Health Insurance Programs and Regulations, Exams of Insurance law

Download Health Insurance Programs and Regulations and more Exams Insurance law in PDF only on Docsity! P ag e1 Smart Sheet Practice Questions And Correct Answers Verified Latest 2024-2025 Guaranteed Pass Grade A + Updated!! Which of the following is NOT a form of medical insurance? -Business overhead expense -Surgical expense -Hospital expense -Long term care - ANSWER>>Business overhead expense (Explanation: Business Overhead Expense insurance is designed to reimburse a business for overhead expenses in the event a business owner becomes disabled. Expenses such as rent, utilities, telephone, equipment, employees' salaries, etc.) All of the following are state or federal government programs that provide health insurance, EXCEPT? -Medicare -OASDI disability -Medicaid -Medigap - ANSWER>>Medigap (Explanation:A Medigap policy is a Medicare supplement insurance policy sold by private insurance companies to fill "gaps" in Medicare Parts A and B.) P ag e2 What type of health insurance is available to assist low-income individuals? -Social Security disability -Medicare supplement -Medicare -Medicaid - ANSWER>>Medicaid What types of reserves are set aside and held by health insurance companies? -Premium reserves -Premium and Claims reserves -Claims reserves -Deductible and Premium reserves - ANSWER>>Premium and Claims reserves (Explanation:Reserves are set aside for the payment of future claims.) Group health insurance is generally written on a basis that provides for dividends or experience rating. What is the basis called? -Contributory -Noncontributory -Nonparticipating P ag e5 All of the following are correct regarding Florida regulation of HMOs, EXCEPT? -Must obtain a Certificate of Authority -Must file a report of its activities within 3 months of the end of each fiscal year -Must deposit $100,000 with the Rehabilitation Administration Expense Fund -Must be sold by agents licensed and appointed as health insurance agents - ANSWER>>Must deposit $100,000 with the Rehabilitation Administration Expense Fund (Explanation: They must deposit $10,000 with the Rehabilitation Administration Expense Fund.) What is "capitation" as it relates to an HMO? -Amount to be collected by the HMO from participating health care providers -Fixed amount paid by an HMO during a policy period -Fixed amount paid by an HMO to a physician for medical services -Amount required to be deposited with the State of Florida - ANSWER>>Fixed amount paid by an HMO to a physician for medical services P ag e6 When a person is covered by an HMO, the contract certificate or member's handbook must be delivered within how many days after approval of the enrollment by the HMO? -20 days -10 days -5 days -14 days - ANSWER>>10 days Which of the following statements about health service organizations is true? -They reimburse Policyowners directly for physicians' fees -They provide loss of income benefits to Policyowners -They reimburse Policyowners directly for all medical expenses -They provide benefit payments directly to the hospitals and physicians providing services - ANSWER>>They provide benefit payments directly to the hospitals and physicians providing services What is the period of time for an HMO "open enrollment"? -45 days during every 18-month period -30 days during every 12-month period -30 days during every 18-month period P ag e7 -45 days during every 12-month period - ANSWER>>30 days during every 18-month period If an HMO is found guilty of unfair trade practices, what is the maximum penalty that can be charged? -Up to $50,000 -Up to $150,000 -Up to $200,00 -Up to $100,000 - ANSWER>>Up to $200,00 Which of the following statements about Worker's Compensation laws is INCORRECT? -Employers can purchase coverage through the state program, private insurers or can self-insure -Worker's compensation provides benefits for work-related injuries, illness or death -Not all states have a workers compensation law -Basic principle is that work-related injuries are compensable by the employer without regard to fault - ANSWER>>Not all states have a workers compensation law P ag e1 0 -Health Maintenance Organization (HMO) -Blue Cross/Blue Shield - ANSWER>>Multiple Employer Trust (MET) Casey has a medical expense policy that provides a fixed rate of $150 per day for hospitalization. Casey is hospitalized for 10 days and incurred covered medical expenses of $20,000. What will her medical expense policy pay? -$1,500 -$20,000 -$15,000 -$3,000 - ANSWER>>$1,500 (Explanation: Casey's policy will only cover a fixed rate per day for hospitalization of $150. If she is hospitalized for 10 days, then her policy will pay $1,500 ($150 x 10) of the total $20,000 in expenses.) Jamie has a reimbursement type medical expense policy with a maximum benefit of $500,000. She is hospitalized and incurs $25,000 in covered medical expenses. What will her policy provide in coverage? -$20,000 -$25,000 -$10,000 -$12,500 - ANSWER>>$25,000 (Explanation: P ag e1 1 A reimbursement type policy will provide coverage for expenses incurred. In this case that would be the total $25,000.) Which of the following will not be covered under "Miscellaneous Expenses" of a hospital expense policy? -Drugs -Lab fees -Daily room and board -Use of operating room - ANSWER>>Daily room and board There are three different approaches used by insurers in providing basic surgical expense coverage and determining the benefits payable. Which of the following is NOT one of these approaches? -Reasonable and customary approach -Physician schedule approach -Relative value scale approach -Surgical schedule approach - ANSWER>>Physician schedule approach Charlie has a hospital expense policy and a surgical expense policy. The hospital pays $100 a day for room and board and a maximum of $1,000 for miscellaneous hospital charges. The surgical policy pays a maximum of $500 for any one operation. If Charlie was hospitalized for 10 days P ag e1 2 and had charges of $200 per day for room and board, $1,500 for miscellaneous expenses, and $2,000 for surgical expenses. What will his policies pay of these expenses? -$3,500 -$1,000 -$5,500 -$2,500 - ANSWER>>$2,500 (Explanation: Hospital will pay - $1,000 for room and board ($100 per day for 10 