FL Manual final exam review PRINCIPLES OF HEALTH INSURANCE
C. assigns a dollar amount to each surgical procedure Under the surgical method, every surgical procedure is assigned a dollar amount by the insurer. When a claim is submitted to the insurer, the claims examiner reviews the policy to determine what amount is payable; if the surgeons bill is less than the allowed charge, the insurer will pay only the full amount billed; if the surgeons bill is more than the allowed charge, the claim payment will never exceed the amount charged.
A basic surgical expense policy that covers surgeons' fees per a scheduled approach A. bases it's benefits on what is customary for a particular area B. assigns a set of points to each surgical procedure C. assigns a dollar amount to each surgical procedure D. basis its benefits on a percentage of hospital room and board expenses
D. amount the insured must pay toward covered expenses To provide a safe guard for insured, many major medical policies contain a stop-loss feature that limits the insured's out-of-pocket expenses. This means that once the insured's covered expenses- usually $1,000 to $2,000- the company pays 100% of covered expenses after that point.
A stop-loss feature in a major medical policy specifies the maximum A. benefit amount the policy provides each year B. benefit amount the policy provides in a lifetime C. amount the insured must pay in premiums D. amount the insured must pay toward covered expenses
C. disability income A waiver of premium rider generally is included with guaranteed renewable and noncancelable individual disability income policies. It is a valuable provision because it exempts the policyowner from paying the policy's premiums during periods of total disability.
A waiver of premium provision may be included with which kind of health insurance policy? A. hospital indemnity B. major medical C. disability income D. basic medical
C. $6,563 responsibility for payment would be as follows: Total expenses: $9,000 Deductible Lola pays: - $250 -------- Basis for insurer's payment: $8,750 x .75 -------- Amount insurer pays: $6,563 Coinsurance Lola pays: $2,187 ($8750-$6563= $2,187[plus the deductible] to find out how much Lola would be responsible for)
After a week in the hospital, Lola receives a bill for $9,000 of covered expenses. Her major medical policy has a $250 deductible and a 75/25 coinsurance feature. How much of the total expense will Lola's policy cover? A. $2,063 B. $6,063 C. $6,563 D. $8,753
B. $1,900 Total expenses: $7,500 Deductible Alice pays: - $500 -------- Basis for insurer's payment: $7,000 x .80 -------- Amount insurer pays: $5,600 Coinsurance Alice pays: $1,400 Deductible + $500 --------- Total Alice pays: $1,900
Alice has a major medical policy with $500 deductible and an 80/20 coinsurance provision. If she receives a hospital bill for $7,500 of covered expenses, how much of that bull will she have to pay? A. $1,400 B. $1,900 C. $2,000 D. $2,400
B. traditional net cost method Traditional net cost method is a way of comparing costs of similar policies
All of the following approaches are used by insurers to determine benefits payable under basic surgical expense insurance EXCEPT A. relative value scale approach B. traditional net cost method C. reasonable and customary approach D. surgical schedule method
B. the parties to a group health contract are the employer and the employees The contract for coverage is between the insurance company and the employer, and a master policy is issued to the employer.
All of the following are characteristics of group health insurance plans EXCEPT A. their benefits are more extensive than those under individual plans. B. the parties to a group health contract are the employer and the employees C. employers may require employees to contribute to the premium payments D. the cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan.
A. change of occupation Change of occupation is an optional provision.
All of the following are mandatory health insurance policy provisions EXCEPT A. change of occupation B. entire contract C. grace period D. reinstatement
D. Misstatement of age Misstatements of age is an optional provision of health insurance policies.
All of the following are mandatory provision in health insurance policies EXCEPT A. proof of loss B. entire contract C. change of beneficiary D. Misstatement of age
C. policy benefits There are three primary factors that affect health insurance premiums: morbidity, interest, and expenses.
All of the following are primary health insurance premium factors EXCEPT A. interest B. expense C. policy benefits D. morbidity
A. welfare benefits Social Security provides death benefits, old-age or retirement benefits, and disability benefits to eligible workers. Social Security is an entitlement program, not a welfare program.
