Iowa Health License Exam

What health policy provision prevents the insured from bringing a lawsuit against the insurance company for at least 60 days after proof of loss is provided?

Legal actions

Two parts of Cost Sharing

-Deductible -Coinsurance

Riders

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

Warranty

An absolutely true statement upon which the validity of the insurance policy depends.

How is the maximum benefit for a surgery calculated using the relative value approach?

Each type of surgery is scored based on a point system, then multiplied by a conversion factor.

Another term used to describe "no deductible" is

First-dollar basis

What entities make up the Medical Information Bureau?

Insurers

Representations

Statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true.

Actual Charge

The amount a physician or supplier actually bills for a particular service or supply

Who decides which optional provisions would be included in a health policy?

The insurance company

Who pays the deductible?

The insured... First thing to be paid, typically a set dollar amount NOT a percentage

Premium

The money paid to the insurance company for the insurance policy

Applicant's/Insured's "consideration" in terms of an insurance contract

The payment of a premium and statements on the application

Accidental Bodily Injury

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

Cancellation

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

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

Definition of Insurable Interest

Proven by love and affection, economic or financial loss.

Special Risk Policy

Provides coverage for unusual hazards normally not covered under accident and health insurance, such as a racecar drive test-driving a new car.

Which health insurance provision describes the insured's right to cancel coverage?

Renewal provision

Underwriting

Risk selection and classification process

Types of Peril

Sickness- Illness that first manifests itself while the policy is in force Accidental Injury - An unforeseen and unintended injury that resulted from an accident rather than an accident

How do payouts differ between Basic and Supplementary Major Medical Policies?

Supplementary require corridor deductible payments%

Approved Amount

The amount Medicare determines to be reasonable for a service that is covered under Part B of Medicare

In health insurance, the policy itself and the insurance application form what?

The entire contract.

Policyowner

The person entitled to exercise the rights and privileges in the policy

Assignment

The physician or a medical supplier agrees to accept the Medicare-approved amount as full payment for the covered services

What makes an insurance policy a "conditional contract"?

The policy is only valid and in effect based on the condition that the insured is up to date on the payment of their premiums.

Insurable interest

The policyowner facing the possibility of losing something of value in the event of a loss

Who must sign a health insurance application?

The policyowner, the insured (if different), and the agent

Insurer's "consideration" in terms of an insurance contract

The promise to pay in the event of an insured's loss

To whom can the results of an HIV exam be disclosed?

The underwriter (but NOT the agent).

Nonrenewal

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

Examples of presumptive disabilitiy

-Dismemberment -Total and permanent blindness -Loss of speech or hearing

What are the two types of Flexible Spending Accounts

-Health Care Accounts -Dependent Care Accounts

Elements of a contract

1) Agreement - Offer & Acceptance 2) Consideration 3) Competent parties 4) Legal purpose

6 "qualified life event changes"

1) Marital status 2) Number of dependents 3) One of dependents becomes eligible for or no longer satisfies the coverage requirement under the Medical Reimbursement plan for unmarried dependents due to attained age, student status, or any similar circumstances 4) The insured, their spouse, or a qualified dependent's employment status that affects eligibility under the plan 5) Change in dependent care provider 6) Family medical leave

Point-of-Service (POS) Plans (AKA "open-ended HMOs")

A "combination" of PPO and HMO. Allows "out-of-network" provider access at the cost of higher copays, coinsurance, and deductibles.

Insurance policy

A contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

Contract of Adhesion

A contract that is prepared by one of the parties (insurer) and accepted or rejected by the other party (insured). In other words, insurance contracts are offered on a take-it-or-leave-it bases by an insurer.

Material Misrepresentation

A false statement that changes the outcome of issuing a policy. If intentionally misstated, would be considered fraud.

Agent/Producer

A legal representative of an insurance company; the classification of a producer usually includes agents and brokers; agents are the agents of the insurer

Applicant or proposed insured

A person applying for insurance

Presumptive Disability

A provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.

Deductible

A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

Probationary Period

A waiting period (often 10 to 30 days) from the policy issue date during which benefits will not be paid for illness-related disabilities. Meant to discourage adverse selection

Ambulatory Surgical Services

Care that is provided at an ambulatroy center. These are surgical services performed at a center that do not require a hospital stay unlike inpatient hospital surgery.

Carriers

Organizations that process claims that are submitted by doctors and suppliers under Medicare

Comprehensive Outpatient Rehabilitation Facility (CORF) services

Outpatient services received from a Medicare participating comprehensive outpatient rehabilitation facility.

False. These reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. The consumers must be advised that they have a right to request additional information concerning the report, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

True or False? If an insurer requests an investigative consumer report, there is no way for the consumer to argue against or prevent the investigation.

Misrepresentations

Untrue statements on an application that could void the contract.

Social Insurance Supplement (SIS) or Social Security Riders

Used to supplement or replace benefits that might be payable under Social Security Disability.

Insurer (principal)

the company who issues an insurance policy

Cafeteria Plan

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

If the insured pays a monthly premium, how long is their grace period?

10 days

Flexible Spending Account (FSAs)1

-A type of cafeteria plan funded by salary reduction and employer contributions. -Subject to annual maximum and "use-or-lose" rule. -No cumulative benefit beyond the plan year. -Tax exempt

Ways of limiting maximum benefit of Major Medical Expense policies

-Blanket limits for specific expenses (stated in policy) -Lifetime benefit per-person limits

Prohibited provisions in long-term care policies:

-Cancelling, non-renewing, or otherwise terminating a LTC policy on the grounds of the insured's age or deterioration of mental or physical condition -Establish a new waiting period when coverage is converted or replaced within the same company, except for increased benefits voluntarily selected by the insured -Cover only skilled nursing care, or provide significantly more coverage for skilled care than lower levels of care.

