Chapter 13 - Group Health Insurance
A(n) _________________ is issued to the sponsor of the group, and employees receive an outline of coverage or other summary of benefits, which offers information about the plan's major benefits and principal exclusions. A Master policy B Certificate of insurance C Individual policy D Certificate of authority
A Master policy
A Taft-Hartley Trust would be formed to provide health and welfare benefits to which of these employees? A Union-represented B Managerial C Part-time D Disabled
A Union-represented The Taft-Hartley Act was enacted to limit the power of labor unions in the workplace.
Which of the following is not used to reduce adverse selection? A Requiring that the group be formed for a purpose other than obtaining insurance B Requiring 75% employee participation for contributory employer group health plans C Establishing a maximum number of participants that can be covered under the plan D Limiting coverage only to those employees who work a minimum number of hours weekly
C. Establishing a maximum number of participants that can be covered under the plan The requirement would be for a minimum number of participants, not a maximum number.
All of the following are accurate statements, except: A In group insurance, the contract is between the employer and the insurer B The Coordination of Benefits provision is designed to help reduce overinsurance C Group insurance normally covers occupational injury or disease D In group insurance, the employer receives a Master Policy and each employee receives a Certificate of Insurance
C. Group insurance normally covers occupational injury or disease Group insurance normally covers nonoccupational injury or disease. Workers' Compensation Insurance is designed for occupational injury and disease.
Under Small Employer Medical Expense Insurance, the insurer can nonrenew the health benefit plan for all of the following, except: A Nonpayment of premium B Misrepresentation by the small employer on the application C High claim frequency D An insufficient number of individuals under the plan to meet participation requirements
C. High claim frequency Claim frequency cannot be a basis for nonrenewal or cancellation. All of the other possible answers are a basis for nonrenewal or cancellation under Small Employer Medical Expense Insurance.
When a group is covered by a MET, who is issued the Master Policy? A A representative for the insureds B The sponsor C The trust D The insurer
C. The trust The sponsor develops the plan, sets the underwriting rules, and administers the plan, but the trust is the Master Policyowner. ***no idea who the trust is...***
When an individual is covered by more than one health plan and is injured, what provision determines which plan is that person's primary coverage? A Conversion Privilege B Continuation of Coverage C Extension of Benefits D Coordination of Benefits
D. Coordination of Benefits The Coordination of Benefits provision determines that a person's own employer-sponsored health plan is his/her primary coverage. However, if any plan fails to include a coordination of benefits provision, that plan would automatically be primary.
Which of the following is consistent with group health underwriting? A Participants must submit to individual physical exams B Smokers pay a higher rate C Individual health histories are required D Each member of the group is covered regardless of his or her health history
D. Each member of the group is covered regardless of his or her health history Group health insurance does not usually require individual underwriting, and the group is either accepted or rejected as a whole. If accepted, all of the group members are covered, regardless of their health history.
Small employer plan preexisting conditions may not be excluded for any longer than _____ months. A 12 B 29 C 18 D 36
A. 12 Preexisting conditions may not be excluded for any longer than 1 year.
The XYZ Company, which employs 800 workers, provides group disability insurance for the 400 employees working 30 hours or more. How many workers must be covered if this group benefit is offered on a noncontributory basis? A 400 B 800 C 600 D 300
A. 400 Employees must work a minimum number of hours in order to qualify for benefits; therefore, only 400 employees qualify. Because the company offers the benefit on a noncontributory basis, all eligible employees must be covered.
Concerning COBRA, which of the following is correct? A Applies to employers with 20 or more employees B Provides 18 months of continuation of coverage for dependents of Medicare-eligible employees C Provides 36 months of continuation of coverage for disabled participants D Provides employees and dependents 36 months of continuation of coverage after termination of employment
A. Applies to employers with 20 or more employees Federal law mandates that employers with 20 or more employees provide a COBRA option. Termination of employment provides only 18 months of continuation. Qualifying events for dependents only (not employees) permit continuation up to 36 months.
