Insurance Ch 18

Which of the following statements about the characteristics of social insurance programs is true? A) Benefits are loosely related to a workerʹs earnings. B) Benefits are paid primarily on the basis of individual equity. C) Participation in social insurance programs is voluntary. D) Social insurance programs must be fully funded at all times to pay required benefits.

A) Benefits are loosely related to a workerʹs earnings.

As of this year, Brad, age 50, has 40 credits under the Social Security program. These credits were all earned in the last 10 years. What is Bradʹs insured status under the program? A) He is currently and fully insured. B) He is currently insured, but not fully insured. C) He is fully insured, but not currently insured. D) He is neither currently insured nor fully insured.

A) He is currently and fully insured.

Which of the following statements about Medigap policies is (are) true? I. Insurers are required to have an open enrollment period of 6 months from the date an applicant first enrolls in Medicare Part B and is age 65 or older. II. Most policies are of limited value because they largely duplicate benefits already provided by Medicare. A) I only B) II only C) both I and II D) neither I nor II

A) I only

Which of the following statements about problems and issues in workers compensation insurance is (are) true? I. The cost of medical care under workers compensation continues to rise. II. Enactment of workers compensation statutes has eliminated litigation with respect to work-related illnesses and injuries. A) I only B) II only C) both I and II D) neither I nor II

A) I only

Which of the following statements about the Medicare prescription drug benefit is (are) true? I. Beneficiaries select a prescription drug plan and pay monthly premiums, with the premium reduced or waived for low-income beneficiaries. II. The benefit provides first-dollar coverage of prescription drugs up to a maximum of $10,000 per year, but no coverage after $10,000. A) I only B) II only C) both I and II D) neither I nor II

A) I only

Which of the following statements about the financial status of Medicare Part A is (are) true? I. Part A has serious financial problems. II. Reforms instituted by Congress have reduced Part A expenditures in recent years. A) I only B) II only C) both I and II D) neither I nor II

A) I only

Which of the following statements about the financing of OASDI and Medicare is (are) true? I. There is a maximum taxable wage base for OASDI. II. There is a maximum taxable wage base for Part A of Medicare. A) I only B) II only C) both I and II D) neither I nor II

A) I only

Which of the following statements about the medical insurance (Part B) portion of Medicare is (are) true? I. Participation in Part B of Medicare is voluntary. II. It is provided at no cost to anyone who is fully insured under Medicare. A) I only B) II only C) both I and II D) neither I nor II

A) I only

All of the following persons are eligible for a benefit under the retirement portion of the Social Security program EXCEPT A) a divorced spouse, age 55, who was married to the retired worker for 6 years. B) a retired workerʹs 63 year-old spouse who is no longer caring for children. C) a retired workerʹs 52 year-old spouse who is caring for a 12 year-old daughter of the retired worker. D) a retired workerʹs unmarried 20 year-old son who has been severely disabled since an automobile

A) a divorced spouse, age 55, who was married to the retired worker for 6 years.

EFG Company suffered reduced demand for its products during a recession. EFG managers were considering laying off some workers when the personnel director said, ʺLetʹs not lay off these workers. If we do, our unemployment insurance premiums will increase. The state considers employment stability when determining our premium.ʺ Considering the firmʹs employment record when determining the rate to charge for unemployment insurance is called A) experience rating. B) class rating. C) sc

A) experience rating.

Which of the following statements about hospice benefits under the hospital insurance (Part A) portion of Medicare is (are) true? I. Hospice benefits are only payable while the beneficiary is hospitalized. II. Hospice benefits are provided to persons who are terminally ill. A) I only B) II only C) both I and II D) neither I nor II

B) II only

Which of the following statements about the Social Security cost-of-living adjustment is (are) true? I. The amount of the adjustment is limited to a maximum of 2.5 percent annually. II. Increases are based on changes in the consumer price index. A) I only B) II only C) both I and II D) neither I nor II

B) II only

Which of the following statements about the role of physicians with respect to Medicare claims is (are) true? I. Physicians who do not accept an assignment of Medicare claims can charge as much as 200 percent of the Medicare-approved fee. II. Physicians who accept assignment agree to accept the Medicare -approved amount as payment in full. A) I only B) II only C) both I and II D) neither I nor II

B) II only

Which of the following statements about the taxation of Social Security retirement benefits is (are) true? I. Social Security retirement benefits are never considered taxable income. II. Up to 85 percent of Social Security retirement benefits may be considered taxable income, depending on the amount of other income received by the beneficiary. A) I only B) II only C) both I and II D) neither I nor II