What two things are required when the agent gives the policy to the newly insured?

-Certificate of (Continued) Good Health -First Premium Check

3 broad ranges of coverage offered in Major Medical Expense policies (over Basic Medical Expense policies)

-Comprehensive coverage for hospital expenses -Catastrophic medical expense protection -Benefits for prolonged injury or illness

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? -Inspection Report -Agent's Report -Any federal report -Consumer Report

-Consumer Report

2 major ways a PPO differs from an HMO

-In a PPO, physicians are paid on a fee basis as opposed to a salary basis. -Members are encouraged but not required to use physicians or facilities within the PPO.

Three situations where Social Security Riders are paid:

-Insured is eligible for SS benefits but before the benefits begin -If the insured has been denied coverage under SS -When the amount payable under SS is less than the amount payable under the rider (difference is paid).

Major Types of Losses

-Medical Expense -Loss of Income from Disability -Dental -Long Term Care

Eligibility requirements of HSAs

-Must be part of an HDHP -Not covered by other health insurance -Not eligible for Medicare -Cannot be claimed as a dependent on someone else's tax return

Long-Term Care exclusions

-Preexisting conditions or diseases -Mental and nervous disorders or disease (such as Alzheimer's, Parkinson's) -Alcoholism and drug addiction -Caused by war, participation in criminal activity, attempted suicide -Treatment payable by the government, Medicare, workers comp. or similar coverage.

Two types of Major Medical Expense policies

-Supplementary Major Medical policies -Comprehensive Major Medical policies

High Deductible Health Plan (HDHP)

-Used in coordination with Medical Savings Accounts, Health Savings Accounts, or Health Reimbursement Accounts. -High deductibles = low premiums -Pay out-of-pocket up to the deductible = lower your maximum possible loss

6 Common Type of Exclusions (for Health Products)

-War/Military Service -Self Inflicted Injuries -Elective Cosmetic Surgery -Conditions covered by Workers' Compensation -Conditions covered by Government Plans -Participation in Criminal Activities

Fair Credit Reporting Act

1970 law that established procedures consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used. Also protects consumers against the circulation of inaccurate or obsolete personal or financial information

Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within ______

90 days.

Business Overhead Expense policy

A unique policy sold to small business owners who must continue to meet overhead expenses such as rent, utilities, employee salaries, etc... following a disability.

Elimination Period

A waiting period that is imposed on the insured from the onset of disability until benefit payments commence. Meant to discourage payment to short-term disabilities.

Unilateral Contract

An agreement in which only one of the parties is legally bound to do anything. The insured makes no legally binding promise. However, the insurer is legally bound to pay losses covered by a policy in force.

Aleatory

An exchange of unequal amounts or values. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of loss.

Sickness

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

Medical Information Bureau (MIB)

An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes.

According to the Time Limit on Certain Defenses provision, when can an insurer contest fraudulent misstatements on a health insurance application?

Any time while the policy is in force.

These answers are considered representations because while they are believed to be true they could potential be inaccurate.

Are the answers given by insureds on an insurance application considered to be a "warranty" or a "representation"?

Limited Risk Policies

Defines the specific risk in which accidental death or dismemberment benefits will be paid Ex: Travel Accident Policy

Health Savings Account (HSA)

Designed to help individuals save for qualified health expenses that they, their spouse, or their dependents incur.

A waiver of premium provision may be included with what type of health insurance policies?

Disability income

3 basic coverages for medical expense insurance

Hospital, surgical and medical

Consumer Reports

Include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.

Durable Medical Equipment

Medical equipment such as oxygen equipment, wheelchairs, and other medically necessary equipment that a doctor prescribes fro use in the home.

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?

Neither approved the application nor issued the policy.

Can Alzheimer's disease be excluded from coverage under a long-term care policy?

No (organic cognitive disorders, such as Alzheimer's or Parkinson's must be covered)

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?

No coverage will apply, since the injury could have been foreseen.

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. (General disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing or attempting to commit a felony)

Consent

Permission to do something

Insured

Person covered by the insurance policy; may or may not be the policyowner

True. In addition, adverse underwriting for the presence of HIV/AIDS symptoms is prohibited unless HIV/AIDS is confirmed in relation to the symptoms.

True or False? An insurance company can require an applicant to take an HIV test, as long as they are not overly discriminatory with the administering of the tests.

False. Insurers can charge higher rates based on adverse information but cannot deny coverage.

True or False? An insurer can refuse coverage solely on the basis of adverse information on an MIB report.

True

True or False? If an insurance company requires an applicant to take a medical examination, the expense is put on the insurer.

1) Paramedical report (completed by a paramedic or RN) 2) Attending Physician's Statement (APS) (From a medical practitioner who treated the applicant for a prior medical problem).

What are the only two types of medical examination that insurers can require of an applicant?

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage.

Investigative Consumer Reports

While these reports also provide information on a consumer's character, the info is obtained through an investigation and interviews with associates, friends, and neighbors of the consumer.

Lump sum

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

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

critical illness

Comprehensive Coverage

health insurance that provides coverage for most types of medical expenses