Insurance Exam Practice Test 1

What fine does an insurer caught misrepresenting the terms of a policy face?

$1000 or imprisonment for up to 6 months

A policy form is deemed to be approved by the Commissioner if it has been on file for at least how many days?

30 days

Employer Health plans must cover ERD before Medicare becomes primary for how many months?

30 months

Relation of Earnings to Insurance provision

Allows the insurance company to limit the insured's benefits to his/her average income over the last 24 months. (2 years)

What is the goal of the HMO?

Early detection through regular checkups

In order to qualify for GROUP insurance what are the conditions that must be met?

Employee must be a full time employee, working in a covered classification, and must be actively at work

If an insurance company offers Medicare supplement policies, it must offer which plan(s) first?

Plan A

Regarding the taxation of Business Overhead policies,

Premiums are deductible and benefits are taxed

Any person or organization willfully violating any provisions of rate-making provisions of the law will be punishable by a fine of a) a maximum of $1000 for each violation b) max of $500 for each violation c) $5000 gross fine d) $500 for each violation, should not exceed $2000

b) max of $500 for each violation

Which of the following is true regarding a risk retention group? a) it is a benefit society formed to provide insurance for members b) it is a company owned by stockholders c) it is a liability insurance d) it provides support for underwriters

c) it is a liability insurance

If an insured is receiving hospice care and the insurer will pay for his meds. but not a surgery what is this called?

cost-containment

If you buy a plan for something specific like heart diseases, that called ___

specified coverage

Every LTC insurer marketing procedures that ensure excessive insurance will not be sold, they identify their other insurance, but NOT:

that they are marketed effectively to prospective insureds

What happens if an employee tries to go to a physician who is not PPO certified?

the PPO will pay reduced benefits

On a MAJOR MEDICAL INSURANCE policy, the amount the insured must pay before the insurer is called ____

the deductible

How do employer contributions to a Health Savings Account affect the insured's taxes?

the employer contributions are not included in the individual insured's taxable income

When a applicant applied for Medicare Supplement. whose responsibility is it to confirm that they have a policy in force?

the insurer's

An insurance institution cannot disclose anything without

the written consent/ authorization of the individual

If an insured makes regular contributions to his HSA, how will those be taxed?

they are tax deductible

How are excess funds in an employee's health savings account (HSA) handled?

they can be carried forward to next year

The HMO Act of 1973 required employers to offer plans if they had over 25 employees, how has this changed?

they no longer have to offer HMO plans

under AFA, how much of preventative care should be covered without cost-sharing?

100%

How long must producers maintain records?

2 years

Medicare will pay for skilled nursing for how many days?

20 days

What is a penalty tax for non qualified distributions from a health saving account?

20%

If an insured's cognitive function lapses, how long do they have before they can request reinstatement

5 months

What is the minimum credit to be partially insured under Social Disability?

6 credits

How long is the open enrollment period for Medicare supplement policies?

6 months

In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits?

60 days

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within

90 days of a loss

What is excluded in a dental insurance plan?

Lost dentures

What type of health care plan allows insured to select a physician or hospital from a list of providers without being required to submit claims?

PPO

Where are practicing providers paid on a fee-for-service basis?

PPO

When benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis?

Reimbursement

When is it legal to limit coverage based on marital status?

Trick Question: NEVER

What option allows the insured to periodically increase benefit levels without providing evidence of insurability? a) Guarantee of insurability b) Guarantee renewable c) annual increase d) level premium

a) Guarantee of insurability (amount is usually limited to 5% compounded increase)

Concerning Medicare Part B, which statement is INCORRECT? a) It is fully funded by Social Security Taxes b) It is known as medical Insurance c) it offers limited prescription drug coverage d) it provides partial coverage for expenses not covered in Part A

a) It is fully funded by Social Security Taxes

All of the following are ways in which a MAJOR MEDICAL POLICY premium is determined except? a) age of the group b) the amount of deductible c) the amount of coinsurance d) the stop-loss amount

a) age of the group

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? a) an individual previously covered by group health insurance for 6 months b) COBRA c) Medicare d) the gap of cover ability is a period of 63 or less days

a) an individual previously covered by group health insurance for 6 months (has to be 18 months)

Which of the following is true regarding inpatient hospital care for HMO members? a) care can be provided outside of the service area b) care can only be provided in service area c) services for treatment of mental disorders is unlimited d) Inpatient hospital care is not part of HMO services

a) care can be provided outside of the service area

Which of the following is an eligibility requirement for all Social Security Disability benefits? a) have attained fully insured status b) have been disabled for a year c) have permanent kidney failure d) be at least 50

a) have attained fully insured status

What is NOT included in a certificate of insurance? a) the cost a company is paying for monthly benefits b) the policy benefits and exclusions c) the procedures fro filing a claim d) the length of coverage

a) the cost a company is paying for monthly benefits

Which of the following is NOT a purpose of HIPAA? a) to provide immediate coverage to employees who have been covered for 18 months b) to guarantee the right to individual policies c) to prohibit discrimination d) to limit exclusions for pre-exisitng conditions

a) to provide immediate coverage to employees who have been covered for 18 months

