CA LAH Ch 14
A major medical policy deductible is designed to: A. Eliminate small, unnecessary claims B. Educate the consumer on health care costs C. Add another layer of taxation or premium tax D. Increase policy cost
Eliminate small, unnecessary claims
Which is an incorrect statement regarding Flexible Spending Accounts? A. They involve pre-tax contributions for specific non-reimbursed expenses. B. They can be used to offset non-reimbursed medical and child care expenses. C. Any amounts not used each year are forfeited. D. Excess contributions can be rolled over into a retirement savings account.
Excess contributions can be rolled over into a retirement savings account.
What is the Federal law that assists individuals in maintaining their group benefits, while also placing limitations on pre-existing condition definitions? A. ADEA B. ERISA C. HIPAA D. CIA
HIPAA
Mike has a major medical policy. After paying $3,000 in copayments, his policy begins paying 100% of the bill thereafter. Mike's policy probably contains what feature? A. Maximum limit clause B. Maximum out-of-pocket clause C. Deductible D. Stop loss limit
Stop loss limit
Which of the following is true regarding premiums paid for a Long Term Care policy? A. Tax deductible to the employer if employer paid. B. Always tax deductible to the employee if employee paid. C. Tax deductible to the employee if employer paid. D. None of the answers are correct.
Tax deductible to the employer if employer paid.
Which of the policies would only cover a particular illness, such as cancer? A. Accident indemnity policy B. AD&D policy C. Major medical D. Dread disease
Dread disease
What is the name of the federal law that helps ensure that employers provide high quality medical and retirement plans to the plan participants and their dependents? A. ADEA B. HIPAA C. ERISA D. FBI
ERISA
Which item below would not be considered a cost containment method? A. Ambulatory outpatient treatment B. Alternative care -- e.g., birthing center C. Preventive care D. Hospital confinement
Hospital confinement
What premium impact would occur if a large company had much higher claims than anticipated? A. Additional benefits will be provided. B. They will have their group insurance dropped. C. Premiums will increase. D. Premiums will decrease.
Premiums will increase.
All are common exclusions found in most medical plans except: A. Treatment in a government hospital facility B. "Compensable" workplace injuries C. Elective cosmetic surgery D. Reconstructive cosmetic surgery
Reconstructive cosmetic surgery
Common exclusions found in most medical plans, including major medical plans, would include all of the following EXCEPT: A. Treatment in a Veterans Administration hospital B. Illnesses contracted through the workplace C. Elective cosmetic surgery D. Reconstructive cosmetic surgery
Reconstructive cosmetic surgery
All are group rating factors used to determine group premiums except: A. Group persistency B. Industry or occupation C. Participation Rate of employees and dependents D. Religion
Religion
Carlos has a Major Medical policy. After paying $3,000 in co-payments, his policy begins paying 100% of the bill thereafter. What added feature is probably included in his Major Medical plan? A. Maximum limit clause B. Maximum Out-of-Pocket clause C. Deductible D. Stop loss limit
Stop loss limit
A probationary period in a group insurance plan is intended to eliminate coverage for a specific period of time for: A. Those employees that enroll in the group plan after the effective date of coverage. B. All employees. C. Only employees over the age of 45 who enroll after the effective date of coverage. D. Group plans do not have probationary periods.
Those employees that enroll in the group plan after the effective date of coverage.
Todd owns a major medical policy with a $5,000 annual deductible. In which of the following situations would Todd's bill exceed his deductible, thereby requiring his policy to provide or offset a portion of the bill? A. Todd is treated at the emergency room for a sprained ankle. B. Todd requires a tetanus shot and three stitches after puncturing his foot on a rusty nail. C. Todd has his sore throat evaluated by his personal physician. D. Todd is diagnosed with artery blockage and must undergo open heart surgery.
Todd is diagnosed with artery blockage and must undergo open heart surgery.
Coverage for leukemia only would be provided by: A. Accident Indemnity policy B. AD&D policy C. Major Medical D. Dread disease
Dread disease
Which of the following groups would be the least likely to self-insure themselves? A. Labor unions B. Local family owned liquor store C. Co-ops D. Fraternals
Local family owned liquor store
A child is doubly covered by both of their parents' medical plans. Assuming the parents currently are not divorced, what parent's plan would be considered the primary policy? A. The parent whose birth date falls first in the calendar year. B. The older parent C. The parent with the better plan D. Either plan, as it is up to the parents to decide.
The parent whose birth date falls first in the calendar year.
