Unit 16 Quiz

When separate deductibles are required for each illness or accident, what kind of deductible is in effect? A) Per benefit B) Flat C) Per cause D) Revolving

Per cause Explanation If a policy defines causes of loss on the basis of each sickness or injury, separate (per cause) deductibles must be satisfied every time a claim is submitted to the insurer.

Major medical policies that pay 100% of covered expenses above a specified amount and after the insured's deductible contain what kind of a provision? A) Stop-loss B) Maximum benefit C) Umbrella D) Blue sky

Stop-loss Explanation Some major medical policies contain a stop-loss provision, meaning that the insurer pays 100% of covered expenses after the insured's out-of-pocket payments for eligible expenses reach a specified level.

Alice has a major medical policy with a $500 deductible and an 80%/20% coinsurance provision. If she receives a hospital bill for $7,500 of covered expenses, how much of that bill will she have to pay? A) 2000 B) 1400 C) 2400 D) 1900

1900 Explanation Of the $7,500 total expenses, Alice pays a $500 deductible. The basis for the insurer's payment is therefore $7,000. The insurer pays 80% of that amount, or $5,600. The coinsurance amount Alice pays is $1,400 plus the $500 deductible. Alice pays a total of $1,900.

All of the following are considered service providers EXCEPT A) a commercial insurance company B) a health maintenance organization C) a Blue Cross/Blue Shield organization D) a preferred provider organization

a commercial insurance company Explanation Service providers include HMOs, PPOs, and Blue Cross/Blue Shield organizations. They are characterized by providing their members with health care services. In contrast, commercial insurers reimburse their policyowners for health care costs.

Major medical policies may include any of the following types of deductibles EXCEPT A) per cause B) decreasing C) corridor D) flat

decreasing Explanation Major medical deductibles may be integrated, flat, or corridor, but not decreasing. Decreasing deductibles are related to life insurance.

Comprehensive medical expense insurance covers all of the following EXCEPT A) hospital room and board B) surgical fees C) miscellaneous hospital expenses D) loss of income resulting from sickness

loss of income resulting from sickness Explanation Comprehensive medical expense insurance covers room and board, surgical fees, and miscellaneous hospital expenses up to a dollar limit. Disability income insurance covers loss of income resulting from accident or illness.

All of the following medical expenses are generally excluded from coverage under individual medical expense policies EXCEPT A) nursing care in a hospital B) treatment for drug and alcohol abuse C) custodial care in a convalescent facility D) nursing care at home

nursing care in a hospital Explanation Individual medical expense policies cover nursing care in a hospital but usually exclude treatment for drug or alcohol abuse, custodial care in a convalescent home, and nursing care at home.

Basic hospital expense insurance provides coverage for all of the following EXCEPT A) drugs and x-rays B) physician services C) hospital room and board D) anesthesia and use of the operating room and supplies

physician services Explanation 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 a basic surgical expense or basic physician's (nonsurgical) expense policy.

Related costs associated with a surgical expense policy do NOT include A) assistant surgeon B) surgeons' fees C) operating room D) room and board

room and board Explanation Room and board are covered under hospital expense. The rest of the choices are covered under the surgical expense policy.

Arthur incurs total hospital expenses of $8,300. His major medical policy includes a $500 deductible and an 80%/20% coinsurance feature. If this is the first covered expense he has incurred this year, how much will Arthur have to pay toward his hospital bill? A) 2060 B) 1800 C) 5900 D) 2160

2060 Explanation Because this is the first covered expense Arthur has incurred this year, he is responsible for the $500 deductible and 20% of the remaining costs. His share of the bill is computed as follows: $8,300 - $500 = $7,800; $7,800 × 0.2 = $1,560; $1,560 + $500 = $2,060.