All of the following benefits are available under Social Security EXCEPT A. welfare benefits B. death benefits C. old-age retirement benefits D. disability benefits
B. Medigap policies cover the cost of extended nursing home care Medigap policies do not cover the cost of extended nursing home care.
All of the following statements about Medicare supplement (Medigap) policies are correct EXCEPT A. Medigap policies supplement Medicare benefits B. Medigap policies cover the cost of extended nursing home care C. Medigap policies pay most, if not all, Medicare deductibles and copayments D. Medigap policies pay for some health care services not covered by Medicare
B. PPOs operate on a prepaid basis Unlike HMOs, preferred provider organizations usually operatize on a fee-for-service-rendered basis, not on a prepaid basis.
All of the following statements are true of preferred provider organizations EXCEPT A. a PPO is as group of health care providers, such as doctors, hospitals, and ambulatory health care organizations, that contract with a group to provide their services B. PPOs operate on a prepaid basis C. PPO members select from among the preferred providers for needed services D. groups that contract with PPOs are employers, insurance companies, or other health insurance benefits providers
C. group coverage must be extended for terminated employees up to a certain period of time at the employee's expense COBRA requires employers with 20 or more employees to continue group medical expense coverage for terminated workers (as well as their spouses and dependents)for up to 18 months (or 36 months, in some situations) following termination. However the terminated employee may now be required to pat the premium which may be up to 102% of the premium that would otherwise be charged.
As it pertains to group health insurance, COBRA stipulates that A. retiring employees must be allowed to convert their group coverage to individual policies B. terminated employees must be allowed to covert their group coverage to individual policies C. group coverage must be extended for terminated employees up to a certain period of time at the employee's expense D. group coverage must be extended for terminated employees up to a certain period of time at the employer's expense
C. physician services Physicians' services are not covered under a basic hospital expense policy, even in the case of surgery. The cost for a physician is covered under basic surgical expense or basic physician's (nonsurgical) expense policy.
Basic hospital expense insurance provides coverage for all of the following EXCEPT A. hospital room and board B. anesthesia and use of the operation room supplies C. physician services D. drugs and x-rays
D. miscellaneous expenses, such as lab fees and x-ray Miscellaneous expenses are covered under under basic hospital expense policies. These "extras" include drugs, x-rays, anesthesia, lab fees. dressings, use of operating room and supplies
Basic surgical expense policies generally provide coverage for all of the following EXCEPT A. anesthesiologist services B. surgeon services C. postoperative care D. miscellaneous expenses, such as lab fees and x-rays
D. conditionally renewable A conditionally renewable policy allows an insurer to terminate the coverage, but only in the event of one or more conditions stated in the contract. These conditions cannot apply to the insured's health. Most frequently, they are related to the insured reaching a certain age or losing gainful employment.
Beth's health insurance policy contains a provision that allows her to renew coverage up to age 65.However, the policy also states that should Beth lose her job, the insurance company will cancel the policy, regardless of Beth's age. In terms of renewability, what type of policy does Beth have? A. cancelable B. optionally renewable C. guaranteed renewable D. conditionally renewable
B. Indemnity Indemnity medical expense policies do not pay expense or bills; they merely provide the insured with a stated benefit amount for each day the insured is confined to a hospital as an in-patient. the money may be used by the insured for any purpose.
Bill's medical expense policy states that it will pay him a flat $50 a day for each day he is hospitalized. the policy pays benefits on which basis? A. Reimbursement B. Indemnity C. Service D. Partial
D. the inability of the insured to perform certain important duties of the insured's own job By most definitions, partial disability is the inability of the insured to perform one or more important duties of the insured's job.