When must the Medicare Supplement Buyer's Guide be presented?

at the time of application

When must the insurance company present an outline of coverage for a MEDICARE SUPPLEMENT policy?

at the time of application

An insurance producer who is found guilty of misrepresenting the terms and benefits of an insurance policy will be required to pay a fine of up to: a) $2000 b) $1000 c) $5000 d) $100

b) $1000

All of the following are true regarding the MIB EXCEPT: a) MIB reports contain previous insurance information b) MIB contains info from doctors c) Insurers cannot refuse a policy simply from MIB report d) Reported in coded form

b) MIB contains info from doctors

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage? a) 25 b) 25.50 c) 100 d) 102

d) 102

Which of the following is responsible for paying the producer's appointment renewal fee? a) Commissioner b) The Guarantee Association c) Producer d) Appointing insurer

d) Appointing insurer

Which of the following is not correct concerning MSAs? a) the employee can use funds from the MSA to cover deductibles b) its linked to a HDMP c) if there us a balance the employee can withdraw as taxable income d) MSA are only available with companies over 100 employees

d) MSA are only available with companies over 100 employees (they are available with 50 employees)

How is the amount of Social Security disability benefits calculated?

it is based on the worker's Primary insurance amount which is calculated from their Average Indexed Monthly earning over their highest 35 years

How is taxation of premium handled with GROUP ACCIDENTAL DEATH AND DISMEMBERMENT policies?

it is deductible as ordinary business income

Which type of care is NOT covered by Medicare?

long term care

Untrue statements on the application unintentionally made are called:

material misrepresentations

One of the differences between group and individual underwriting is that there is little to no medical information required for groups ____

of 50 or more

Durable hospital equipment includes...

oxygen equipment, wheelchairs, and other medically necessary equipment doctor prescribes

How are GROUP MEDICAL EXPENSE premiums and benefits taxed?

premiums are tax deductible and benefits are not taxed

An underwriter may reject an applicant for health insurance if the rejection is based off?

prescription drug usage, age, gender, occupation, physical condition, avocation, moral and morale hazards NOT on genetics, sexual orientation, marital status, blindness, or deafness

What is it called when an insurance agent pretends to be someone who they are not?

pretext interviewing

What would a physicians use if she wanted to know if treatment is covered under an insureds plan and the rate it would be paid?

prospective review

An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary?

revocable

What type of care is not in the home?

skilled care

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees

to renew the policy until the insured has reached 65

An insured wants to transfer his personal insurance policy to a friend. Under what conditions is this possible?

with written consent of the insurer

For how many days of skilled nursing facility care will Medicare pay benefits?

100 days

Every insurer must file a certificate of appointment within _____ days from the date the contract is executed or the first insurance application is submitted. A. 15 B. 30 C. 45 D. 60

15 days

COBRA applies to employers with ______ or more employees.

20

A hearing may NOT occur sooner than how many days after the notice of hearing is served?

21 days

What is the period of coverage for events such as health or divorce under COBRA?

36 months

In the event that a policy lapses due to the nonpayment of premium, how many days would the policy automatically be reinstated once the outstanding premium is paid?

45 days

What is the name if the statement on the first page of a health insurance policy that says "this is a limited policy?"

Limited Policy Notice

Which is FALSE about workers comp? a) all states most require it b) benefits include medical, disability income, and rehab coverage c) you only get paid if it isn't your fault d) workers comp varies by state

c) you only get paid if it isn't your fault

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? a) Concealment b) Unfair Claims Practice c) Rebating d) Misrepresentation

d) Misrepresentation

The insured decides to cancel a Medicare supplement policy, but is unsure if free-look applies, where is that found? a) policy application b) Buyer's Guide c) Certificate of Coverage d) Notice Regarding Replacement

d) Notice Regarding Replacement

Which of the following insurance options would be considered a risk-sharing agreement? a) Stock b) Mutual c) Surplus Lines d) Reciprocal

d) Reciprocal

How soon following a loss must an insured submit written proof of loss?

within 90 days, but not exceed 1 year

What is the goal of a PPO?

A Preferred Provider Organization attempts to provide subscribers with the choice of a health care provider while effecting cost-saving by contracting with providers for services NOT only from physicians in network

How is emergency care covered for a member of an HMO?

A member of an HMO can receive care in or out of a service area, but in the area is preferred

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?

