Chapter 12 : Health and Accident Insurance

Continued coverage under COBRA would be provided to all of the following EXCEPT: A) former dependent of employee no longer of dependent status B) terminated employee C) divorced spouse of employee D) a covered employee is terminated for gross misconduct

D) a covered employee is terminated for gross misconduct

In an employer-sponsored group accident and health plan, a master contract is issued to the A) TPA B) employees C) Administrative Services Organization D) employer

D) employer

Group health plans may deny participation based upon the A) member's claims history B) member's current age C) member's pre-existing condition D) member' part-time employment status

D) member's part-time employment status

An eligible individual who would like to obtain group health insurance without providing evidence of insurability must A) enroll within a specified eligibility period B) sign an affidavit that they are in good health C) pay a higher premium than those providing evidence of insurability D) agree to an individual policy instead of group coverage

A) enroll within a specified eligibility period

According to HIPAA, when an insured individual leaves an employer and immediately begins working for a new company that offers group health insurance, the individual A) is eligible for coverage upon hire B) must wait 360 days to be eligible for coverage C) must continue coverage with the previous employer D) is eligible for only health insurance, not life or dental insurance

A) is eligible for coverage upon hire

How many employees must an employer have for a terminated employee to be eligible for COBRA? A) 20 B) 30 C) 40 D) 50

A) 20

During the underwriting process for a group health policy, it was discovered that 15 out of 50 members of the group have major health issues. How would the insurer handle this? A) Accept or reject the whole group B) Accept the 35 insurable individuals while rejecting the remaining 15 C) Charge a higher premium to the 15 unhealthy individuals D) Assign the group to a re-insurer

A) Accept or reject the whole group

If an employee contributes 50% toward the disability plan premium provided by an employer, what would be considered the taxable income of a $1,000 monthly disability benefit? A) $100 B) $250 C) $500 D) $1,000

C) $500

Sole proprietors are permitted tax deductions for health costs paid from their earnings in the amount of A) costs that exceed 7 1/2 % of AGI B) costs that exceed 10% of AGI C) 100% of costs D) no deduction permitted

C) 100% of costs

In an employer-sponsored contributory group Disability Income plan, the employer pays 60% of the premium and each employee pays 40% of the premium. Any income benefits paid are taxed to the employee at A) Employee has no tax liability B) 40% of the benefit C) 60% of the benefit D) 100% of benefit

C) 60% of the benefit

A master contract and certificate of coverage can be found in which type of policy? A) Long-term B) Medicaid C) Group D) Medicare

C) Group

Mark continues working after the age of 65 and is covered through his employer's group health plan. Which of the following statements is TRUE? A) He's not eligible for Medicare B) His group health plan and Medicare pay 50/50 C) Medicare is the secondary payer D) Medicare is the primary payer

C) Medicare is the secondary payer

What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? A) 0% B) 25% C) 50% D) 100%

D) 100%

HIPAA considers which of the following as "individually identifiable health information"? A) A person's employment history B) A person's net income C) A person's hire date D) A person's health claim information

D) A person's health claim information

Under a disability income policy, which provision would be payable if the cause of an injury is unexpected and accidental? A) Presumptive disability provision B) Absolute accidental provision C) Accidental death benefit provision D) Accidental bodily injury provision

D) Accidental bodily injury provision

Which of the following is INELIGIBLE to participate in a Section 125 Plan? A) Key Employee in a C-Corp B) Highly Compensated Employee in an S-Corp C) A C-Corp Owner with a greater than 2% share D) An S-Corp Owner with a greater than 2% share

D) An S-Corp Owner with a greater than 2% share

Which type of business insurance is meant to cover the costs of continuing to do business while the owner is disabled? A) Disability overhead policy B) Business continuation policy C) Disability buy-sell policy D) Business overhead expense policy

D) Business overhead expense policy

What is issued to each employee of an employer health plan? A) Provision B) Receipt C) Policy D) Certificate

D) Certificate

The problem of overinsurance is addressed in which health insurance provision? A) Entire contract B) Suitability C) Reinstatement D) Coordination of benefits

D) Coordination of benefits

When a claimant has coverage under more than one health plan, which group medical plan provision applies? A) Legal actions B) Notice of claim C) Time of payment of claims D) Coordination of benefits