David has a comprehensive major medical policy. Specifically, the policy has a basic plan that provides $10,000 worth of overall benefits. Once exhausted, the policy has an 80%/20% copayment following a $1,000 corridor deductible. David has a $21,000 hospital bill. How much of this would he be responsible for? A. $2,000 B. $3,000 C. $4,000 D. $10,000
$3,000
Doris has a major medical policy with a $500 deductible and 80/20 coinsurance. If she has $8,000 worth of excluded expenses, how much of the bill will Doris be responsible for? A. $2,000 B. $1,500 C. $0 D. $8,000
$8,000
A self-employed individual or sole proprietor is allowed to deduct what percentage of their health insurance premiums each year according to HIPAA regulations? A. 100% B. 90% C. 50% D. 40%
100%
An employee must convert her group insurance plan within ___ of her termination date. A. 31 hours B. 31 days C. 10 days D. 3 months
31 days
An individual enrolls in a new group medical plan that has an exclusion provision for pre-existing conditions. This individual can apply time covered under the old plan against the new pre-existing condition timeframe if there was a gap in coverage of no more than how many days? A. 31 B. 62 C. 63 D. 90
63
Characteristics of a Basic Plan would include all the following except: A. No deductible B. Low overall limits C. Specific benefits per category of coverage D. 80/20% co-payment
80/20% co-payment
Most medical insurance policies provide coverage for an insured's dependents. Which statement below is false? A. A 21 year old-part time college student is covered. B. A 16 year old dependent is covered. C. Handicapped children can continue coverage beyond the "limiting" age. D. A 22 year old full time college student is covered.
A 21 year old-part time college student is covered.
Most medical insurance policies provide coverage for an insured's dependents. Which statement below is FALSE? A. A 21-year-old, part time college student is covered. B. A 16 year-old-dependent is covered. C. Handicapped children can continue coverage beyond the "limiting" age. D. A 22-year-old, full-time college student is covered.
A 21-year-old, part time college student is covered.
Which of the following is not a characteristic of major medical? A. High benefit limits B. Co-payments C. Adult day care D. Front-end deductible
Adult day care
Advantages of a Consumer Driven Plan would include all except: A. Employee has more options in selecting and managing their medical benefits. B. Make employees more cost conscious about their health care. C. Employees can create a tax-exempt health account that can be used to pay for health expenses to a certain dollar amount. D. All of these examples would be considered advantages.
All of these examples would be considered advantages.
The general term used to describe a variety of consumer health care options that are evolving at a time when employers are asking employees to shoulder more of their health care cost best describes: A. Consumer Driven Plans B. Government Driven Plans C. Community Driven Plans D. State Funded Plans
Consumer Driven Plans
An insured is diagnosed as being terminally ill. Her insurance company provides palliative care at a local hospice facility. She is told that there are no surgical procedures that will assist her battle against cancer. This is an example of: A. Selective coverage B. Unfair discrimination C. Cost Containment D. Preventative Care
Cost Containment
An insured is diagnosed as being terminally ill. Her insurance company provides palliative care at a local hospice facility. She is told that there are no surgical procedures that will assist her battle against cancer. This is an example of: A. Selective coverage B. Unfair discrimination C. Cost containment D. Preventive care
Cost containment
All of the following are characteristics of Major Medical EXCEPT: A. High benefit limits B. Co-insurance feature C. Blanket coverage D. Coverage for routine check-ups
Coverage for routine check-ups
All of the following are characteristics of major medical EXCEPT: A. High benefit limits B. Co-insurance feature C. Blanket coverage D. Coverage for routine checkups
Coverage for routine checkups
Which of the following rating systems uses the past claim experience of the group to determine future group premiums? A. Underwriting B. Community rating C. Experience rating D. Standard rating
Experience rating
Why are hospitals, doctors and insurance companies concerned with Managed Care? A. To provide Universal Health Care coverage for all. B. It lowers liability insurance premiums. C. It helps control skyrocketing health care costs D. It allows additional specialized benefits to be provided.
It helps control skyrocketing health care costs
Why are hospitals, doctors and insurance companies concerned with managed care? A. It enables universal health care coverage for all. B. It lowers liability insurance premiums. C. It helps control skyrocketing health care costs. D. It allows additional specialized benefits to be provided.
It helps control skyrocketing health care costs.