days) and $1,000 (maximum allowed) for miscellaneous expenses. Surgical will pay - $500 (maximum allowed) for surgery) Once the insured has paid a specified amount of his expenses, under the stop-loss feature of a health insurance policy, how much will the company then pay? -75% -20% -80% -100% - ANSWER>>100% How will the "miscellaneous expenses" benefit be expressed in a basic health insurance policy? -Reasonable, usual and customary rates P ag e1 5 -$250 -$1,300 -$4,450 - ANSWER>>$1,300 (Wanda will pay the first $250 (her deductible) and then 20% of the remainder ($5,250, remainder amount, x .20 = $1,050. So Wanda will pay a total amount of $1,300 ($250 deductible, plus 20% of 5,250).) Travis has a Major Medical policy with a flat deductible of $500 and coinsurance of 80%/20% on the next $5,000 in covered expenses with 100% coverage for any remaining covered expenses. On an claim of $10,000, what amount will Travis pay? -$2,500 -$1,500 -$2,000 -$1,000 - ANSWER>>$1,500 (Explanation: Travis will pay the first $500 (deductible) and then 20% of the next $5,000 ($5,000 x .20 = $1,000. So Travis will pay a total of $1,500 (deductible plus 20% of $5,000).) When comparing a major medical policy having an 80%/20% coinsurance provision with one having a 75%/25% coinsurance P ag e1 6 provision, the insured will pay more or less premium for the 80%/20% provision? -Less premium -The same premium -Significantly less premium -More premium - ANSWER>>More premium (Explanation: Because the insured will be responsible for less of the cost for medical expenses (20% verses 25%), he will pay more in premium costs.) Jason has a Major Medical policy with a flat deductible of $500, coinsurance of 80%/20% and a stop-loss of $5,000. If he has a covered claim of $5,500, what will the insurance company pay? -$0 -$4,400 -$1,500 -$4,000 - ANSWER>>$4,000 (Explanation: Jason will pay the first $500 (his deductible amount) of the total medical bills. After this Jason will pay 20% of the remainder ($5,000) and the insurance company will pay 80%. $5,000 (amount remaining) x .80 = $4,000 paid by insurance company.) P ag e1 7 All of the following are types of major medical policy deductibles, EXCEPT? -Franchise -Integrated -Corridor -Flat - ANSWER>>Franchise What type of medical expense policy simply provides a daily, weekly, or monthly payment of a specified amount based on the number of days the insured is hospitalized? -Daily room and board expense policy -Surgical expense policy -Hospital Fixed-rate policy -Hospital expense policy - ANSWER>>Hospital Fixed-rate policy What type of medical expense policy would be available to cover the high costs associated with a specific kind of illness such as cancer or heart disease? -Hospital expense -Surgical expense -Major medical -Limited risk - ANSWER>>Limited risk (Explanation: P ag e2 0 -Any occupation and is more restrictive than other definitions -Any occupation and is less restrictive than other definitions -Own occupation and is more restrictive than other definitions - ANSWER>>Any occupation and is more restrictive than other definitions Which of the following is NOT correct about partial disability? -Benefit period is usually 3 to 6 months -Flat amount benefit is usually 50% of the total disability benefit -Proof of disability is not required for partial disabilities -Follows period of total disability - ANSWER>>Proof of disability is not required for partial disabilities For individual disability income policies there are basically two types of benefit periods, which are? -Short-term and long-term -Short term and interim term -Basic term and broad term -Full term and partial term - ANSWER>>Short-term and long-term Tad earns $2,000 a month and currently has a disability income policy with Company X and is limited to a monthly benefit of $400. If Tad P ag e2 1 decides to purchase another disability income policy from Company Z and Company Z's limit on benefits is 70% of his monthly income, how much coverage can he purchase with this second disability policy? -$1,200 -$1,120 -$1,400 -$1,000 - ANSWER>>$1,000 (Explanation: Tad currently has a disability income policy that will pay him $400 per month. The second policy limits payments to 70% of his income, which would be ($2,000 x .70 = $1,400) $1,400. Because he is already covered for $400 by Company X, Company Z will only pay $1,000 per month. The total of the two policies will then equal 70% of Tad's monthly pre disability income of $2,000.) Peter is injured in an auto accident. He is only able to work on a part- time basis and at 60% of his predisability salary. If Peter's disability income policy provides for residual disability benefits of $2,000, what amount would he receive in monthly benefit payments? -$1,200 -$1,000 -$400 -$800 - ANSWER>>$800 (Explanation: P ag e2 2 Residual amount benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income. The benefit is usually determined by multiplying the percentage of lost income by the stated monthly benefit for total disability. In this example Peter is would receive 40% of the total disability benefit of $2,000 which will equal $2,000 x .40 = $800.) Joseph has a disability income policy stating a flat amount of $2,000 monthly benefit. He has been totally disabled for 6 months but is now able to work part-time. What can he expect to receive from his disability income policy if the policy also covers partial disability? -$1,000 monthly benefit -$500 monthly benefit -$0 benefit -$2,000 monthly benefit - ANSWER>>$1,000 monthly benefit What form of insurance is the primary form of pure accident coverage? -Major Medical -Disability Income -Medical Expense P ag e2 5 A famous dancer decides to take out a special policy covering her legs for $1 million. What type of accident policy is this? -Disability income policy -Limited risk policy -Major Medical policy -Special risk policy - ANSWER>>Special risk policy Margaret has a special risk policy. It will pay a benefit for... -Unusual hazards normally not covered by other policies -Death or dismemberment resulting from an aviation accident during a specified trip -Dreaded diseases -Special risks such as Lou Gehrig's disease or Parkinson's disease - ANSWER>>Unusual hazards normally not covered by other policies What is the free-look