By most insurers' definitions, "partial disability" is A. the loss of one or more limbs B. the anility of a disabled insured to work at any job for which the insured is reasonably suited C. the inability of the insured to work at the insured's own job D. the inability of the insured to perform certain important duties of the insured's own job
A. Harry's salary Business overhead policies do not include any compensation for the disabled owner.
Harry, the owner of a convenience store, is the insured under a business overhead policy. Were Harry to become disabled, the policy would cover all of the following EXCEPT A. Harry's salary B. the store manager's salary C. the rent D. utility bills
A. preventative care HMOs stress preventative care to reduce the number of unnecessary hospital admissions and duplication of services.
Health maintenance Organizations are known for stressing the provision of A. preventative care B. health care and services on a fee-for-service rendered basis C. health care and services in hospital settings D. health care and services to government employees
B. Nonparticipating Most individual health insurance is issued on a nonparticipating basis.
Individual health insurance policies are typically written on which basis? A. Participating B. Nonparticipating C. Experience-rated D. Claims-rated
B. deductible A deductible is a stated initial dollar amount that the individual insured is required to pay before insurance benefits are paid.
Leonard owns a major medical health policy which requires him to pay the first $200 of covered expenses each year before the policy pays its benefits. The $200 is the policy's A. coinsurance amount B. deductible C. stop-loss D. annual premium
C. martial status Physical condition, habits or lifestyle (moral hazards), and occupation are major risk factors in health insurance. Martial status is not a risk factor.
Major risk factors in health insurance underwriting include all of the following EXCEPT A. physical condition B. habits or lifestyle C. martial status D. occupation
B. funds to states to assist their medical public assistance programs Medicaid provides matching federal funds to states for their medical public assistance programs to help needy persons, regardless of age.
Medicaid provides A. funds to states for the provision of medical care to the aged B. funds to states to assist their medical public assistance programs C. funds to charitable organizations for providing medical benefits to poor people D. medical benefits to those who contributed to Medicare funding through payroll taxes.
B. $2,000 Business overhead expense insurance reimburses business for the covered expenses incurred or the maximum that is stated in the policy. If Mr. Ritchie's monthly expenses were $1,700, his plan would have paid a monthly benefit of $1,700. However, because Mr. Ritchie's expenses exceeded his maximum coverage, the policy pays the maximum benefit stated in the policy, $2,000.
Mr. Ritchie, a taxidermist, is insured under a business overhead expense policy that pays maximum monthly benefits of $2,000. Mr. Ritchie becomes disabled. His actual monthly expenses are $2,700. The monthly benefit payable under his policy will be A. $1,300 B. $2,000 C. $2,350 D. $2,700
B. Roger's coverage began when he received the insurability receipt. The insurability type of conditional receipt provides that when an applicant pays the initial premium, coverage is effective- on the condition that the applicant proves to be insurable- either on the date the application was signed, or the date of the medical examination, if one is required.
On August 1, Roger completed an application for a major medical policy, gave his agent a check for the initial premium, and received an insurability receipt from the agent. No medical examination was required. On August 3, the agent submitted Roger's application and premium to the insurance company. On August 6, Roger was involved in an accident and admitted to a hospital. On August 12, the agent received Roger's policy from the insurance company. Which of the following statements concerning this situation is CORRECT? A. Roger's coverage will begin when he receives the policy from the agent. B. Roger's coverage began when he received the insurability receipt. C. Roger's coverage began when the insurance company received the application and premium from the agent. D. Roger's coverage began the day the agent sent the application and premium to the insurance company.
A. elimination period Similar in concept to a deductible, the elimination period is the time immediately following the start of a disability when benefits are not payable.
Paul is hospitalized with a back injury, and upon checking his disability income policy, learns that he will not be eligible for benefits for at least 60 days. This would indicate that his policy probably has a 60-day A. elimination period B. probationary period C. disability period D. blackout period
B. state law State laws specify the minimum number of persons to be covered under a group policy. One state may stipulate 15 persons as a minimum number, while another state may require a minimum of 10. (the most typical minimum requirement is 10 lives)
The minimum number of persons to be insured under a group health insurance plan is established by A. the NAIC B. state law C. federal law D. the employer
A. the elimination period The elimination period is the time immediately following the start of a disability when benefits are not payable. Elimination periods eliminate claims for short-term disabilities for which the insured can usually manage without financial hardship and save the insurance company from the expense of processing and settling small claims
The period of time immediately following a disability during which benefits are not payable is A. the elimination period B. the probationary period C. the residual period D. the short-term disability period
B. claims must be paid after the insurer is notified of a and receives proof of loss The time of payment of claims provision provides for immediate payment of the claim after the insurer receives notification and proof of loss.
