2-40 FLORDIDA INSURANCE EXAM (CHAPTERS 15, 16, & 17)

The term FIRST DOLLAR often is used to describe benefits payable by which type of policy? A) A Hospital Indemnity policy B) A Disability Income policy C) A Business Overhead Expense policy D) A Major Medical policy

A) A Hospital Indemnity policy

Basic Medical expense policies do not contain which feature? A) Deductibles B) Room & Board benefits C) Physician office visits D) Miscellaneous benefits

A) Deductibles

Which of the following about Health Reimbursement Accounts HRA's is/are correct? A) HRA's are established by the employer B) HRA's are established by the employee C) HRA's are established with after tax dollars D) HRA's are the least common of High Deductible Health Plans

A) HRA's are established by the employer

Which of the following plans used with High Deductible Health Plans is employee owned? A) Health Savings Accounts (HSAs) C) Flexible Spending Accounts (FSAs) D) Health Reimbursement Accounts (HRAs)

A) Health Savings Accounts (HSAs)

Which of the following may administer a self-funded HMO? A) Insurance company B) Actuary C) PEO D) TPA

A) Insurance company

Which of the following is not considered a "service provider"? A) Lloyds of London B) Health Maintenance Organizations C) Preferred Provider Organizations D) Exclusive Provider Organizations

A) Lloyds of London

Which of the following would exclude certain conditions from coverage under a health insurance policy? A) Pre-existing conditions B) Impairment rider C) The insuring clause D) The consideration clause

A) Pre-existing conditions

When medical expense policies do not state specific dollar benefit amounts, but instead base payment upon the charges for the services in the same geographical area, benefits are designated as which of the following? A) Reasonable and Customary Approach B) Stated charges C) Percentage of stated charges D) Designated charges

A) Reasonable and Customary Approach

In a Basic Surgical policy, which of the following pays per point? A) Relative Value B) Surgical Schedule C) Reasonable and Customary D) Surgical Point

A) Relative Value

The usual payment arrangement under a Preferred Provider Organization contract is: A) a fee-for-service basis. B) a flat monthly amount for each subscriber. C) reimbursement to the individual subscriber. D) any of the above.

A) a fee-for-service basis.

In a Basic Hospital Expense policy, the miscellaneous expense limits are a multiple of what factor? A) daily room and board B) physician's expense C) surgical expense D) reasonable & customary

A) daily room and board

If all or part of a $500 deductible is offset by a Basic Medical policy, what type of deductible applies? A) integrated B) corridor C) flat D) split

A) integrated

Which of the following are eligible for Medicare benefits? 1. folks aged 65 and over 2. folks under age 65 receiving Social Security disability benefits 3. folks with chronic liver problems 4. folks with chronic kidney problems A) 1, 2, & 3 B) 1, 2, & 4 C) 1, 3, & 4 D) all the above

B) 1, 2, & 4

How long is the waiting period before a person may file a claim for Social Security Disability benefits? A) 12 Months B) 5 Months C) 90 Days D) 6 Months

B) 5 Months

A Supplementary Medical Expense policy combines the benefits of what two types of plans? A) Hospital Expense and Surgical Expense B) Basic Medical and Major Medical C) Major Medical and Disability A) A.D.& D. and Major Medical

B) Basic Medical and Major Medical

An applicant for insurance may pay the initial premium and receive a document from the agent indicating that if the policy is issued as requested coverage begins on the date of the documents. What is this document called? A) Executing agreements B) Conditional receipt C) Warranty D) Notice of inspection

B) Conditional receipt

The type of health care provider that provides both the health care services and the health care financing is a: A) Preferred Provider Organization B) Health Maintenance Organization C) Blue Cross/Blue Shield organization D) Traditional health insurance company

B) Health Maintenance Organization

Which type of coverage is least affected by an increase in medical costs? A) Basic Medical Expense B) Hospital Indemnity C) Comprehensive Medical D) Major Medical

B) Hospital Indemnity

Basic Medical expense policies do not generally provide coverage for: A) Emergency room visits B) Lost income C) Surgical expenses D) Skilled nursing facility expenses