A replacing insurer must assume liability for paying ongoing existing claims under which law? A No-Loss, No-Gain B COBRA C ERISA D HIPAA
A. No-Loss, No-Gain The process being described is mandatory risk transfer accomplished by a Hold-Harmless Agreement or No Loss-No Gain legislation.
Which of the following might be done to protect against adverse selection when underwriting group medical insurance? A Require a minimum percentage of the group to enroll B Include all dependents to make the group larger C Enroll the business owner first D Allow coverage to begin immediately
A. Require a minimum percentage of the group to enroll By requiring a minimum percentage of the group to enroll, the risk is spread by possibly getting those of better health to participate along with those of poorer health.
A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be: A Required to continue paying them under the No Loss-No Gain law B Allowed to deny claims over 60 days old under ERISA C Required to keep paying them under the Dual Choice Provision D Required to stop paying them under COBRA
A. Required to continue paying them under the No Loss-No Gain law The No Loss-No Gain law (a.k.a. the Hold Harmless Agreement) establishes mandatory risk transfer.
In noncontributory group health plans, how many eligible employees must be covered by the plan? A At least 90% B 100% C 75% D At least 50%
B 100%
The employees of a corporation must each pay a portion of the premium for their group insurance. This means they are members of a _____________. A Noncontributory group plan B Contributory group plan C Participating plan D Nonparticipating plan
B Contributory group plan
HIPAA defines a pre-existing condition as one for which the insured received medical advice, diagnosis, care, or treatment within the past _____ months. A 3 B 6 C 12 D 18
B. 6
The employee or the beneficiary must notify the employer within ______ days if they elect to continue coverage under COBRA. A 90 B 60 C 30 D 45
B. 60 The employee or the beneficiary must notify the employer within 60 days if they elect to continue coverage under COBRA.
Until yesterday, J. J. worked for his father's company and was covered by the company's large group health plan. He stopped working to go to college. He is 26 years of age and wants to keep the same coverage until he earns his degree in approximately 24 months. Which of the following statements is true? A J.J.'s only option is to buy a personal plan of coverage B A good option for J.J. is to exercise the COBRA option under his father's group plan C As a student, J.J. is still covered under his father's group plan D J.J. can obtain coverage under COBRA, but it won't be the same coverage he had under his father's group plan
B. A good option for J.J. is to exercise the COBRA option under his father's group plan Since J.J has lost his dependent status, but still wants the same group coverage, he can continue that coverage under COBRA for up to 36 months.
Which of the following types of policies would a sports team purchase to obtain coverage for a season? A AD&D B Blanket C Limited Sickness D Limited Accident
B. Blanket Athletic teams, schools, common carriers and the like typically purchase Blanket contracts as their membership tends to fluctuate. Members are not individually underwritten and do not receive a policy or Certificate of Insurance.
An employer group health insurance sponsor does all of the following, except: A Pays the premium B Issue the policy C Apply for coverage D Provide underwriting information
B. Issue the policy The group sponsor applies for coverage, provides information for underwriting, maintains the policy, and makes premium payments. Only insurers issue policies.
When underwriting group life, the underwriter treats the group as if it were: A A substandard risk B One individual C Two groups, with all the males in one group and all the females in the other D A number of separate individuals
B. One individual In group insurance, the group as a whole is considered an individual, and issuance is based upon that whole. Having one uninsurable individual in a group will not cause a declination, but may increase the premium charged.
All of the following are correct regarding employer group health insurance plan's eligibility requirements EXCEPT: A Employees must sign up during the enrollment period to avoid providing proof of insurability B Newly hired employees must usually satisfy a probationary period before they can enroll in the plan C Employees can enroll at any time without restrictions D Employees must be considered full-time and actively at work
C Employees can enroll at any time without restrictions Employees can only enroll during the open enrollment period and must follow any and all eligibility requirements in order to obtain coverage without having to prove insurability. Otherwise they may have to prove insurability if they attempt to enroll later.
