Module 4 Flashcards
Health, Disability, LTC, and VA Insurance
1
Q
Understanding the health insurance rights, requirements, and responsibilities that pertain to your clients through various government mandates and contract requirements is essential in your financial planning role. There are three important federal acts that form the basis of these items:
A
the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the Patient Protection and Affordable Care Act of 2010 (PPACA).
2
Q
Although COBRA went a long way in ensuring continuation of health care for departing employees, it did not address the issue of ? when switching jobs.
A
pre-existing medical conditions
3
Q
What is the Health Insurance Portability and Accountability Act of 1996 (HIPAA)?
A
It is a U.S. federal law enacted in 1996 that establishes national standards to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge.
4
Q
HIPAA eliminated the previously detrimental aspects of changing jobs and enrolling in a new employer group health insurance plan that included a pre-existing conditions clause.
Specifically, HIPAA provided that there could not be enforcement of a pre-existing medical condition clause if:
an employee was covered by the prior employer’s health insurance plan for at least ?, and
fewer than ? have elapsed since the loss of coverage under the prior employer’s plan.
A
12 months; 63 days
5
Q
What is the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) ?
A
A U.S. federal law that allows employees and their families to continue their employer-sponsored health insurance coverage for a limited period after losing their job or experiencing certain other qualifying events.
6
Q
What act is the below blurb referring to?
In most cases, employees may maintain group health insurance benefits for up to 18 months after leaving work. Employers with 20 or more employees normally have to offer this extended health insurance coverage to terminating employees. A part-time employee counts as half an employee for purposes of this rule. Note that government and church employers are exempt from ? requirements.
A
COBRA
7
Q
What is the Patient Protection and Affordable Care Act of 2010 (PPACA)?
A
Commonly known as the Affordable Care Act (ACA) or Obamacare, is a U.S. federal law enacted in 2010 to expand access to healthcare, improve the quality of care, and control healthcare costs.
8
Q
One of the goals of the PPACA is to make it easier for small businesses to ?.
A
offer insurance to their employees
9
Q
What is the Small Business Health Options Program (SHOP)?
A
A marketplace created under the Affordable Care Act (ACA) that allows small businesses (typically those with 1 to 50 full-time employees) to offer affordable health and dental insurance to their employees.
10
Q
What program is the below blurb referring to?
? allows the employer to control the coverage it is offering and how much it pays toward employee premiums. The employer can decide whether to offer dependent coverage and dental insurance, and it chooses the open enrollment period and waiting period for new employees. Employees can then enroll online, and the employer pays one bill. Employers with fewer than 25 employees may qualify for the Small Business Health Care Tax Credit of up to 50% of premium costs.
A
Small Business Health Options Program (SHOP)
11
Q
The greatest benefits of Small Business Health Options Program (SHOP) are for employers with fewer than ? employees making under $25,000.
A
10
12
Q
What is Medicaid?
A
A government insurance program for persons of all ages whose income and resources are insufficient to pay for health care. Medicaid is a federally initiated program, but it is primarily administered, and at least partially funded, at the state level. As such, each state sets its own criteria to qualify for benefits other than those federally mandated requirements.
13
Q
? and ? provide health care coverage to children, pregnant women, parents, and disabled individuals with low incomes.
A
Medicaid; CHIP
14
Q
There are generally two types of assets when calculating eligibility for Medicaid:
A
assets that are counted and those that are not.
15
Q
Poverty alone does not qualify someone for Medicaid. In addition to income requirements, individuals need to satisfy federal and state requirements regarding:
A
residency, immigration status, and documentation of U.S. citizenship.
16
Q
Because Medicaid, unlike Medicare, provides coverage for long-term care (LTC)—including nursing home care—many people are tempted to use this program as a way to shift the cost burden of nursing homes to the government. Due to this temptation, Medicaid law includes a provision defining a lookback period of ? months for assets transferred to others (usually adult children) designed to impoverish the donor to become eligible for Medicaid.
A
60
17
Q
Recall that Medicaid is a joint ? and ? health insurance program.
A
federal; state
Generally, the program is administered by the states with financial assistance from the federal government.
18
Q
What is the Children’s Health Insurance Program (CHIP)?
A
A federal program that is administered by the states. CHIP provides health insurance to children in families who do not qualify for Medicaid. Typically, CHIP benefits are applied for at the same time as Medicaid benefits.
19
Q
What do the below situations represent?
Joshua’s health plan limits the number of chiropractic visits in a calendar year, specifies the number of days of inpatient care that will be provided for mental and nervous conditions, and requires that certain surgical procedures be performed on an outpatient basis.
Abby’s managed care plan will pay nothing if services are provided by a doctor who is not on an approved list of providers.