period for a Medicare Supplement policy? -7-days -10-days -14-days -30-days - ANSWER>>30-days P ag e2 6 Which of the following statements is true about a Medicare Supplement policy? -These policies are designed to cover deductibles and co-insurance -Only insurance companies affiliated with Medicare can provide Medicare Supplement policies -These policies may be issued to anyone 59 1/2 or older without evidence of insurability -Anyone who qualifies for Medicaid benefits may be issued these policies - ANSWER>>These policies are designed to cover deductibles and co-insurance All of the following are correct regarding Medicare Supplement policies, EXCEPT -Must cover pre-existing conditions from the date the policy goes into effect -Must automatically adjust its benefits to reflect statutory changes in Medicare -Must cover all expenses not covered by Part A from the 61st to the 90th day -Must supplement both Part A and Part B of Medicare - ANSWER>>Must cover pre-existing conditions from the date the policy goes into effect P ag e2 7 Which of the following is NOT a requirement for an agent soliciting Medicare supplements? -Explain to prospect where there will be overlapping coverage -Send a signed form to the company explaining why coverage could not be placed -Inquire from each prospect if they already have coverage -Have prospect sign a form acknowledging information has been provided - ANSWER>>Send a signed form to the company explaining why coverage could not be placed Which of the following is NOT a category level of long-term care? -Custodial care -Intermediate nursing care -Hospitalization care -Skilled nursing care - ANSWER>>Hospitalization care Long-term care insurance also provides for a short rest period for a family caregiver. What is the known as? -Home care -Custodial care -Continuing care P ag e3 0 -Maternity benefits are more comprehensive than those in an individual policy. -Each individual insured covered by the group policy is given a separate policy. -Enables the employer to have some control over employees. - ANSWER>>Each individual insured covered by the group policy is given a separate policy. Which of the following is CORRECT about group health insurance? -Insured members decide participation requirement -Individual plans have better maternity benefits than group plans -Once issued, group insurance may only be cancelled by the insurer -Dependent survivors of a deceased worker, eligible for COBRA, may be covered by COBRA for 36 months - ANSWER>>Dependent survivors of a deceased worker, eligible for COBRA, may be covered by COBRA for 36 months To qualify for group health coverage, a group of persons must be considered a "natural group". What is meant by "natural group"? -Group must be made up of people in good health -Group must have been formed for some reason other than to obtain insurance P ag e3 1 -Group must be consist of natural born citizens -Group must have ten (10) or more members - ANSWER>>Group must have been formed for some reason other than to obtain insurance All of the following are correct regarding group health insurance, EXCEPT? -Major medical coverage may be written on a group basis -Employees receive separate policies -Debtor groups are eligible for group plans -Employer is issued a master policy - ANSWER>>Employees receive separate policies Which of the following is CORRECT regarding group health insurance? -Insurer must ask health questions of each individual in the group -Labor unions are not eligible -A group may be eligible that is formed just for the purpose of purchasing insurance -Lodges are eligible - ANSWER>>Lodges are eligible Florida requires what percentage of participation by employees in a contributory group health plan? -100% P ag e3 2 -50% -No minimum percentage -75% - ANSWER>>No minimum percentage (Explanation: Most noncontributory group health plans require 100% participation by eligible members, whereas contributory group health plans often require participation by 75% of eligible members. Under Florida law there is no specific minimum percentage participation for employees covered by group health insurance.) Which of the following is CORRECT about a group health insurance plan? -Non-contributory plans are paid for by the employer and employee -Non-contributory plans require 100% participation -Contributory plans are paid for by the employer only -Contributory plans require 100% participation - ANSWER>>Non- contributory plans require 100% participation All of the following are characteristics of group health insurance, EXCEPT? -Group plans may be contributory or noncontributory -More Americans are covered by individual health plans than by group health plans P ag e3 5 -90 days -31 days -45 days -180 days - ANSWER>>31 days Jake purchased group "credit disability" insurance to cover a loan. He was injured and disabled for 7 months. What benefits were paid under this policy? -Insured's loan is paid off at the beginning of his disability -Creditor receives monthly payments equal to the monthly loan payments -Creditor receives monthly payments equal to the loan amount less loan interest charges -Insured receives monthly disability income payments - ANSWER>>Creditor receives monthly payments equal to the monthly loan payments Generally what type of health insurance policies offer dental and vision care benefits? -Individual -Franchise -Blanket P ag e3 6 -Group - ANSWER>>Group COBRA is a federal law that provides for an extension of health benefits for what length of time after employment is terminated? -24 months -6 months -12 months -18 months - ANSWER>>18 months Which of the following is CORRECT about "franchise" health plans? -It doesn't matter if the plan is contributory or noncontributory -It can only be sold to a franchise -Plans are guaranteed issue -Individual policies are issued to individual members - ANSWER>>Individual policies are issued to individual members The Coordination of Benefits (COB) clause is found in what kind of policy? -Fictitious -Group -Indemnity -Individual - ANSWER>>Group P ag e3 7 Blanket health plans may provide coverage for which of the following groups? -School covering students -Company covering employees -Multiple employer group covering members -Association covering members - ANSWER>>School