EXAM SIMULATION QUESTIONS

Anyone who knowingly allows compensation of an unlicensed person can be punished by a fine of an amount between

$50 and $500

HIPAA applies to groups of

2 or more

COBRA only applies to employers with at least

20 employees

Nonqualified distributions from an MSA are included in the employee's gross income and subject to penalty tax of

20%

The duration of the freelook period for medicare is

30 days

How many pints of blood will be paid for by Medicare Supplement core benefits

First 3

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain

A statement that is sufficiently clear to identify the insured and the nature of the claim.

Insurance policies are not drawn up through negotiations and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

pretext interview

An interviewer assumes a false identity or refuses to disclose his true identity and interviews a person without disclosing the true purpose of the interview.

Which of the following hospice expenses would NOT be covered in a cost-containment setting?

Antibioitics

Which of the following types of agent authority is also called "perceived authority"?

Apparent

Morale hazards

Arise from a state of mind that causes indifference to loss, such as carelessness

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?

As long as the policy is in force

Health savings accounts are designed to

Help individuals save for qualified health expenses

All fo the following are requirements of eligibility for social security disability income benefits EXCEPT

Being age 65

When an insurer offers services like preadmission testing, second opinions regarding surgery, and preventative care, which term would best apply?

Case management provision Cost-saving services aka case management provisions

A health insurance plan that covers all accidents and sicknesses that are not specifically excluded form the policy is referred to as a:

Comprehensive plan

What is the contract provision that allows insurers to non renew health coverage if certain events occur?

Conditionally renewable The conditionally renewable provision is similar to the optionally renewable provision, the difference is that conditionally renewable policies may be canceled for specific conditions contained in the policy, nut optional renewable policies do not specify a condition or reason for cancellation.

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

Which of the following reports will provide the underwriter with the information about an insurance applicants credit?

Consumer report

Which of the following is NOT a characteristic of an HMO plan?

Contracting with insurance companies

Which of the following is the term for a specific amount that must be paid by an HMO member for a service?

Copayment

Which of the following is NOT a cost saving service in a medical plan?

Denial of coverage Cost saving services also known as case management provisions, include the following: controlled access of providers, large claim management, preventative care, hospitalization alternatives, second surgical opinion, readmission testing, catastrophic case management, risk sharing, and providing high quality of care

What is the difference between medicare approved amount for service or supply and the actual charge?

Excess charge

Which of the following statements is correct concerning taxation of long-term care insurance?

Excessive benefits may be taxable

If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is...

Fully insured

As it pertains to group health insurance, COBRA stipulates that:

Group coverage must be extend for terminated employees up to a certain period of time at the former employees expense

Which of the following entities has the authority to make changes to an insurance policy?

Insurer's executive officer

Misrepresentation

Making an intentionally false statement to induce someone to contract.

In group insurance, what is the policy called

Master policy

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is

Monthly

Medicare Part A services do NOT include the following:

Outpatient hospital treatment This is covered by part B

Risidual disability

Pays an amount to make up the difference between what the insured would have earned before the loss

Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death?

Principal sum In case of loss sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy, often referred to as the capital sum (% of principal sum)

Under which provision can a physician submit claim information prior to providing treatment?

Prospective review

What would a physician utilize if they wanted to know if a treatment is covered under an inured's plan and at what rate it will be paid?

Prospective review

Time of Payment of Claims

Provides for immediate payment of the claim after the insurer receives notification and proof of loss. 45 days

Consideration

Something of value that is transferred between the two parties to form a legal contract

Stock companies are owned by

Stockholders

Which of the following statements regarding conditional receipts is true?

They are temporary insuring agreements

Which of the following statements is correct concerning the changing of an irrevocable beneficiary?

