Life/Health - A.D. Banker - Chapter 12

The employees of a corporation must each pay a portion of the premium for their group insurance. This means they are members of a _____________. A. Nonparticipating plan B. Participating plan C. Contributory group plan D. Noncontributory group plan

C. In contributory plans (those in which employees pay a portion of the premium), employers are generally required to maintain a minimum of 75% participation among eligible employees.

All of the following are requirements that insurers may place on a group plan to avoid adverse selection, except: A. A purpose other than obtaining insurance B. Coverage only for full-time employees C. Proof of insurability from each employee D. A minimum level of employee participation

C. Proof of insurability is not required for group plans. All of the other answers are underwriting measures employed to help reduce adverse selection under a group plan.

A replacing insurer must assume liability for paying ongoing existing claims under which law? A. HIPAA B. COBRA C. No-Loss, No-Gain D. ERISA

C. The process being described is mandatory risk transfer accomplished by a Hold-Harmless Agreement or No Loss-No Gain legislation.

COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following certain qualifying events such as death of the employee. A. 15, 36 B. 20, 36 C. 20,18 D. 25, 45

C. The question specifies coverage for dependents (36 months), not the employee (18 months).

When a group is covered by a MET, who is issued the Master Policy? A. A representative for the insureds B. The insurer C. The trust D. The sponsor

C. The sponsor develops the plan, sets the underwriting rules, and administers the plan, but the trust is the Master Policyowner.

Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act? A. Death of the employee B. The employee's eligibility for Medicare benefits C. Termination of the employee for theft D. Divorce or legal separation

C. This would be termination for gross misconduct and neither the employee nor his/her dependents would be eligible for continuation under COBRA.

Which of the following is incorrect regarding the group underwriting process? A. Adverse selection is not a concern for group contracts B. New employees usually become eligible to enroll after a waiting period C. Evidence of insurability is not required since premiums are adjusted annually by evaluating the group and the claims experience D. The insurer's office location is not a cost factor

A. Adverse selection is a major underwriting concern for group contracts.

All of the following are correct regarding employer group health insurance plan's eligibility requirements EXCEPT: A. Employees can enroll at any time without restrictions B. Employees must be considered full-time and actively at work C. Newly hired employees must usually satisfy a probationary period before they can enroll in the plan D. Employees must sign up during the enrollment period to avoid providing proof of insurability

A. Employees can only enroll during the open enrollment period and must follow any and all eligibility requirements in order to obtain coverage without having to prove insurability. Otherwise they may have to prove insurability if they attempt to enroll later.

When a group member terminates employment, he or she has 31 days to purchase an individual policy without proof of insurability. This is referred to as the: A. Conversion Privilege B. Extension of Benefits C. Adverse Selection D. Coordination of Benefits

A. It is the Conversion Privilege, which affords a group member the right to purchase individual coverage without proof of insurability. The 31-day period also applies when COBRA continuation is exhausted.

Which statement is incorrect regarding COBRA? A. The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage B. Evidence of insurability is not required to continue coverage under COBRA C. Coverage continues for 29 months for individuals receiving Social Security disability D. The employer may require the former employee or beneficiary to pay an amount equal to 102% of the premium

A. The employee or beneficiary must notify the employer within 60 days if he/she wants to continue the coverage.

How much time after a qualifying event has occurred and notice is given of their right to continue insurance does an employee or dependent have to elect continuation of the group health plan under COBRA? A. 90 days B. 60 days C. 36 months D. 18 months

B. An election to continue the group health plan under the provisions of COBRA must usually be made within 60 days of the qualifying event. Only in the event that proper notice was not given may the election period be extended.

HIPAA laws apply to groups of _____ or more. A. 5 B. 2 C. 100 D. 20

B. HIPAA laws apply to groups of 2 or more

A Taft-Hartley Trust would be formed to provide health and welfare benefits to which of these employees? A. Disabled B. Managerial C. Union-represented D. Part-time

C. The Taft-Hartley Act was enacted to limit the power of labor unions in the workplace.

What law provides the right of employees to continue health insurance coverage when changing employers by removing any restrictions against waiting periods and coverage in a new group health plan, as long as the employee has had creditable coverage? A. ERISA B. COBRA C. HIPAA D. PPACA

C. When covered under a group health plan, the Health Insurance Portability and Accountability Act (HIPAA) provides an employee and his/her dependents with the right to enrollment in a new employer's group health plan at the earliest possible moment when an employee begins new employment within 63 days of leaving the former group plan.