covering students Under a credit health policy, what is the maximum amount of any accidental death benefit? -Multiple of the monthly loan payments -Amount of original debt -Amount of outstanding debt -$100,000 - ANSWER>>Amount of outstanding debt For an individual to be able to take a tax deduction for individual contributions to a group medical plan, his medical expenses must exceed what percentage of his adjusted gross income? -7.0% -6.5% -7.5% -5.5% - ANSWER>>7.5% P ag e4 0 -Owner's salary -Employees' salaries - ANSWER>>Owner's salary (Explanation: Business Overhead Expense insurance is designed to reimburse a business for overhead expenses in the event a businessowner becomes disabled.) As compared to individual disability income policies, group disability income policies are generally? -More costly and have less liberal provisions -Tied more closely to Social Security disability benefits -Less costly and have more liberal provisions -More restrictive in terms of covered medical expenses - ANSWER>>Less costly and have more liberal provisions What is the typical maximum coverage provided to an individual by a group disability income insurance policy? -100% of pre-disability gross earnings -60% of pre-disability gross earnings -75% of pre-disability gross earnings -50% of pre-disability gross earnings - ANSWER>>60% of pre-disability gross earnings P ag e4 1 Which of the following is NOT a reform provided by the new Health Care Reform Act? -Companies cannot deny pre-existing conditions -Children can stay on parent's insurance plans until age 26 -There will be a fine for those who do not purchase health insurance -Illegal immigrants now eligible for Medicaid - ANSWER>>Illegal immigrants now eligible for Medicaid All of the following are considered "rights of ownership" for a life insurance policy, EXCEPT? -Right to change irrevocable beneficiary -Right to assign ownership of the policy to someone else -Right to cancel the policy and select a nonforfeiture option -Right to select how the death proceeds will be paid - ANSWER>>Right to change irrevocable beneficiary When someone other than the insured is the owner of a life insurance policy, the owner may do all of the following without consent of the insured, EXCEPT? -Change the beneficiary -Take out a policy loan -Increase the amount of insurance P ag e4 2 -Surrender the policy for its cash value - ANSWER>>Increase the amount of insurance Group health insurance is generally written on a basis that provides for dividends or experience rating. What is the basis called? -Participating -Contributory -Noncontributory -Nonparticipating - ANSWER>>Participating (Explanation: Group plans written by mutual companies provide for dividends while stock companies frequently issue experience-rated plans.) Workers Compensation will not provide which of the following benefits? -Rehabilitation to return the person to work -Unemployment insurance -Replacement of wages due to disability -Payment for medical expenses - ANSWER>>Unemployment insurance Which of the following is NOT one of the three most important factors in underwriting a health insurance policy? -Parents' medical history P ag e4 5 -Age -Sex - ANSWER>>Parents ages Who is the one that determines the classification of an applicant for health insurance? -Underwriter -Agent -Risk manager -Actuary - ANSWER>>Underwriter All of the following are techniques commonly used by insurers in issuing health insurance policies to substandard risks, EXCEPT? -Add a waiting period of 6 months -Charge extra premium -Attach exclusion or impairment rider or waiver -Limit the type of policy - ANSWER>>Add a waiting period of 6 months All of the following are classifications of applicants for health insurance, EXCEPT? -Standard risk -Preferred risk -Special risk P ag e4 6 -Substandard risk - ANSWER>>Special risk (Explanation: The classifications of applicants for health insurance are: preferred risk, standard risk, substandard risk and uninsurable risk.) When an insured holds more than one occupation, and occupation is used to classify the risk, what occupation will the insurer generally use to classify the insured? -Occupation that would produce the lowest premium -Occupation where insured spends the majority of hours -Occupation insured has been employed the longest -Occupation that is most hazardous - ANSWER>>Occupation that is most hazardous Which of the following is NOT a factor affecting health insurance premiums? -Marital status -Sex -Age -Hobbies - ANSWER>>Marital status With all other factors being equal, who of the following would have the highest premiums for a health insurance policy? P ag e4 7 -25 year old female -45 year old male -25 year old male -45 year old female - ANSWER>>45 year old female (Explanation: Health insurance costs tend to increase as the age of the insured increases. The older the insured, the higher the applicable premium rate. Disabilities among women under the age of 55, on the average, have a greater frequency and longer duration than among men, so female premium rates for certain coverages are higher than premium rates for males.) Both life and health insurance use all of the following factors in determine premiums, EXCEPT? -Interest factor -Expense factor -Morbidity -Age - ANSWER>>Morbidity An insurer authorized to do business within this state is considered what type of insurer? A) Foreign B) Domestic P ag e5 0 If you are found guilty of any crime punishable by imprisonment one year or more, you must report it to the Insurance Department within how many days? A) 15 B) 20 C) 30 D) 60 - ANSWER>>30 (If you are declared guilty of any crime that is punishable by imprisonment for 1 year or more, you must report it to the Insurance Department within 30 days, even if you pleaded 'no contest' or it occurred outside of Florida or even the U.S.) An insurance license may NOT be suspended for which of the following? A) Cheating on the license exam B) Twisting C) Over-insuring a health insurance risk D) Violating the code of ethics - ANSWER>>Over-insuring a health insurance risk P ag e5 1 (An agent's license will not be suspended for over-insuring a health insurance risk unless the agent willfully over-insured it.) Which of the following is NOT true about a fiduciary? A) A fiduciary holds a