”

Question 223

Supplemental Information

Answer 223

There are 10 federally standardized plans available: A, B, C, D, F, G, K, L, M, and N;

All Plans contain basic insurance and must pay:

• Part A Coinsurance 61-90 of benefit period
• Part A coinsurance days 91-150 of benefit period
• Part A eligible covered hospitalization for 365 days during lifetime
• Part A Hospice care coinsurance or copayment
• Part B Coinsurance of 20%
• First 3 pints of blood

Question 224

Long Term Care Insurance

Answer 224

Producers must take an initial 8 hour accredited LTCI course prior to the marketing or sale of LTC Insurance and receive an LTCI ‘‘Line of Authority”. Renewal consists or a 4 hour CE course every 2 years.

Question 225

Long Term Care Insurance (contracts)

Answer 225

LTCI provides coverage for skilled care and personal care for individuals with prolonged physical illness, disability, or cognitive disorder.

• policy provides lifetime coverage
• policies provide daily benefits ($100, $120, or $150) on a valued or reimbursement basis.
• Minimum benefit period is 1 year (WA min). Naturally longer benefit periods may be purchased (2 to 10 years, or unlimited)
• Benefits are available after an elimination period (time deductible) of 30 days up to 1 year. Longer elimination periods allow for lower premiums.

Question 226

Benefit Triggers are _______

Answer 226

1. Inability to do 3 ADL’s (most insurers require 2)
2. Cognitive impairment, such as Alzheimers Disease
3. Physician Cert is required

Question 227

Long-term Care Insurance

Answer 227

Insurance includes any policy, contract, or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. LTCI does not include provisions for Accelerated Death Benefits or specific limited policies.

Question 228

Long Term Care Partnership contract

Answer 228

Contract of long-term care insurance which provides asset protection under the Washington Long-term care partnership act.

Question 229

Activities of Daily Living (ADL’s)

Answer 229

Bathing, continence, dressing, eating, toileting, transferring (mobility).

Question 230

Custodial Care

Answer 230

Care of a non-medical nature which is essential to assist the individual in the activities of daily living. Generally this aids in meeting personal needs rather than medical needs

Question 231

Cognitive Impairment

Answer 231

Problems with attention, affect, memory or other loss of intellectual capacity that requires supervision to help or protect the impaired person

Question 232

Skilled (Primary) Care

Answer 232

Care requiring a licensed professional nurse, prescribed by a physician, is medically necessary and available on a 24 hour basis.

Question 233

Home Health Care

Answer 233

Provides medical services including nursing services, speech therapy, respiratory therapy, medical supplies, etc.

Question 234

Home Care

Answer 234

Provides non-medical services including homemaker services, assistance with ADL’s, etc.

Question 235

Community (Based) Care

Answer 235

Services provided outside an institutional setting including home delivered nursing services or therapy, home and chore services, nutritional services, day care, respite care, etc. Policies shall provide benefits for these services at all levels of care, from skilled care to custodial or personal care

Question 236

Alternative Care

Answer 236

Care or services not specified in a policy but that may be provided if appropriate and agreed upon by the insurance company, the insured person and his or her physician. These benefits are then provided in lieu of normal contract benefits

Question 237

Case Management:

Answer 237

Coordination of all aspects of long-term care. This includes assessment of needs, coordination of elements of a treatment plan, referrals, monitoring

Question 238

Plan of Care

Answer 238

Prioritizes the expectations and needs of the patient and family and prioritizes a program of treatment. Includes regular reevaluation of needs.

Question 239

Adult Day Care

Answer 239

Daytime program for functionally impaired adults that provides a variety of services to those who are otherwise being cared for by family members.

Question 240

Hospice Care:

Answer 240

Services to provide comfort and counseling for terminally ill patient and his/her family. Terminal care must be provided if the insured is expected to die within 6 months

Question 241

Respite Care (Short Break)

Answer 241

Provides the caregiver and patient time away from one another for a short period of time. May provide a temporary care person to attend to the patient so the primary caregiver may take a break, holiday, or vacation.

