Day 04: Texas PLE - Life and Health Insurance

Which of the following statements is correct regarding an employer/employee group health plan?

the employer receives a master policy and the employees receive certificates

Which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for six weeks?

Business Overhead Expense

Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance?

Disability income policy premiums are tax-deductible

Group/voluntary long-term care policy premiums are typically deducted from the employee's income and

are less costly as compared to individual long term care coverage

In order to establish a Health Reimbursement Arrangement (HRA), it MUST be offered in conjunction with other employer provided health benefits limit the benefits to prescription drugs only be established by the employer limit the amount of money the employee can contribute toward the account

be established by the employer

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n)

closed panel

The benefits under a Disability Buy-Out policy are

payable to the company or another shareholder

The Coordination of Benefits provision

prevents an insured covered by two health plans from making a profit on a covered loss

Medicare

is a hospital and medical expense insurance program

Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?

Reimbursement

An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim?

$1,250 (3.5 months - 1 month elimination period = 2.5 months. 2.5 months X $500 monthly indemnity = $1,250.)

An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred?

$7,000

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

($10,000 × .2) + $1,000= $3,000 In this situation, the insured is responsible for $1,000 deductible + 20% of the remaining bill = $3,000

What is the maximum Social Security Disability benefit amount an insured can receive?

100% of the insured's Primary Insurance Amount (PIA)

All of the following statements regarding group health insurance is true EXCEPT a. Premiums are usually determined by the claims experience of the group b. A master contract is issued for the group c. An individual policy is given to each member d. Group health insurance premiums are typically lower than individual health insurance premiums

An individual policy is given to each member

Which of the following medical expenses does Cancer insurance NOT cover? a. Chemotherapy b. Radiation treatment c. Physician visit d. Arthritis

Arthritis

All of the following statements about Major Medical benefits are true EXCEPT -The deductible can be expressed as a fixed dollar amount -The benefit period begins only after a specified amount of expenses have accrued -Benefits are generally expressed as a percentage of eligible expenses -Benefits have no maximum limit

Benefits have no maximum limit

Accidental Death coverage is provided to commercial airline passengers in which of the following types of policies?

Blanket Accident policy

The difference between group insurance and blanket health policies is

Blanket health policies do not issue certificates

G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is

Business Overhead Expense

Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?

Business owner becoming disabled

Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deducitble? -Deferral provision -Carryover provision -Stop Loss provision -Corridor provision

Carryover provision

Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures?

Commercial insurer

When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans?

Contributory

M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? Claim payment is equal to physician's actual charges Claim payment is negotiated between physician and patient Determined by the schedule of benefits from the hospital Determined by the terms of the policy

Determined by the terms of the policy

B is a teacher who was injured in a car accident and cannot work. She is now receiving monthly benefits as a result of this accident. Which type of policy does B have?

Disability Income

K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income? -Indemnity -Major Medical -Travel -Disability Income

Disability Income

A characteristic of Preferred Provider Organizations (PPOs) would be: -Discounted fees for the patient -Not allowed to see out-of-network physicians -Physicians are paid on a capitation basis -A primary care physician is required

Discounted fees for the patient

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)? -MEWA -Blanket insurance -Dread disease insurance -Disability insurance

Dread disease insurance

M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?

Earned, but unpaid benefits

In a Disability Income policy, which of these clauses acts as a deductible? -Elimination Period -Waiver Period -Deductible Period -Probationary Period

Elimination Period

Which of these is NOT a characteristic of a Health Reimbursement Arrangement (HRA)? Employee funds the HRA entirely Employer funds the HRA entirely HRA's can be offered with other health plans HRA's allow reimbursement for eligible medical expenses

Employee funds the HRA entirely

A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow?

Guaranteed Insurability Option rider

Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements?

HMO

Which type of provider is known for stressing preventative medical care?

Health Maintenance Organizations (HMO's)

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a -Low-deductible health plan -Medicare Supplement -High-deductible health plan -Flexible savings plan

High-deductible health plan

For which of the following expenses does a Basic Hospital policy pay? -Hospital room and board -Prescription medication -Surgical fees -Physician's fees

Hospital room and board

Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT? If the employee had a qualified medical leave from work, lost wages can be reimbursed If the employee paid for qualified medical expenses, the reimbursements may be tax-free Any unused amounts are added to employee's gross income Health insurance premiums can be reimbursed to the employee

If the employee paid for qualified medical expenses, the reimbursements may be tax-free

How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?