B) II only

Which of the following statements is (are) true with respect to the Medicare Advantage Plans? I. These plans replace the original Medicare program, Parts A and B, which are no longer available to new retirees. II. These plans provide an opportunity for retirees to receive Medicare coverage through private health care plans. A) I only B) II only C) both I and II D) neither I nor II

B) II only

Under one type of Medicare Advantage Plan, members of the plan can see any doctor or health services provider that accepts Medicare patients. If members receive care outside the network of member physicians and care facilities, they must pay higher out-of-pocket costs. This type of Medicare Advantage Plan is a A) Medicare HMO. B) Medicare PPO. C) Medicare Special Needs Plan. D) Medicare Private Fee-for-Service Plan.

B) Medicare PPO.

All of the following statements about the Medicare Prescription Drug Plan are true EXCEPT A) Medicare prescription drug coverage is available to all Medicare beneficiaries. B) Medicare prescription drug coverage is funded exclusively through the Part A payroll tax. C) Private firms administer the program on a regional basis. D) In addition to the initial deductible, there is a coverage gap where the beneficiary must pay the entire cost of prescription drugs.

B) Medicare prescription drug coverage is funded exclusively through the Part A payroll tax.

Dale, age 65, was dismayed to learn about all of the deductibles, co -pays, limits, and exclusions in the Medicare program. Dale bought a type of health insurance specifically designed to supplement Medicare, and selected his coverage from among 12 standard policies that private insurers offer. What type of health insurance did Dale purchase? A) long-term care insurance B) Medigap insurance C) major medical insurance D) viatical insurance

B) Medigap insurance

Which of the following statements about covered occupations under the Social Security program is true? A) Employees of private firms are exempt from coverage if they are covered by private pension plans. B) Ministers are automatically covered unless they elect out of coverage because of conscience or religious principles. C) Self-employed persons are covered only if their net annual earnings are $5,000 or less. D) Federal civilian employees hired after 1983 are covered for Medicare on

B) Ministers are automatically covered unless they elect out of coverage because of conscience or religious principles.

Tony is 48 years old. He earned the maximum taxable wage base under Social Security annually between the time when he was 26 and when he was 40. At age 40, he dropped out of the workforce to care for children as his wife had a high-paying job. Which statement is true regarding Tonyʹs insured status under Social Security? A) Tony is fully insured and currently insured. B) Tony is fully insured, but not currently insured. C) Tony is currently insured, but not fully insured. D) Tony is

B) Tony is fully insured, but not currently insured.

All of the following changes would reduce the long-range deficit for the Social Security program EXCEPT A) increase the OASDI taxable wage base. B) delay scheduled increases in the full retirement age. C) make all OASDI benefits fully taxable. D) use general revenues of the federal government to help pay benefits.

B) delay scheduled increases in the full retirement age.

Beth was injured at work and is eligible to receive workers compensation benefits. All of the following benefits are provided under workers compensation EXCEPT A) disability income. B) retirement benefits. C) rehabilitation. D) medical care.

B) retirement benefits.

Frank is doing some life insurance planning. A financial advisor said, ʺbe sure to consider Social Security when examining sources of funds available for family support if you die.ʺ The financial advisor was referring to which Social Security benefit? A) retirement benefits B) survivor benefits C) disability benefits D) health insurance benefits

B) survivor benefits

All of the following persons are eligible for survivor benefits under Social Security EXCEPT A) dependent parents age 62 or older. B) unmarried children between the ages of 18 and 22 who are attending college. C) a surviving spouse age 60 or older. D) a surviving spouse with eligible children younger than age 16.

B) unmarried children between the ages of 18 and 22 who are attending college.

All of the following statements about Medicare are true EXCEPT A) While Social Security old-age benefits are available at age 62, Medicare Part A benefits are not available, in most cases, until age 65. B) Medicare covers disabled persons younger than age 65 who have been entitled to Social Security disability benefits for at least 24 months. C) An individual who does begin to receive Social Security old-age benefits until age 67 is not eligible for Medicare benefits until age 67. D)

C) An individual who does begin to receive Social Security old-age benefits until age 67 is not eligible for Medicare benefits until age 67.