Question 242

Health Care False Claims Act

Answer 242

To prevent spiraling increases in the cost of Health Care, 
no person shall participate in the submission, to a health care payer, or a claim for health care payment knowing the claim to be false (referred to as "deceptive"). 
Penalty for noncompliance: violation is considered a class C Felony. If a claim is paid, that is later found to be fraudulent, the insurer should seek to recover benefits paid.

Question 243

Claim:

Answer 243

any attempt to cause a health care payer to make a health care payment

Question 244

False

Answer 244

Wholly or partially untrue or deceptive

Question 245

Health Care Payment

Answer 245

Payment for health care services or the right under a contract, certificate, or policy of insurance to have a payment made by a health care payer for specific health care service

Question 246

Health Care Payer

Answer 246

any insurance company or HMO authorized to provide health insurance in this state and insurer or other person responsible for paying for health care services

Question 247

Producer Responsibilities

Answer 247

Application questions must be clear and precise. Producers should solicit more than simply a “yes” answer from the applicant. (Treatment received, medications, and results of tests, ailment, or treatment resolve).

Question 248

Minimum Standards

Answer 248

The commissioner is authorized to set minimum standards for all types of disability insurance. Policies issued by insurers must comply.

Categories include:

• Basic Hospital expense, basic medical-surgical expense, hospital confinement coverage and major medical expense coverage.
• Disability income protection coverage
• Specific disease, specified accident or accident only coverage and limited benefit coverage
• Medicare Supplemental Coverage

Question 249

Standard Provisions required - substitutions - Captions

Answer 249

Each policy delivered or issued for deliver to any person in this state shall contain the provisions as specified in Washington code. An insurer may substitute these provisions with more favorable corresponding provisions, approved by the commissioner.

Question 250

HCSC

Answer 250

Health Care Services Contractors

Question 251

Carrier

Answer 251

a Health maintenance organization, and insurer, a health care service contractor, or other entity responsible for the payment of benefits or provisions of services under a group or individual contract

Question 252

Comprehensive Health Care Services

Answer 252

Consultative, diagnostic, and therapeutic services, as well as emergency and preventive care, inpatient hospital, outpatient and physician care, offered by a health maintenance organization

Question 253

Consumer

Answer 253

Member, subscriber, enrollee, beneficiary, or other person entitled to health care services under terms of a health maintenance agreement.

Question 254

Department

Answer 254

State department of social and health services (DSHS)

Question 255

Enrolled Participant

Answer 255

Person(s) who contact to receive health care services from a health care service contractor

Question 256

Group Contract

Answer 256

contract for health care services available only to members of a specific group. The group contract may include coverage for dependents.

Question 257

Group Practice

Answer 257

(A.K.A Closed Panel Plan): Health care professionals (which may be individual health professionals, clinics, or both) providing services exclusively for the HMO and it’s participants

Question 258

Individual practice Health Care Plan

Answer 258

association of health professionals in private practice who practice independently, yet contract with the HMO to provide comprehensive health care services to participants, on a prepaid, fee-for-service or capitation basis. Also known as an “open Panel Plan” or independent practice association (IPA)

Question 259

Insolvent or Insolvency:

Answer 259

A “Carrier” which has been declared insolvent and is placed under an order of liquidation by a competent judicial court

Question 260

Foreign Group Policy

Answer 260

an Insurer may not engage in any insurance transaction for life or disability on individuals in this state under a group policy to a policyholder outside this state when it is not clear or is misleading and does not include all terms and conditions required by Washington State statutes.

Question 261

Health Care Services

Answer 261

Means and includes medical, surgical, dental, chiro, hospital, optometric, podiatric, pharma, ambulance, custodial, mental health, and other therapeutic services

Question 262

Health Maintenance Agreement

Answer 262

An agreement for services between a health maintenance organization and enrolled participants

Question 263

Health Maintenance Organization (HMO)

Answer 263

Any charted organization that provides comprehensive health care services to enrolled participants. Prepayment may be on a group practice per capita basis or individual practice plan. Participants are responsible for copayments and/or deductibles

Question 264

Health Professionals

Answer 264

Health care practitioners who are regulated by the state of Washington

Question 265

Individual contract

Answer 265

Contract for Health Care Services issued to and covering an individual (and dependents). Underwriting is on individuals covered and cost (premium) is wholly paid by the insured.

