Other Health Concepts

Question 1

What is the purpose of managed care health insurance plans?

Answer 1

To control health insurance claims expenses

Question 2

What is a birthday rule in a coordination of benefits provision?

Answer 2

The coverage of the parent whose birthday is earlier in the year is considered primary

Question 3

What is subrogation in health insurance?

Answer 3

The legal process that gives the insurer the right to seek recovery from a third party that was responsible for the loss after the insurer has paid the insured for the loss

Question 4

What type of health insurance covers partners or corporate officers of a closely held business?

Answer 4

Disability buy-sell

Question 5

What are the four types of workers compensation benefits?

Answer 5

Medical, death benefits, income, and rehabilitation

Question 6

For how long do short-term disability group plans pay benefits?

Answer 6

For up to 52 weeks

Question 7

If the insureds share in the cost of health insurance premiums with the employer, this would be known as what type of group health plan?

Answer 7

Contributory

Question 8

Under a fully contributory health plan, how are benefits received by the employee?

Answer 8

Income tax free

Question 9

How are benefits received by the business from a key person disability insurance?

Answer 9

Income tax free

Question 10

n group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?

Answer 10

100%

Question 11

What type of disabilities will be covered by occupational coverage?

Answer 11

Disabilities that result from accidents or sicknesses that occur on or off the job

Question 12

Under what employer-provided plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

Answer 12

Disability income

Question 13

What type of insurance covers an employee who is hurt on the job?

Answer 13

Workers compensation

Question 14

According to the Coordination of Benefits provision, if both parents have coverage for a child from their employers’ policies, which policy will pay first?

Answer 14

The order of payment will be determined by the birthday rule: the coverage of the parent whose birthday is earlier in the year will be considered primary

Question 15

What are the five basic characteristics of managed care plans?

Answer 15

Controlled access to providers, comprehensive case management, preventive care, risk sharing, and high quality care

Question 16

What type of health insurance is sold to small business owners to reimburse them for the overhead expenses?

Answer 16

BOE - Business Overhead Expense insurance

Question 17

What is the tax advantage of the employer paying premiums for its employees for disability income insurance?

Answer 17

Premiums are deductible as a business expense

Question 18

How are individually-owned disability income benefits taxed once received by the insured?

Answer 18

Disability benefits are not taxed; they are received income tax free

Question 19

In health insurance, when would an excess plan pay benefits?

Answer 19

After the primary plan has paid its full promised benefit, the excess plan will pay the balance

Question 20

When a business receives benefits from its key person disability insurance, how are those benefits taxed?

Answer 20

The key person disability insurance benefits are received tax free.

Question 21

Group disability income insurance premiums paid by the employer are

Answer 21

Deductible by the employer as an ordinary business expense.

Question 22

A man works for Company A and his wife works for Company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim,

Answer 22

The insurance through his company is primary.

Question 23

When an insurer combines two periods of disability into one, the insured must have suffered a

Answer 23

Recurrent disability.

Recurrent disability is the period of time (usually within 3-6 months) during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.

Question 24

Which of the following individuals will be eligible for coverage on the Health Insurance Marketplace?
A. A U.S. citizen living abroad
B. A permanent resident lawfully present in the U.S.
C. Someone who has Medicare coverage
D. A U.S. citizen who is incarcerated

Answer 24

B. A permanent resident lawfully present in the U.S.

To be eligible for health coverage on the Marketplace, the individual must be a U.S. citizen or national or be lawfully present in the United States, must live in the United States, and cannot be currently incarcerated. Medicare recipients are not eligible for coverage in the Marketplace.

Question 25

Which of the following is NOT true regarding Workers Compensation?
A. Benefits are offered by the insurer.
B. Benefits are not regulated by the federal government.
C. Benefits vary from state to state.
D. Benefits are regulated by the state government.

Answer 25

A. Benefits are offered by the insurer.

The state government regulates Workers Compensation benefits, which vary slightly from state to state.

Question 26

An insured has a primary group health plan and an excess plan, each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay?
A. $10,000
B. $7,500
C. $5,000
D. $0

Answer 26

C. $5,000

Once the primary plan has paid its full promised benefit, the insured submits the claim to the secondary, or excess, provider for any additional benefits payable.

Question 27

Which of the following statements about occupational vs. nonoccupational coverage is TRUE?
A. Group medical expense policies and individual medical expense policies always cover both occupational and nonoccupational injuries.
B. Individual disability policies never cover nonoccupational injuries.
C. Only group disability income policies can be written on an occupational basis.
D. Disability insurance can be written as occupational or nonoccupational.

Answer 27

D. Disability insurance can be written as occupational or nonoccupational.

Question 28

Which of the following are the main factors taken into account when calculating residual disability benefits?
A. Employee’s full-time status and length of disability
B. Present earnings and standard cost of living
C. Present earnings and earnings prior to disability
D. Earnings prior to disability and the length of disability

Answer 28

C. Present earnings and earnings prior to disability

Residual disability will help pay for loss of earnings by making up the difference between the employee’s present earnings and what they were earning prior to disability.

