Types of Health Policies

Question 1

Accidental Bodily Injury

Answer 1

An unforeseen and unintended injury that resulted from an accident rather than a sickness

Question 2

Cafeteria Plan

Answer 2

Type of employee benefit plan that allows insureds to choose between different types of benefits

Question 3

Cancellation

Answer 3

Termination of an in force insurance policy by either the insured or the insurer, prior to the expiration date shown in the policy

Question 4

Comprehensive coverage

Answer 4

Health Insurance that provides coverage for most types of medical expenses

Question 5

Lump Sum

Answer 5

A payout method that pays the beneficiary the entire benefit in one payment

Question 6

Nonrenewal

Answer 6

Termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy

Question 7

Riders

Answer 7

Added to the basic insurance policy to add, modify or delete policy provisions

Question 8

Sickness

Answer 8

An illness which first manifests itself while the policy is in force

Question 9

Medical Expense Insurance

Answer 9

Type of insurance pays benefits for medical, surgical, and hospital costs

Referred to as first-dollar coverage because they usually do not require the insured to pay a deductible

limited coverage compared to major

Question 10

Major Medical Expense
(Medical Expense Insurance)

Answer 10

Insured usually has out of pocket costs before the insurer will contribute.

Functions through reimbursement to the medical service provider

Question 11

Basic Hospital Expense Coverage\
(Medical Expense Insurance)

Answer 11

(Admission) hospital expense policies cover hospital room and board, and misc hospital expenses.
**There is no deductible and the limits on room and board are set as a specified dollar amount per day with a max number of days.

Question 12

Miscellaneous hospital expenses (Admission)
(Medical Expense Insurance)

Answer 12

Has a separate limit from room and board.
The amount paid can be expressed either as a multiple of the room and board charge (such as 10x the room and board chart)or as a flat amount.
May have max limit amounts for different categories

Question 13

Basic medical expense coverage
(Medical Expense Insurance)

Answer 13

Coverage for non surgical expenses for a provider’s services. Benefits are usually limited to visits to patients who are admitted. Some policies will give outpatient visits but are limited.

Also can be purchased to cover emergency accident benefits, mental and nervous disorders, hospice, home health care, outpatient care, and nurses’ expenses. Usually these policies have limited benefits and subject to time limitations.

Question 14

Basic surgical expense coverage
(Medical Expense Insurance)

Answer 14

Commonly written in conjunction with hospital expense policies. These pay for costs of surgeon’s services in or outpatient.
Covers surgeon’s fees, anesthesiologist, and the operating room which it is not covered as a misc medical item.
No deductible, but coverage is limited.

Question 15

Surgical Schedule
(Basic surgical expense coverage)

(Medical Expense Insurance)

Answer 15

Each contract has this and lists the types of operations covered and their assigned dollar amounts.
If operation is not listed, they will pay for comparable operation.
Express the amount payable as a percentage of the max benefits, list a specified amount of assign a relative value that when multiplied by its conversion factor gives the benefit.

Question 16

Relative Value with Conversion Factor
(Basic surgical expense coverage)

(Medical Expense Insurance)

Answer 16

An approach that is used each surgical procedure will be assigned a number of points that are relative to the number of points assigned to the max benefit.
Major procedures= higher amount of points
Minor procedures= lower amount of points

Conversion factor is when the assigned points ‘X’ of a procedure are multiple by the total amount payable per point

Question 17

Major Medical Policies
(Broad range of coverage)

Answer 17

Policies that take over when the limits of a basic insurance plan have been exhausted.
-Comprehensive coverage for hospital expenses
-Catastrophic medical expense protection
-Benefits for prolonged injury or illness

Usually a blanket limit for specific expenses, lifetime benefit per person limit.

Has deductibles, coinsurance, and large benefit maximums

Question 18

Comprehensive Major Medical

Answer 18

Combination of basic coverage and medical coverage that features low deductibles, high maximum benefits, and coinsurance

Question 19

Supplementary Major Medical Policies

Answer 19

Supplement the coverage payable under a basic medical expense policy

Question 20

Corridor Deductible

Answer 20

Insured must pay after the limits of the basic policy are exhausted before the major medical coverage will pay benefits.

Question 21

Health Maintenance Organizations (HMOs)

Answer 21

Use of preventive care to reduce health costs
offer free preventive care and low to no cost immunizations
**Main focus of HMO is preventive care

Question 22

HMO Gen Characteristics

Answer 22

Offer services instead of reimbursment
HMO provides both the financing and patient care

Question 23

HMO Limited areas

Answer 23

Offers services to those living within a specific geographic boundaries
Not eligible if not living within boundaries
Offer limited physicians

Question 24

HMO copayments and Prepaid

Answer 24

Cost of care is flat dollar amount
Usually no deductible
HMO receives a flat amount each month to each member whether the member sees a physician or not

Question 25

PCP vs Referral Specialty Physician (HMO PLANS)

Answer 25

PCP- basically a gatekeeper that has to refer you to other providers to obtain services from specialty
Keeps the patient away from high cost specialists
** In an HMO, a gatekeeper helps control the cost of healthcare by only making the necessary referrals

Question 26

HMO Hospital services and Emergency care

Answer 26

HMO provides for emergency care in our out of network but will try to relocate the patient to an in network hospital to reduce costs
Inpatient services covered in or out of network but may be limited for treatment of mental, emotional, or nervous disorders.