Question 266

Meaningful Grievance Procedure

Answer 266

Procedure for investigation of consumer grievances in a timely manner aimed at mutual agreement for settlement according to procedures approved by the commissioner, and which may include arbitration procedures

Question 267

Participating Provider

Answer 267

Any provider who has contracted with an HCSC to accept an agreed upon payment from the HCSC for any health care services rendered to an “enrolled participant”.

Question 268

Provider:

Answer 268

Any health professional, hospital, or other institution, organization, or person that furnishes health care services and is licensed to furnish such services.

Question 269

Approved Treatment Program

Answer 269

Means a discrete program of chemical dependency treatment provided by a treatment program certified by the department of social and health services

Question 270

Chemical Dependency

Answer 270

Illness characterized by a dependency on a controllable substance or alcoholic beverage resulting in the user losing self control

Question 271

Chemical Dependency Professional

Answer 271

person certified as a chemical dependency professional by the washington State Department of health

Question 272

Cost Sharing

Answer 272

Includes deductibles, copayments, coinsurnace, and out of pocket expenses.

Question 273

Emergency Medical Condition

Answer 273

Medical condition manifesting itself by acute symptoms of sufficient severity, including sever pain, such that a prudent layperson who possesses an average knowledge of health and medicine. Could reasonably expect the absence of immediate medical attention to result in a condition placing eh health of the individual in jeopardy, serious impairment to bodily functions, or dysfunction of any bodily organ.

Question 274

Medically necessary

Answer 274

with respect to chemical dependency coverage is defined by the American Society of Addiction Medicine patient placement criteria.

Question 275

Treatment Limitation

Answer 275

Includes limits on the frequency of treatment, number of visits, days of coverage, waiting periods, or other similar limits on the scope or duration of treatment

Question 276

Chemical Dependency

Answer 276

an Illness characterized by a dependency on a controllable substance or alcoholic beverage resulting in the user losing self-control.

Group contracts, including group HMO contracts, must provide a minimum dollar amount of coverage over a 24 month period in an approved treatment facility or program.

Question 277

Standards for coverage of chemical dependency

Answer 277

1. Any group contract providing coverage for chemical dependency benefits must define “chemical dependency” consistent with definitions in the code.
2. Must include payment for reasonable charges for any medically necessary treatment and supporting service rendered to an enrollee by an approved treatment program
3. Cost sharing amounts for chemical dependency services may be no more than the cost sharing amounts for medical and surgical services otherwise provided under the health benefit plan.
4. Lifetime limits must apply to chemical dependency benefits in the same manner as medical and surgical benefits
5. Treatment limitation for chemical dependency services is allowed only if the same limitation or requirement is imposed on coverage for medical and surgical services. benefits for treatment and services rendered may no the denied solely because treatment was interrupted or not completed.
6. Medically necessary detoxification must be covered as an emergency medical condition.

Question 278

Conversion / Continuation

Answer 278

Employee or covered dependent that becomes ineligible for group coverage, after a minimum of 3 months coverage, has 31 days to convert the group policy to an individual policy.

Group HMO’s must offer the plan holder the right to continue the group benefits for a period of time at an agreed upon rate. After which, conversion must be offered.

Question 279

Coverage of Newborn

Answer 279

Health Care Providers that provide coverage for dependent children of all participant shall provide coverage for newborns from birth. If additional premium is required, notification of birth must be within 60 days. Adoption is considered birth and treated the same as newborn.

Question 280

Coverage for Children - Option to cover child under 26.

Answer 280

Individual and group health care service plan contracts that are not “grandfathered” and that provide coverage for a subscribers child must offer the option of covering any child under the age of 26, unless child is eligible to enroll in an eligible health plan sponsored by the child’s employer.

Grandfathered: plans in place before 3/23/2010, when the ACA was signed into law.

Question 281

Administrator

Answer 281

WA Basic Health plan means: Administrator of the WA State Health Care Authority

Question 282

Adjusted Community Rate

Answer 282

Rating method used to establish the premium for health plans according to actuarial differences in geographic region, age, family size, and utilization of routine care

Question 283

Basic Health Plan - Intent

Answer 283

To Improve the health of low-income children and adults by expanding access to basic health care and by reducing tobacco-related and other illnesses that disproportionately affect low-income persons

Question 284

Basic Health Plan - Purpose

Answer 284

To provide or make more readily available and affordable, necessary, facilitated basic health care services to working persons and others who lack coverage.