Justin’s health plan will provide a reduced benefit for treatment provided by nonapproved providers.
Unless prior approval is obtained, Oliver’s health plan will pay the cost of a procedure as if it was done as an outpatient treatment, even though it was performed in the hospital.
A
Internal limits of health insurance.
20
Q
What is utilization review?
A
The process of evaluating the necessity, efficiency, and appropriateness of medical services, procedures, and treatments provided to patients. It is commonly used by health insurance companies, hospitals, and healthcare providers to ensure that care is medically necessary and cost-effective.
21
Q
What is case management?
A
Another form of utilization review that is used to control costs and optimize patient benefits in the treatment of expensive illnesses such as diabetes, hypertension, AIDS, cancer, or heart disease.
22
Q
What is a coordination of benefits provision?
A
Many working couples are covered as employees under their own employer’s plan, and each is also covered as a dependent under their spouse’s plan. This type of double coverage can result in individuals being overinsured—meaning that the individual is able to collect benefits in excess of the amount of the loss.
To avoid this situation, group health insurance policies contain a coordination of benefits provision that says if a loss is payable under two group health insurance plans, one plan will be considered primary and the other will be considered secondary. The primary plan pays benefits up to its limit first; the secondary insurance plan will pay up to its limit for costs not covered by the primary plan. The provision describes how to determine which plan is primary and which is secondary.
23
Q
What is the maximum out-of-pocket (MOOP)?
A
The limit the insured will pay out of pocket for care. Most of the health plans today include the deductible, copayments, and coinsurance under the definition of MOOP.
24
Q
One thing to keep in mind is that the MOOP limit only applies to ?.
A
approved charges
If the plan allows the insured to go out of network, but pays a lower percentage, the additional amount the insured is responsible for is not included in the MOOP calculation. Further, if the policy limits certain care (e.g., chiropractic) the additional care received is in addition to the MOOP.
25
26
What are prepayment health care plans?
Managed care plans in which payments for services are negotiated and paid to health care providers.
27
What is a capitation fee?
A fixed, pre-arranged amount paid per patient to a healthcare provider for a specified period, regardless of how many services the patient actually uses. It is commonly used in healthcare financing, especially in managed care models.
28
What are postpayment health care plans?
Pay for covered expenses once they are incurred.
29
What are indemnity plans (also known as fee-for-service plans)?
Plans where the client has total choice of providers without payment discrimination are known as indemnity plans because an insurance company is indemnifying covered persons and reimbursing them for their expenses.
These plans are also called fee-for-service plans because from the providers’ viewpoint, they charge the fee they wish for the service, and it is the patient’s responsibility to pay. The insurance company may or may not have negotiated rates or a specific payment. However, if the provider’s charge is greater than what is covered under the plan, the balance is the responsibility of the insured.
30
What is a comprehensive major medical policy?
An indemnity plan that incorporates essential medical services under one plan. Each policy may have limits within it defining what it will and will not cover and can have exclusions and limitations for various services. The amount of coverage can vary based on the policy, and the prices will reflect the level of coverage.
31
What is a daily benefit plan?
Another type of indemnity plan typically offered by specialty providers that pays a daily benefit (or fixed dollar) amount when the insured is sick, in the hospital, or disabled. Premiums are based on the chosen benefit amount. These plans do not really provide medical expense coverage—they are ancillary or supplemental benefit plans that pay the insured a benefit once a specific trigger event has happened (e.g., the insured enters a hospital).
32
Health maintenance organizations (HMOs), preferred provider organizations (PPOs), POS plans, exclusive provider organizations (EPOs), and provider service networks (PSNs) are all examples of what kind of plan?
Managed care plans
33
Individuals covered by managed care plans are usually called ? or members rather than insureds.
subscribers
34
? assures that a primary care physician (PCP) is paid a fixed fee for every health care plan subscriber who names that physician as the patient’s PCP. The physician then provides whatever services the patient needs.
capitation
35
Most managed care plans have a fixed fee for each visit to a health care provider’s office, referred to as a ?.
copayment
36
What is a health maintenance organization (HMO)?
a type of health insurance plan that provides healthcare services through a network of doctors, hospitals, and other providers who have agreed to specific payment rates. HMOs emphasize preventive care and usually require members to choose a primary care physician (PCP) who coordinates their healthcare.
the doctors and hospital staff are employees/contractors of the HMO. The plan offers the services of its own participating physicians and hospitals to the plan’s subscribers under the terms of a contract similar to a comprehensive major medical contract. The difference is that a subscriber can use only the physicians that are a part of the HMO network.
37
? generally have no annual deductibles and no coinsurance provisions. Office visits normally have a nominal copayment (e.g., an amount from $10 to $50 paid on each visit), and hospital stays, lab tests, and X-rays usually have a somewhat larger copayment.