position of special trust and confidence B) Giving an agent a premium payment is the same as giving it to the insurer C) If an agent is holding a premium payment for less than 3 days, it can be put in his personal account D) A fiduciary responsibility is to offer advice about financial security - ANSWER>>If an agent is holding a premium payment for less than 3 days, it can be put in his personal account (An agent or agency must keep funds belonging to each insurer in a separate account so it can be properly audited. An agent must never commingle the insurer's premium with personal funds, or otherwise use it for personal purposes.) An agent may write insurance under which of the following circumstances? A) Agent's company rejected the insurance so the agent submitted it to another company P ag e5 2 B) An agent may not broker rejected business to another company C) An agent may share commissions with another agent who is licensed, but not appointed with the insurer D) An agent may not be paid a fee for making a recommendation regarding group health insurance - ANSWER>>Agent's company rejected the insurance so the agent submitted it to another company (An agent may write excess or rejected business with another company after the agent's company rejected it or accepted it on a substandard basis, or a portion of a risk is above the limits of that which the agent's own insurer will accept.) Which of the following is INCORRECT about life insurance company appointments? A) Also applies to health applications B) An agent must be appointed for life and health insurance separately C) An agent may not use the same insurer appointment to sell life insurance and excess business D) An agent may present a proposal to a company without being appointed - ANSWER>>An agent must be appointed for life and health insurance separately P ag e5 5 -All of the above - ANSWER>>All of the above The Office of Insurance Regulation is NOT concerned with which of the following? -The assets and investments of insurance companies -The types and degree of risks of investments made by insurance companies -The examination of agent's income records -Limiting the amount that insurers can invest in different types of investments - ANSWER>>The examination of agent's income records The best definition of a legal reserve is? -The amount set aside by federal reserve banks as required by law -The amount set aside by the company for future liabilities as required by law -A leeway provision -None of the above - ANSWER>>The amount set aside by the company for future liabilities as required by law Fines and penalties for violating provisions of the agent's qualification laws include? -The denial, suspension, revocation and nonrenewal of License P ag e5 6 -A misdemeanor fine of not less than $500 nor more than $3500 -Imprisonment for not more than 6 months as well A misdemeanor fine of not less than $500 nor more than $3500 -All of the above - ANSWER>>All of the above Florida holds which of the following responsible for the content of any Medicare Supplement as using their name even if they did not approve the ad? -The insurer -The agent who ran the ad -The advertising association -The Agency of Ethical Conduct - ANSWER>>The insurer Must a mail-order insurance company be authorized to solicit insurance in the state of Florida? -Yes, and the applications must be taken by a Florida State Agent -No, since there is no personal contact any company can solicit by mail -Yes, but the applications do not have to be sent to a Florida address -No, Florida prohibits the sale of insurance without personal contact - ANSWER>>Yes, and the applications must be taken by a Florida State Agent P ag e5 7 Which of the following is NOT considered one of the renewability classifications? A) Optionally renewable B) Guaranteed renewable C) Conditionally cancellable D) Conditionally renewable - ANSWER>>Conditionally cancellable __________ are set aside by an insurance company and designated for the payment of future claims. A) Reserves B) Dividends C) Capital accounts D) Premiums - ANSWER>>Reserves Most individual health insurance is written on a ________ basis. A) Nonparticipating B) Participating C) Group D) Franchise - ANSWER>>Nonparticipating (Individual is commonly nonparticipating, group is commonly participating.) P ag e6 0 D) Self-Insured - ANSWER>>Blue Cross/Blue Shield (Blue Cross/Blue Shield falls under the Service classification of provider. The 3 types of providers are Service, Reimbursement, and Self-Insured (Self-Funded).) What are the 3 provider types? -Service, Blue Cross/Blue Shield & Self-Insured -Blue Cross/Blue Shield, Service & Reimbursement -Service, Reimbursement & Self-Insured -None of the above - ANSWER>>Service, Reimbursement & Self-Insured (Blue Cross/Blue Shield falls under the Service classification of provider. The 3 types of providers are Service, Reimbursement, and Self-Insured (Self-Funded).) Fred's group health offers prepaid routine medical exams to provide early treatment and preventive care. He has what type of coverage? A) Blue Cross B) Hospital Indemnity C) PPO D) HMO - ANSWER>>HMO P ag e6 1 (HMOs emphasize preventive medicine and early treatment with prepaid routine medical exams, stress management, and diagnostic screening techniques.) A firm that provides administrative services for employers, acts as liaison between the insurer and employer and processes claims, etc. is a(n)? A) Third Party Administrator B) Administrative Services Only C) Staff Plan D) Gatekeeper - ANSWER>>Third Party Administrator (The key words are acts as liaison between the insurer and employer.) Sylvia is a participant in a Preferred Provider Organization (PPO) and finds that if she opts to use a provider other than a preferred provider, that? A) Her PPO will not pay at all. B) Her PPO will pay only if the circumstances for care were precipitated by an emergency. C) Her PPO will pay a reduced amount with Sylvia paying the balance. P ag e6 2 D) Her PPO will cover any charges in full. - ANSWER>>Her PPO will pay a reduced amount with Sylvia paying the balance. Which of the following is TRUE of traditional commercial insurers? A) They offer only individual plans of insurance. B) They offer only group plans of insurance. C) They traditionally market reimbursement type contracts that pay directly to the insured. D) They traditionally market service type contracts that pay directly to the provider of the service. - ANSWER>>They traditionally market reimbursement type contracts that pay directly to the insured. 