Which of the following organizations reimburses its insureds for covered medical expenses? A) Preferred provider organizations B) Commercial insurers C) Health maintenance organizations D) Blue Cross/Blue Shield organizations

Commercial insurers Explanation Health insurance may be written by a number of commercial insurers, including life insurance companies, casualty insurance companies, and monoline companies that specialize in 1 or more types of medical expense and disability income insurance. Commercial insurance companies function on the reimbursement approach. A policyowner obtains medical treatment from whatever source she feels is most appropriate and, per the terms of her policy, submits her charges to her insurer for reimbursement.

Which of the following is usually included in an individual health insurance contract? A) Injuries due to accidents B) Situations involving deliberate acts of the insured, such as self-inflicted injuries C) Losses associated with pre-existing conditions D) Losses that are covered by workers' compensation

Injuries due to accidents Explanation Individual health insurance contracts normally contain certain exclusions and coverage suspensions. These include losses associated with pre-existing conditions (to protect the insurer against adverse selection); losses associated with deliberate acts of the insured, such as suicide and self-inflicted injuries; losses associated with excessive risk, such as hazardous occupations; and losses covered by other types of insurance (to prevent duplication of benefits).

Which of the following types of plans integrates its coverage with basic medical expense coverage, providing benefits in excess of those specified in the basic plan? A) Basic umbrella B) Hospital indemnity C) Supplementary major medical D) Comprehensive major medical

Supplementary major medical Explanation A supplementary major medical plan is coordinated with a basic plan and is designed to pick up coverage where the basic plan leaves off. It covers expenses not included under a basic plan and provides coverage for expenses that exceed the basic plan's dollar limits.

Which of the following items is NOT typically covered under a medical expense policy's miscellaneous expense benefit? A) Surgeon's fees B) X-rays C) Laboratory fees D) Use of the operating room

Surgeon's fees Explanation The miscellaneous expense benefit covers hospital "extras," such as x-rays, laboratory fees, and use of the operating room. It does not cover a surgeon's fees, which would be covered under a surgical expense policy.

A basic medical expense policy is usually written with first-dollar coverage, which means it does not have A) a deductible B) a corridor deductible C) a coinsurance clause D) a stop-loss provision

a deductible Explanation Basic medical expense policies are often referred to as first-dollar insurance coverage because they provide for the payment of all losses up to the specified limit without any use of deductibles.

A stop-loss feature in a major medical policy specifies the maximum A) amount the insured must pay in premiums B) benefit amount the policy provides in a lifetime C) amount the insured must pay toward covered expenses D) benefit amount the policy provides each year

amount the insured must pay toward covered expenses Explanation To provide a safeguard for insureds, many major medical policies contain a stop-loss feature that limits the insured's out-of-pocket expenses. This means the insured is no longer required to pay coinsurance once expenses have reached a specific limit.

Leonard owns a major medical health policy that 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) stop-loss amount B) annual premium C) deductible D) coinsurance amount

deductible Explanation A deductible is a stated initial dollar amount that the individual insured must pay before insurance benefits are paid

In major medical and comprehensive medical expense policies, a coinsurance provision A) does not apply until benefit amounts exceed $2,000 B) provides for percentage participation by the insured C) helps to satisfy the deductible amount D) has no effect on claims

provides for percentage participation by the insured Explanation In major medical and comprehensive medical expense policies, a coinsurance provision provides for percentage participation by the insured. For example, a 75/25 coinsurance provision means the insurance company will cover 75% of the allowable medical expenses, and the insured pays the remaining 25%. Coinsurance provisions apply after any required deductible has been paid.

The calendar year deductible provision of a major medical policy stipulates that A) the deductible is applied against each claim during the first calendar year the policy is in effect B) the deductible is applied only once during the calendar year C) all claims submitted during the calendar year are subject to the amount of the deductible D) the insurer pays a higher percentage of the medical expenses than the insured

the deductible is applied only once during the calendar year Explanation A major medical policy's calendar year deductible stipulates that when the deductible amount is met during the calendar year, all claims submitted will be treated for the balance of the year without meeting any new deductibles. Dividing the costs of medical expenses between the insured and insurer is known as percentage participation, or coinsurance.