The time of payment of claims provision requires that A. claims must be paid after the insurer is notified of a loss B. claims must be paid after the insurer is notified of a and receives proof of loss C. the insured mist submit proof of loss within a specified time, or the claim may be denied D. the insured must periodically submit proof of loss in order to receive the claim.
B. 20 days after an occurrence or a commencement of a loss Under the notice of claims provision, an insured must provide notification of loss 20 days after an occurrence or commencement of a loss.
Under the notice of claims provision of a health insurance policy, a policyowner must provide notification of loss within a reasonable period of time, usually A. 10 days after an occurrence or a commencement of a loss B. 20 days after an occurrence or a commencement of a loss C. 1 month after an occurrence or a commencement of a loss D. no later than 3 months after an occurrence or a commencement of a loss.
A. taxable income to the employee Disability benefit payments that are attributed to employee contributions are not taxable, but benefit payments that are attributed to employer contributions are taxable.
When a group disability insurance plan is paid entirely by the employer, benefits paid to disabled employees are A. taxable income to the employee B. deductible income to the employee C. deductible business expenses to the employer D. taxable income to the employer
D. misstatement of age Misstatement of age is 1 of 11 optional policy provisions. Companies may ignore them or use them in their policy forms.
Which of the following is a standard optional provision for health policies? A. grace period B. physical exam and autopsy C. change of beneficiary D. misstatement of age
C. Health maintenance organizations Health Maintenance organizations stress preventative care to promote patient health and to control the use of health care resources, particularly expensive resources like hospitals.
Which of the following is known for stressing preventative health care. A. Administrative-services-only providers B. Lloyd's of london C. Health maintenance organizations D. Commercial insurers
C. Hospice care Long-term care services are designed for senior citizens, while hospice services are for terminally ill persons and their families.
Which of the following is not a typical type of long-term care coverage? A. Skilled nursing care B. Home health care C. Hospice care D. Residential care
C. Commercial Insurers Commercial insurance companies function on the reimbursement approach. Policyowners obtain medical treatment from whatever source they feel is most appropriate and per the terms of their policy, submit their charges to their insurer for reimbursement.
Which of the following reimburses its insureds for covered medical expenses? A. Health Maintenance Organization B. Preferred Provider Organizations C. Commercial Insurers D. Service Providers
B. they indicate the average number of individuals from a given group who will become disabled. Whereas mortality rates show the average number of persons within a larger group of people who can be expected o die within a given year at a given age, morbidity tables indicate the average number of individuals at various ages who can be expected to become disabled each year due to accident or sickness. they also reveal the average duration of disability.
Which of the following statements regarding morbidity tables is CORRECT? A. they indicate the average number of individuals from a given group who will die in a given year B. they indicate the average number of individuals from a given group who will become disabled. C. they indicate the average number of males and females from a given group who will die in a given group. D. they indicate the average number of males and females from a given group who will become disabled.
B. Optionally renewable The renewability provision in an optionally renewable policy gives the insurer the option to terminate the policy on the date specified on the contract/ Furthermore, this provision allows the insurer to increase the premiums for any class of insureds.
Which renewability provision allows an insurer to terminate a health insurance policy on any date specified in the policy and to increase the premium for any class of insureds? A. Conditionally renewable B. Optionally renewable C. Guaranteed renewable D. Cancelable
A. work-related disabilities All states have worker's compensation laws, which were enacted to provide mandatory benefits to employees for work-related injuries, illness, and death.
Worker's compensation covers income loss resulting from A. work-related disabilities B. plant and office closings C. job layoffs D. job determinations