B) Lost income

Which is not a service provider? A) PPO B) MIB C) EPO D) HMO

B) MIB

All of the following are true about health insurance dividends except: A) Mutual (participating) insurers generally issue dividends B) Mutual (participating) insurers generally issue experience-rated plans C) Stock insurers generally issue experience-rated plans D) The two major factors that influence these are expenses and claims costs of the insurer

B) Mutual (participating) insurers generally issue experience-rated plans

Which of the following policies would cover a student pilot taking flying lessons? A) Limited Risk B) Special Risk C) Dread Disease D) Long-Term Care

B) Special Risk

Which of the following statements is true regarding Multiple Employer Trusts ? A) Multiple Employer Trusts require employers to have an employment-related common bond. B) The Multiple Employer Trust, not the employer, is the contract holder. C) Multiple Employer Welfare Arrangements are designed for those below a certain income level. D) An employer must subscribe to all the coverages of the Multiple Employer Trust.

B) The Multiple Employer Trust, not the employer, is the contract holder.

An insured was charged $550 for a procedure that was assigned a reasonable & customary amount of $500 under her Basic Surgical policy. Which of the following statements is correct? A) The $50 would be applied to her deductible B) The insured would be responsible for the $50 C) The miscellaneous benefit would pick up the extra charge D) The physician would not charge more than the allowable amount

B) The insured would be responsible for the $50

HMOs are a distinct form of health provider because: A) They are popular for large groups of employers B) They provide financing for the health care plus the health care itself C) They provide a large variety of options D) The doctors operate on a fee for service arrangement

B) They provide financing for the health care plus the health care itself

What is included under the miscellaneous expense benefit? A) surgical expenses B) anesthesia C) physician fees D) post-operative care

B) anesthesia

Under the Basic Hospital Expense policy, what would not be covered under the miscellaneous expense benefit? A) anesthesia B) anesthesiologist B) use of the operating room D) drugs

B) anesthesiologist

How does a basic medical plan avoid small claims and keep the cost of premiums down? A) by utilizing deductibles and co-insurance B) by imposing benefit limits C) by paying only catastrophic medical expenses D) by providing a network of physicians and hospitals

B) by imposing benefit limits

All of the following are eligible for Medicare except: A) those 65 or older B) dependents of those 65 or older C) folks with a chronic kidney disorder D) folks receiving Social Security Disability benefits

B) dependents of those 65 or older

What is the agreement between an HMO and subscriber or group? A) subscriber agreement B) health maintenance contract C) policy D) capitation arrangement

B) health maintenance contract

Dread disease, travel accident, vision care, and hospital indemnity policies are all examples of: A) LTC policies B) limited risk policies C) special risk D) blanket policies

B) limited risk policies

Which of the following statements regarding workers compensation plans is correct?

Benefits may be financed by private insurers, state funds or self-insurance

Rose Bud receives a hospital bill for $9,500 after being released from the hospital. Her Major Medical policy has a $500 deductible and an 80% - 20% continuous coinsurance feature. Of the total expense, how much will Rose have to pay? A) $1,800 B) $500 C) $2,300 D) $1,900

C) $2,300

Social Security was started in what year? A) 1925 B) 1930 C) 1935 D) 1945

C) 1935

Which of the following is the most common type of co-insurance in a major medical policy? A) 5 - 10% B) 10 - 15% C) 20 - 25% D) 25 - 30%

C) 20 - 25%

Grouping small businesses together to obtain group insurance as one large group is characteristic of which of the following? A) A Health Maintenance Organization (HMO) B) A Franchise Health plan C) A Multiple Employer Trust (MET) D) A Fictitious group

C) A Multiple Employer Trust (MET)

All of the following may administer self-insured plans except: A) Third Party Administrators - TPAs B) Administrative Services Organizations - ASOs C) Actuaries D) Insurance Companies

C) Actuaries

Which of the following non-insurance entities are NOT involved with self-insured plans? A) Third Party Administrator B) Administrative Services Organization C) Actuaries D) Health Maintenance Organization

