chapter 14 part 3 questions and notes

Which of the following is a true statement about the regulation of advertising? A Before using any advertisement, an agent must file it with the Commissioner for written approval B The insurer may describe a reduced initial or first year premium as free insurance C A basic illustration shows both guaranteed and non-guaranteed elements D An advertisement may use a trade name of an insurance group designation

C

Catastrophic Plan

option for people under 30 or those who cannot afford insurance - Individuals already enrolled in Medicaid are not eligible for a catastrophic plan.

An HMO must hold an open-enrollment period at least annually for: A 31 days B 10 days C 60 days D 45 days

A

Qualified Long-term Care Insurance Contract

A long-term care insurance contract with benefits that are not taxable.

A small employer health benefit plan requirements:

...An eligible employee does not include an employee who has not satisfied any applicable waiting or affiliation period. Availability of coverage is subject to minimum participation requirements; a small employer with only two eligible employees must have 100% participation.

The following minimum benefit standards apply to Medicare supplement policies being advertised, solicited, or issued for delivery in this state:

A Medicare supplement policy may not exclude or limit benefits for losses incurred more than 6 months from the effective date of coverage due to a preexisting condition Limitations or exclusions on coverage may not be more restrictive than those of Medicare A policy cannot contain benefits that duplicate benefits provided by Medicare A policy may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents Benefits that are designed to cover cost-sharing amounts under Medicare must automatically change to coincide with any changes in the applicable Medicare deductible, copayment, or coinsurance amounts (premiums may be modified to correspond with changes)

Evidence of Coverage

A certificate or agreement issued to an enrollee that states the coverage in which the enrollee is entitled.

Copayments

A copayment is a charge, in addition to an enrollee's premium, to supplement payment for health care services. The copayment may be expressed as a dollar amount or a percentage of the contracted rate (not to exceed 50%). The HMO must state the copayment in the group, individual, or conversion certificate.

Deductibles

A deductible is the specific dollar amount for the cost of basic, limited, or single health care service paid by the enrollee, in addition to any premiums paid. The HMO may only charge a deductible for services that are actually performed outside the HMO's service area or by a physician or provider not in the HMO's provider network. The HMO must state the deductible in the group, individual, or conversion certificate.

Qualified Health Plan (QHP)

A health insurance plan that has passed a federal certification process to be offered on a Marketplace. - essential health benefits

Capitation

A method used by an HMO to compensate a physician or provider for providing a defined set of health care services and is based on a predetermined payment per enrollee and not the quantity of services actually provided.

Level Premium Long-term Care Policy

A non-cancellable long-term care policy.

Small Group Health Insurance - guaranteed issue

A small employer carrier must issue a health benefit plan to any small employer that elects to be covered under the plan and agrees to satisfy the requirements of the plan factors.

Eligibility

A subscriber must reside, live, or work in the service area and the legal residence of any enrolled dependents must be the same as the subscriber The conditions under which dependent enrollees may be added The evidence of coverage may not contain a provision excluding or limiting coverage for a newborn child Newborn children are covered immediately at birth for the initial 31 days and the enrollee must be provided 31 days after the birth to notify the HMO of the addition of the newborn as a covered dependent Benefits may be provided to an enrollee's dependent grandchild who is living in the same household The limiting age applicable to an unmarried child or grandchild of the enrollee is age 25 and must be clearly stated

Commissions may be paid: A To a licensed agent for the sale of insurance to a non-related individual B To the holder of a temporary license on a sale made to an individual with whom the licensee has a business relationship C In addition to a fee from the same client D By an insurer to an agent who is not licensed, but is appointed by the insurer

A; An agent may not receive an additional fee, except a legally permissible reimbursement or payment, for services from the same client. A commission may not be paid to the holder of a temporary license on a sale made to an individual with whom the licensee has a family, employment, or business relationship. An insurer may pay a commission only to a licensed agent.

If an insurer requires an individual to be tested for the AIDS virus, all of the following are required, if applicable, except: A Gather statistical information that identifies the applicant to share with other insurers B Notice to the proposed insured of the requirement prior to testing C Obtain notice of the requirement to test and written authorization from a parent or guardian of a proposed insured D Written authorization from the applicant on a Notice of Consent form

A; The insurer may not gather or share information that identifies the applicant.

Which of the following statements is true regarding a Life and Health Insurance Counselor? A The title 'counselor' implies that this person gives advice B The counselor reviews life, health, property, and casualty policies C The counselor can charge a service fee for his advice in addition to a commission on the sale. D The counselor receives a salary from the insurer rather than a commission

A; This person publicly uses a title, such as insurance adviser, analyst, specialist, policyholders' adviser, or counselor that indicates that this person gives advice or other information to any person interested in a life, accident, or health policy, health benefit plan, or annuity or pure endowment contract.