D) Coordination of benefits

What does the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allow an employee to do? A) In the event of employment termination, group health insurance can be kept if the employee pays the premiums B) Receive a tax credit to help offset the cost of health insurance C) Remain on their current coverage for 30 months D) In the event of employment termination, group health insurance can be kept if the employer pays the premiums

D) In the event of employment termination, group health insurance can be kept if the employee pays the premiums

Sonya applied for a health insurance policy on April 1. Her agent submitted the information to the insurance company on April 6. She paid the premium on May 15 with the policy indicating the effective date being May 30. On which date would Sonya have coverage? A) April 1 B) April 6 C) May 15 D) May 30

D) May 30

The election of COBRA for continuation of health coverage will A) increase the coverage and lower premium B) maintain the same coverage and increase premium C) increase out-of-pocket costs and lower premium D) decrease out-of-pocket costs and maintain same premium

maintain the same coverage and increase premium

Which of the following is NOT typically covered under vision care insurance? A) Eye surgery B) Eyeglasses C) Examinations D) Contacts

A) Eye surgery

Under group health insurance, a certificate of coverage is issued to the A) employer B) employee C) producer D) sponsor

B) employee

Which of the following does Coordination of Benefits allow? A) Allows the secondary payor to reduce their benefit payments so no more than 100% of the claim is paid B) Allows both a group health plan and individual health plan to coordinate their benefit payments C) Allows the deductible to be spread out between all the health providers D) Allows each health provider to pay 100% of the claim

A) Allows the secondary payor to reduce their benefit payments so no more than 100% of the claim is paid

Who is financially liable for the payment of covered claims in a fully insured group health plan? A) Insurer B) Group member C) Health provider D) Guaranty Association

A) Insurer

Without a Section 125 Plan in place, what would happen to an employee's payroll contribution to an HSA? A) It would be considered taxable income to the employee B) The employee would not be allowed to an HSA C) The employer would pay payroll tax and FICA on the contribution amount D) The employer would not be allowed to deduct the contribution from the employee's pay

A) It would be considered taxable income to the employee

Buy-sell plans are typically funded by which two types of insurance? A) Life insurance and disability insurance B) Annuities and disability insurance C) Modified endowment contracts and Long-term care insurance D) Life insurance and Long-term care insurance

A) Life insurance and disability insurance

What is the contract called that is issued to an employer for a Group Medical Insurance plan? A) Master policy B) Certificate of coverage C) Provisional policy D) Document of coverage

A) Master policy

Which of the following decisions would a Health Savings Account (HSA) owner NOT be able to make? A) The amount contributed by the employer B) The amount contributed by the owner C) The underlying account investments used D) The medical expenses paid for by the HSA

A) The amount contributed by the employer

When are group disability benefits considered to be tax-free to the insured? A) When the recipient pays the premiums B) When the employer pays the premiums C) When both the employer and recipient pay the premiums D) When benefits paid are equal to or lower than the recipient's salary

A) When the recipient pays the premiums

The purpose of the Coordination of Benefits provision in group accident and health plans is to A) avoid overpayment of claims B) reduce out-of-pocket costs C) reduce adverse selection D) lower the cost of premiums

A) avoid overpayment of claims

Business Overhead Expense Insurance pays for A) business expenses when a business owner becomes disabled B) a business owner's salary in the event of the owner's disability C) any loss in value of a business if the owner becomes disabled D) business expenses during an economic downturn

A) business expenses when a business owner becomes disabled

A person covered with an individual health plan A) is issued a policy B) is issued a certificate of medical costs C) does not contract directly with the insurance company D) is not subject to medical underwriting

A) is issued a policy

Under the subrogation clause, legal action can be taken by the insurer against the A) responsible third party B) beneficiary C) policyowner D) State

A) responsible third party

The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers who employ at least A) 10 employees B) 20 employees C) 30 employees D) 40 employees

B) 20 employees

Ron has a new employer and wishes to enroll in the company's group health plan. In determining whether his pre-existing health condition applies, Ron cannot have more than a ___ day gap without previous health insurance. A) 45 B) 63 C) 75 D) 90

B) 63

In regards to a group health insurance plan, which statement is CORRECT? A) A contributory group health plan must cover at least 50% of all eligible members B) A non-contributory group health plan must cover all eligible members C) A minimum of 75% of eligible members is required for a non-contributory group health plan D) A contributory group health plan only requires participation of key employees