They can be changed only with the written consent of that beneficiary

If an insurance company makes a statement that its policies are guaranteed by the existence of the insurance guarantee association, that would be considered

an unfair trade practice

Under a Key Person disability income policy, premium payments

are made by the Buisness and are NOT tax deductible

If an applicant for heath insurance policy is found to be a substandard risk, the insurance company is most likely to

charge an extra premium

PPOs contract providers on a

fee for service basis

The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as

legal actions

In groups of 50 or more,

medical information cannot be required of plan participants

Medicare Supplement policies do not cover

the cost of extended nursing home care

When is the insurability conditional receipt given?

when the premium is paid at the tie of application

In Massachusetts, according to the payment of claims provision, what amount is the insurer entitled to pay in the event that a beneficiary is unable to give a valid release?

$1,000

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage?

$102, The employer is permitted to collect a premium from the terminated employee at a rat Eno more than 102% of the individuals group premium rate (in this scenario 102% of 100 total premium is $102) the 2% change is to cover the employers administrative costs.

A noncontributory group disability income plan has a 30 day waiting period and offers benefits of $2,000 a month. If an employe is unable to work for 7 months due to a covered disability, the employee will receive:

$12,000 all of which is taxable. In noncontributory group health plans, the employer pays the entire cost, so the income benefits are included in the employees gross income and taxed as ordinary income. Only up to 6 Months of disability

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true?

**The insured was in compliance with the policy requirements regarding claims

Every insurer must file all rates, rating plans, and modifications to its plans with the Commissioner at least how many days prior to the effective date of use?

*15 days

An insured buys an individuals LTC policy and is not satisfied with the provisions. Within how many days will the insured be able to return the policy for a full premium refund?

10 days

According to OBRA, what is the minimum number of employees required to constitute a large group?

100

S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct?

100%

Under the affordable care act, what percentage of preventative care must be covered without cost sharing?

100%

The most the insurance guaranty association will pay for net cash surrender values is

100,000

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least

12 months

How long does the insurance company have to notify the commissioner of a new producer appointment?

15 days

Within how many days must a carrier send an insured a written acknowledgment of the receipt of the insured's grievance?

15 days

The pregnancy discrimination act specifically prohibits pregnancy discrimination by employer with the minimum of how many employees?

15*

HIPAA requires that the individual have a previous continuous creditable health coverage for at least

18 months

Insured health plans must provide mental health benefits on a nondiscriminatory basis for the diagnosis and treatment of mental health disorders for children under what age?

19

A complaint record is required to be maintained for a period of

2 Years

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan?

2 years Under own occupation, it covers up to two years

What is the penalty tax for non qualified distributions from a Medical savings account

20%

If a producer is found guilty of a violation which has caused a claimant to suffer actual economic damages, a court may award punitive damages in addition to the amount of claim. this amount cannot excess what percentage of this claim?

25%

The Medicare Supplement renewal commissions paid in the 3rd year must be as high as the commission of which year?

2nd year

A policy form is deemed to be approved by the commissioner if it has been on file for at least ow many days?

30 days

if a producers appointment has been terminated, within how many days must the insurance company notify the commissioner?

30 days

Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months?

30 months

what is the period of coverage for events such as death or divorce under COBRA?

36 months

Health benefit plans are prohibited from including waiting periods that exclude coverage for more than

4 months

If an insured's cognitive impairment results in the lapse of a long-term care policy, how long from the policy lapse may the insured request reinstatement?

5 months

What is the elimination period for social security disability benefits?

5 months

Medical savings account are only available to groups of

50 or fewer employees

How long is open enrollment period for Medicare Supplement policies?

6 Months

The minimum bomber of credits required for PARTIALLY insured status of social security disability benefits is

6 credits

Health benefit plans may not include pre-existing condition provisions excluding coverage beyond

6 months

Benefits periods for individual short term disability ponies will usually continue from:

6 months to 2 years

Generally "creditable coverage" does not include insurance that has lapse in covered for more than

63 days

A carrier must maintain records of each grievance process for how many years?

7 years

The maximum amount that can be contributed to an MSA is what % of the family deductible for those with family coverage?

75% For a high-deducible plan for individuals it's 65%

most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs within

90 days

A hospital indemnity policy will pay

A benefit for each day the insured is in a hospital.

In underwriting a substandard risk, which of the following is INCORRECT?