HMO plans
38
In HMO plans, another way that costs are contained is by using the PCP as a ?
gatekeeper
39
HMOs provide both the health care ? and the health care ?, while traditional health care insurance companies provide only the financing.
service; financing
40
What is a preferred provider organization (PPO)?
a group of providers (e.g., generalists, specialists, hospitals, clinics) that have agreed to be part of the plan. The plan pre-negotiates charges and fees for all the different services. These fees are typically discounted from the standard charges of the physician/hospital. Providers accept the discounted rates with the anticipation of increased patient volume.
41
What are some differences between an HMO and a PPO?
PPOs operate on a fee-for-service rather than a prepaid basis like an HMO. PPO plans also have deductibles, coinsurance, and copays. The PPO premium is generally less than an HMO fee.
Unlike an HMO, typically a PPO neither requires the insured to choose a PCP nor does it require a referral to use a specialist. The insured is not restricted to using only in-network providers, but is encouraged to do so due to the lower cost-sharing arrangements. For example, the plan’s coinsurance arrangement might cover 80% of the approved charges of the in-network provider while only covering 50% of the approved charges of an out-of-network provider.
42
What is a point-of-service (POS) plan?
A hybrid between an HMO and a PPO. Typically, the insured will need to designate a PCP and use that PCP for referrals to specialists. Unlike the HMO, an insured may receive care outside the network and still receive some form of benefit level. The POS plan has more restrictions than a PPO, but it is not as restrictive as an HMO.
43
44
What is the overall purpose of a POS plan?
to provide financial incentives to each covered individual to use the lowest-cost providers, while still maintaining a full range of choices for each person. This type of plan is popular because it addresses everyone’s needs—the need of the plan to hold down costs and the desire of covered persons to have a choice regarding health care services.
45
Assume Frank has a major medical health insurance policy with a $1,000 deductible, a 20% coinsurance provision, and a $5,000 MOOP. Due to a hospital stay, Frank has $25,000 of eligible medical expenses. He first must pay the $1,000 deductible. Then, the coinsurance provision of the policy takes effect, under which the insured will pay 20% of covered medical expenses above the deductible until the MOOP is reached.
How much is Frank responsible for?
After the $1,000 deductible is applied, $24,000 of eligible medical expenses remain; Frank’s 20% of this amount is $4,800. This amount plus the $1,000 equals $5,800. However, Frank is only responsible for a MOOP of $5,000. The insurance company will cover the additional $800 not paid by Frank plus 100% of the remaining covered expenses, which totals $20,000.
46
What is Medicare?
a federal health care program for persons age 65 or older, younger disabled persons who qualify for Social Security disability insurance (SSDI) after 24 months, and anyone who has end-stage renal (kidney) disease. The program is administered by the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services. Hospital insurance benefits are financed by a tax on all earnings that must be paid by every person who is subject to the regular Social Security tax or to the railroad retirement tax.
47
To be covered by Medicare, an individual must be fully insured according to Social Security. Qualification requires accumulating at least ? credits, which are earned by generating a minimum amount of work-related income over at least the past 10 years and paying Social Security taxes.
40
48
What is the initial enrollment period?
The initial enrollment period is the first chance to enroll in Medicare and is the three months before the 65th birthday month, during the birth month, and three months after the birth month—for a total of seven months. If a client enrolls before turning age 65, coverage will start on the first day of the birth month. If a client enrolls during their birth month or later, coverage starts on the first day of the month following the date of enrollment.
49
What is the special enrollment period?
Clients who remain employed past age 65 may still enroll in Part A when they become age 65. Because Part A typically involves no cost, there is little reason not to enroll. They should enroll in Part B when they decide to retire. To enroll in a Medicare plan without penalty, a client has eight months beginning with the earlier of (1) the first full month of their employment ending or (2) their health coverage through the employer ending. Note this is different from the customary six month enrollment period because the client continued to be employed past age 65.
The special enrollment period allows clients to continue working past age 65 and then, upon retiring or deciding to leave the employer-based health care plan, they can then sign up for Part B (or Part C) and obtain a guaranteed issue Medicare supplement policy.
50
What is the general enrollment period?
If a client fails to sign up during either the initial or special enrollment periods, there is an annual general enrollment period for Part A and Part B, which is between January 1 and March 31. Coverage takes effect on July 1. The penalty for signing up late is 10% per year of delay, and this penalty is permanent.
51
Medicare Part A helps pay ? expenses.
in-hospital
52
What are lifetime reserve days?
extra hospital days that Medicare Part A provides beyond the standard 90 days of inpatient hospital coverage per benefit period.
