( 3 )- Medical Expense Insurance

Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim?

$2,100 (In this situation, $10,000 x 20% coinsurance + $100 deductible = $2,100)

Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy?

Discourages overutilization of the insurance coverage. ( A purpose of the Coinsurance clause in a Major Medical Policy is to discourage overutilization of the insurance coverage.)

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?

Dread disease insurance. ( Dread disease insurance provides benefits for ONLY specific types of illnesses such as cancer or stroke.)

A major medical policy typically?

Provides benefits for reasonable and necessary medical expenses, subject to policy limits. (A major medical policy provides benefits for reasonable and necessary medical expenses, subject to policy limits.)

Which of the following services is NOT covered under a hospitalization expense policy?

Surgeon's fees. (While an insured is hospitalized, the hospitalization expense coverage includes benefits for the cost of all of these services EXCEPT a surgeon's fees.)

Major Medical policies typically?

Contain a deductible and coinsurance.

Comprehensive Major Medical policies usually combine?

Major Medical with Basic Hospital/Surgical coverage. (A Comprehensive Major Medical Policy combines Basic Hospital/Surgical and Major Medical insurance.)

A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will?

Continue coverage but exclude the heart Condition. (If the insured did not cite the condition on the application and the insurer did not exclude the condition, the pre-existing condition provision still applies. Exclusions are subject to the "time limit on certain defenses" provision, however.)

Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT?

If the employee paid for qualified medical expenses, the reimbursements may be tax-free. ( Under a Health Reimbursement Arrangement, reimbursements may be tax free if the employee paid for qualified medical expenses.)

All of the following statements about Major Medical benefits are true EXCEPT?

Benefits have no maximum limit.

N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as?

Coinsurance. ( The provision in a Major Medical policy that requires the insurance company pay only part of a loss and the insured to pay the balance is known as coinsurance.)

Which of these is NOT a characteristic of a Health Reimbursement Arrangement (HRA)?

"Employee funds the HRA entirely" (HRA plans are employer-funded medical reimbursement plans.)

Which of the following types of health coverage frequently uses a deductible?

"Major Medical policy". (Most major medical benefits begin to be paid after the deductible is satisfied.)

A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013?

$1,000 (In this situation, the insured's maximum out-of-pocket expenses for 2013 would be $1,000.)

Basic Medical Expense insurance?

Has lower benefit limits than Major Medical insurance.

Which of the following costs would a Basic Hospital/Surgical policy likely cover?

Surgically removing a facial birthmark. (A Basic Hospital/Surgical policy would most likely cover cosmetic surgery to remove a facial birthmark.)

Which of these options can an individual use their medical flexible spending account to pay for?

Prescription drugs. (Prescription drugs are an allowable expense when paid for by a medical flexible spending account.)

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

$3,000 (In this situation, the insured is responsible for $1,000 deductible + 20% of the remaining bill = $3,000.)

J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay?

$3,600 (In this situation, $2,000 + 20% of the remaining bill = $3,600.) or (In this situation, ($2,000) + 20% of $8,000 the remaining bill ($1,600) = $3,600.)

Which of the following BEST describes a Hospital Indemnity policy?

Coverage that pays a stated amount per day of a covered hospitalization. (The typical Hospital Indemnity policy pays a stated amount per day of a covered hospitalization.)

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a?

High-deductible health plan. (To be eligible for a Health Savings Account, an individual must be covered by a high-deductible health plan (HDHP), must not be covered by other health insurance (does not apply to accident insurance, disability, dental care, vision care, long-term care), must not be eligible for Medicare, and can't be claimed as a dependent on someone else's tax return.)

The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the?

Initial deductible. ( A provision that requires the insured to pay the first portion of covered expenses before Major Medical coverage applies is called an initial deductible.)

In Major Medical Expense policies, what is the intent of a Stop Loss provision?

Limits an insured's out-of-pocket medical expenses. (The purpose of a Stop Loss provision in Major Medical Expense policies is to limit the amount of an insured's out-of-pocket medical expenses.)

Which of the following health insurance coverages is BEST suited for meeting the expenses of catastrophic illness?

Major Medical ( Major Medical health insurance coverage is best suited for meeting catastrophic illness expenses.)

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?

The maximum amount considered eligible for reimbursement by an insurance company under a health plan.