All of the following regarding Evidence of Coverage are correct, except: A The evidence of coverage must be delivered in writing B Approval by the Commissioner of Insurance is required before delivery C Health care services and benefits available must be stated D The name, address, and phone number of the HMO must be included

A; it can be emailed

HMO

Provides a health care plan to enrollees on a prepaid basis.

There are 10 categories of benefits that must be offered by every plan offered in a marketplace The Essential Health benefits package must provide at least the following:

Ambulatory patient services Maternity and newborn care Emergency services Hospitalization Laboratory services Preventive, wellness, and chronic disease management Mental and behavioral health services and substance use disorder Prescription drugs Pediatric services, including dental and vision care Rehabilitative and habilitative services and devices

small employer benefits

An adopted child may be enrolled, at the insured's option, within 31 days after either the insured sues to adopt the child or the adoption becomes final. Upon enrollment, new entrants must be accepted for coverage without any restrictions or limitations based on an illness or accident, medical treatment, or medical condition.

preexisting condition

An illness or disorder of a beneficiary that existed before the effective date of insurance coverage. 6 months prior

Long-term Care Insurance

An insurance policy that provides coverage for not less than 12 consecutive months for each covered person on an expense-incurred, indemnity, prepaid, per diem or other basis for one or more necessary or medically necessary services of the following types, administered in a setting other than an acute care unit of a hospital: diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative, maintenance, or personal care.

A long-term care policy issued in Texas must, at a minimum, be offered as: A Conditionally renewable B Guaranteed renewable C Noncancellable D Optionally renewable

B

All Medicare supplement policies must offer coverage for all of the following, except: A The reasonable cost of the first 3 pints of blood B Disability income C Hospitalization D Physicians' services

B; Medicare supplement policies provide coverage for medical services from a physician or hospital. They do not provide income for losses from a disability.

Which of the following is not included in a Summary of Benefits and Coverage? A Limitations B Premiums C Deductibles, copayments and coinsurance D Covered benefits

B; The Summary of Benefits and Coverage includes the plan's benefits and services, cost-sharing provision, and coverage exceptions, exclusions, and limitations. It does not include the premium.

four levels of coverage, with premium costs going from low to high, as follows:

Bronze plans cover 60% of the benefit costs Silver plans cover 70% of the benefit costs Gold plans cover 80% of the benefit costs Platinum plans cover 90% of the benefit costs

All of the following statements about life insurance policy provisions are correct, except: A Suicide may not be used as a defense to deny payment after the second year B An individual may assign up to 100% of policy ownership C If a policy lapses due to unpaid premiums, it may only be reinstated up to 2 years after lapse D If it is discovered that an insured's age is misstated at the time of a loss, the amount payable is based on the amount of coverage the premiums paid would have purchased at the correct age

C; All life insurance policies that provide nonforfeiture benefits must include a provision that states if the policy lapses due to unpaid premiums, the policy may be reinstated within 3 years.

With respect to advertising requirements, all of the following are allowable unless the insurer: A Solicits nonpaid testimonials representing the personal opinion of the author B Uses the term "invitation to contract" C Includes the terms investment, savings plan, or profit sharing D Advertises preferred rates to classes of policyholders based on certain qualifications

C; An advertisement may not include the terms savings, investment, investment plan, profit, profit sharing, interest plan, or other similar terms that imply that the product advertised is something other than life insurance or an annuity.

An enrollee may have coverage cancelled or nonrenewed by an HMO for which of the following? A Being diagnosed with heart disease B Failing to quit smoking C Nonpayment of premium D Excessive claims

C; An enrollee may have coverage cancelled or nonrenewed for failing to pay premiums or moving outside the service area, but not for health or lifestyle status.

A licensed life insurance agent in Texas can share commissions with which of the following? A A licensed property and casualty agent who referred the client B A person holding a temporary license C Another licensed life insurance agent in Texas who assisted with the sale D An insurance counselor who charged a fee for recommending the policy

C; An insurer or agent may not pay to another person, or accept from another person, a commission or other valuable consideration unless such person holds a license to act as an agent in the same line of insurance in this state. Insurance counselors cannot charge a fee and get paid commission and temporary licensees cannot get paid commission.

Coverage for newborns must begin: A 31 days after birth B 14 days after birth C At birth D After evidence of insurability is provided and the first premium is paid

C; Coverage for newborns must begin at birth for 31 days. For coverage to continue beyond 31 days the owner must pay the premium within 31 days of birth.

Which of the following is not a prohibited claims practice? A Refusing to pay a claim without reasonably investigating it B Misrepresenting a material fact to a claimant C Requiring a claimant's income tax return while investigating an arson fire D Requiring an insured to release the insurer from a claim in order to receive a partial payment

C; Requiring a claimant's federal income tax return to settle the claim is an unfair claim settlement practice unless a court orders that such returns be provided or the claim involves a fire/arson loss, lost profits, or lost income.