53
What is skilled nursing care?
refers to medically necessary care provided by trained professionals, such as registered nurses (RNs), licensed practical nurses (LPNs), and physical, occupational, or speech therapists. It is typically provided in a Skilled Nursing Facility (SNF), hospital, or home health setting under a doctor’s supervision.
54
Medicare Part B helps cover ? and ? expenses.
physician’s; outpatient
55
Medicare Part C, or Medicare Advantage plans, is offered by private insurance companies and work similarly to group plans offered by employers.
an alternative to Original Medicare (Parts A & B). These plans are offered by private insurance companies approved by Medicare and often include additional benefits beyond what Original Medicare covers.
56
What are Medicare HMOs?
a type of Medicare Advantage (Part C) plan offered by private insurance companies. It provides Medicare Part A (hospital) and Part B (medical) coverage and often includes extra benefits like prescription drugs, vision, dental, and wellness programs.
57
What are Medicare PPO plans?
offer many features of an HMO, but with fewer restrictions. However, this coverage may be more expensive than an HMO. PPO plans usually do not require the individual to choose a PCP, and services can be received from any provider. The tradeoff is that the participant will pay more for services received out of network. Some areas may have regional PPOs, which increase flexibility, but also may increase costs.
58
What are Medicare private fee-for-service (PFFS) plans?
a type of Medicare Advantage (Part C) plan offered by private insurance companies. It provides the same coverage as Original Medicare (Parts A & B) and may also include prescription drug coverage (Part D) and extra benefits like vision, dental, or wellness programs.
59
As the name implies, Medicare special needs plans cover individuals with special health needs. Frequently, these plans are referred to as ? because they may be receiving benefits from both Medicare and Medicaid.
dual elligible
60
What are Medicare supplement plans (medigap)?
private insurance designed to help cover out-of-pocket costs that Original Medicare (Part A & B) doesn’t pay, such as deductibles, copayments, and coinsurance.
61
Retirees may not be turned down for a Medicare supplement policy as long as they apply for coverage within ? months of enrolling in Medicare after age 65 or when they retire after age 65.
six
62
A Medicare supplement policy is designed to fill the “gaps” in original Medicare and Parts A and B. For this reason, it is often referred to as a ? plan.
"Medigap"
63
Medicare Part D provides coverage for ?.
prescription drugs
64
What is disability income insurance?
(DI) provides income replacement if you become unable to work due to illness, injury, or disability. It helps cover essential expenses like rent, mortgage, utilities, and daily living costs when you're unable to earn a paycheck.
65
The narrowest definition in use in the private insurance industry is any occupation, or any occ. Under the ?, insureds are considered totally disabled if they are “unable to perform the duties pertaining to any gainful occupation.”
any occupation definition of disability
This definition, which generally is limited to policies for blue-collar workers but can be found in group and association plans, provides benefits to insureds who are unable to work in any occupation, despite their qualifications or salary needs.
66
The broadest definition of disability is own occupation, or own occ. The ? considers insureds totally disabled if they are unable to engage in the principal duties of their own occupation.
own occupation definition of disability
This definition is available only to individuals in certain occupational classifications. Generally, the classifications include professional/technical and managerial personnel who meet certain income and duration of employment criteria. In the case of some types of professionals, a few companies are willing not only to specify that insureds must be able to work in their own occupations, but also in their own specialties.
67
Some insurers are shifting to a modification of the own occupation definition. Under the ?, the insured is considered disabled if he is unable to engage in any occupation for which he is reasonably fitted by education, training, experience, and, with some policies, prior economic status.
modified own occupation definition of disability
68
What is a split definition of disability?
uses the broad own occupation definition for a specific time (e.g., the first two to five years of disability), after which the narrower modified own occupation, or the any occupation, definition takes effect for the duration of the benefit period. This split definition may apply to all employees, or it may apply only to selected employee classes, such as salaried employees.
69
What is the elimination period?
also referred to as the waiting period, is the period after
the disability occurs and before benefit payments begin. The elimination period essentially is the deductible for a disability income insurance policy. In other words, it is a time deductible, as it defines the amount of time the insured must wait before the benefit period begins.
70
The ? is usually not a factor in insurance company selection, since a full range of waiting periods are available with any insurance company.
elimination period
71
What is the probation period?
defined as the period during which the individual policy must be in force before the insured is covered for specified perils or illnesses.
the probation period is specifically designed to protect the insurance company from having to cover certain pre-existing conditions and other adverse selection situations. Generally, if an insured discloses pre-existing conditions on an application for insurance and the company does not eliminate or discount the conditions in the policy, the insured is fully covered. Pre-existing conditions that are not disclosed are not covered during the probation period, which can range from 30 days to two years.
