exam 3 chap 16

16) A deductible under which expenses are accumulated on an annual basis, and once a specified total is reached, the deductible is satisfied for the year is called a A) calendar-year deductible. B) prospective deductible. C) straight deductible. D) waiting period.

A

18) Which of the following statements about HMO managed care plans is (are) true? I. There is an emphasis on controlling costs. II. They usually have high deductibles. A) I only B) II only C) both I and II D) neither I nor II

A

27) Maria is covered under a group medical expense plan as an employee. She is also covered under her husband's plan as a dependent. If Maria is hospitalized, how will each plan respond to her medical bills if both plans have the typical coordination-of-benefits provision? A) Maria's plan is primary, and her husband's plan is excess. B) Her husband's plan is primary, and Maria's plan is excess. C) The primary plan is determined by which birthday, Maria's or her husband's, is earlier in the year. D) Both plans will pay benefits on a pro rata basis.

A

35) Advantages of cafeteria plans include all of the following EXCEPT A) simplicity of benefit administration. B) employees can select benefits that best match their needs. C) reduced taxes for employees. D) greater employer control over increasing benefit costs.

Answer: A

13) All of the following are reasons why employers self-insure medical expense plans EXCEPT A) to reduce certain costs, such as premium taxes and commissions. B) to provide mandated state benefits. C) to retain funds until needed to pay claims. D) to eliminate the need to comply with separate state laws.

Answer: B

12) What is the purpose of stop-loss insurance that is used with self-insured group medical expense plans? A) to require employees to buy insurance for losses in excess of some specified amount B) to have a commercial insurer pay claims that exceed a specified limit C) to obtain administrative services from a commercial insurer D) to exempt self-insured plans from state insurance laws that require mandated benefits

B

14) A key feature of group medical expense plans is the employee being required to pay a percentage of covered expenses in excess of the deductible. This feature is A) other insurance. B) coinsurance. C) pro-rated insurance. D) reinsurance.

B

17) Which of the following is (are) characteristics of HMO managed care plans? I. Unlimited choice of physicians and hospitals II. Emphasis on controlling the cost of covered services A) I only B) II only C) both I and II D) neither I nor II

B

20) An HMO that contracts with two or more independent group practices to provide medical services to covered members is called a(n) A) group model HMO. B) network model HMO. C) staff model HMO. D) individual practice association HMO

B

26) Some employers offer employees a choice of health care plans which are designed to make employees more sensitive to health care costs, to provide an incentive to avoid unneeded care, and to seek low-cost health care providers. Such plans are called A) employee assistance plans. B) consumer-directed health plans. C) cafeteria plans. D) preferred provider organization (PPO) plans.

B

34) Which of the following statements about cafeteria plans is (are) true? I. Unspent flexible spending account balances are refunded to the employee, tax-free, at year-end. II. Cafeteria plans enable employees to select benefits that meet their specific needs. A) I only B) II only C) both I and II D) neither I nor II

B

39) Turner Company self-insures its group life and group health insurance plans. Turner entered into an agreement with ABC Insurance through which ABC handles the plan design, claims processing, and record keeping for Turner. The agreement between Turner and ABC is called a(n) A) preferred provider agreement. B) administrative services only contract. C) exclusive provider agreement. D) point-of-service contract.

B

41) Nancy's employer provides an interesting employee benefit plan. Each employee is given 250 employee benefit credits to spend. A wide array of benefits is available, and the employee uses benefit credits to select the benefits that he or she wants. This type of employee benefit plan is called a(n) A) defined benefit plan. B) cafeteria plan. C) employee selection plan. D) contributory plan.

B

44) Which of the following statements is (are) true with regard to group life insurance? I. Most group life insurance is whole life coverage. II. Most group life insurance plans allow a modest amount of life insurance on the employee's spouse and dependent children. A) I only B) II only C) both I and II D) neither I nor II Answer: B Question Status: Previous Edition

B

5) Which of the following statements about the eligibility requirements for group insurance is true? A) Most plans cover both full-time and part-time employees. B) An employee must be actively at work on the day the employee's group insurance becomes effective. C) An employee who signs-up for insurance during an eligibility period must furnish evidence of insurability. D) One purpose of a probationary period is to determine whether the employee is healthy enough to be covered under the group health insurance plan.