What law provides the right of employees to continue health insurance coverage when changing employers by removing any restrictions against waiting periods and coverage in a new group health plan, as long as the employee has had creditable coverage? A PPACA B ERISA C HIPAA D COBRA
C HIPAA When covered under a group health plan, the Health Insurance Portability and Accountability Act (HIPAA) provides an employee and his/her dependents with the right to enrollment in a new employer's group health plan at the earliest possible moment when an employee begins new employment within 63 days of leaving the former group plan.
All of the following are true of the Coordination of Benefits Provision under a group plan, except: A Secondary carriers will only pay claims that are in excess of the primary carrier's responsibility B It is a method of determining primary and secondary coverage when an insured is covered by more than one group policy C In a spousal situation, the insurer for the claim of an employee is primary, with the spouse's plan being secondary D In the event children are covered under two group plans, the insurer for the parent who is the oldest is primary, and the other parent's plan is secondary
D In the event children are covered under two group plans, the insurer for the parent who is the oldest is primary, and the other parent's plan is secondary Under the Coordination of Benefits Provision, the insurer for the parent whose birthday is first in the calendar year is primary, not the plan for the parent who is oldest.
Generally, regulatory jurisdiction over a group insurance plan belongs to the insurance commissioner of: A The state in which the initial solicitation took place B The state where the application was completed C The resident state of the producer D The state in which the group contract was delivered to the policyowner
D The state in which the group contract was delivered to the policyowner It is generally accepted that the state in which the group contract is delivered to the policyowner has governing jurisdiction.
What can an employee do in order to obtain coverage when they have a preexisting condition and find that their job was just eliminated? A Apply for Medicaid benefits B Find an experienced agent and apply to insurance companies that specialize in insuring high risk applicants C Apply for Medicare benefits D Utilize the group plan's conversion privilege
D Utilize the group plan's conversion privilege The conversion privilege allows eligible employees the option to convert from the group plan into an individual plan without having to prove insurability so long as they act within 31 days.
For an employee to be eligible to participate in an employer's group health insurance plan, he/she must be considered full-time and work a minimum of _____ hours as established by the Affordable Care Act. A 40 B 35 C 50 D 30
D. 30 To be eligible, an employee must be considered full-time and work a minimum of 30 hours as established by the Affordable Care Act.
How much time after a qualifying event has occurred and notice is given of their right to continue insurance does an employee or dependent have to elect continuation of the group health plan under COBRA? A 90 days B 36 months C 18 months D 60 days
D. 60 days An election to continue the group health plan under the provisions of COBRA must usually be made within 60 days of the qualifying event. Only in the event that proper notice was not given may the election period be extended.
What benefit does COBRA provide to employees when an employee is terminated? A Continuation of life and health insurance if an employee quits or is fired or laid-off B Continuation of health insurance at the employee's expense for up to 36 months C Continuation of health insurance at the employer's expense for up to 29 months D Continuation of health insurance at the employee's expense for up to 18 months
D. Continuation of health insurance at the employee's expense for up to 18 months In the event an employee is terminated for any reason other than gross misconduct, COBRA provides for continuation of the group health plan for the employee and his/her dependents for up to 18 months (29 months if a person is disabled at the time of a qualifying event). The employee can be required to pay up to 102% of the cost of the insurance. Life insurance is not covered under COBRA.
Regarding COBRA, which of the following is not true? A It provides continuation of coverage for 36 months for an individual losing dependent status B It provides continuation of coverage for 29 months for the disabled C It provides continuation of coverage for 36 months for a surviving spouse D It covers participants who have resigned for 36 months following the date of their resignation
D. It covers participants who have resigned for 36 months following the date of their resignation Termination of employment other than for gross misconduct allows former employees and their dependents a maximum of 18 months of continuation.
Which statement is incorrect regarding COBRA? A Coverage continues for 29 months for individuals receiving Social Security disability B Evidence of insurability is not required to continue coverage under COBRA C The employer may require the former employee or beneficiary to pay an amount equal to 102% of the premium D The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage
D. The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage The employee or beneficiary must notify the employer within 60 days if he/she wants to continue the coverage.