Which of the following Medical Providers does not utilize a service approach? A. Major Medical B. Health Maintenance Organization C. Preferred Provider Organization D. Blue Cross
Major Medical
Bud is the owner of a small sheet metal fabrication company. What item below can be used to verify that his company has group insurance? A. Insurance policy B. Certificate of coverage C. Master contract D. Letter from his local agent
Master contract
Advantages of a "service" approach to billing would include all the following except: A. Less out-of-pocket expenses B. Less paperwork C. More paperwork D. Prepaid benefits
More paperwork
All are advantages of a "service" approach to billing except: A. Less out of pocket expenses. B. Less paperwork C. More paperwork D. Pre-paid benefits
More paperwork
What type of dental procedure provides care for the tissue and gums that surround the teeth? A. Restorative B. Endodontics C. Periodontics D. Prosthodontics
Periodontics
What premium impact would occur if a large company has much lower claims than anticipated? A. Additional benefits will be provided. B. They will have their group insurance dropped. C. Premiums will decrease. D. Premiums will increase.
Premiums will decrease.
All are true statements regarding a "self-funded" medical plan except: A. The employer assumes the risk. B. Small companies generally self-fund their medical plans. C. Trusts are set up to pay claims. D. They can be administered "in-house" or by a Third Party Administrator.
Small companies generally self-fund their medical plans.
Who funds a Health Reimbursement Account? A. The employee B. The employee and employer C. The employer D. The state in which the employee resides.
The employer
If a child is covered under both of his parents' medical plans, and the parents are not separated or divorced, which parent's plan would be considered the primary policy? A. The plan of the parent whose birth date falls first in the calendar year B. The older parent's plan C. The better plan of the two parents' plans D. Either plan, as it is up to the parents to decide
The plan of the parent whose birth date falls first in the calendar year
How are medical expenses received by an insured with regard to taxation? A. They are received tax-free since they are not considered income. B. They are taxable as income. C. They are taxable to the extent that exceeds $10,000. D. They are taxable as a reimbursement of an expense.
They are received tax-free since they are not considered income.
A probationary period in a group insurance plan is intended to eliminate coverage for a specific period of time for: A. Those employees that enroll in the group plan after the effective date of coverage B. All employees C. Only employees over the age of 45 who enroll after the effective date of coverage D. Group plans do not have probationary periods.
Those employees that enroll in the group plan after the effective date of coverage
In most cases, medical plan premiums are not deductible to an employee, but employer paid premiums are deductible to the employer. True or False? A. True B. False C. Not enough information to answer question. D. Not enough information to answer question
True
All are characteristics of a Health Savings Account except: A. Personal savings accounts designed to offset un-reimbursed medical expenses. B. Used in conjunction with high deductible, low premium health plans. C. Contributions are tax-deductible to both the employee and employer. D. Unused contributions can always carry-over into the next plan year.
Unused contributions can always carry-over into the next plan year.
In most cases, medical plan premiums ___ deductible to an employee, and ___ deductible to an employer. A. are, are B. are not, are not C. are, are not D. are not, are
are not, are
Johan has a Comprehensive Major Medical policy. Specifically, the policy has a Basic Plan that provides $10,000 worth of overall benefits. Once exhausted, the policy has an 80/20% co-payment following a $1,000 corridor deductible. Johan has a $21,000 total hospital bill. How much of this would he be responsible for? A. $2,000 B. $3,000 C. $4,000 D. $10,000
$3,000
A comprehensive major medical policy has a basic component that provides 100% coverage for the first $10,000 of medical expenses. The plan has a corridor deductible of $500 and 80/20 coinsurance thereafter. The insured incurs $25,500 in medical expenses. How much of this bill will be paid by the insured? A. $15,500 B. $500 C. $3,000 D. $3,500
$3,500
All would be considered an advantage of a Health Savings Account except: A. Tax deductible contributions B. Tax deferred growth C. Designed to offset out-of-pocket medical expenses D. Can be used to fund college tuition expenses
Can be used to fund college tuition expenses
What term is used to describe long-term continual conditions that generally have a negative impact on the premium charged to a group? A. Chronic Conditions B. Chronic Premiums C. Adverse Prevention D. Adverse Characteristic
Chronic Conditions
What term is used to describe long-term continual conditions that generally have a negative impact on the premium charged to a group? A. Chronic conditions B. Chronic premiums C. Adverse prevention D. Adverse characteristic
Chronic conditions
What policy is a combination of Basic and Major Medical? A. A low cost policy B. Comprehensive Major Medical C. Major Medical D. Stop Loss
Comprehensive Major Medical
If a person, over the age of 65 is covered by both their group insurance plan at work and Medicare, what plan would normally be considered the primary provider of benefits? A. Neither, each would pay 50% of the bill. B. Group insurance C. Medicare D. There is no correct answer, as this is something that would be determined by a group arbitrator.