All of the following statements about benefits under workers compensation programs are true EXCEPT A) Disability income benefits are usually paid retroactively to the date of injury if the worker is still disabled after satisfying a waiting period. B) Death benefits and benefits to eligible survivors are payable if a worker is killed on the job. C) Medical benefits are usually subject to substantial deductibles, coinsurance, and numerous exclusions. D) Rehabilitation benefits are ava

C) Medical benefits are usually subject to substantial deductibles, coinsurance, and numerous exclusions.

Which of the following statements about unemployment insurance benefits is true? A) Benefits are a flat amount regardless of a workerʹs previous wages. B) Because of federal legislation, the maximum benefit is the same in all states. C) Most states pay regular benefits for a maximum duration of 26 weeks. D) Under the extended benefits program, the federal government continues benefit payments for up to 4 years for workers who have exhausted their regular benefits.

C) Most states pay regular benefits for a maximum duration of 26 weeks.

All of the following statements about the characteristics of social insurance programs are true EXCEPT A) They are designed to provide a floor of income with respect to the risks which are covered. B) The method of determining benefits is prescribed by law. C) Participants are required to satisfy a means test to receive benefits. D) With few exceptions, social insurance programs are compulsory.

C) Participants are required to satisfy a means test to receive benefits.

Marion owns substantial financial assets. She was surprised that she qualified for Social Security retirement benefits when she retired because of her high investment income. What characteristic of social insurance programs is Marion overlooking with respect to her Social Security retirement benefits? A) Social insurance programs are financially self-supporting. B) Social insurance program benefits are loosely related to earnings. C) Social insurance benefits are not means tested. D)

C) Social insurance benefits are not means tested.

All of the following statements about the Medicare prescription drug benefit are true EXCEPT A) Beneficiaries are required to pay a monthly premium for the benefit. B) The plan provides protection against catastrophic prescription drug expenditures. C) The plan requires a $20 deductible for each prescription which is filled. D) The plan has a coverage gap before a beneficiary has coverage for catastrophic costs.

C) The plan requires a $20 deductible for each prescription which is filled.

In addition to most persons over age 65, which of the following persons is (are) eligible for Medicare benefits? I. Persons under age 65 who have been entitled to Social Security disability benefits for at least 24 months. II. Persons under 65 who need long-term kidney dialysis treatment or a kidney transplant. A) I only B) II only C) both I and II D) neither I nor II

C) both I and II

Objectives of unemployment insurance include which of the following? I. To help unemployed workers find jobs. II. To encourage employers to stabilize employment. A) I only B) II only C) both I and II D) neither I nor II

C) both I and II

Which of the following statements about the coverage of health care services under Part A of Medicare is (are) true? I. Services in the patientʹs home are covered if the patient requires skilled care and meets certain conditions. II. Hospice care is available for beneficiaries with a terminal illness. A) I only B) II only C) both I and II D) neither I nor II

C) both I and II

Which of the following statements about the financing of the Social Security programs is (are) true? I. Although the self-employed pay an OASDI tax rate that is twice the employee rate, they are allowed certain deductions that reduce the effective tax rate. II. The earnings base on which OASDI taxes are paid increases annually based on changes in average wages in the national economy. A) I only B) II only C) both I and II D) neither I nor II

C) both I and II

Which of the following statements about the problems and issues of unemployment insurance programs is (are) true? I. Many state programs are inadequately financed. II. Only a small portion of the total unemployed receive benefits at any time. A) I only B) II only C) both I and II D) neither I nor II

C) both I and II

Which of the following statements is (are) true with respect to the Social Security earnings test? I. The earnings test does not apply to dividends, interest, and rental income. II. The earnings test does not apply to work earnings for those individuals who have reached the full retirement age under Social Security. A) I only B) II only C) both I and II D) neither I nor II

C) both I and II

Current problems and issues with workers compensation include all of the following EXCEPT A) involvement of lawyers in workers compensation claims B) insuring catastrophic loss exposures C) reduced benefits for occupational illness D) rising medical costs

C) reduced benefits for occupational illness

All of the following are options for reducing the long-range OASDI actuarial deficit EXCEPT A) increasing the payroll tax. B) reducing benefits. C) reducing the taxable wage base. D) using general revenues to fund benefits.

C) reducing the taxable wage base.

Prior to the establishment of workers compensation laws, an employer could use all of the following defenses to block an injured workerʹs claim for benefits EXCEPT A) the contributory negligence doctrine. B) the fellow-servant doctrine. C) the employer liability doctrine. D) the assumption-of-risk doctrine.

C) the employer liability doctrine.