Question 285

Basic Health plan - Model

Answer 285

Employer or group sponsor may pay the health plan cost on behalf of an eligible enrollee, with prior approval of the administrator and upon prior arrangement with an enrollee. the administrator receives an IRS Tax credit on eligible enrollees.

Question 286

Basic Health Plan Services

Answer 286

means the schedule of covered health services, including the description of how benefits are administered, that are required to be delivered to an enrollee under the basic health plan. The plan will be reviewed and revised from time to time.

Question 287

Catastrophic Health Plan

Answer 287

any health benefit plan that provides benefits for hospital inpatient and outpatient physician services and prescription drugs prescribed in conjunction with these services.

Question 288

Certification (of health care services)

Answer 288

Review and prior approval by the administrator that a procedure and/or hospital stay is medically necessary and appropriate according to the auspices of the applicable health benefit plan.

Question 289

Concurrent review

Answer 289

Utilization review conducted during a patients extended hospital stay or course of treatment to assure continued appropriateness for subsidized funding.

Question 290

Covered person or Enrollee

Answer 290

Person covered by a health plan including a subscriber, policyholder, beneficiary of a group plan or individual.

Question 291

Dependent (Min. requirement)

Answer 291

Enrollee’s Legal spouse and qualified unmarried dependent children

Question 292

DSHS

Answer 292

Department of Social and Health Services

Question 293

Emergency services and emergency medical condition

Answer 293

covered health care services medically necessary to evaluate and treat an emergency medical condition which is a symptom or condition that requires immediate medical attention.

Question 294

Enrollee Point-of-Service Cost-sharing

Answer 294

Enrollee’s copayments, coinsurance, or deductibles

Question 295

Health Plan, or Health Benefit plan

Answer 295

Any policy, contract, or agreement offered by a health carrier to provide, arrange, reimburse, or pay for health care services except for:

• Long term Care Insurance
• Medicare supplemental health insurance
• Limited Health care services and plans deemed by the insurance commissioner to have a short-term limited purpose (short term medical)
• Disability Income and Accident only Coverage
• Coverage incidental to a property/casualty insurance policy (i.e, PIP, or Homeowners med. Pay)
• Workers compensation coverage
• Employer-sponsored self-funded health plans
• Dental only and vision only coverage

Question 296

Utilization Review

Answer 296

The prospective assessment of the need and appropriateness of providing health care services to an enrollee or group of enrollee’s.

Question 297

Wellness Activity

Answer 297

Regimented activity consistent with department of health guidelines for the purpose of improving enrollee health status and reducing health service cost.

Question 298

Maternity Services - Requirements

Answer 298

Every health provider providing coverage for maternity services must permit the attending provider, in consultation with the mother, to make decisions on the length of the inpatient stay. Decisions are not to be made based on contracts provisions or agreements between providers, hospitals, and insurers. Decisions must be based on accepted medical practice.

Question 299

What must all carriers that provide coverage for maternity services provide to policy holders?

Answer 299

• must provide services for inpatient, post-delivery care to a mother and her newly born child, which is ordered by the attending provider, in consultation with the mother after delivery.
• Type and Location of follow-up care upon discharge, must be made by attending provider and in consultation with the mother.
• Covered eligible services may not be denied for follow-up care, including in-person care, as ordered by attending provider in consultation with the mother. Coverage for the newly born child must be no less than the coverage of the child’s mother and for no less than 3 weeks.

Question 300

Independent Review of Healthcare Disputes

Answer 300

Establishes a process for the fair consideration of disputes relating to decisions by carriers. Enrollee’s may seek review by a certified independent review organization or decision made.

No later than the third business day after the date the carrier receives a request for review, carriers must provide the certified independent review organization a copy of:

• Medical records of the enrollee
• Documents used by the carrier in making determination
• documentation and written information submitted to the carrier in support of the appeal
• list of each physician or health care provider who has provided care to the enrollee.

