Chapter 2- Types of Policies (16%)

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

$102.00- The employer is permitted to collect a premium from the terminated employee at a rate of no more than 102% of the individual's group premium rate (in this scenario, 102% of $100 total premium is $102). The 2% charge is to cover the employer's administrative costs.

An insured's 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/day- LTC policies will pay the benefit amount in a specific fixed dollar amount per day, regardless of the actual cost of care.

HIPAA applies to groups of

2 or more

Benefit periods for individual short-term disability policies will usually continue from

6 months to 2 years- STD= no more than 2 yrs

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy?

An indvidual who was previously covered by group health insurance for 6 months is eligible- An indvidiaul who has used up COBRA continuation, an individual who doesn't qualify for Medicare, and the gap of coverage for eligibility is a period of 63 days or less are all correct. Except, an individual who was previously covered for at least 6 months. HIPAA required that the indvidiaul have a previous continuous creditable health coverage for at least 18 months.

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

An institutional setting- skilled nursing care is performed under the direction of a physician, usually in an institutional setting.

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

Attending physician- Home health care is care provided in one's home and could include occasional visits to the person's home by registered nurses, licensed practical nurses, licensed vocational nurses, or community-based orgs like hospice. Home health care might include physical threapy and some custodial care such as meal preps.

Which best describes the features of a comprehensive major medical policy?

Basic medical expense benefits are provided in a single package- A comprehensive major medical plan is a combo of BASIC EXPENSE and MAJOR MEDICAL and these policies include a deductible and coinsurance.

The gatekeeper of an HMO helps

Control specialist costs- initally the member chooses a PCP, or gatekeeper. If the member needs the attention of a specialist, the PCP must refer the member. This helps keep the member away from the higher priced speacialists unless it is truly necessary.

If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days?

Conversion- conversion provisions are required by law. It allows terminated employees to convert their group health coverage to individual insurance without evidence of insurability within a specific amount of time, and for eligible reasons.

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

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

Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy?

Dread disease policy- a dread disease policy is a limited policy that is written to specifically cover cancer expense.

A policy which covers medical costs related to a specific condition is called a

Dread disease policy- dread disease policies cover medical expenses for a particular medical condition, such as cancer or heart disease.

In a disability policy, the probationary period refers to the time

During which illness-related disabilities are excluded from coverage.

LTC coverage may be available as any of the following options EXCEPT

Endorsement to a health policy- LTC may be purchased on an individual or group basis, or as an endorsement to a life insurance policy.

What type of group rating do the Blue Cross and Blue Shield orgs use as a factor developing the rates to be charged?

Experience rating- BC/BS insurance companies use experience rating to determine rates to be charged. The actual loss of experience of the group, in part, determines the rates charged by the insurer.

Most LTC plans have which of the following features

Guaranteed Renewability- The benefit amount payable under most LTC policies is usually a specific amount per day, and some policies pay the actual charge incurred per day. Most LTC policies are also GR; however, insurers do have the right to increase the premiums.

In long-term care LTC policies, as the benefit period lengthens, the premium

Increases- LTC policies define the benefit period for how long coverage applies, after the elimination period. The longer the benefit period, the higher the premium will be.

Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?

None- general disability policies do not cover losses caused by war, military service, intentionally self-inflicted injuries, overseas residence, or injuries suffered while committing/attempting to commit a felony.

What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered?

Probationary period- This is a period of time after a policy is in effect before claims arising out of an illness are covered. This is to prevent adverse selection, persons waiting until they have been exposed to a cause of loss before purchasing coverage.

The primary purpose of disability income insurance is to

Replace income lost due to disability

Which of the following special policies covers unusual risks that are NOT normally included under AD&D coverage?

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

What happens if a non-member physician is utilized under the Point-of-Service plan?

The attending physician will be paid a fee for a service, but the member patient will have to pay a higher insurance amount. E

Which of the following is true regarding optional benefits with long-term care policies?

They are available for an additional premium- Optional benefits, such as guarantee of insurability and return or premium, are available with LTC policies for add'l premium.

An insured makes regular contributions to his Health Savings Account HSA. How are those contributions treated in regards to taxation?

They are tax deductible-One covered by a high deductible health plan can make a tax deductible contribution to an HSA and use it to pay for out-of-pocket medical expenses.

Which of the following is NOT the purpose of HIPAA

To provide immediate coverage to new employees who had been previously covered for 18 months- HIPAA does not prohibit employers or providers from estabilishing waiting periods or pre-existing conditions exclusions, in which case the coverage to new employees would not be immediate.

Can an individual who belongs to a POS plan use an out of network physician?

Yes, and they may use any preferred physician, even if not part of the HMO.