A discounted premium would be charged A substandard risk is one below the insurers standard or average risk guidelines. Can be rated as poor health, dangerous occupation. Some substandard risk re rejected outright, while others are accepted at a higher premium.

An insurer used fraudulent representations to procure the payment of premiums. What sort of punishment does she face?

A fine of between $100 and $1000 or imprisonment up to 1 year

An insurer was just caught misrepresenting the terms of a policy. What fine does he face?

A fine up to $1,000 or imprisonment for up to 6 months

Any person or organization willfully violating any provision of rate-making provisions of the law will be punished by a fine of:

A maximum of $500 for each violation

How is emergency car recovered for a member of an HMO

A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area

What documentation grants express authority to an agent?

Agents contract with the principal The principal grants authority to an agent through the agent's contract

the commissioner will grant a certificate of authority stating that the company has complied with all the conditions and provisions of the law once they are satisfied that the company

All above are true

An insured has been quoted an estimated cost for a procedure from their health carrier. This quote must include all of the following except:

An exact and final price of the procedure

rebating

Any inducement offered in the sale of insurance products that is not specified in the policy.

When must an insurance company present an outline of coverage to an applicant for a Medicare Supplement policy?

At the time of application

When must the Medicare Supplement Buyer's Guide be presented?

At the time of application

Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care?

Attending Physician

What document describes an insureds medical history, including diagnosis and treatments?

Attending physicians statement

Which of the following is not required to be stated in the outline of coverage provided with a long-term care policy

Basic information about supplementary polices The outline of coverage must follow the standard format included in the insurance regulations. It must provide information about the insurance company, the policy number, important features of the policy, and explain the right to return the policy for a refund

An individual is insured under his employers group disability income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policies pay the benefit, which of the following would be true?

Benefits that are attributable to the employer contributions are fully taxable to the employee as income

A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have?

Both subscriber and insured

A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called

Business Overhead Expense

Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service?

Copayment --A specific dollar amount of the cost of care that must be paid by the member.

An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement?

Cost containment

Under which of the following employer-provided plans are the benefits taxable to an employer in proportion to the amount of premium paid by the employer?

Disability income

What is the goal of an HMO

Early detection through regular checkups

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?

Employee benefits are tax deductible the year in which they are received For group and medical dental expense insurance any premium paid by the employer is deductible as business expense. However, any premiums provided by the employee are only deductible if certain conditions are met. Group medical and dental expense benefits are received income tax free by the employee.

retrospective review

Employers and insurers can evaluate the utilization review process and the effectiveness of the professionals involved in large claims. These reviews include hospital bill audits.

Which of the following are the authorities that an agent can hold?

Express and implied

The authority granted to an agent through the agent's contract is referred to as

Express authority

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

Health coverage becomes effective when the

First premium has been paid and the application has been approved.

What option allows the insured to periodically increase benefit levels without providing evidence of insurability?

Guarantee of insurability Allows the insured to periodically increase benefit levels without providing evidence of insurability. The amount is usually limited to allowing a 5% compounded annual increase

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?

Guaranteed

Medicare Supplement policies must be

Guaranteed renewable

Which insurance concept is associated with the names Weiss and Fitch?

Guides describing company financial integrity

Employers are no longer forced to offer

HMO plans

Which of the following is an eligibility requirement for all social security disability income benefits?

Have attained fully insured status

Which benefits would a disability plan most likely pay?

Income lost by the insureds inability to work

Issue age policy premiums increase in response to which of the following factors?

Increased benefits

The patient protection and affordable care act includes all of the following provisions EXCEPT:

Individual tax deductions for premium paid

Which of the following entities must approve all Medicare Supplement ads?

Insurance commisioner or director

When a person applies for Medicare supplement insurance, whose responsibility is it to confirm that the applicant does not already have accident or sickness insurance already in force?

Insurer

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the

Insuring clause

What is the benefit of experience rating?

It allows employers with low claims experience to get lower premiums.

All of the following statements about medicare part b are correct EXCEPT

It is a compulsory program

Concerning Medicare Part B, which statement is INCORRECT?