Enrollee’s must have at least 5 business days to submit to the independent review organization information needed.

Question 301

Enrollment of a child under the health plan of parent - requirements and restrictions

Answer 301

• may not deny coverage of child for any reason
• Urgent and immediate service must still be covered even if child doesn’t reside in service area
• INS offering broader coverage will provide coverage to any child otherwise covered that does not reside in service area
• INS must continue coverage for eligible children in cases of divorce. Where a parent is required to provide health coverage for a child, and parent is eligible for family health coverage, provider of benefits must not disenroll an eligible child.
• Coverage providers assigned Medicaid recipients may not impose requirements on the health care authority that are different from requirements applicable to an agent of any individual so covered.
• Where current health coverage is available through a noncustodial parent, the plan sponsor will provide info to the custodial parent for the child to obtain health benefits. Allowing the custodial parent to submit claims for covered services without approval of noncustodial parent.

Question 302

Laws Common to Life, Disability, Property, Casualty

{Commissioner Vocab / Definitions}

Answer 302

• Scope of Code: All INS and INS Transactions in this state, or affecting subjects located within this state, are governed by this code
• Public Interest: The business of INS is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all INS matters.
• Insurance: Contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies.
• Insurer: used in this code includes every person engaged in the business of making contracts of ISN.
• Insurance Transaction: Includes; solicitation, negations, execution of INS contract, transaction of matters subsequent to contract, insuring.

Question 303

Laws Common to Life, Disability, Property, Casualty

{Commissioner Vocab / Definitions}

Answer 303

• Person: any individual, company, insurer, association, organization, reciprocal, or interinsurance exchange, partnership, business trust, or corporation
• Penalties: guilty of a gross misdemeanor and be fined not less than $10 or more that $1000, or imprisoned for no more than 364 days.
• INS Commissioner (IC): Elected for 4 years

Question 304

Insurance Commissioner Powers and Duties - State of Emergency

Answer 304

• IC has authority expressly conferred upon him or implied from provisions of code
• IC must execute duties and must enforce provisions of code
• IC may: make reasonable rules for effectuating this code, which first must be filed for public investigation, conduct investigations to determine if someone has violated, conduct examinations, investigations, and hearings
• When governor proclaims state of emergency, the IC may issue an order that addresses any of the following: Reporting requirements for claims, grace periods for payments, temporary postponement of cancellations and nonrenewal, and medical coverage to ensure access to care.
• an order by the IC under subsection (4) of this section may remain effective for not more than 60 days.
• IC may adopt rules that establish general criteria for orders issued under subsection (4) and may not adopt emergency rules applicable to a specific proclamation of a state of emergency by the governor.

Question 305

IC Enforcement

Answer 305

• IC may prosecute an action in any court of competent jurisdiction
• IC shall certify the facts of the violation to the public prosecutor of jurisdiction
• The IC may: issue a cease and desist order, or bring an action any court of competent jurisdiction to enjoin the person from continuing the violation.
• Attorney General and several prosecuting attorneys throughout the state shall prosecute or defend all proceedings brought pursuant to the provisions of this code when requested by the IC.
• ## IC may delegate authority

Question 306

Examination of Records

Answer 306

• IC Shall examine each insurer holding a certificate at least every 5 years
• IC shall examine rating organizations and examining bureaus at least every 5 years
• IC may accept an audit of out of state insurers from their state of domicile or port-of-entry state
• iC may examine insurance producers, adjusters or title insurance agents of a person holding shares or proxies of domestic insurers for the purpose of control.

Question 307

Rates and Forms

Answer 307

Most policies must be filed at least 30 days before use with the IC. If no action has been taken by the IC, the policy will be deemed approved.

Question 308

Penalties

Answer 308

IC may place on probation, suspend, revoke, or refuse to issue or renew a license for:
Violating insurance laws, providing misleading info, misrepresentation, cheating, etc.

Business license may be revoked if the managers don’t report violations. the IC may enforce the law even if a license has been lapsed by operation of law.

To revoke or suspend a license, the IC must give 15 day written notice. Suspension may not exceed 12 months. Fines shall not exceed 1,000 per violation and paid within 30 days.