'Insurance Transaction' includes? A) Negotiations. B) Informal conversation among producers. C) Setting up an unattended brochure stand. D) Taking a random phone survey. - ANSWER>>Negotiations A policy that covers inpatient doctor visits and may be expanded to include payment for office visits, diagnostic x-ray, laboratory charges, ambulance and nurses expenses when not hospitalized, and maternity P ag e6 5 A) There are no schedules in a Major Medical Policy. B) 40% better coverage. C) 20% better coverage. D) Same coverage, major medical has more exclusions. - ANSWER>>There are no schedules in a Major Medical Policy. (Remember, a Major Medical Plan provides protection against health losses that may be catastrophic in nature with a lifetime maximum limit; usually there are no schedules included.) Hank was in the hospital last month for 3 days, today he received a check for $330. Is this a refund or a payment from a health policy? A) A benefit payment from his Hospital Income or Indemnity Policy. B) A refund from his doctor. C) A refund of premium triggered by hospitalization. D) He submitted the claim wrong and this is the total benefit. - ANSWER>>A benefit payment from his Hospital Income or Indemnity Policy. (The Hospital Income or Indemnity Policy pays directly to the insured a specified dollar (cash) amount per day during hospitalization.) P ag e6 6 Which type of insurance policy combines Basic Medical Expense Coverage with Major Medical Coverage? A) Supplemental Major Medical B) Hospital Expense C) Comprehensive Major Medical D) Surgical Expense - ANSWER>>Comprehensive Major Medical (A Comprehensive Major Medical Policy combines the best features of the basic policies and Major Medical policy into a single policy and provides the most complete hospital coverage.) Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as? A) Reimbursement B) Cash C) Scheduled D) Usual Customary and Reasonable - ANSWER>>Usual Customary and Reasonable (UCR is not scheduled, but is based on the average fee charged by all doctors in a given geographical area.) P ag e6 7 Which policy may be written with Basic Medical Expense Coverage utilizing a Corridor Deductible after the basic plan benefits have been exhausted and before Major Medical benefits begin? A) Supplementary Major Medical B) Hospital Expense C) Comprehensive Major Medical D) Surgical Expense - ANSWER>>Supplementary Major Medical (The question is describing the characteristics and mechanics of a Supplemental Major Medical Policy.) Which type of Accident and Health policy would provide reimbursement for expenses involved with a broken hip? A) Endowment Policy. B) Medical Expense Policy. C) Accidental Death and Dismemberment Policy. D) Disability Income Policy. - ANSWER>>Medical Expense Policy. (Key word is in the question "expenses". The question specifies to reimburse for expenses, not death, dismemberment, or loss of income.) P ag e7 0 (The Elimination Period is a period of time that must expire after onset of an illness or occurrence of an accident before benefits will be payable.) Which is NOT a reason insurers limit disability income benefits to 70% or less of the insured's past earnings? A) Insurers limit the benefits simply because it keeps their expenses down. B) The full income is not paid in order to reduce malingering. C) The insurer considers other sources of disability income in order to prevent overinsurance. D) Insurers limit the length of the benefit to encourage the return to work. - ANSWER>>Insurers limit the benefits simply because it keeps their expenses down. (Although insurers are always sensitive to controlling expenses, that is not a factor in this question.) A court reporter develops arthritis making it impossible to continue this employment. The reporter now has other employment at a reduced salary and receives a monthly benefit from an insurance contract due to which of the following policy provisions? P ag e7 1 A) Residual Disability B) Recurrent Disability C) Partial Disability D) Total Disability - ANSWER>>Residual Disability (Residual Disability recognizes one's ability to continue to work, but at a reduction of earnings.Arthritis is what forms as a result of an injury from an accident or otherwise, therefore it's considered a residual disability.) Steve Borden, a kindergarten teacher, was in a boating accident and lost both legs. Although he will continue to teach, his disability policy pays full benefits because of this provision? A) Presumptive Disability B) Total Disability C) Partial Disability D) Residual Disability - ANSWER>>Presumptive Disability (Presumptive Disability is where a loss is presumed to be total and permanent due to loss of sight, hearing, speech or loss of two limbs.) P ag e7 2 This provision states that if there is a second disability due to the same cause within a specified period, then the elimination period may not apply the second time. It is which provision? A) Rehabilitation Disability B) Residual Disability C) Recurrent Disability D) Second Disability - ANSWER>>Recurrent Disability (Under Recurrent Disability, if a second disability - NOT a left over as in Residual, is suffered due to the same cause as the first, within a given period, the elimination period may not apply the second time. The benefit period will be considered as a continuous period of disability.) Which of the following would meet the definition of Presumptive Disability? A) The loss of a leg below the knee. B) The loss of sight in an eye. C) The loss of the ability to speak. D) The loss of hearing in an ear. - ANSWER>>The loss of the ability to speak P ag e7 5 D) Increase the benefit period and increase the amount of the benefit. - ANSWER>>Shorten the benefit period and increase the elimination period. (All other possible answers actually increase the risk.) Penelope received benefits from her disability policy and went back to work. After 30 days she found she was not able to work and began to immediately receive her disability payments. Which of following