6/2 Vocab:

What type of group insurance plan allows the policyowner to pay the minimum amount of premium for anticipated claims and the insurer pays the excess?

A minimum premium agreement is made between the policyowner and the insurer in which the policyowner pays the minimum amount of premium for anticipated claims, and the insurer pays the excess. The correct answer is: Minimum premium

What type of group health insurance plan is self-funded, but an insurer processes the claims?

Administrative Services Only (ASO) option applies specifically to health insurance _ a group policy is self-funded, and an insurer is subcontracted to process claims. The correct answer is: Administrative Services Only (ASO)

What is the minimum participation rate of eligible employees for non-contributory plans?

For noncontributory group plans, 100% of the group's eligible employees must participate in the group plan. The correct answer is: 100%

What type of group insurance plan allows the insurer to collect a base premium amount, but the insurer may collect additional premium amounts based on actual loss experience?

Retrospective premium allows the insurer to collect a base premium amount, but is entitled to collect additional premium amounts based on the actual loss experience. The correct answer is: Retrospective premium

What is the minimum participation rate of eligible employees for contributory plans?

Contributory group plans require at least 75% participation of the group's eligible employees. The correct answer is: 75%

Group insurance plans for non-employer groups in which the insured pays all the premiums are called:

In group employer policies, employers must pay at least some portion of the premium. Non-employer groups in which the members are fully responsible for paying premiums and the group pays no part of the premiums are called fully contributory plans. The correct answer is: Fully contributory plans

What type of group health insurance plan is self-funded up to a specific amount, then the insurer covers the remaining costs?

Shared-funding is an agreement specific to health insurance. It allows the policyowner to self-fund its medical expenses, but after a specified amount the insurer will cover the remaining costs. The correct answer is: Shared-funding

Which of the following is the method for rating group insurance premiums based on the prior claim history of the group?

The experience rating establishes group premiums on the group's prior claims history. Experience rating more accurately rates the group; however, groups with more claims will inevitably pay higher premiums. The correct answer is: Experience rating

What is the term used to describe a group's ability to pay premiums and renew group coverage?

The group's ability to pay premiums and renew coverage impacts policy issuance, called persistency. In the case of group employer plans, employers are required to pay at least some portion of the premiums; therefore, the group policies are likely to be kept in force. The correct answer is: Persistency

What is the term for the period where new members may enroll in a group plan and current members can change their coverage?

The open enrollment period is the period of time new members may enroll in group coverage each year, and when members can change their coverage. New members that miss the open enrollment period may either be required to show evidence of insurability or wait until the following year's open enrollment period to enroll. The correct answer is: Open enrollment period

All of the following statements are true about the waiting period for group insurance EXCEPT:

All of the statements are true when referring to the probational or waiting period prior to being eligible for coverage under a group plan.

What is the term for the period when an individual is eligible for coverage under a contributory plan and may enroll in the group plan?

Contributory plans require eligible individuals to satisfy the probationary period and enroll in the group plan during the eligibility period, spanning a period of 30 or 31 days. The correct answer is: Eligibility period

All of the following helps reduce the likelihood of adverse selection in group insurance plans, EXCEPT:

Adverse selection is reduced in group insurance for several reasons. First of all, the group exists naturally. This is crucial because groups that exist only for the purpose of obtaining insurance are more than likely to contain a large number of individuals who are sick or approaching death. Second, member turnover is favorable since younger people pose less of a risk than older people. Third, the persistency of the group, the ability to pay premiums and renew coverage, provides for continuous business with that group. The fact that individuals do not undergo medical exams or provide proof of insurability will increase the likelihood of adverse selection in group plans. The correct answer is: Individuals do not have to undergo medical exams or provide proof of insurability

All of the following statements regarding group insurance policies are correct, EXCEPT:

Group insurance policies are written on a group basis, not an individual basis. For this reason, group policies are usually cheaper than individual policies. Additionally, individuals typically do not have to undergo a medical exam and do not have to show proof of insurability unless enrolling after the group enrollment period. The correct answer is: Applicants usually have to undergo a medical exam.

Group insurance plans in which the policyowner and the insured pay the premiums are called:

Group insurance premiums may be paid solely by the policyowner or jointly by the policyowner and the insureds. Contributory plans are paid by both the policyowner and the insureds. This reduces adverse selection because the insureds share in the cost of premiums. Noncontributory plans are paid solely by the policyowner. The correct answer is: Contributory plans

Group insurance plans in which the policyowner pays all of the premiums are called:

Group insurance premiums may be paid solely by the policyowner or jointly by the policyowner and the insureds. Contributory plans are paid by both the policyowner and the insureds. This reduces adverse selection because the insureds share in the cost of premiums. Noncontributory plans are paid solely by the policyowner. The correct answer is: Non-contributory plans

Which of the following classifications of employees is not used for the purpose of determining group insurance eligibility?

Insureds under a group policy are typically classified according to their employment status. By classifying employees, the employer decides which class/classes of employees are eligible for coverage. While employees can be classified by their job responsibilities, union or non-union status or department, employees may not be classified based on their sex or age. The correct answer is: Age or gender

Which of the following is not true about adverse selection in group insurance?

Insurers actually prefer younger people, because they pose less risk than older people - who are more likely to have issues. The correct answer is: Younger people pose a great risk because of their lifestyles.

Which of the following is the method for rating group insurance premiums based on the actual or projected costs of insureds in a particular geographic location based on the age, gender, and occupation of the insureds?

With community rating, premiums are based on the actual or projected costs of insureds in a particular geographic location with reference to insureds' age, gender, occupation and health. With community rating, each member pays the same premium. The correct answer is: Community rating

What is the term for the period before an individual is eligible for coverage under the group plan?

Individuals who join a group insurance plan must undergo a waiting period or probationary period before being eligible for coverage under the plan. The correct answer is: Probationary period