Hearing: producer may ask for a hearing to contest the revocation or suspension within 90 days of the notice. this must be done by written notice to the IC. IC must hold hearing within 30 days.

Question 309

Unlicensed Activities

Answer 309

Unlicensed activities are a Class B Felony - a fine up to $20,000 and 10 years imprisonment, in addition to any civil penalty imposed.

Civil penalties - IC may issue a cease and desist order, suspend or revoke a producers license, and/or impose a fine of up to $25,000 per violation.

Question 310

Insurance (RCW 48.01.040) (Terms and Concepts)

Answer 310

Insurance is a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies

Question 311

Insurer (Terms and Concepts)

Answer 311

Domestic mutual insurer is owned and operated in the interest of it’s members. Each member shall have one vote in the election of directors and may receive dividends from surplus and net earnings of it’s business. No dividend may be contingent upon paying a renewal premium. Policies are called participating (par) policies.

Question 312

Insurance Transaction

Answer 312

INS transaction includes any: Solicitation, negotiations, execution of an insurance contract, transaction of matters subsequent to execution of the contract and arising out of it, insuring

Question 313

Authorized and unauthorized certificate of authority

Answer 313

Authorized insurers must have a certificate of authority stating: INS name, location on principal office, kinds of INS authorized to transact in this state.

Settlement of claims by an unauthorized insurer is not considered an insurance transaction. Any unauthorized insurer transacting business in WA submits itself to the courts of WA. Placing business with an unauthorized insurer may result in a fine up to $25,000 per violation.

Surplus line coverage is used for ins that cannot be procured from an authorized insurer.

• must be procured through a surplus lines brother
• a diligent effort must be made to ascertain coverage is not available
• cannot be procured just to get a low premium
• filing with the IC within 30 days of procuring coverage attesting these facts must be made.

Question 314

Guaranty Association

Answer 314

For life and disability contracts:

• Covers insolvency of member insurers
• insureds are covered by only one state association
• Contract interest rates will be calculated for the past 4 years before insolvency as the average for that time using Moody’s corporate bond yield average minus 2 points. After insolvency the rate will be 3 points less the moody’s corporate bond yield.
• limit for one life, surrender value, major medical, disability income, annuity is $500,000. Group contracts covered up to $5,000,000
• Not covered HMO’s, health care service contractor, fraternal, mandatory state pooling plan

Purpose is to avoid delay and loss to claimants and policyholders because of insurer insolvency.
Covers insurers authorized to transact in this state at the inception of a policy or at the time of claim.
All insurers must remain members of the association as a condition to transact insurance.
Powers shall be exercised through a board of directors.

Question 315

Persons required to be licensed

Answer 315

• Producer: May act as agent / broker. Producer must be appointed by those insurers. (appt notice sent by the insurer to the IC stating the producer represents them). To act as broker, they must have a bond. Bond is greater of $2,500 or 5% of the brokered premium the previous year (Important: Agents represent insurers and brokers represent the applicant or insured)
• Life Producers: selling variable products must be FINRA (Securities licensed) registered

Question 316

Temporary License

Answer 316

Temporary license may be issued by the IC because of death or disability of a producer not to exceed 180 days to:

• Surviving spouse or court appointed personal rep
• person of a business entity licensed as a producer
• Designee of a licensed producer entering active military service
• Others where the IC deems public interest will best be served (Temporary Licensee may be limited by IC, temporary licensee may be required to have a suitable sponsor, or end upon disposal of business

Question 317

non-resident

Answer 317

Non-resident license may be issued to producers in good standing in their home state, for the same lines of insurance, if that state reciprocates with WA. No finger print necessary IF required by the resident state and no test is required. Continuing Education is also reciprocal. the IC must be appointed by the producer to receive service of legal process issued against producer.

Exemptions:

• Insurer
• Officer, Director, or employee of an insurer not receiving commissions
• Employer providing insurance benefits and not compensated in any manner
• Person advertising in this state as part of a multiple state ad, who does not sell in WA.
• Person forwarding group credit insurance applications who receive no commission.

Question 318

Appointments / Terminations of Appointments

Answer 318

An appt is authorization given by an insurer or agent to a producer, granting permission to represent the company/agency in transacting insurance business on their behalf. Appointments - are required from each insurer a producer represents.