72
The more favorable the renewability provision is to the insured, the higher the ?. The less favorable the provision is to the insured, the lower the ?.
premium
73
What is the presumptive disability clause?
provides that full disability benefits will be paid if the insured loses their sight, hearing, speech, both hands, both feet, or one hand and one foot. However, some policies do not cover all of these losses.
74
What is the disability waiver of premium benefit?
prevents the policy from lapsing as a result of nonpayment of premiums during the insured’s disability. Policy benefits are based on the insured being disabled, so the premiums generally are waived whenever the insured qualifies for benefits.
75
The insured’s ? is the most important factor in underwriting disability income insurance.
occupation
76
What is business overhead expense (BOE) insurance?
is designed to cover the expenses that are usual and necessary in the operation of the business, should its owner become disabled.
77
What is disability buyout insurance?
These policies may provide for either a lump sum payment or series of payments after an elimination period. The amount of coverage typically is limited to no more than 80% of the market value of the insured owner’s share, with a maximum that would not be sufficient for most multimillion-dollar businesses. The elimination period is a minimum of 18 months, but more commonly is two or three years.
78
What is a guaranteed purchase option rider?
guarantees the insured the right to increase a policy’s benefit amount or purchase additional policies at specified option dates or time periods in the future, regardless of physical health, as long as the insured’s income at that time meets the underwriting requirements for the increased benefit. Most companies require the initial policy to be at least 80% of the maximum amount that the insurance company will sell to the insured before it will allow the purchase of this rider.
79
What is a cost-of-living adjustment rider?
periodically increases disability benefit payments to avoid the problem of a loss of purchasing power during the course of a long-term disability. There are many different approaches to these riders, and each insurance contract should be consulted for the details of any such provision. This rider allows the insured to receive greater benefits after a claim occurs.
80
What is an additional insurance rider (AIR)?
Essentially, this is a combination of the cost-of-living rider and the guaranteed insurability option. This benefit automatically increases policy benefits by 1.5%–2.5% each year while the insured is not disabled. Typically, at the end of four or five years, the company asks for financial data to determine if the insured is eligible to continue to have benefits increase. In many versions of this rider, if the insured turns down one increase or is denied an increase due to inadequate income, no further increases will be allowed. The AIR alone often does not include additional premium, but policy premiums increase each year as benefits increase.
81
What is a social insurance supplement (SIS) rider?
its purpose is to reduce the disability policy benefit by the amount of Social Security that the disabled person is eligible to receive. When this rider is added, a policy pays its full benefit unless, and until, some social insurance benefit, such as Social Security or workers’ compensation, is paid to the insured. By including this benefit, the policyowner will be able to reduce the policy premium.
82
Maria is eligible for a $2,500-per-month benefit under her disability income insurance policy. If she also becomes eligible for a $700 monthly Social Security disability benefit, the individual policy will now pay a benefit of only ? per month.
$1,800 (equal to the original $2,500-per-month benefit less the $700 Social Security benefit)
83
What is long-term care (LTC) insurance?
provides coverage for medical and nonmedical care for individuals with chronic illnesses, cognitive impairment, or difficulty performing activities of daily living (ADLs). The three general levels of LTC are skilled nursing care, intermediate care, and custodial care. Not all LTC is nursing care; instead, most LTC is actually custodial care.
84
LTC is generally divided into three categories:
1. Skilled nursing care
2. Intermediate care
3. Custodial care
85
What is skilled nursing care?
the highest level of care, and generally refers to 24-hour availability of a registered nurse (RN) under a doctor’s supervision.
86
What is intermediate care?
refers to less intensive nursing, or rehabilitative care. This level of care does not require 24-hour availability of an RN or physician.
87
What is custodial care?
generally refers to care that is not medical in nature, but is nonetheless necessary for the health of the individual. This includes such things as assistance with ADLs (e.g., bathing, moving from bed to a chair, eating).
88
What is a benefit period?
the number of years benefits will last before the policy is exhausted. Choices can range from 1 to 10 years. Nearly all carriers have discontinued offering unlimited or lifetime benefit periods. By multiplying the daily or monthly amount by the number of years, you can identify the maximum pool of money available to offset expenses. Depending on the policy definitions, the pool could last longer than the number of years.
89
What is an inflation protection rider?
an optional feature in long-term care insurance, disability insurance, and some life insurance policies that increases your benefits over time to keep up with inflation. This helps ensure that your coverage maintains its value as the cost of living rises.
90
What is Program of All-Inclusive Care for the Elderly (PACE)?
a Medicare and Medicaid program that provides an alternative to nursing home care. The PACE plan generally allows participants to live in and receive care at their own home rather than moving into a nursing home. Providers are paid on a capitation basis, which may allow for more extensive or diverse treatment possibilities than traditionally available under Medicaid or Medicare.