Guaranteed

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the

Insuring clause, and it is on the first page of the policy

The classification "Small Employer" means any person actively engaged in a business that on at least 50% of its working days the preceding year employed: a) at least 10 and no more than 100 persons b) at least 1 no more than 50 persons c) at least 2 no more than 15 persons d) at least 3 no more than 25 persons

b) at least 1 no more than 50 persons

what is not a characteristic of an HMO plan? a) providing care on an outpatient basis b) contracting with insurance companies c) providing free annual checkups d) encouraging early treatment

b) contracting with insurance companies

Which of the following is not a cost-saving service in a medicare plan? a) risk-sharing b) denial of coverage c) preventative care d) second surgical options

b) denial of coverage

Under INDIVIDUAL DISABILITY POLICY, the minimum schedule of time in which claim payments must be made to an insured is: a) biweekly b) monthly c) within 45 days d) weekly

b) monthly (in all other cases, the company may specify the time period of 45 or 60 days for payment of claims)

If a member of a Blue Cross/ Blue Shield obtains medical treatment from a nonparticipating provider, the insurer will pay a) the entire bill on a 50/50 coinsurance basis b) the amount that would have been paid to a participating provider c) Nothing. d) the entire bill, minus copays and deductibles

b) the amount that would have been paid to a participating provider

A DENTAL plan that provided coverage based on a specified max schedules amount for each procedure on a 'first dollar basis' is called what

basic or scheduled plan

How can a new physician be added to the PPO's approved list?

by agreeing to follow the PPO standards and by paying a fee

The fine for impersonation of a licensed producer is? a) At least $500, but no more than $1,000 b) no more tha $50 c) At least $10, but no more than $100 d) At least $100, but no more than $500

c) At least $10, but no more than $100

Which of the following is INCORRECT concerning taxation of disability income benefits? a) if the insured paid the premiums, any disability income benefits are tax free b) If the benefits are for a permanent loss, the benefits are not taxable c) If paid by the individual, premiums are tax deductible

c) If paid by the individual, premiums are tax deductible

Which of the following is NOT a characteristic of a group long-term disability plan? a) the benefit period may be to age 65 b) the benefit period can be up to 66 and 2/3% of one's monthly income c) The benefit can be up to 50% of one's yearly income d) the elimination period is the same as in the short-term plan's benefit period

c) The benefit can be up to 50% of one's yearly income (the maximum benefit is based upon monthly income)

Which of the following authorities can an agent hold? a) authorized and admitted b) primary and secondary c) express and implied d) apparent and allowed

c) express and implied

Bob says he is a public insurance advisor but he is not. What is his fine? a) not less than $500 nor more than $1000 b) not less than $50 but not more than $1000 c) not less than $50 but not more than $500 d) not less than $100 but not more than $500

c) not less than $50 but not more than $500

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain a) a statement from the insured's employer showing that the insured was unable to work b) an estimate of the total amount of medical and hospital expense for the loss c) a complete physicians statement d) a statement that is sufficiently clear to identify the insured and the nature of the claim

d) a statement that is sufficiently clear to identify the insured and the nature of the claim

The purpose of MANAGED CARE HEALTH INSURANCE plans is to: a) Provide for the contribution of coverage when an employee leaves a plan b) provide access to the largest # of physicians possible c) coordinate benefits d) control health insurance claims expenses

d) control health insurance claims expenses

Any person with a cease an desist order of the Commissioner after it has become final must a) pay a fine to the state of $1000 but must not exceed $10,000, which may be recovered in civil action b) be considered in contempt of court and shall be guilty of a Class A misdemeanor c) Pay a fine to the state not to exceed $10,000, which may be recovered d) pay a fine to the state that must not exceed $10,000 for each violation, which may be recovered in civil action

d) pay a fine to the state that must not exceed $10,000 for each violation, which may be recovered in civil action

Which of the following statements is an accurate comparison between private and government insurers? a) government is called federal insurance b) private offer fewer lines c) private only offer where government will not d) private insurers may be authorized to transact insurance by state insurance departments

d) private insurers may be authorized to transact insurance by state insurance departments

An insured has a MAJOR medical policy with a $500 deductible and a coinsurance claim of 80/20. If they incur medical expenses of $4,000, the insurer would pay: a)$3,200 b)$3,500 c)$2,500 d)$2,800

d)$2,800

If a producer is found guilty of a violation which has caused a claimant to suffer actual economic damager, an court can award an amount that cannot exceed what percentage of the claim? a) 5% b)10% c)20% d)25%

d)25%

Prior to issuance of a Long-Term Care policy to an applicant age 80 or older, the insurer must obtain all of the following EXCEPT

date of previous doctors visit

In a non contributory plan, is it taxable?

yup