INS producers must be authorized to transact at least one line of authority within the authority of the insurer or the business entity (initial appt). Unlicensed will be denied.

Question 319

Penalties for non-compliance

Answer 319

1. refusal / nonrenewable
2. Suspension / Revocation: Suspension may be for a max of 12 months. Producer is informed, in advance of start and end date. License shall be suspended for non-compliance DSHS order. Revocation of a producers license may be permanent. Commissioner must provider a 15 day written notice (3 day notice if for public safety prior to.
3. Probation: Commissioner may probate a suspension or revocation of a license under reasonable terms determined by commissioner. May need to report, limit practice, or continue education.
4. Fines: IC may levy a civil penalty or any combination of action or violations of the code.

Question 320

Maintenance and Duration of License

*Renewal

Answer 320

• Initial and reinstated individual licenses are valid from their date of issuance until the end of the licensee’s next birth month plus one year
• after initial renewal, licenses are valid for 2 years and must be renewed prior to the end of the birth month of the licensee
• Renewal filed with the IC before expiration, allow a producer to continue to act under his license
• Licensees must inform the IC of an address or email change within 30 days.
• Business entity’s license is valid for two years from issuance

Question 321

Continuing Education

Answer 321

Resident producers in life, disability, personal lines, property, casualty, or variable insurance must meet continuing education requirements. (exempt: adjusters and limited lines).
Requirements:
- 24 credit hour of which 3 hours must be in ethics. Producers needed to complete courses required to sell specific insurance plans (E.g.; annuities and LTC).
- Course completion within 24 months of license expiry
- no hours may be carried over for next renewal
- Waivers may be granted for Medical / Military

Question 322

Late Renewal / Reinstatement

Answer 322

Late renewal fee consists of the renewal license fee and surcharge: 50% surcharge after license expiry date for first 30 days late; 100% after 30 days up to 60 days late; after 60 days to 12 months late, 200% and license reinstatement

Question 323

Reporting of Actions

Answer 323

Any insurance producer having administrative action taken against them in another jurisdiction, or by another governmental agency in this state, shall report it to the commissioner within thirty days

Question 324

Designated Responsible Licensed Person

Answer 324

DRLP must be given the necessary authority and info by the business entity that reasonably assures that the DRLP can cause or influence the entity’s compliance with all applicable ins laws, rules, or both of state.

Question 325

Protection of public Interest

Answer 325

Public Interest: Business of INS is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all ins matters.

Question 326

Unfair Practices and Frauds

Answer 326

Insurers and their reps must act in good faith and in a timely manner during claims process.

• Insurers must respond to claim within 10 working days (15 for group)
• Insurers must respond to an inquiry by IC within 15 working days
• insurers must complete investigation of a claim within 30 days after notification (unless cannot be completed in that time).
• Insurers must within 15 days of proof of loss, notify first party claimants of denial or acceptance.

Question 327

Unfair practices with respect to out-of-state group life and disability insurance

Answer 327

It’s unfair method of competition and an unfair practice for any insurer to engage in any insurance transaction, regarding life insurance, annuities, or disability ins coverage. It is further defined to be an unfair practice for any insurer marketing group insurance coverage in this state to fail to comply with the state requirements.

Question 328

Producers Compensation Disclosure

Answer 328

• The relationship of a producer appointed by an insurer shall be that of insurer and agent
• Producer may receive commission from the insurer and a fee paid by the insured
• if both commission and fee, the producer may reimburse part of the fee
• if fee is charged for each policy, then the fee, commission, offsets, or future bonus’s must be disclosed in writing, signed by producer and insured and kept on file for 5 years

Question 329

Rebating

Answer 329

Violation of the statutes for insurers or producers to offer, promise, discount premium, or give money to induce a perspective insured to buy a policy

Question 330

Rebate - Acceptance Prohibited

Answer 330

No insured personal shall accept such a rebate as described above, which is not specified in the insurance contract

Question 331

Illegal Inducements

Answer 331

Insurer/producer/title agent may not offer as an inducement to the purchase of INS or in connection with any insurance transaction.