91
What is partnership long-term care insurance?
bring together state government and private insurance companies, which sell LTC insurance, with residents who may want to purchase LTC insurance. The goal of these programs is to help citizens purchase less lengthy, more complete LTC insurance.
92
What are partnership qualified policies?
a special type of long-term care insurance that allows you to protect more of your assets if you ever need to apply for Medicaid. These policies are part of the Long-Term Care Partnership Program, a collaboration between state governments and private insurers to encourage people to plan for long-term care.
93
John had purchased a partnership LTC insurance policy 10 years ago. This policy has a face amount of coverage of $100,000. The inflation protection feature allowed the benefit to grow to $140,000. Assume John used all of the benefits provided in this policy over the next five years and needs to apply for Medicaid. Normally, he would have to spend his assets down to approximately $2,000. Because John had a partnership qualified LTC policy with a face amount of $140,000, he will be able to keep a total of ? in assets.
$142,000. Clients can keep the face amount of the policy plus approximately $2,000 in assets and still qualify for Medicaid.
94
Casey is a full-time accountant for the DEF Company. DEF has 25 full-time employees and provides a group health plan for its full-time employees. Casey and her two children, ages 6 and 9, are covered by the plan. This year, DEF terminates Casey after discovering she has been embezzling company funds. Which of the following statements regarding Casey’s eligibility for COBRA continuation coverage is CORRECT?
A. Casey is not eligible for continuation coverage because her employment was terminated for gross misconduct, but her children are eligible for coverage until they reach age 19.
B. Casey is not eligible for continuation coverage because her employment was terminated for gross misconduct, but her children are eligible for continuation coverage for up to 29 months.
C. Neither Casey nor her children are eligible for continuation coverage because Casey was terminated for gross misconduct.
D. Casey and her children are eligible for continuation coverage for up to 18 months.
C. Neither Casey nor her children are eligible for continuation coverage because Casey was terminated for gross misconduct.
Neither Casey nor her children are eligible for continuation coverage because Casey was terminated for gross misconduct. Termination of employment for gross misconduct is not a qualifying event for purposes of COBRA, so neither Casey nor her children are eligible for continuation coverage.
95
Which of the following types of Medicaid assets generally are considered when calculating eligibility for Medicaid?
I. Checking and savings account
II. Life insurance with a face amount of under $1,500
III. Certificates of deposit
IV. Stocks and bonds
A. I and II
B. II and III
C. I, III, and IV
D. I, II, III, and IV
C. I, III, and IV
Life insurance with a face amount under $1,500, one motor vehicle, personal property and household belongings, and one’s primary residence (with some limitations) generally do not count when calculating eligibility for Medicaid.
96
Which of these is a type of managed care plan that is distinguished by use of the terms capitation fee and gatekeeper?
A. POS
B. PPO
C. HMO
D. SOS
C. HMO
A health maintenance organization (HMO) is distinguished by the medical providers receiving a fixed monthly payment, called the capitation fee, and the presence of a primary care physician (PCP), or gatekeeper.
97
Steven is insured through his employer in a group health care plan. His annual deductible is $1,000, after which Steven must pay 20% of all additional charges to a MOOP of $5,000. In his first claim of the year, Steven has $1,500 of covered medical expenses. How much will the insurer pay?
A. $400
B. $500
C. $1,000
D. $1,100
A. $400
Subtract the $1,000 deductible from the $1,500 of expenses, then multiply the remaining $500 by 80%, which represents the insurer’s share since Richard’s share is 20%. So, ($1,500 – $500) × 80% = $400.
98
Which of the following services are NOT covered under Medicare Part A?
A. Hospice care
B. Home health care services
C. Outpatient hospital services
D. Skilled nursing facility services
C. Outpatient hospital services
Outpatient hospital services are covered under Medicare Part B, not Part A. All of the other services are covered under Medicare Part A.
99
Which statement regarding Medicare coverage of long-term care (LTC) is CORRECT?
A. Medicare will pay for the first 90 days of coverage without limits.
B. Medicare covers persons with a life expectancy of six months or less.
C. Medicare requires that the care must be in a skilled nursing facility.
D. Medicare covers custodial care subject to a deductible and coinsurance by the patient.
C. Medicare requires that the care must be in a skilled nursing facility.
Medicare requires that the care must be in a skilled nursing facility. Medicare does not cover custodial care expenses. Coverage for those with a life expectancy of six months or less refers to the hospice care provision.
100
Which statement regarding insurance coverage provided by Medicare Part B is CORRECT?
A. The election to participate must be made at the time the insured is eligible for Medicare Part A and at no time thereafter.