C) Actuaries

What term describes the concept that the insurer and the insured share in the cost of medical expenses, with the insurer bearing the greater share? A) Deductible B) Stop-loss limit C) Coinsurance D) Benefit Restoration

C) Coinsurance

Another term used for Home Service insurers is: A) Franchise insurers B) Wholesale insurers C) Debit insurers D) Door to door insurers

C) Debit insurers

When benefits are paid to a policyowner covered under a Hospital Expense policy, the policy is considered to be which of the following? A) Service B) Limited C) Fixed-Rate plan D) Special Risk

C) Fixed-Rate plan

Which of the following is true about coinsurance? A) Coinsurance applies to the deductible as well as to claim payments. B) Premiums are higher for a policy that contains a coinsurance provision than for one that does not. C) It helps control overutilization of benefits. D) Insurance companies can change the coinsurance ratio after the policy has been issued.

C) It helps control overutilization of benefits.

Which of the following statements is usually true about a Medical Expense policy? A) It is available on a group basis only. B) It covers accidental injuries only. C) It pays benefits on a cost-incurred basis only. D) It covers hospital expenses only.

C) It pays benefits on a cost-incurred basis only.

Which of the following most accurately describes the Health Maintenance Act of 1973? A) It requires all employers to offer enrollment into an HMO B) It requires all employers with 25 or more employees to offer enrollment into an HMO C) It requires all employers with 25 or more employees to offer enrollment into an HMO if they provide health care benefits to their workers D) It requires all employers with 25 or more employees to offer enrollment into an HMO as a minimum health care benefit offering

C) It requires all employers with 25 or more employees to offer enrollment into an HMO if they provide health care benefits to their workers

Health insurance policies generally do issue dividends in which of the following circumstances? A) Health insurance policies never issue dividends B) Only individual health insurance policies issue dividends C) Only group health insurance policies issue dividends D) Both individual and group health insurance policies issue dividends

C) Only group health insurance policies issue dividends

Which of the following service providers allows for a primary care physician as well as out-of-network care? A) Health Maintenance Organization (HMO) B) Preferred Provider (PPO) C) Point of Service Plan (POS) D) Exclusive Provider Organization (EPO)

C) Point of Service Plan (POS)

Health insurance may be written by all the following types of companies except: A) Life B) Casualty C) Surety D) Home Service

C) Surety

All of the following statements about noncancellable policies are true except: A) A noncancellable policy is also called a noncancellable and guaranteed renewable policy. B) The only right to cancel the noncancellable policy is for nonpayment of premiums. C) The insurer may increase the premium rate after the policy is in effect provided it does so by classes of insureds. D) The insurer may regain the right to cancel or not to renew when the insured reaches an age specified in the policy.

C) The insurer may increase the premium rate after the policy is in effect provided it does so by classes of insureds.

Which of the following statements about deductible provisions in medical insurance policies is NOT correct? A) They help to eliminate small claims B) They provide that initial expenses up to a specified amount are to be paid by the insured C) They are most common in basic medical expense policies D) They help to hold down premium rates

C) They are most common in basic medical expense policies

Which statement concerning commercial companies is not true? A) They function on the reimbursement approach. B) They have a right of assignment built into many policies. C) They are not debit companies. D) May be monoline companies.

C) They are not debit companies.

Which of the following statements is true about Basic Hospital, Medical, and Surgical Expense Policies? A) They have high deductibles. B) The benefits provided are usually equal to the actual expenses incurred. C) They usually have a stated limit for specific expenses. D) Benefits are provided for loss of income.

C) They usually have a stated limit for specific expenses.

The miscellaneous expense benefit in a basic hospital expense policy will cover A) physician's bedside visits B) the administering of anesthesia C) drugs and medicine administered in the hospital D) hospital room and board

C) drugs and medicine administered in the hospital

A policyowner has just informed the agent that she is younger than what was stated in the policy. The agent should: A) write a new policy at the correct age immediately so there will be no gap in coverage. B) notify the insurance company for a possible review of the application. C) notify the insurance company for a possible adjustment of the policy. D) determine whether there has been any change in health since the application for the policy.