B

54) Under many cafeteria plans, employees make premium contributions with pre-tax dollars. Then they use money from the salary reduction to purchase group health insurance or dental insurance. This type of cafeteria plan is called a A) health reimbursement arrangement plan. B) premium conversion plan. C) full-choice plan. D) flexible spending account plan.

B

Many group insurers contact employers and arrange for their individual insurance producers to meet with interested employees at the workplace to conduct sales interviews. This distribution method is called a A) mixed marketing program. B) worksite marketing program. C) cafeteria plan. D) mass merchandising program.

B

1) Which of the following statements about group insurance is true? A) Individual contracts are issued to each person covered under a group insurance plan. B) The cost of group insurance is usually higher on a per-person basis than the cost of individual insurance. C) The actual experience of a large group is a factor in determining the premium that is charged. D) Individual evidence of insurability is usually required.

C

21) Which of the following statements about preferred provider organization (PPO) health plans is (are) true? I. A PPO plan contracts with health care providers to provide medical services to members at reduced fees. II. Plan members are given a financial incentive to use PPO providers rather than other providers. A) I only B) II only C) both I and II D) neither I nor II

C

25) Connors Company self-funds the medical expense benefits that it provides to its employees. Connors Company has a contract with a commercial health insurance company providing that the health insurance company will pay all claims in excess of $250,000. The arrangement with the health insurance company is called A) reinsurance. B) managed care. C) stop-loss insurance. D) coinsurance

C

38) Most group health insurance plans have adopted the coordination-of-benefits rules developed by the National Association of Insurance Commissioners. Under these rules, if a dependent child is covered by both of the health insurance plans of the child's married parents, which health plan is primary for the child's medical expenses? A) always the mother's plan B) always the father's plan C) the plan of the parent whose birthday occurs first in the calendar year D) the plan of the parent who works for the larger employer, based on number of total employees

C

46) One type of managed care plan has a network of preferred providers. When care is needed, the member has the option to seek care in the network or to go outside the network. If care is received outside the network, the member must pay substantially higher deductibles and coinsurance. This type of managed care plan is a(n) A) individual practice association plan. B) staff model plan. C) point-of-service plan. D) network model plan.

C

8) High deductible group health insurance plans have all of the following characteristics EXCEPT A) health savings accounts or health reimbursement accounts. B) high dollar deductibles. C) low coverage limits. D) major medical insurance.

C

Reasons for having a minimum participation requirement before a group is eligible for insurance include which of the following? I. To lower the expense rate per unit of insurance II. To minimize the possibility of insuring a group which consists largely of unhealthy individuals A) I only B) II only C) both I and II D) neither I nor II

C

19) An HMO physician who determines if medical care from a specialist is necessary is called a(n) A) capitator. B) internist. C) network facilitator. D) gatekeeper.

D

22) A managed care plan under which members can receive medical care from non-network providers at higher out-of-pocket costs is an example of a(n) A) group practice plan. B) individual practice plan. C) exclusive provider organization. D) point-of-service plan.

D

3) Which of the following statements about group insurance underwriting principles is true? A) Employees should be required to remit premiums directly to the insurance company. B) The average age of the group should ideally increase over time. C) A group should be formed for the specific purpose of obtaining insurance. D) The employer should ideally share in the cost of a group insurance plan.

D

42) Marv is covered by a group health insurance plan at work. His employer funds the entire cost of the group health insurance. Because of this characteristic, the group health insurance plan can be described as A) defined benefit. B) contributory. C) defined contribution. D) noncontributory

D

48) Under older group medical expense plans, physicians were paid a fee for each covered service and were reimbursed on the basis of reasonable and customary charges, up to a maximum limit. These older group medical expense plans were called A) major medical plans. B) managed care plans. C) point-of-service plans. D) indemnity plans.

D

6) The period of time during which an employee can sign up for group insurance coverage without furnishing evidence of insurability is called a(n) A) probationary period. B) noninsurability window. C) waiting period. D) eligibility period.

D

Which of the following statements about group insurance underwriting principles is (are) true? I. If a plan is contributory, 100 percent of the eligible employees must be covered. II. Employees should be allowed to determine their own level of benefits.

D