Question 29

What type of insurance is sold to small business owners that must meet overhead expenses such as rent or utilities following a disability?
A. Key-person disability
B. Medical expense coverage
C. Buy-sell
D. Business overhead expense

Answer 29

D. Business overhead expense

Business overhead expense (BOE) insurance is a unique type of policy that is sold to small business owners who must continue to meet overhead expenses such as rent, utilities, employee salaries, installment purchases, leased equipment, etc., following a disability.

Question 30

All of the following statements concerning workers compensation are correct EXCEPT
A. Benefits include medical, disability income, and rehabilitation coverage.
B. A worker receives benefits only if the work related injury was not his/her fault.
C. Workers compensation laws are established by each state.
D. All states have workers compensation.

Answer 30

B. A worker receives benefits only if the work related injury was not his/her fault.

Workers Compensation benefits are payable when a worker is injured by a work-related injury, regardless of fault or negligence.

Question 31

Which of the following definitions would make it easier to qualify for total disability benefits?
A. The more strict "own occupation"
B. The more liberal "own occupation"
C. The more strict "any occupation"
D. The more liberal "any occupation"

Answer 31

B. The more liberal “own occupation”

Total disability is defined differently under some disability income policies. The more liberal “own occupation” definition of disability makes it easier to qualify for benefits.

Question 32

A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses?
A. “Any occupation” - less restrictive than other definitions
B. “Any occupation” - more restrictive than other definitions
C. “Own occupation” - less restrictive than other definitions
D. “Own occupation” - more restrictive than other definitions

Answer 32

C. “Own occupation” - less restrictive than other definitions

In theory, the brain surgeon could find other work, but because her disability income policy specifies that she is covered for her own occupation, she would be wholly covered.

Question 33

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse’s coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?
A. Neither plan would pay.
B. Each plan will pay in equal shares.
C. The insured will have to select a plan from which to collect benefits.
D. The benefits will be coordinated.

Answer 33

D. The benefits will be coordinated.

Benefits will be coordinated when individuals are covered under two or more health plans.

Question 34

All of the following are true regarding Key Employee Disability Income insurance EXCEPT
A. Premiums are not tax deductible for the employer.
B. Benefits are taxable to the employer.
C. The employer owns the policy.
D. Benefits are paid to the employer to retrain a new person.

Answer 34

B. Benefits are taxable to the employer.

Key person disability income premiums are not deductible to the business, but the benefits are received income tax free by the business.

Question 35

Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as
A. Own occupation - more restrictive than other definitions.
B. Own occupation - less restrictive than other definitions.
C. Any occupation - more restrictive than other definitions.
D. Any occupation - less restrictive than other definitions.

Answer 35

C. Any occupation - more restrictive than other definitions.

If total disability is defined as any occupation, it means the coverage will apply only if the insured cannot find any means of income whatsoever. This is more strict than own occupation, where a person merely has to prove that they cannot perform the job for which they were previously trained.

Question 36

An insured is covered under 2 group health plans – under his own and his spouse’s. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?
A. $0
B. $500
C. $1,000
D. $2,000

Answer 36

B. $500

Once the primary insurer has paid the full available benefit, the secondary insurer will cover what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out-of-pocket costs.

Question 37

Which of the following is CORRECT regarding Business Overhead Expense insurance?
A. Benefits received are taxable income to the employee.
B. Premiums are not tax deductible.
C. Premiums are tax deductible.
D. Benefits received are received tax free.

Answer 37

C. Premiums are tax deductible.

The premiums paid for BOE insurance is tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received.

Question 38

The purpose of managed care health insurance plans is to
A. Give the insured an unlimited choice of providers.
B. Coordinate benefits.
C. Control health insurance claims expenses.
D. Provide for the continuation of coverage when an employee leaves the plan.

Answer 38

C. Control health insurance claims expenses.

Managed care is a system of delivering health care and health care services, characterized by arrangements with selected providers, programs of ongoing quality control and utilization review and financial incentives for members to use providers and procedures covered by the plan.

Question 39

Under a Key Person disability income policy, premium payments
A. Are made by the employee and are not tax-deductible.
B. Are made by the employee and are tax-free.
C. Are made by the business and are tax-deductible.
D. Are made by the business and are not tax-deductible.

Answer 39

D. Are made by the business and are not tax-deductible.

Premiums are nondeductible to the business; however, benefits are received tax-free by the business.

Question 40

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy?
A. When the expenses exceed a certain percentage of the insured’s adjusted gross income
B. Only if the insured is age 65 or older
C. All LTC expenses are tax deductible.
D. Only if the insured does not itemize the expenses

Answer 40

A. When the expenses exceed a certain percentage of the insured’s adjusted gross income

In either medical expense insurance policies or long-term care insurance policies, unreimbursed medical expenses paid for the insured, the insured’s spouse and dependents may be claimed as deductions if the expenses exceed a certain percentage of the insured’s adjusted gross income.