Group insurance
What is the federal law that assists individuals in maintaining their group benefits, while also placing limitations on pre-existing condition definitions? A. ADEA B. ERISA C. HIPAA D. CIA
HIPAA
A basic plan is characterized by all of the following characteristics except: A. Low overall limits B. No deductible C. Specific benefits per category of coverage D. High co-insurance provision
High co-insurance provision
What item below can be used to verify that his company has group insurance? A. Insurance policy B. Certificate of Coverage C. Master Contract D. Letter from the selling agent
Master Contract
Which statement below is a false statement regarding dental insurance? A. Preventative care often has no deductible or co-payment. B. Dental coverage provides diagnostic, preventative and curative care of the teeth C. Non-Scheduled plans have no deductibles or co-payments. D. Non-scheduled plans have deductibles and co-payments.
Non-Scheduled plans have no deductibles or co-payments.
All are characteristics of a Major Medical plan except: A. Front End Deductible B. Co-Payments C. Orthodontia coverage D. High Benefit limits
Orthodontia coverage
Which of the following would not be considered a limited policy? A. Travel accident B. Cancer only insurance C. Major medical D. Credit life or disability insurance
Major medical
Which of the following medical providers does not utilize a service approach? A. Blue Cross B. Preferred provider organization C. Health maintenance organization D. Major medical
Major medical
In this type of health care delivery system, doctors and hospitals are involved in financing, managing and delivering medical services. In addition, this type of plan requires providers to share in the overall risk of the plan. Which of the following plans are we describing? A. Preferred provider organization B. Managed care C. Multiple employer trust D. Group insurance
Managed care
Which option below is not limited policy? A. Travel Accident B. Cancer only insurance C. Comprehensive Major Medical D. Credit life or disability insurance
Comprehensive Major Medical
Basic medical and major medical combined into one coverage describes: A. A low cost policy B. Comprehensive major medical C. Major medical D. Stop loss
Comprehensive major medical
All are benefits of a Flexible Spending Account except: A. Employee deductions lower taxable state and federal income. B. Lower income means lower FICA contributions by employer. C. Assist in retention/hiring of new employees. D. All are benefits of a Flexible Spending Account
All are benefits of a Flexible Spending Account
This type of premium rating system is most often associated with small groups. Which of the following rating methods is generally used for smaller groups where rates are based upon the claim experience of the insurance company? A. Community rating B. Experience rating C. Industry rating D. State wide rating
Community rating
What is the name of the Federal law that helps ensure that employers provide high quality medical and retirement plans to the plan participants and their dependents? A. ADEA B. HIPAA C. ERISA D. FBI
ERISA
If a person over the age of 65 is covered by both their group insurance plan at work and Medicare, which plan would normally be considered the primary provider of benefits? A. Neither; each would pay 50% of the bill B. Group insurance C. Medicare D. There is no correct answer, as this is something that would be determined by a group arbitrator
Group insurance
All of the following are group rating factors used to determine group premiums, EXCEPT: A. Group persistency B. Industry or occupation C. Participation rate of employees and dependents D. Religion
Religion
All of the following statements regarding a "self-funded" medical plan are TRUE, EXCEPT: A. The employer assumes the risk. B. Small companies generally self-fund their medical plans. C. Trusts are set up to pay claims. D. They can be administered "in-house" or by a third party administrator.
Small companies generally self-fund their medical plans.
What is the penalty for unqualified withdrawals from an HSA if done before age 65? A. Withdrawal amount is taxable as ordinary income. B. Withdrawal amount is subject to a 10% IRS penalty. C. Withdrawal amount is both taxable as ordinary income and subject to the IRS penalty of 20%. D. There are no penalties.
Withdrawal amount is both taxable as ordinary income and subject to the IRS penalty of 20%.
Conversion of a group insurance plan must take place within ___ of group termination date. A. 31 hours B. 31 days C. 10 days D. 3 months
31 days
All are advantages of a Health Reimbursement Account except: A. Employer contribution amounts are tax-deductible to the employer. B. The employer has much flexibility in determining the overall plan. C. Funding amounts are not included in employee's income. D. Must be included as part of a high deductible, low premium health plan.
Must be included as part of a high deductible, low premium health plan.
Which statement is not true regarding a Health Reimbursement Account? A. Benefits received by the employee are a tax-free reimbursement of a qualified medical expense. B. Reimbursable expenses include deductibles, co-payments and other qualified expenses such as vision and eye exams. C. Employer has the option of prepaying money into the fund for future use, or they can reimburse employee claims as they arise. D. Upon employee termination, any unused funds are portable for the employee.
Upon employee termination, any unused funds are portable for the employee.