Question 332

Illegal Dealing in Premiums

Answer 332

Commingling: combining the customer’s money (premium) with the producers funds. Violation is misdemeanor. *charging too much and keeping excess / charging premiums not needed

Question 333

Twisting

Answer 333

No person shall by misrepresentations or misleading comparisons, induce or tend to induce any insured to laps, terminate, forfeit, surrender, retain, or convert any INS policy

Question 334

Misrepresentation

Answer 334

Intentionally making false or misleading statement. Guilty of gross misdemeanor and loss of license

Question 335

Defamation of Insurer

Answer 335

Includes publishing or disseminating false or maliciously critical info designed to insure an insurer

Question 336

Discrimination

Answer 336

Unfair when based on sex, marital status, sexual orientation, handicap unless bona fide statistical differences in risk have been substantiated

Question 337

Failure to Issue Proper Receipts

Answer 337

Any representative of an Insurer who receives a payment or premium for personal insurance shall issue a receipt no later than the next business day

Failure to issue proper receipts: Any representative of an insurer who receives a payment or premium for personal insurance (personal lines) shall issue a receipt no later than the next business day. The receipt need not be independent of the application. It must be dated, identify the insurer and insured, include the amount paid, with a brief description of the insurance it’s applied to.

Question 338

Penalties

Answer 338

the IC may define other acts to be unfair and promulgate by regulation restrictions, effective no earlier than 30 days later. the IC may order a person to cease and desist and fine $1,000 per violation thereafter.

Question 339

Advertising

Answer 339

• don’t make misleading statements or advertisements
• insurer must have it’s full name and home office location in advertisement
• no person who is not insurer can claim they are
• Ads showing financial conditions of the insurer must correspond to the state
• no ads may reference in any fashion the WA INS Guaranty Assn. Act

No person shall knowingly make or publish any misleading statements or advertisements relative to the business of insurance or any person engaged therein.

An insurer must have its full name and home office location (domicile) in an advertisement.

No person who is not an insurer may infer it is.

Ads showing financial conditions of the insurer must correspond to the last filing with the state.

No ads may reference in any fashion the WA Insurance Guaranty Assn. Act.

Question 340

Producer Responsibilities

Policy Delivery

Answer 340

Policies must be delivered to the policyholder within a reasonable time after issuance.

Question 341

Producer responsibilities

Premium Accountability

Answer 341

Producers must report the exact consideration charged as premium to the insurer and that premium shall be shown in the contract.

Question 342

Producer Responsibilities:

Separate Account Requirement

Answer 342

All funds received by a producer must be segregated and maintained in a separate account. No agency or personal funds may be combined with premiums in this account (commingled).

Question 343

Producer Responsibilities

Reply to the IC

Answer 343

must respond in writing promptly to an IC inquiry. Responses must be within 15 business days of inquiry

Question 344

Compensation of Licensees

Receiving Compensation

Answer 344

No entity may pay any person for selling, soliciting, or negotiating insurance unless that person is licensed. Renewals may be paid if the person was licensed at time of sale.

Question 345

Compensation of Licensees

Charges for extra services

Answer 345

the IC may permit a reduced fee for other services so that an overall charge to an insured is reasonable

Question 346

Mutual Insurers

Answer 346

Mutual insurers sell participating policies (par) and if dividends are to be paid, they go to the policyholders.

Question 347

Part A: Hospital Insurance

Answer 347

PART A: HOSPITAL INSURANCE

Covers reasonable and covered inpatient hospital expenses.

1 - 60 days

A benefit period deductible (Set by CMS)

61 - 90 days

A daily coinsurance (usually 1/4 of the benefit period deductible)

91 -150 days

A daily coinsurance (usually 1/2 of the benefit period deductible) (Reserve benefit)

The benefits for 1 to 60 days and 61 to 90 days are restored each benefit period. Deductibles are also restored.

The 91 to 150 day benefit is a once in a lifetime benefit called a reserve benefit.

Question 348

Guaranty Association

Answer 348

Guaranty Association
Purpose is to avoid delay and loss to claimants and policyholders because of insurer insolvency.
Covers insurers authorized to transact in this state at the inception of a policy or at the time of claim.
All insurers must remain members of the association as a condition to transact insurance.
Powers shall be exercised through a board of directors.