C) notify the insurance company for a possible adjustment of the policy.

All of the following are types of deductible provisions associated with major medical policies except: A) corridor B) integrated C) stop loss D) flat

C) stop loss

A limited risk policy will pay for dread diseases A) that are terminal B) that are incurable C) such as cancer D) that are chronic

C) such as cancer

What term describes the concept that the insurer and the insured share in the cost of medical expenses, with the insurer bearing the greater share? A) Deductible B) Stop-loss limit C) Coinsurance D) Benefit restoration

Coinsurance

An insured has a basic hospital expense policy with a $10,000 limit for benefits, coordinated with a major medical policy with a $500 corridor deductible and 80/20 coinsurance provision. If she incurs a loss of $20,000, how much will the insurer pay? A) $16,000 B) $15,600 C) $8,000 D) $17,600

D) $17,600

Stagmite purchases a major medical policy with a $100 annual deductible, 80/20 co-insurance and a maximum out-of-pocket of $5000. If Stagmite were to incur covered expenses of $10,100, how much would Stag be out of pocket? A) $5000 B) $5100 C) $2000 D) $2100

D) $2100

A Hospital Expense policy that pays a FLAT AMOUNT per day for hospital room and board pays benefits on what basis? A) Billing B) Reimbursement C) Automatic D) A fixed-rate plan

D) A fixed-rate plan

Which is not true concerning a Hospital Fixed-Rate plan? A) Claim costs are not affected by rising health care costs B) High benefits for relatively low premiums C) Simple underwriting and administration D) Benefits are paid directly to the hospital

D) Benefits are paid directly to the hospital

All of the following statements concerning Social Security disability benefits are true except: A) The impairment must be expected to last at least 12 months B) The waiting period is 5 months C) The waiting period may be waived in certain circumstances D) Benefits are retroactive to the time of disability

D) Benefits are retroactive to the time of disability

If one becomes totally disabled, Social Security Disability benefits: A) May begin after 30 days B) May begin after 60 days C) May begin after three months D) May begin after six months

D) May begin after six months

Which of the following are NOT eligible for Medicare coverage? A) People age 65 and older eligible for Social Security B) People age 65 and older not eligible for Social Security, but willing to pay a monthly premium C) People of any age who have been entitled to S.S. Disability benefits D) People with any life threatening condition

D) People with any life threatening condition

Which of the following are NOT eligible for Medicare coverage? A) People age 65 and older who are eligible for Social Security B) People age 65 and older not eligible for Social Security, but willing to pay a monthly premium C) People of any age who have been entitled to S.S. Disability benefits D) People with any life threatening condition

D) People with any life threatening condition

In a health insurance policy, what term describes a situation where a policyowner transfers a portion of his or her rights in an insurance policy to the hospital? A) Collateral assignment B) Absolute assignment C) Transfer assignment D) Right of assignment

D) Right of assignment

A Health Savings Account does not allow: A) Tax deductible contributions B) Tax free growth C) Tax free withdrawals D) Tax free non-qualified withdrawals

D) Tax free non-qualified withdrawals

The Blues have contractual relationships with which of the following? A) subscribers B) HMOs C) PPOs D) doctors and hospitals

D) doctors and hospitals

Blue Cross and Blue Shield subscribers pay a set fee, usually each month, for medical services covered under the plan. This is describing: A) reimbursement approach B) capitation arrangement C) fee-for-service plan D) prepaid plan

D) prepaid plan

HMO's are known for stressing A) state sponsored health plans B) in hospital care and services C) health care services for government employees D) preventive medicine and early treatment

D) preventive medicine and early treatment

Many major medical policies include a provision whereby when expenses reach a certain dollar amount, the insured no longer shares in the cost of expenses: the insurer pays 100% of remaining covered charges. This is referred to as the: A) maximum benefit B) benefit restoration C) coinsurance percentage D) stop-loss limit

D) stop-loss limit

What type of contract pays a stated amount in the event of loss? A) reimbursement B) stated C) loss of value D) valued

D) valued