provisions made this possible? A) Recurrent Disability Provision B) Residual Disability Provision C) Presumptive Disability Provision D) Second Injury Provision - ANSWER>>Recurrent Disability Provision Accident and Health Insurance, insures for two major perils, they are? A) Driving under the influence and driving while intoxicated. B) On the job and off the job. C) Accidental injury and sickness. D) Automobile and home health care. - ANSWER>>Accidental injury and sickness. P ag e7 6 Which contract would a bus line passenger purchase to cover injuries sustained while traveling across the United States? A) Blanket B) Limited Accident C) Common Carrier Insurance D) Liability Insurance - ANSWER>>Limited Accident (A Limited Accident Policy provides specific benefits for specific injuries from specific causes such as travel.) Which statement is INCORRECT concerning an Accidental Death and Dismemberment Policy? A) It provides a specified payment for a specified injury. B) May be written separately or added to a Health/Disability or Life Policy as a rider. C) It usually provides that the death benefit (Principal) will also be paid if the insured loses sight in both eyes or loses any two limbs. D) A smaller amount (Capital) may be paid for the loss of sight in one eye or the loss of one limb. - ANSWER>>It provides a specified payment for a specified injury. P ag e7 7 (This is describing a Limited Accident Policy, not an Accidental Death and Dismemberment Policy.) Which is the best definition of a Limited Accident Policy? A) Provides specific benefits for specific injuries from specific causes. B) Only covers for a limited time after the accident. C) Limited in geographical scope (i.e. only in the state where written). D) All answers are correct. - ANSWER>>Provides specific benefits for specific injuries from specific causes. Raymond owns an Accidental Death and Dismemberment Policy with a Principal amount of $50,000, and a Capital amount of $25,000. After owning the policy several months, Raymond dies as the result of coronary artery disease. Lynn, his beneficiary, can expect to receive what amount of benefit from the policy? A) $0 B) $25,000 C) $50,000 D) $75,000 - ANSWER>>$0 P ag e8 0 B) Medicare Part A C) Supplemental Security Income D) State Supplemental Payment Program - ANSWER>>Medicaid (In California, Medi-Cal) (Medicaid (in California, Medi-Cal) is the federal and state administered program that provides increased assistance to those who are unable to pay for their own medical needs.) Part A of Medicare is known as? A) Medical Insurance B) Medicare + Choice C) Outpatient Insurance D) Hospital Insurance - ANSWER>>Hospital Insurance (Part A of Medicare is formally known as Hospital Insurance (Inpatient). Part B is formally known as Medical Insurance (Outpatient)) This is a product designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital. This product is called? P ag e8 1 A) Long-Term Care B) Medicare Supplement C) Retirement Benefits D) Outpatient Care - ANSWER>>Long-Term Care (The question is describing a Long-Term Care Policy. Medicare Supplement is incorrect as it covers skilled nursing care only, and then on a limited basis by number of days.) Exclusions listed in the policy are NOT covered. Which of the following is not an exclusion? A) Intentionally self-inflicted injuries B) Elective cosmetic surgery C) Nonoccupational injuries D) Care in a government facility - ANSWER>>Nonoccupational injuries (Nonoccupational injuries are covered. Job related or occupational injuries are typically excluded as they are covered by Workers' Compensation.) Which Long-Term Care definition does not match the coverage? P ag e8 2 A) Residential Care - health care provided in one's home under a planned program established by his/her attending physician. B) Respite Care - provides relief to the caregiver not the long-term care patient. C) Custodial Care Facility - a licensed facility, operated according to the laws of the state, under the supervision of an R.N. D) Skilled Nursing Facility - a licensed facility, operated in accordance with the laws of the state, providing skilled nursing care under the supervision of a physician. - ANSWER>>Residential Care - health care provided in one's home under a planned program established by his/her attending physician. (This is the definition of Home Convalescent Care, not Residential Care, which occurs within a long-term care facility.) Every LTC Policy that provides benefits of homecare or community- based services shall provide all of the following except? A) Adult day care B) Hospice services C) Respite care D) Acute care - ANSWER>>Acute care P ag e8 5 The policy, a copy of the application, any riders and policy endorsements constitute the _____ _____. A) Entire contract B) Legal actions C) Time limit D) Whole policy - ANSWER>>Entire contract (The Entire Contract Provision (a Mandatory Uniform Provision) stipulates that the policy, a copy of the application and any riders constitutes the entire contract between the insurer and insured.) Notice of claim is required within _____ days of loss. A) 90 B) 15 C) 20 D) 10 - ANSWER>>20 (The insured under the Notice of Claim Provision (a Mandatory Uniform Provision) is required to notify the insurer, in writing, within 20 days of any loss.) Proof of loss is required within _____ days of loss. P ag e8 6 A) 45 B)180 C) 60 D) 90 - ANSWER>>90 (The Proof of Loss Provision (a Mandatory Uniform Provision) stipulates the insured is to prove their loss within 90 days of the loss, or in the shortest time possible, but not to exceed 1 year unless the insured suffers legal incapacity.) Which of the following is not a Mandatory Uniform Provision? A) Payments of Claims B) Reinstatement C) Conformity with State Statutes D) Physical Exam & Autopsy - ANSWER>>Conformity with State Statutes Harry was hospitalized in a coma for 6 months. Since no one knew about his health care coverage, when does proof of loss have to be submitted? A) Within 1 year, unless he suffers legal incapacity. B) Anytime, since he was in a coma and obviously could not submit a claim. P ag e8 7 C) Within 2 years, covered under the contestable period. D) An executor would be appointed by the courts to handle the necessary paperwork - ANSWER>>Within 1 year, unless