It is fully funded by social security taxes (FICA) Part b is funded by monthly premiums and from general revenues of the federal government

What is a franchise insurance?

It is health coverage for small groups whose numbers are too small to qualify for true group insurance

Every insurer marketing Long-Term Care insurance must establish marketing procedures to ensure all of the following EXCEPT

LTC polices are marketed effectively to prospective insureds

Failure to pay the premiums after written demand is made is called

Larceny

Under workers compensation, which of the following benefits are NOT included?

Legal benefits

In group insurance, what is the policy called?

Master policy

Masshealth is a combination of

Medicaid and SCHIP (state children's health insurance plan)

Which of the following is NOT correct regarding medicare?

Medicare Advantage must be provided through HMOs

To sign up for a Medicare prescription drug plan, individuals must first be enrolled in

Medicare plan a

continuation provision

Must be included on the first page of Medicare Supplement policies. This provisions explains the right of an insurer to alter premium amounts

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?

None Does not cover overseas residence

An insured does not have to pay co-insurance or deductibles on a full-series mouth x-ray, but does have to pay a deductible to get his cavities filled. Which dental plan does he have?

Nonscheduled Diagnostics and preventatives services are generally not subject to coinsurance or deductibles in nonscheduled plans, but basic and major services are.

Qualified medical expensed paid for participants in a Medical Savings Account (MSA) are:

Not taxable MSA Funds are only taxable when distributions are made for reasons other than qualified medical expenses

Shortly after a replacement transaction on a Medicare Supplement policy, the insured decided to cancel the policy, but is unsure whether the free-look provision applies. They can find this information in the

Notice regarding replacement

No insurance institution or producer may base an adverse underwriting decision in whole or in part

On the existence of a precious adverse decision or the fact that an individual previously obtained insurance coverage through a residual market mechanism

When an individual is covered under two health insurance policies that have duplicate benefits which could make a claim for benefits because of an injury or illness profitable, it is called

Overinsurance

Any person who violates a cease and desist order of the commissioner after it has become final must:

Pay a fine to the state not to exceed $10,000 for each violation which may be recovered in a civil action

Which of the following factors would be an underwriting consideration for a small employer?

Percentage of participation Coverage under a small employer health benefit plan is generally available only if at least 75% of edible employees elect to be covered

Risk retention

Planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance.

Mutual companies are owned by

Policyowners

All of the followings are examples of risk retention EXCEPT

Premiums

In regard to taxation of group medical expense premiums and benefits

Premiums are tax deductible and benefits are not taxed

Which services are associated with standard & poor's and AM Best?

Rating the financial strength of insurance companies

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

Reasonable expectations

All of the following are marketing arrangements used by insurers EXCEPT

Reinsurance system Reinsurance is a method used by insurers to protect against catastrophic losses.

Which of the following is an example of a peril covered in an accident and health insurance policy?

Sickness or Accident

Your client wants to know what the tax implications are for contributions to a health savings account. You should advise her that the contributions are

Tax deductible. Contributions to HSAs by individuals are deductible, even if the taxpayer does not itemize. Contributions by an employer are not included in the individuals taxable income

Which of the following is an example of a producer being involved in an unfair practice of rebating?

Telling a client that his first premium will be waived if he purchases the insurance policy today

Which of the following is NOT covered under plan A in medigap insurance

The Medicare Part A deductible Medicare Supplement plan a provides the core, or basic benefits.

Which of the following does NOT have to disclosed in a LTC policy?

The aggregate amount of premiums due

If a member of blue cross/blue shield obtains medical treatment from a non-participating provider, the insurer will pay:

The amount that would have been paid to a participating provider If a subscriber/member incurs medical expenses from a nonparticipating provider, the BC/BS is responsible for only that amount that it would have paid to a participating subscriber

Apparent Authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. also known as perceived authority

Which of the following is true about the requirement regarding HIV exams?

The applicant must give prior informed written consent.

Express authority

The authority granted to an agent through the agent's contract Express powers are written into the contract between the insurer and the agent.

Which of the following is NOT a characteristic of a group long term disability plan?

