Benefits Exam 2

Peter Nelson has been totally and permanently disabled for the past 3 years. Peter is single and has annual investment income of $5,000 in addition to social security benefits and $6,000 in annual long-term disability benefits from Peter's employer's group disability income plan. While Peter was actively employed, Peter was required to pay 40 percent of the cost of his coverage under the employer plan. How much of Peter's disability benefit from the employer's plan is includible in Peter's gross income for federal income tax purposes? A. $0 B. $2,400 C. $2,400 D. $3,600

6000 * 60%

All of the following are common exclusions of medical coverage that are found in major medical contracts EXCEPT: A. maternity coverage. B. occupational injuries or diseases. C. cosmetic surgery, unless procedure is used to correct a condition resulting from either an accident or a birth defect. A. dental care, except for (1) treatment required because of injury to natural B. teeth and (2) hospital and surgical charges associated with hospital confinement for dental surgery. This exclusion will not be included if dental coverage is provided under the major medical contract.

A

All of the following are included in traditional basic medical coverage EXCEPT: A. home health care. B. hospital expense benefits. C. surgical expense benefits. D. physicians' expense benefits.

A

All of the following are traditional reasons for having different benefit plans for different groups of employees EXCEPT: A. To meet government regulations. B. To provide different benefits for salaried and union employees. C. To be competitive by providing different benefits in different geographic regions. D. To provide supplemental benefits to top management.

A

All of the following are usually covered under home health care benefits EXCEPT: A. 24-hour nursing care. B. hospital beds. C. physical therapy. D. wheelchairs.

A

All of the following causes of disability are covered under a typical group short-term disability income contract EXCEPT: A. self-inflicted injuries. B. drug addiction. C. mental disorders. D. alcoholism. E. all of the above are excluded from coverage

A

All of the following statements about various basic medical expense benefits are correct EXCEPT: A. diagnostic X-ray and laboratory expense benefits usually cover charges incurred as part of a routine physical. B. benefits for care in a birthing center may be paid in full as an incentive to use such a facility. C. hospice benefits may be provided in the home of the terminally ill person. D. vision-care expense benefits usually cover the cost of routine eye examinations.

A

All of the following statements concerning managed competition plans as an approach to national health insurance are correct EXCEPT: A. Preexisting-condition provisions would be allowed as long as they expire within 24 months of an individual's coverage. B. The insurance agent's role would be virtually eliminated. C. Health insurance purchasing cooperatives (HIPCs) would be established under state regulation and operate in a specific geographic region. D. Subscribers to HIPCs would be provided with information on the quality care of available medical expense plans.

A

All the following statements concerning group disability income contracts are correct EXCEPT? A. The insurance company usually offers a conversion policy to any terminating employee who was covered under the contract for at least 2 years. B. The insurance company has the right to have a disabled employee examined by a physician of its own choice. C. The insurance company has no obligations to make benefit payments until a proof of loss has been filed. D.The insurance company often allows a worker to enter a trial work period in rehabilitative employment without having benefits totally terminated

A

Basic medical coverage consists of all of the following traditional basic medical coverage EXCEPT: A. nursing home care benefits. B. physician's visit expense benefits. C. surgical expense benefits. D. hospital expense benefits.

A

Major medical coverage has all of the following services and supplies specified in the contract EXCEPT: A. services furnished by or on behalf of government agencies. B. hospital room and board. C. prescription drugs. D. private duty nursing by a registered nurse.

A

Which of the following benefit plan design features focuses on shifting costs to employees rather than reducing costs? A. Maximum benefit provisions B. Second surgical opinions C. Coverage for the use of alternatives to hospitals, such as home health care D. Preadmission testing

A

Which of the following is NOT a reason for significant increases in the cost of health care? A. overcapacity of medical facilities B. AIDS C. technological advances D. aging population E. increases in third-party payments

A

Which of the following is NOT covered under outpatient coverage in a hospital expense contract? A. occupational injury or disease B. surgery C. pre-admission testing D. emergency room treatment.

A

Which of the following is true regarding the hospital pre-admission certificate? A. It requires that a covered person or his or her physician obtain prior authorization for any non-emergency hospitalization. B. Usually must be obtained within 12 to 24 hours of admissions for emergencies. C. If the pre-approved length of stay is insufficient, the patient is able to extend stay without prior approval. D.If the pre-admission procedure is Not followed, the most common reduction is to pay only 75 percent of the benefit that would otherwise be paid.