All of the following are reasons for social insurance programs EXCEPT A) to solve complex social programs. B) to provide a base of economic security. C) to provide need-tested benefits to low-income individuals. D) to provide coverage for perils which are difficult to insure privately.

C) to provide need-tested benefits to low-income individuals

Which of the following statements about the full retirement age under the Social Security program is true? A) The current retirement age for full benefits is age 62. B) Beginning in the year 2022, the retirement age will be gradually increased to age 80. C) Early retirement with reduced benefits is allowed as early as age 55. D) Delayed retirement beyond the age for full benefits increases the amount of the monthly benefit.

D) Delayed retirement beyond the age for full benefits increases the amount of the monthly benefit.

Under Part A of Medicare, how is reimbursement for inpatient hospital care determined? A) The amount billed to Medicare by the hospital is the amount Medicare pays. B) Eighty percent of the hospitalʹs regular charge for care is paid. C) The hospitalʹs usual, reasonable, and customary charge is paid. D) Hospital care is classified into diagnosis-related groups (DRGs) and the amount reimbursed depends on the DRG classification of the care delivered.

D) Hospital care is classified into diagnosis-related groups (DRGs) and the amount reimbursed depends on the DRG classification of the care delivered.

Which of the following statements about disability benefits under Social Security is true? A) There is a one-year waiting period before benefits are payable. B) Benefits are payable as long as the disabled worker is unable to perform his or her regular occupation. C) Benefits are payable only if the condition causing the disability is expected to result in death prior to age 65. D) In addition to the disabled worker receiving the benefits, benefits can also be paid to eligible depend

D) In addition to the disabled worker receiving the benefits, benefits can also be paid to eligible dependents

All of the following statements about the financing of unemployment insurance benefits are true EXCEPT A) All contributions from a state are deposited in the stateʹs account in a federal trust fund from which benefits are paid. B) The tax rate for a given employer may be reduced if the employer has a favorable employment record. C) Part of an employerʹs contribution is used for administrative expenses, to fund extended benefits, and to maintain a loan fund that can be draw upon if th

D) Most state programs are financed primarily by payroll taxes paid by employees.

All of the following statements about workers compensation programs are true EXCEPT A) They are based on the principle of liability without fault. B) Disabled workers are paid for their injuries based on a schedule of benefits established by law. C) Options available for complying with the law may include one or more of the following: self-insurance, private insurance, or insurance through a state insurance fund. D) Most states have elective laws whereby the employer can choose wheth

D) Most states have elective laws whereby the employer can choose whether or not to provide workers compensation coverage to employees.

Marco, a risk manager in California, is interviewing for a new position in the state of Washington. When Marco asked about methods of providing workers compensation, the answer surprised him. In Washington, employers can self-insure the risk or obtain coverage through a state fund. Private insurers do not market workers compensation insurance in Washington. Washington uses a A) competitive state fund. B) guaranty fund. C) reinsurance facility. D) monopoly state fund.

D) monopoly state fund.

Which of the following statements about a workerʹs primary insurance amount is (are) true? I. It is the monthly amount paid to a worker who elects early retirement at age 62. II. It is equal to 50 percent of the workerʹs final average pay that was subject to Social Security taxes. A) I only B) II only C) both I and II D) neither I nor II

D) neither I nor II

Which of the following statements about credits (quarters of coverage) under the Social Security program is (are) true? I. Up to 10 credits can be earned in a single year. II. A worker receives one credit for each $10,000 of covered wages in a calendar year, regardless of the workerʹs wages. A) I only B) II only C) both I and II D) neither I nor II

D) neither I nor II

Which of the following statements concerning Medicare Prescription Drug Plans is (are) true? I. The monthly premium is based on the health status of the beneficiary and the number of prescriptions the beneficiary needs. II. After the beneficiary has paid an initial deductible, Medicare pays the entire cost of all prescription drugs the beneficiary needs. A) I only B) II only C) both I and II D) neither I nor II

D) neither I nor II

Charges for all of the following medical expenses are covered under the medical insurance (Part B) portion of Medicare EXCEPT A) physiciansʹ services in doctorsʹ offices. B) hospital equipment and other durable medical equipment used at home. C) clinical laboratory services. D) prescription drugs outside of the hospital.

D) prescription drugs outside of the hospital.

In order to receive unemployment insurance benefits, an unemployed worker must meet all of the following eligibility requirements EXCEPT A) have qualifying wages and employment. B) be able to work. C) be actively seeking work. D) satisfy a 6-month waiting period.

D) satisfy a 6-month waiting period.