B) A non-contributory group health plan must cover all eligible members

The policyholder for a group health benefit plan is considered to be the A) Employee B) Employer C) Liaison D) Insurer

B) Employer

Which of the following would be considered a possible applicant and contract policyholder for group health benefits? A) Human resource department B) Employer C) Insured employee D) Insurance company

B) Employer

Health insurance will typically cover which of the following perils? A) Death due to illness B) Injury due to accident C) Death due to accident D) Dismemberment

B) Injury due to accident

Coordination of Benefits regulation applies to all of the following plans EXCEPT A) Group vision plan B) Preferred Provider Organization plan C) Self-funded group health plan D) Group health plan

B) Preferred Provider Organization plan

Which of the following is typically NOT eligible for coverage in a group health policy? A) Full-time employee B) Temporary employee C) Business owner D) Partner in a partnership

B) Temporary employee

Susan is insured through her Group Health Insurance plan and changed her coverage to an individual plan with the same insurer after her employment was terminated. This change is called a(n) A) crossover B) conversion C) exchange D) extension of benefits

B) conversion

An employer is issued a group medical insurance policy. This single contract is known as a(n) A) entire contract B) master policy C) certificate of coverage D) employer contract

B) master policy

Minimum participation standards exist for group health insurance plans in order to A) cover the agent's commission B) prevent adverse selection C) avoid treating benefits as taxable income D) meet state requirements

B) prevent adverse selection

Health insurance involves two perils, accident and ____. A) death B) sickness C) disability D) liability

B) sickness

According to the Health Insurance Portability and Accountability Act (HIPAA), when can a group health policy renewal be denied? A) There have been too many claims in the previous year B) The size of the group has increased by more than 10% C) Participation or contribution rules have been violated D) Participation or contribution rules have been changed

C) Participation or contribution rules have been violated

Which of the following would evidence ownership in a participating health insurance contract? A) Stock ownership B) Irrevocable beneficiary status C) Policy ownership D) Collateral assignment

C) Policy ownership

Justin is receiving disability income benefits from a group policy paid for by his employer. How are these benefits treated for tax purposes? A) Partially taxable income B) Non-taxable income C) Taxable income D) Conditionally taxable income

C) Taxable income

When can a group health policy renewal be denied according to the Health Insurance Portability and Accountability Act (HIPAA)? A) When a change of management has occurred within the group B) When the annual number of claims has increased by 25% C) When contribution or participation rules have been violated D) When group participation has increased by 25%

C) When contribution or participation rules have been violated

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a terminated employee's benefits must A) be less extensive and premium cannot exceed 102% B) be the same and the premium cannot exceed 102% C) be more extensive and the premium cannot exceed 102% D) be the same as well as the premium

C) be the same and the premium cannot exceed 102%

Under the Health Insurance Portability and Accountability Act (HIPAA), the employee's new Group Health Plan will verify Creditable Coverage so that the A) employee's benefits still owed can be claimed B) employee cannot be excluded from the new employer's health plan C) employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan D) new health insurance carrier will have a clear record of any chronic conditions that exist

C) employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan

Key Person Disability Insurance pays benefits to the A) hospital B) employee C) employer D) employee's creditors

C) employer

Credit Accident and Health plans are designed to A) permit creditors the ability to require that coverage be purchased through insurers of their choice B) provide permanent protection C) help pay off existing loans during periods of disability D) not permit free choice of coverage selection

C) help pay off existing loans during periods of disability

Coverage is limited for vision and dental insurance in all of the following ways, EXCEPT A) Number of teeth cleanings per year B) Dollar amount for eyeglass frames C) Number of X-rays performed per year D) Specific dollar amount for examinations

D) Specific dollar amount for examinations

The limited period of time given to all members to sign up for a group health plan is called the A) enlistment period B) sign-up period C) probationary period D) enrollment period

D) enrollment period

A group Disability Income plan that pays tax-free benefits to covered employees is considered A) non-contributory B) partially contributory C) group contributory D) fully contributory

D) fully contributory

A common exclusion with Vision plans is A) eyeglass frames B) the examination C) contact lenses D) lasik surgery

D) lasik surgery

An insurer has the right to recover payment made to the insured from the negligent party. These rights are called A) contributory B) indemnity C)estoppel D) subrogation

D) subrogation