If the primary beneficiary dies before the insured

The premiums on a ___________/___________ policy are usually deducted from an employee's wages and are generally lower than the premiums on an individual policy

group/voluntary

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition? Insurer will require a higher deductible for any claims resulting from this condition Insurer is required to initially cover this pre-existing condition Insurer will permanently exclude the condition from the policy Insurer will likely treat as a pre-existing condition which may not be covered for one year

Insurer will likely treat as a pre-existing condition which may not be covered for one year

What kind of Accidental Death and Dismemberment (AD&D) insurance beneficiary requires his/her consent when a change of beneficiary is made?

Irrevocable beneficiary

Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition?

Less restrictive

T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect? -$5,000 per month benefit -$10,000 per month benefit if the cause was accidental -More than $5,000 per month benefit if cause was work-related -Less than $5,000 per month benefit regardless of the cause

Less than $5,000 per month benefit regardless of the cause

Which of the following situations does a Critical Illness plan cover? Asthma Leukemia Alcohol rehabilitation Severe car accident

Leukemia

In Major Medical Expense policies, what is the intent of a Stop Loss provision? Limits an insurer's premium increases Limits an insurer's liability Limits an insured's out-of-pocket medical expenses Limits an insured's coverage for pre-existing conditions

Limits an insured's out-of-pocket medical expense

Which of the following types of health coverage frequently uses a deductible? Major Medical policy Basic Surgical policy Basic Hospital policy Worker's Compensation

Major Medical policy

Comprehensive Major Medical policies usually combine -Major Medical with Disability Income coverage -Major Medical with Basic Hospital/Surgical coverage -Basic Hospital/Surgical with Accidental coverage -Basic/Hospital/Surgical with Disability Income coverage

Major Medical with Basic Hospital/Surgical coverage

Which of the following characteristics is associated with a large group disability income policy?

No medical underwriting

Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)? a. PPO's normally have more providers to chose from as compared to an HMO b. Prices are negotiated in advance for PPO providers c. In-network PPO providers offer members better coverage of incurred expenses d. PPO's are NOT a type of managed care systems

PPO's are NOT a type of managed care systems

What does Medicare Parts A and B cover?

Part A covers hospitalization; Part B covers doctor's services

How does group insurance differ from individual insurance?

Premiums are lower

Which of these options can an individual use their medical flexible spending account to pay for? Vitamins and supplements Prescription drugs Household expenditures Cosmetic procedures

Prescription drugs

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

Request of the change will be refused

Which of the following statements BEST describes dental care indemnity coverage? Services are reimbursed before the insurer receives the invoice Services are reimbursed after insurer receives the invoice In-network dentists must always be used Very limited list of providers

Services are reimbursed after insurer receives the invoice

The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which of the following programs?

Social Security Disability Income

Which statement is TRUE regarding a group accident & health policy issued to an employer? a. Neither the employer or employee are policyowners b. The employer is issued a certificate of coverage and each employee receives a policy c. The employer receives the policy and each employee is issued a certificate d. Both the employer and employee are policyowners

The employer receives the policy and each employee is issued a certificate

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges? -The maximum premium an insurer can charge for their health insurance based on geography -The maximum amount an employer can contribute to a contributory health plan -The maximum deductible an insured can be charged -The maximum amount considered eligible for reimbursement by an insurance company under a health plan

The maximum amount considered eligible for reimbursement by an insurance company under a health plan

What is the elimination period of an individual disability policy?

Time period a disabled person must wait before benefits are paid

Disability policies do NOT normally pay for disabilities arising from which of the following? -Accidents -War -Negligence -Sickness

War

All students attending a large university could be covered by

a blanket policy

A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will continue coverage but request a corrected application deny coverage and increase premiums continue coverage but exclude the heart condition rescind the coverage and return the premiums

continue coverage but exclude the heart condition

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to

continue group health benefits

Medicare Part A and Part B do NOT pay for

dental work

A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for -hospital charges -physician fees -experimental and investigative services -nursing services

experimental and investigative services

The reason for a business having a Business Overhead Expense Disability Plan is to cover

fixed business expenses

Basic Medical Expense insurance -normally has a deductible and coinsurance -covers an illness but not an accident -pays for lost wages while hospitalized -has lower benefit limits than Major Medical insurance

has lower benefit limits than Major Medical insurance

With a Basic Medical Expense policy, what does the hospitalization expense cover? -hospital room and board -hospital administration expenses -surgeon's fees -physician fees

hospital room and board

Which of these types of coverage is best described as a short term medical policy?

interim coverage

Which of the following is NOT a limited benefit plan? cancer policies life insurance policies dental policies critical illness policies

life insurance policies

An accident policy will most likely pay a benefit for a(n)

off-the-job accident

A disability elimination period is best described as a

time deductible