B. The premiums for Part B are paid monthly by the insured.
C. Once participants elect Part B, they must maintain the coverage until death.
D. Coverage under Part B does not require payment of a deductible by the insured.
B. The premiums for Part B are paid monthly by the insured.
Premiums for Part B are paid monthly by the insured. The insured’s election to participate in Medicare Part B can be made during a general enrollment period after initial eligibility. (This period is from January 1–March 31 of each year.) These premiums are withheld from the insured’s Social Security benefit.
101
Jerry has a disability income insurance policy that pays him a monthly benefit of $1,200. He has been disabled for 60 days, but has received only $1,200 from his disability policy. Which of these is the probable reason for this occurrence?
A. The policy has a deductible of $1,200.
B. The policy has an elimination period of 30 days.
C. Jerry is considered to be only 50% disabled.
D. Jerry has only owned the policy for six months.
B. The policy has an elimination period of 30 days.
The policy has an elimination period of 30 days. Disability income insurance policies do not have deductibles or coinsurance provisions. There is no indication that Jerry purchased a policy with a partial disability rider, nor do we know when he purchased the policy. Therefore, if the elimination period is 30 days, Jerry will have received only one monthly benefit payment.
102
Which of these are characteristics of a guaranteed renewable disability income insurance policy?
I. The insurer guarantees to renew the policy to a stated age.
II. The policy is noncancelable.
III. The renewal of the policy is solely at the insurer’s discretion.
IV. The insurer has the right to increase the premium rates for the underlying class of insureds.
A. III only
B. IV only
C. I and IV
D. I, II, and IV
C. I and IV
Guaranteed renewability provides renewal at the insured’s (not the insurer’s) discretion. However, the insurer does have the right to increase the premium at the time of renewal if it does so for an entire class of insureds. Noncancelable is a more beneficial form of renewability than guaranteed renewable, and not the same thing.
103
If a client has a specialized skill and wants to purchase a disability income policy with a rider that would allow him, upon disability, to receive benefits and still work at a lower wage, which of the following should you recommend?
A. Partial disability rider
B. Residual disability rider
C. Social security rider
D. Any occupation rider
B. Residual disability rider
A residual disability rider allows a disabled worker to work at lesser pay and still maintain a reduced monthly benefit amount. Such a rider would pay the difference between the pay earned before disability and the current pay for the benefit period. The benefit is usually payable in proportion to the insured’s reduced earnings in an applicable range, such as 20%–80%.
104
Which of the following organizations would be most likely to be eligible for business overhead expense (BOE) insurance?
A. A law firm with 25 partners
B. A doctor’s office
C. A major multinational corporation
D. A public library
B. A doctor’s office
BOE insurance typically covers small businesses.
105
Which of the following types of health insurance covers the cost of providing nonmedical custodial care to individuals with cognitive problems?
A. Disability income insurance
B. Hospital expense coverage
C. Long-term care (LTC) insurance
D. Medical expense coverage
C. Long-term care (LTC) insurance
LTC insurance provides coverage for medical and nonmedical custodial care for individuals with chronic illnesses; cognitive impairment; or difficulty performing activities of daily living (ADLs) such as bathing, dressing, eating, toileting, transferring, or continence.
106
An insured must receive care for a stated number of days before a long-term care (LTC) policy can pay benefits. This time deductible is known as:
A. the elimination period.
B. the delay period.
C. the benefit period.
D. the enrollment period.
A. the elimination period.
LTC insurance policies usually have an elimination period. The insured must receive care for a stated number of days before the policy begins to pay.
107
A client, Lisa, had a partnership long-term care (LTC) policy with a benefit of $125,000. She was forced to use the policy’s entire benefit after she was admitted to the local nursing home. Lisa is wondering if she will qualify for Medicaid. Her partnership LTC policy’s benefit has been depleted, and she only has $97,000 in assets. Which of the following statements is CORRECT?
A. Lisa cannot qualify for Medicaid until her total assets are approximately $2,000.
B. Lisa cannot qualify for Medicaid because her total assets are not less than $90,000.
C. Lisa can qualify for Medicaid because she is currently living in a nursing home.
D. Lisa can qualify for Medicaid because she will be allowed to retain up to $125,000 in assets plus approximately $2,000.
D. Lisa can qualify for Medicaid because she will be allowed to retain up to $125,000 in assets plus approximately $2,000.
Lisa can qualify for Medicaid because she will be allowed to retain up to $125,000 in assets plus approximately $2,000. Lisa will be able to keep a total of $127,000 ($125,000 + $2,000) in assets as a result of the partnership LTC policy.
108
Which of these is NOT accurate about client transitions?
A. A parent has 30 days to get a child listed for health insurance to avoid preexisting conditions.
B. A widow has 60 days from notice to enroll for COBRA and can remain on that coverage for 36 months.
C. A child can stay on their parent's coverage as long as the child is claimed as a dependent for income tax purposes up to age 26.