The benefit can be up to 50% of one's yearly income. The maximum benefit is based on monthly income

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouses coverage. If one of the incurs a hospital expenses, how will this expenses likely be paid?

The benefits will be coordinated

An insured who has Accidental Death and dismemberment policy losses her left arm in an accident. What types of benefit will she most likely receive from this policy?

The capital amount in a lump sum Benefits for ADAD are paid in lump sums

What time of information is NOT included in a certificate of insurance?

The cost the company is paying for monthly premiums

In order for an insured under Medicare Part A to receive benefits for care in a skilled nursing facility, which of the conditions must be met?

The insured must have first been hospitalized for 3 consecutive days

Which of the following is NOT a feature of guaranteed renewable provision?

The insurer can increase the policy premium on a individual basis. They can only be increased on a CLASS basis

Under the prospective review or recertification provision,

The physician can submit claim information to providing treatment to know in advance if the procedure is covered under the insureds plan and at what rate it will be paid

An individual purchased a medicare supplement policy in march and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true?

The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off

Which of the following is true regarding benefits paid to disabled employees?

They may be subject to taxation if they premium was paid by the employer

Which of the following is NOT a goal of risk retention?

To minimize the insureds level of liability in the invent of a loss

which of the following Is NOT a purpose of HIPAA

To provide immediate coverage to new employees who had been previously covered for 18 months HIPAA does not prohibit employers or providers from establishing waiting periods or pre-existing conditions exclusions, in which case the coverage to new employees would not be immediate

Under Credit Disability Policy, until what point will payments to a Creditor be made for the Insured?

Until the disability ends or the debt is satisfied, whichever is sooner

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in a business of insurance affecting interstate commerce

Without receiving written consent from an insurance regulatory authority

To be eligible for a Health Savings account,

an individual must be covered by a High deductible Health plan

The fine for impersonation of a licensed producer is

at least $10 but no more than $100

The commissioner must examine each domestic and foreign company in order to determine its financial condition, ability to fulfill its obligations, compliance with insurance laws and dealigns with its policyholders

at least once every 5 years and whenever deemed necessary the commissioner.

forcing a client to buy insurance form a particular lender as a condition of grating a loan is defined as:

coercion

An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called

concurrent review

The most common time for errors and omissions to occur on the part of an insurer is

during policy delivery

In a major medical expense policy, this is not covered

emergency surgery

The provision in a health insurance policy that interrupts premiums being paid to the insurer while the insured is disabled is called the

entire contract clause

In LTC insurance, every policy

must offer nonforfeiture benefits to the applicant.

In an individual LTC insurance plan, the insured is able to deduct premiums from taxes. What income taxation will be imposed on the benefits received?

no tax

Qualified medical expenses paid for participants in a medical savings account are

not taxable

In regard to taxation of individual disability income benefits and premiums

premiums are not tax deductible and benefits are not taxable

The commissioner may delay effective date of an insurers rate plan which has been duly filed for not more than 30 additional days in order to

properly examine the filing and any supporting information filed as requested or to permit a related hearing.

whenever the commissioner has reason to believe that nay person has engaged in any unfair method of competition or any unfair acts or practice, the commissioner will serve a notice of a hearing the time and place of which cannot be:

sooner than 21 days after the date such notice was served

Private insurers may be authorized to transact insurance by

state insurance departments.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the

the entire contract clause

Revocable Beneficiary

the policyowner reserves the right to change the beneficiary designation without the beneficiary's consent

For the purpose of insurance, risk is defined as

the uncertainty or chance of loss

What is the purpose of medicare carve our or supplement?

they pay deductibles or copayments that are not paid by medicare

An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this?

unpaid premium

Under what condition are group disability income benefits received by an employee NOT taxable as income?

when the benefits received are equal or less than the employees percentage of the contribution

All of the following cases show when a small employer medical plan cannot be renewable EXCEPT

when the employer chooses to renew the plan.

Any individual insurance producer who allows his license to lapse may, within 12 months from the due date of the renewal fee, reinstate the same license

without the necessity of passing a written examination, but a penalty fee of double the unpaid renewal fee must be paid