The Department of Insurance must examine each insurance company as least once every ______ years. A 7 B 3 C 5 D 4

C; The Department will examine the insurer's financial condition and legal compliance at least every 5 years, and at any other time as necessary.

An agent's appointment: A Can only be canceled if the agent fails to write new business B Is valid for a maximum of 2 years C Remains in force until terminated or withdrawn D Must be renewed before the license expires

C; by insurer

The following words and terms must be included in all Medicare Select policies, certificates, and plans of operation and must be defined as described in Texas Statutes:

Complaint Emergency care Grievance Medicare Select issuer Medicare Select policy or Medicare Select Certificate Network provider Non-network provider Service area

Which of the following would NOT be an eligible group for group life insurance? A Creditors, in order to insure their debtors B Employers, to insure their employees C Labor unions, to insure members actively engaged in the same occupation D A group of individuals formed solely for purchasing life insurance

D

Which of the following is false regarding provisions for life policies? A The policy must be incontestable after 2 years from the effective date of coverage B The policy must have a grace period of at least 31 days C The policy must have a legal action time limit of 2 years D The policy may not include a provision for reinstatement

D; A life policy must have a provision that provides for reinstatement of the policy within 3 years.

Which of the following is false regarding acts considered as insurance transactions? A Making a proposal to solicit an insurance policy B Soliciting an insurance application C Receiving premiums for an insurance policy D Addressing policyholder complaints

D; Addressing policyholder complaints does not constitute an insurance transaction.

Which of the following is a method used by an HMO to compensate a physician or provider for providing a defined set of health care services and is based on a predetermined payment per enrollee: A Fee-for-service B Enrollment fee C Copayment D Capitation

D; Capitation is a method used by an HMO to compensate a physician or provider for providing a defined set of health care services and is based on a predetermined payment per enrollee and not the quantity of services actually provided.

General life and health agents must complete ______ credit hours of continuing education each renewal period. A 20 B 10 C 48 D 24

D; Individuals holding a general life and health license, a life and health counselor license, or a general property and casualty license must complete 24 credit hours of continuing education every 2 years.

Which of the following is not one of the Commissioner's duties? A Examining Insurers B Issuing Certificates of Authority C Conducting investigations D Establishing new insurance law

D; The Commissioner is the Chief Executive Officer of the Department of Insurance and enforces, but does not establish, the state's insurance laws.

When taking an application for a Medicare supplement policy, an agent must provide the applicant with a(n): A Summary of Benefits B Copy of the agent's insurance license C Certificate of Authority D Outline of Coverage

D; The Outline of Coverage must be provided to all applicants at the time of application and an acknowledgment of receipt must be obtained.

A small employer health insurer may not offer coverage to an eligible employee unless the employee has: A Been eligible for at least 6 months B Satisfied a pre-existing condition waiting period of 6 months C Paid 100% of the first year's premium to the employer D Satisfied the applicable waiting period

D; The health insurer may not offer coverage to an eligible employee until they have satisfied the applicable waiting period, which cannot exceed 90 days.

Guaranteed Issue - Insurers may not:

Deny or condition the issuance of a Medicare supplement policy if it is offered to, and available for, an eligible person Discriminate in the pricing of a Medicare supplement policy because of heath status, claims experience, receipt of healthcare, or medical condition Impose a pre-existing condition exclusion Every Medicare supplement policy must be issued a guaranteed renewable basis.

A group health benefit plan must provide coverage for the necessary care and treatment of chemical dependency by one of the following:

Directly by the group health benefit plan issuer Another entity, including a single service HMO, under contract with the group health benefit plan issuer

other important requirements for health care insurance under the ACA:

Guaranteed Issue - Insurers must provide health insurance to any person regardless of medical history or current state of health; premiums must be offered at an average and the law restricts the ability of the insurer to limit the scope of coverage Preexisting Conditions - Insurers may not discriminate against or charge higher rates based on preexisting conditions Dependents - Coverage for dependents must continue to age 26 There are no lifetime or annual limits Out-of-pocket limit - The out-of-pocket limit is the maximum amount a person can pay during a policy period before the health plan begins paying 100% for essential health benefits and includes deductibles, copayments, coinsurance, and any other qualified medical expense, but does NOT include premiums

Immunizations

HMOs are not permitted to charge a deductible or copayment for immunizations provided to children from birth until a child's sixth birthday. An exception exists for a small employer health benefit plan; these types of plans may charge a deductible or copayment for a child's immunizations.

