Types of Health Insurance Policies

Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that contributions are

tax deductible Contributions to the HSAs by individuals are deductible, even if the taxpayer does not itemize. Contributions by an employer are not included in the individuals taxable income.

Cancellation

termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy

Nonrenewal

termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy

When the amount payable under the Social Security is more than the amount payable under the rider

the Social Security Supplement (SIS) or Social Security Riders would not provide payment of income benfits

Medicare

the United States federal government plan for paying certain hospital and medical expenses for person who qualify

Accidental Death and Dismemberment Policy

the death benefit will be paid if the accidental death occurs within 90 days of the accident.

Employer-Sponsored Group

the employer (a partnership, corporation or a sole proprietorship) provides group coverage to its employees

Who chooses a primarty care physician in an HMO?

the individual member

Benefit Period

the length of time over which teh montly disability benefit payments will last for each disability after the elimination period has been satisfied

Income Limit

a person cannot contribute more than what was earned for the year from the employer through whom the person has an HDHP

Dependent

a person who relies on another for support and maintenance

Presumptive Disability

a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits

Basic Medical Expense Coverage

often referred to as Basic Physicians Nonsurgical Expense Coverage because it provides coverage for nonsurgical services a physician provides

Disability Buyout Agreement

specifies who will purchase a disabled partners interest and legal obligates that person or party to purchase such interest upon disability

Taxable

subject ot taxations

Prepaid Plans

subscriber pays a set fee (usually monthly) in order to receive the services that are provided under the plan

High Deductible Health Plans (HDHPs)

often coordination with MSAs, HSAs, or HRAs. features higher annual deductibles and out-of-pocket limits than traditional health plans, which means lower premiums

Business Overhead Expense (BOE)

insurance is a unique type of policy that is sold to small business owners who must continue to meet overhead expenses such as rent, utilities, employee salaries, installment purchase, leased equipment, etc.

Community Rating

involves a pooling of the experience of all groups in all areas and then the setting of an average rate that will be sufficient to support this experience

An insureds long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged a $100 per day. How much will the insurance company pay?

$120 dollars per day. Most LTC policies will pay the benefit amount in a specific fixed dollar amount per day, regardless of the actual cost of care.

What is the typical deductible for basic surgical expense insurance?

$0

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 montly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage?

$102, the employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individuals group premium rate (in this scenario, 102% OF $100 total premium is $102). The 2% charge is to cover the employers administrative cost.

Which of the following insurance coverages would be allowed with an MSA?

long term care

Disqualifying Events for COBRA

-failure to make premium payment - becoming covered under another group plan -becoming eligible for medicare -or if the employer terminates all group health plans

COBRA Qualifying Events

-voluntary termination of employment -termination of employment for reasons other than gross misconduct eg company downsizing -employment status change: from full time to part time

How many consecutive months of coverage (other than in acute care unit of a hospital) must LTC insurance provide in this state?

12 months in a setting other than acute care unit of a hospital.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

1985 requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event

Intermediate care

occasional nursing or rehabilitative care provided for stable conditions that require daily medical assistance on a less frequent basis than skilled nursing care

Which describes the features of a comprehensive major medical policy?

Basic medical expense benefits are provided in a single package deal

type of employee benefit plan that allows insureds to choose between different types of benefits

Cafeteria Plan

What would be an example of a limited accident and health insurance policy?

Dread diesease policy. Limited risk policies cover specific illness or accidents.

Which of the following is avaliable to employers of all sizes?

HRA's

What are the 2 types of Flexible Spending Accounts?

Heath care accounts and dependent care accounts

In which of the following locations would skilled care most likely be provided?

In an institutional setting. Skilled nursing care is performed under the direction of a physician, usually in an institutional setting

Which of the following is not true of a major-medical health insurance policy?

It is designed to pay on first dollar of expense basis

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?

No coverage will apply, since the injury could have been forseen.

An insured purchased a disability income policy with a 10-year benefit period. The policy stated a 20 day probationary period for illness. If the insured is hospitalizeed with an illness 2 weeks after the policy was issued, how much will the policy pay?

Nothing; illness is not covered during the first 20 days of the contract. Loss by illness is not covered if it occurs during the probationary period.

What special policie covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage?

Special Risk Policy. It will cover unusual types of risk that are not normally covered under AD&D policies. It covers only the specific hazard or risk identified in the policy, such as racecar driver test-driving a new car.

Which of the following would basic medical expense coverage not cover?

Surgeon's services

Recurrent Disability

Usually expressed in a policy provision that specifies the period of time during which the recurrence of an injury

Comprehensive Major Medical Plan

a combination of basic expense coverage and major medical coverage, sold as one policy

Flexible Spending Accounts (FSAs)

a form of cafeteria plan benefit funded by salary reduction and employers contributions

Lump Sum

a payout method that pays the beneficiary the entire benefit in one payment

Deductible

a specified dollar amount that the insured must pay before the insurance company will pay the policy benefits

Elimination Period

a waiting period that is imposed on the insured from the onset of disability until benefit payments commence

Health Maintenance Organizations (HMOs)

act forced employers with more than 25 employees to offer HMO as an alternative to their regular health plans

Riders

added to the basic insurance policy to add, modify or delete policy provisions

Regarding a PPO which of the following is correct when selecting a primary care physician?

all of the above, the insured may choose medical providers not found oon the preferred list and still retain coverage, the insured is allowed to receive from any provider, but if the insured selects a PPO provider the insured will realize lower out-of-pocket costs, if a non-network provider is used the insured's out-of-pocket costs will be higher