When underwriting group life, the underwriter treats the group as if it were: A. Two groups, with all the males in one group and all the females in the other B. One individual C. A number of separate individuals D. A substandard risk

B. In group insurance, the group as a whole is considered an individual, and issuance is based upon that whole. Having one uninsurable individual in a group will not cause a declination, but may increase the premium charged.

What can an employee do in order to obtain coverage when they have a pre-existing condition and find that their job was just eliminated? A. Apply for Medicaid benefits B. Utilize the group plan's conversion privilege C. Find an experienced agent and apply to insurance companies that specialize in insuring high risk applicant D. Apply for Medicare benefits

B. The conversion privilege allows eligible employees the option to convert from the group plan into an individual plan without having to prove insurability so long as they act within 31 days.

The employee or the beneficiary must notify the employer within ______ days if they elect to continue coverage under COBRA. A. 90 B. 60 C. 45 D. 30

B. The employee or the beneficiary must notify the employer within 60 days if they elect to continue coverage under COBRA.

A(n) _________________ is issued to the sponsor of the group, and employees receive an outline of coverage or other summary of benefits, which offers information about the plan's major benefits and principal exclusions. A. Certificate of insurance B. Individual policy C. Certificate of authority D. Master policy

D. A master policy is issued to the group sponsor while a certificate of insurance or policy summary is issued to the employees.

Which of the following might be done to protect against adverse selection when underwriting group medical insurance? A. Allow coverage to begin immediately B. Include all dependents to make the group larger C. Enroll the business owner first D. Require a minimum percentage of the group to enroll

D. By requiring a minimum percentage of the group to enroll, the risk is spread by possibly getting those of better health to participate along with those of poorer health.

Which statement would be considered inaccurate regarding the underwriting of a group plan? A. The corporate home office of the group normally is the group's address B. The insurer can require a minimum percentage of the group to be enrolled to guard against adverse selection C. The cost of a group policy is determined by the type, size, and average age of the group and claims experience with previous insurers D. Contributory plans require 100% employee participation

D. Contributory plans require both the employee and the employer to contribute to the premium, and 75% participation is required.

Events that will cause termination of continuing health coverage under COBRA include all of the following, except: A. Timely premium payments are not made B. The employee becomes eligible for Medicare benefits C. The employer ceases to maintain any group health insurance plan D. The employee fails to convert an individual health insurance plan on the day it is offered

D. Events that will cause termination of continuing health coverage by COBRA include failure to pay premiums on time, cessation of group health coverage by the employer, and employee eligibility for Medicare benefits. Employees have a period of time in which to convert coverage.

What benefit does COBRA provide to employees when an employee is terminated? A. Continuation of health insurance at the employee's expense for up to 36 months B. Continuation of life and health insurance if an employee quits or is fired or laid-off C. Continuation of health insurance at the employer's expense for up to 29 months D. Continuation of health insurance at the employee's expense for up to 18 months

D. In the event an employee is terminated for any reason other than gross misconduct, COBRA provides for continuation of the group health plan for the employee and his/her dependents for up to 18 months (29 months if a person is disabled at the time of a qualifying event). The employee can be required to pay up to 102% of the cost of the insurance. Life insurance is not covered under COBRA.

In noncontributory group health plans, how many eligible employees must be covered by the plan? A. 75% B. At least 50% C. At least 90% D. 100%

D. Noncontributory plans (in which the employer pays the full cost) must cover 100% of eligible employees.

A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be: A. Required to stop paying them under COBRA B. Allowed to deny claims over 60 days old under ERISA C. Required to keep paying them under the Dual Choice Provision D. Required to continue paying them under the No Loss-No Gain law

D. The No Loss-No Gain law (a.k.a. the Hold Harmless Agreement) establishes mandatory risk transfer.