he suffers legal incapacity. (The Proof of Loss Provision (a Mandatory Uniform Provision) stipulates the insured is to prove their loss within 90 days of the loss, or in the shortest time possible, but not to exceed 1 year unless the insured suffers legal incapacity.) Which statement is INACCURATE regarding the Change of Occupation Provision? A) Change to a less hazardous occupation, insured may apply for a rate reduction. B) Change to a more hazardous occupation, upon claim, benefits will be reduced to that which premiums paid would have purchased at the more hazardous occupation. C) Insured must notify the insurer of a change of occupation, or policy will be cancelled. D) If the insured works at two occupations, rates for the most hazardous occupation will be charged. - ANSWER>>Insured must notify the insurer of a change of occupation, or policy will be cancelled. P ag e9 0 insurer since. Each contract contains the Other Insurance With This Insurer Provision. What happens if Charles has a claim? A) Only one policy will pay, the premiums for the other contracts will be returned. B) Each contract will pay in direct proportion to the loss. C) Benefits are paid in full by all contracts. D) The insurer will cancel all contracts because of intent to defraud. - ANSWER>>Only one policy will pay, the premiums for the other contracts will be returned. (Other Insurance With This Insurer (an Optional Uniform Provision) stipulates that if the insured has more than one policy of the same type with the same insurer, the insured may elect the policy to be used, and excess premiums for the excess coverage will be returned.) Louise purchased a disability policy when her salary was $4,000 a month. Later, she lost that job and her salary was reduced to $2,000 a month. Three years ago, she became self-employed and now receives $3,500 a month. The maximum disability benefit she might expect will be based on which salary amount? A) $2,000 B) $4,000, the contract amount P ag e9 1 C) The average of her income over the life of the contract D) $3,500 - ANSWER>>$3,500 (Relations of Earnings to Insurance (a Optional Uniform Provision) establishes that disability benefits shall not exceed the monthly earnings of an insured at the time the disability commenced, or his/her average earnings for the 2 years immediately preceding a disability, whichever is greater.) If an insurer cancels a contract, a written notice must be provided within 5 to 31 days. The contract must have which of the following provisions? A) Legal Actions B) Conformity with State Statutes C) Entire Contract D) Cancellation - ANSWER>>Cancellation (Cancellation (an Optional Uniform Provision) establishes that the insurer may cancel, with written notice of 5 to 31 days, to the insured.) P ag e9 2 Hank has medical coverage to age 70. He submits a claim for hospitalization. The insurer discovers Hank is actually 73, when his contract states he is 68. What will the insurer do? A) The insurer must prove fraud to be relieved from making payments. B) The insurer must refund the excess premiums Hank paid after his 70th birthday. C) The insurer pays what the premiums would have purchased at the correct age. D) The insurer must pay the claim, and then cancel the contract. - ANSWER>>The insurer must refund the excess premiums Hank paid after his 70th birthday. (Misstatement of Age (an Optional Uniform Provision) stipulates that since the misstatement of age led the insurer to provide coverage beyond the age limit, liability is limited to a refund of premiums.) If an insurer makes a payment for a claim but you are dissatisfied, you must wait _____ days after proof of loss before you might take any legal action. A) 60 B) 90 C) 45 P ag e9 5 D) Cancellable - the life of the policy is expressed and cannot be renewed. - ANSWER>>Cancellable - the life of the policy is expressed and cannot be renewed. (The definition is defining Nonrenewable instead of Cancellable.) Which clause in a contract states that Jim is covered by XYZ insurer for a lifetime maximum of $1,000,000, with a schedule of benefits for various expenses? A) Consideration Clause B) Entire Contract C) Free Look Provision D) Insuring Clause - ANSWER>>Insuring Clause (The Insuring Clause states who is covered, by whom, for how much, and for what period, against what peril.) Abigail has a preexisting condition noted in her new A & H policy. If she submits a claim for this condition during the probationary period, what will the insurer do? A) Reduce the benefits paid. B) Pay a reduced amount or deny any claim payment. P ag e9 6 C) Pay benefits in full. D) Provide coverage only if this claim is nonoccupational. - ANSWER>>Pay a reduced amount or deny any claim payment. (Since Abigail's claim occurred during the Probationary Period, the insurer would likely deny any claim outright or at least pay a reduced amount.) Insurers include provisions in contracts to help reduce unnecessary claims and the overpayment of claims. Which of the following is NOT one of those provisions? A) Concurrent Review B) Mandatory Second Surgical Option C) Consideration Clause D) Ambulatory Service - ANSWER>>Consideration Clause (The other choices are Case Management Provisions designed to contain costs. The Consideration Clause stipulates that the payment of the first premium and statements in the application are the applicant's consideration, and the insurer's consideration is the promise to pay within the contract terms.) P ag e9 7 A health policy not conforming to the Uniform Individual Accident and Sickness Policy Provisions Law... A) Is invalid. B) May be voided. C) Will be construed as if it conformed to the Law. D) The insurer is fined and the policy corrected - ANSWER>>Will be construed as if it conformed to the Law. (According to the Conformity with State Statutes Provision (an Optional Uniform Provision), any provision on the policy effective date that is in conflict with statutes of the state is automatically amended to meet state requirements.) An application for disability insurance may be altered by? A) The insurer B) The Commissioner C) The agent D) No one without the applicant's written consent. - ANSWER>>No one without the applicant's written consent. (Only the applicant may alter statements on the application.)