D. The range for enrollment in Medicare and the various components is three months prior to age 65, the birth month, and three months after attaining age 65. If the client does not sign up at that point, penalties, additional lifelong premiums, and preexisting conditions issues may apply.
C. A child can stay on their parent's coverage as long as the child is claimed as a dependent for income tax purposes up to age 26.
109
Under the Patient Protection and Affordable Care Act of 2010 (PPACA), which of these has been eliminated for comprehensive major medical indemnity plans?
A. Copayments
B. Maximum policy limits
C. Coinsurance amounts below 80/20
D. Deductible amounts above $1,000
B. Maximum policy limits
110
Which of these is a federal program administered by the states?
A. HIPAA
B. COBRA
C. Medicare
D. Medicaid
D. Medicaid
111
Which of these is NOT considered to be a managed care program?
A. Health maintenance organizations (HMOs)
B. Preferred provider organizations (PPOs)
C. Provider service networks (PSNs)
D. Medicaid
D. Medicaid
112
Richard is insured through his employer in a group indemnity health care plan. His annual deductible is $1,000, after which Richard must pay 20% of additional charges, with a MOOP limit of $5,000. In his first claim of the year, Richard has $1,500 of covered medical expenses. How much will his insurer pay?
A. $300
B. $400
C. $1,100
D. $1,200
B. $400
113
Which of these is NOT a true statement concerning medicare?
A. Part A covers hospitalization and most people pay a small premium.
B. Part B covers doctors and expenses outside of hospitalization and there is a penalty in terms of increased premiums if a client fails to sign up, unless they maintained credible coverage.
C. If a client has Medicare Advantage plan, Part D drug coverage is incorporated into the coverage.
D. Medicare Supplement/Medigap plans may help pay for Medicare approved expenses that are not reimbursed by Medicare.
A. Part A covers hospitalization and most people pay a small premium.
114
Which Medigap policy is the least expensive and provides the least amount of coverage?
A. Medigap Policy A
B. Medigap Policy B
C. Medigap Policy C
D. Medigap Policy D
A. Medigap Policy A
115
Which of these is CORRECT regarding business (disability) overhead expense insurance?
A. It is most often purchased by large businesses with public ownership.
B. Benefits normally extend for 10-15 years.
C. It is most often purchased to cover costs such as office rent, utility expenses, staff salaries, and so forth.
D. It is usually purchased by blue-collar individuals.
C. It is most often purchased to cover costs such as office rent, utility expenses, staff salaries, and so forth.
116
All of these are differences between blue-collar disability coverage and white-collar disability coverage EXCEPT:
A. The definition of disability becomes progressively more liberal when approaching the white-collar level.
B. The duration of how long benefits are payable becomes progressively longer when approaching the white-collar level.
C. Benefit payments become progressively lower when approaching the white-collar level.
D. The availability of other policy riders increases when approaching the white-collar level.
C. Benefit payments become progressively lower when approaching the white-collar level.
117
Marcus is single and is helping to support his widowed mother. The out-of-pocket expenses to cover a basic lifestyle for both of them requires an after-tax income of $4,000 per month. His average tax rate is 20%. His group coverage is 60% of his base salary paid by the employer. Marcus earns $100,000, of which $10,000 is bonus income. What will Marcus have to live on if he becomes permanently disabled?
A. $5,000; he will be able to meet the income need and save.
B. $4,500; he will be able to meet the income need and save some initially, but inflation will make meeting the future income need difficult.
C. $4,000; he will be able to meet the income need but will be unable to save for retirement, and inflation will make it impossible to meet the goal in the future.
D. $3,600; he will not be able to meet current needs and inflation will create a larger gap, and he will not be able to save for retirement.
D. $3,600; he will not be able to meet current needs and inflation will create a larger gap, and he will not be able to save for retirement.
118
Which of these is considered to be the highest level of long-term care?
A. Custodial care
B. Respite care
C. Skilled nursing care
D. Home care
C. Skilled nursing care
119
Which of these stipulations must be met for Medicare to cover the cost of long-term care?
A. The care can be needed either full- or part-time.
B. The patient's condition must be expected to improve.
C. The need for care can be determined by the patient's family.
D. The care can be either skilled or unskilled.
B. The patient's condition must be expected to improve.
120
When determining how much long-term care insurance to buy, all of these should be considered except:
A. The cost of long-term care in the client's area.
B. Marital status of the client.
C. HIPAA qualification.
D. Daily benefit amount offered by the policy.
C. HIPAA qualification.
121
Which of the following is not a service typically provided by the VBA?
A. Compensation and pensions
B. Home loan guaranties
C. Financial and accounting assistance
D. Educational and career assistance
C. Financial and accounting assistance