A health benefit plan issuer must renew any employer's health benefit plan, if the employer wishes to renew it, unless the employer:

Hasn't paid the required premium Has committed fraud or intentional material misrepresentation (an intentional misrepresentation must not include any health status related misrepresentation) Hasn't complied with the plan's terms (premium contribution, group size, or participation requirements) Has no enrollee who resides or works in the geographic service area Terminates membership in an association, but only if coverage is terminated uniformly without regard to a factor related to a covered individual's health status

Basic Health Care Services

Health care services that the Commissioner determines a person might reasonably need to be maintained in good health.

who to notify if applicant has aids:

If an HIV test result is positive, the insurer must notify, in writing, a physician designated by the proposed insured or, if one is not designated, insurer will notify the Texas Department of Health (not the Texas Department of Insurance).

Enrollee

Individual enrolled in a health care plan and includes dependents.

Agent Compensation

Insurers issuing Medicare supplement policies may provide commission to an agent for the sale of a Medicare supplement policy only if the first year commission is no more than 200% of the commission paid for the renewal commission in the 2nd year.

Subsidies

Most legal residents will qualify for federal subsidies to help them pay their insurance premiums or cost sharing obligations (co-insurance or co-payments) under a plan, but ONLY if they purchase a plan through the marketplace.

Cancellation

No Medicare supplement policy or certificate may be canceled or nonrenewed based solely on the health status of the insured. An issuer cannot cancel or nonrenew a policy for any reason other than nonpayment of policy premium or material misrepresentation.

The following Basic (Core) benefits must be provided by all Medicare supplement policies or certificates issued in Texas:

Part A Medicare eligible expenses for hospitalization for days 61-90 per benefit period for the amount not covered by Medicare Part A Medicare eligible expenses incurred for hospitalization for each Medicare lifetime inpatient reserve day used for the amount not covered by Medicare 100% of the Medicare Part A eligible expenses for hospitalization for 365 additional days after the lifetime reserve days have been exhausted The reasonable cost of the first 3 pints of blood under Medicare Parts A and B Coinsurance amounts of Medicare eligible expenses under Part B after the deductible is met

Long-term Care Partnership Insurance Policy

Policy provides access to Medicaid under special eligibility rules should additional LTC coverage be needed beyond what the policy provides.

Minimum standards for individual and group Medicare supplement insurance have been established to:

Provide for the reasonable standardization of coverage and simplification of terms and benefits Facilitate public understanding and comparison of such policies Eliminate policy provisions that may be misleading or confusing with respect to the purchase of coverage or the settlement of claims Provide for full disclosure in the sale of accident and sickness insurance persons eligible for Medicare

If a proposed insured is required to take an HIV-related test to detect the AIDS virus as part of the application process, the insurer must:

Provide written notice to the proposed insured or parent/legal guardian of proposed insured Obtain written authorization/consent of the proposed insured or parent/legal guardian on the Notice and Consent for HIV-Related Testing form

Guaranteed renewability describes a policy in which:

The policyholder has the right to continue the policy when making timely premium payments The insurer does not have any unilateral right to change any provision or rider while the insurance is in force The insurer cannot non-renew the policy; however, it may revise rates if doing so for every policyholder within a class The policyholder has the right to cancel a long-term care contract without required notice of cancellation and the insurer must return any unearned premium to the policyholder

prohibited when marketing Medicare supplement insurance:

Twisting - The practice of knowingly making a misleading representation or incomplete or fraudulent comparison of any policies or insurers to induce any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, convert, or borrow against a policy or to take out a policy with another insurer High-pressure Sales Tactics - The employment of any marketing method that induces or recommends the purchase of insurance coverage through the use of force, fear, threats, or undue pressure Cold lead Advertising - The use of any marketing method that fails to disclose in an obvious manner that its purpose is to solicit insurance and that contact will be made by an insurance company or agent (other regulatory definitions of "cold lead advertising" also exist)

The Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA)

a combination of measures to control healthcare costs and to expand health insurance coverage in the United States through public and private insurance. primary goals: to provide stronger consumer rights and protections, to make health insurance more affordable, strengthen the Medicaid program, and to make available subsidized, regulated private insurance.

evidence of coverage

has been filed for review and received approval of the Commissioner of Insurance before delivery or issuance

outline of coverage

must be delivered to an applicant for an individual or group LTC insurance policy or certificate at the time of initial solicitatio

Outline of Coverage

must explain grievance procedures and any provision allowing a premium refund if the insured dies. The Outline must be provided to all applicants at the time of application and an acknowledgment of receipt must be obtained

cancellation or non-renewal notice

must specify the grounds for cancellation or non-renewal of coverage, along with the minimum notice period that will apply

In other words, a long-term care policy issued in this state must be, at a minimum, guaranteed ___________.

renewable

Certificate of Coverage

serves as proof of insurance - second anniversary of date of issuance - becomes incontestable

A Medicare supplement policy may not describe benefit payments as

usual and customary the sup policy must have 30 day free look