Benefit Limitation

amount of montly benefit that is payable under most disability income policies is based on a percentage of the insureds past earnings

Medical Savings Account

an employer-funded account linked to a high deductible medical insurance plan

Sickness

an illness, which first manifests itself while the policy is in force

Accidental Bodily Injury

an unforseen and unintended injury that resulted from an accident rather than a sickness

Provider

any group or individual who provides health care services

Supplementary Major Medical Policies

are used to supplement the coverage payable under a basic medical expense policy

Occasional visits by which of the following medical professionals will not be covered under LTC's home health care?

attending physician home health care is provided in ones home and could include occasional visits to the persons home by a registered nurses, licensed practical nurses, licensed vocational nurses or community-based organizations like hospice. Home health care might provide PT and some custodial care such as meal prep.

Worker Compensation

benefits paid to an employee by an employer in the case of injury, disability, or death as the result of an on-the-job hazard. workers compensation is required by state law

Service Plan

benefits that are paid to the hospitals and physicians (health care providers) instead of to the subscriber (insured)

Primary Care Physicians or Gatekeeper

best interest to keep members healthy to prevent future time for treatment of disease. Will be regularly compensated for being responsible for the care of that member whether care is provided or not. (HMO)

In comparison to a policy that uses the accidental menas definition, a policy that uses the accidental bodily injury definition would provide coverage that is

broader in general. A policy that uses the accidental bodily injury definition will provide broader than a policy that uses the accidental means definition.

Long-Term Care Policies

can be marketed in the form of individual policies, group policies or as riders to life insurance policies, provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing facility

Association Group

can buy a group insurance for its members. must have 100 members, be organized for a reason other than insurance, been active for at least 2 years, have a constitution, by-laws, and must hold an annual meeting

Custodial Care

care for meeting personal needs such as assistance in eating, dressing, or bathing which can be provided by nonmedical personnel such as relatives or home health care workers

Home Health Care

care provided by a skilled nursing or other professional services in ones home

Respite Care

care provided either by paid workers who come to the home for short period of time or by a nursing facility when a patient statys for a short period of time to give family memebers a rest

Adult Day Care

care provided for functionally impaired adults on less than a 24-hour basis

Health Reimbursement Accounts (HRAs)

consist of funds set aside by employers to reimburse employees for qualified medical expenses, such as deductibles or coinsurance amounts

Basic Surgical Expense Coverage

coverage is commonly written in conjunction with hospital expense policies

Skilled Care

daily nursing and reabilitative care that can be provided by medical personal under the direction of a physician

Corridor Duductible

derives its name from the fact that it is applied between the basic coverage and the major medical coverage

Health Savings Accounts (HSAs)

designed to heal individuals save for qualified health expenses that they, their spouse, or their dependents incur

Disability Income Insurance

designed to replace lost income in the event of this contingency, and is vital component of a comprehensive insurance program

Relative Value

each surgical procedure will be assigned a number of points that are relative to the number of points assigned to the maximum benefit

Preferred Provider Organizations (PPOs)

group of physicians and hospitals that contract with employers, insurers, or third party organizations to provide medical care services at a reduced fee

Comprehensive Coverage

health insurance that provides coverage for most types of medical expenses

Capital Sum

incase of loss of sight or accidental dismemberment, a percentage of that principal sum will be paid by the policy.

Master Contract

issued to the to the group sponser

Surgical Schedule

lists the types of operations covered and their assigned dollar amounts

Annual Deductible Limit

maximum amount that can be contributed to an MSA is 65% of high-deductible plan for individuals or 75% of the family deductible for those with family coverage

Creditable Coverage

means that an insured must be given day-for-day credit for previous health coverage against the application of pre-existing condition exclusion period when moving from one group health plan to another, or from a group health plan to an individual plan

Point-Of-Service (POS)

merely a combination of HMO and PPO plans

Tax Exept

not subject to taxation

Principal Sum

paid for accidental death

Probationary Period

period of time between the effective date of health insurance policy and the date coverage for all or certain conditions begins

Sickness

physical illness, disease, and pregnancy are all considered sickness. Mental illness is not considered a sickness

Critical Illness

policy covers multiple illnesses, such as heart attack, stroke, renal failur and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy

Hospital Indemnity

policy provides a specific amount on a daily, weekly or monthly basis while the insured is confined to a hospital

Dread Disease

policy provides a variety of benefits for a specific disease such as cancer policy or heart disease policy

Certificates of Insurance

proof of coverage

Home Convalescent Care

provided in the insureds home under a planned program established by his or her attending physician

Residential Care

provided while the insured resides in a retirement community or a residential care facility for the elderly

Experience Rating

rates are based on the overall experience of the group

Conversion Factor

represents the total amount payable per point

Underwriting

risk selection and classification process

Which of the below statements does not describe a blue cross blue shield plan?

services are paid for at the time of use

Limited Risk Policy

the specific risk in which accidental death or dismemberment will be paid

How are employer contributions to health reimbursement accounts treated in regards to taxation?

they are tax deductible

Comprehensive Major Medical

this is a combination of basic coverage and major medical coverage that features low deductibles, high maximum benefits, and coinsurance

Medical Expense Insurance

this type of insurance pays benefits for medical, surgical, and hospital costs

Purpose of COBRA

to provide continuation of coverage for terminated employees

Special Risk Policy

will cover unusal types of risks that are not normally covered under AD&D policies