Question 27

Preferred Provider Organizations (PPOs)

Answer 27

PPO is a group of physicians and hospitals that contract with employers, insurers, or third party organizations to provide medical care services at a reduced fee.

Physicians are paid fees for their services instead of a salary like HMOs. Still would prefer the patient to be seen by preferred providers. ‘Encouragement’ comes in the form of benefits and prices.
**Unlike HMOs, PPOS allow more flexibility between in network and out of network providers in exchange for higher premiums

Question 28

Point of Service Plans (POS)

Answer 28

Combination of HMO and PPO plans
Does not need to be locked in one plan, if a need arises they can chose.
‘Open ended HMOs’

Question 29

Out of network access

Answer 29

PPOs do not require plan members to be in network, if they go out of network it is a higher cost
POS plans is controlled by a gatekeeps like HMO plans but they can still seek outside the coverage area and get reduced coverage levels

Question 30

Out of network access

Answer 30

PPOs do not require plan members to be in network, if they go out of network it is a higher cost
POS plans is controlled by a gatekeeps like HMO plans but they can still seek outside the coverage area and get reduced coverage levels

Question 31

In network vs Out of network

Answer 31

in network providers= lower out of pocket costs
out of network providers= higher out of pocket costs

Question 32

Flexible Spending Accounts (FSAs)

Answer 32

Form of cafeteria plan benefit funded by salary reduction and employer contributions.
Amount allowed into an account before taxes
subject to annual maximum and ‘use it or lose it’ concept
**FSAs may be used to pay medical and dental expenses for employees and their dependents

Question 33

Child and dependent care expenses

Answer 33

-Under the age of 13 (claimed under federal tax return)
-Spouse mentally and physically unable to take care of themselves
-Dependent who mentally and physically unable to take care of themselves (and can be claimed as a tax exemption

Question 34

Qualified Life Event Changes

Answer 34

1. Marital status
2. Number of dependents
3. One of the dependents becomes eligible for or no longer satisfies the coverage requirements
4. Employment status change (341 day break in employment)
5. Change in dependent care provider
6. Family medical leave

Question 35

Dependent Care limits

Answer 35

IRS limits annual contribution for dependent care accounts even with two parents having a FSA

Question 36

High Deductible Health Plans (HDHPs)

Answer 36

Used with medical savings accounts (MSAs), health savings accounts (HSAs), or health reimbursement accounts (HRAs).
lower premiums since it is higher OOP and deductible.
First-dollar expenses are not covered until the ded is met.

Question 37

HSAs

Answer 37

-Health savings accounts
-Lets patients save for qualified health expenses
-Tax deductible
-Have to have a HDHP, not a dependent, not eligible for Medicare, and no other medical insurance

Question 38

HSA contribution limits

Answer 38

$3,850 for singles and $7,750 for families

Question 39

HSA non health withdrawals

Answer 39

** Withdrawals before the age of 65= 20% penality; after the age of 65= no penalty

Question 40

HRAs

Answer 40

-Health Reimbursement Accounts
-Funds set aside by the employer for the employee to use for qualified medical expenses
-Employers write this off as a business expense

Question 41

HRA Characteristics

Answer 41

-Contribution to health plans, not defined benefit plans
-not a taxable employee benefit
-Employers contributions are tax deductible
-Can roll over unused balances
-Provided by the employer, not salary deductions
-Balance the group purchasing power of larger employers and small employers

Question 42

HRA Contribution limits

Answer 42

HRA has not statutory limit. limits may be set at employer discretion

Question 43

HRA roll over

Answer 43

**HRA allows employees to roll over unused benefits to the following calendar year in addition to new benefits.

Question 44

Disability Income Insurance

Answer 44

Replace lost income in the event of this contingency and is a vital component of a comprehensive insurance program. Purchased individually or though an employer on a group basis

Question 45

Elimination Period

Answer 45

Waiting period that is imposed on the insured from he onset of a disability until benefit payments commence
Deductible measured in days instead of dollars.
**The elimination period is a ‘time’ deductible, designed to eliminate coverage for short term disabilities and reduce filing of excessive claims.

Question 46

Probationary Period

Answer 46

Additional to the elimination period in some policies.
Often 10 to 30 days from the policy issue date during which benefits will not be paid for illness related disability.
**Only applies to sickness not accidents or injury

Question 47

Benefit Period

Answer 47

Length of time over which the monthly disability payments will last for each disability after the elimination period has been satisfied
1, 2, and 5 years or to age 65
Some have lifetime benefits