A

Which of the following statements is true? A. Blue Cross covers hospital expenses, while Blue Shield covers surgical and physician expenses. B. Full benefits usually are provided if the pre-admission testing is not followed? C. Blue Cross provides coverage for surgical expenses and physicians visits while Blue Shield provides coverage for hospital expenses. D. Second surgical opinions are not useful in lowering medical expenses for a company.

A

Group Disability Insurance

A type of insurance that covers a group of individuals against loss of pay due to accident or sickness.

All of the following are distinguishing characteristics of HMO=s EXCEPT: A. comprehensive care. B. large choice of specialists. C. delivery of medical services, by which in many cases are performed by salaried physicians and other personnel employed by the HMO. D. cost control.

B

All of the following statements concerning Blue Cross plans are correct EXCEPT: A. Most plans operate in a single state. B. They are required to use experience ratings of all groups of more than 100 employees. C. Benefits are usually expressed in the form of services rather than in the form of dollar maximums. D. Hospitals are typically reimbursed on a per diem basis for each day a subscriber is hospitalized.

B

All the following statements concerning the effect of the Health Insurance Portability and Accountability Act on group health plans are correct EXCEPT: A. The act applies to both insured and self-insured plans. B. The act allows a higher premium to be charged for any individual or dependent who is disabled. C. The act makes new dependents eligible for coverage under special enrollment rules. D. With some exceptions, the act requires providers of group health insurance coverage that operate in the small group market to accept all small employers.

B

Controlling rapidly increasing costs and the lack of coverage for a large segment of the population are the primary objectives of which of the following? A. Medical Savings Accounts B. National Health Insurance C. Medicaid D. Single Payer Plans

B

Hospital expense contracts commonly provide coverage for emergency room treatment of accidental injuries within some specified time period after an accident. This time varies from which of the following? A. 34 to 82 hours B. 24 to 72 hours C. 20 to 70 hours D. 12 to 24 hours

B

If an employee does not enroll in his/her employers plan because they are covered on someone else's plan, how many days do they have to enroll in the plan provided after their other coverage has been eliminated? A. 10 B. 30 C. 90 D. 60 E. 45

B

In Group Medical Expense Plans, employers can use the following measures for cost containment EXCEPT: A. claims review. B. increasing eligible benefits. C. managed care. D. health education and preventive care. E. Group medical expense plans use all of these measures.

B

Many employers have a basic medical expense plan plus a supplemental major medical plan rather than a single comprehensive major medical plan. All the following are reasons for the use of separate plans EXCEPT: A. more than one provider of coverage is being used. B. it is easier to administer and communicate the separate coverage. C. there is a desire to provide first-dollar coverage for certain medical expenses. D. different employer contribution rates are made for the basic and major medical coverage.

B

The Cheap Corporation has 500 employees covered under its group hospital expense plans. Which of the following is least likely to be excluded from coverage? A. Face lifts B. Pregnancy C. Custodial care D. Occupational injuries

B

What are some of the difficulties in using supplemental medical plans? A. Employers are no=t willing to offer this option since it is much easier to redesign the medical expense plan. B. The administration and communication. C. Employee reluctance in acceptance supplemental plans. D. None of the above.

B

When compared to private insurance companies Blue Cross and Blue Shield: A. have tended to offer their services on an indemnity reimbursement basis rather than in the form of services. B. have a tax rate that is lower than the average tax rate for insurance companies. C. traditionally have offered a wider range of group insurance benefits to employers. D. have an advantage because they are still exempt from federal income tax laws. E. tends to have small hospital discounts.

B

Which of the following is a charge that is covered in room-and-board charges in a hospital expense contract? A. Telephones B. Meals C. Televisions D. Operating room use

B

Which of the following is an outpatient benefit under hospital expense contracts? A. Cosmetic surgery B. Emergency room treatment C. Private-duty nursing D. Physical exams

B

Cost-containment techniques for medical expense coverage include which of the following: I. The encouragement by employers of external cost-control systems, such as health systems agencies II. The use by insurers of utilization review A. I only B. II only C. Both I and II D. Neither I nor II

Both

Issues that must be addressed when outsourcing benefit administration include which of the following? I. Confidentiality of data II. Vendor responsibility for system upgrades. A. I only B. II only C. Both I and II D.Neither I nor II

Both

Which of the following statements concerning extended care facility benefits is (are) correct? I. Benefits are usually contingent upon a prior hospitalization. II. Benefits are usually provided only if 24-hour-a-day nursing care is needed.

Both

A managed care plan should have all of the following characteristics EXCEPT: A. preventative care. B. high quality care. C. open access to medical providers. D. risk sharing. E. All of the above are characteristics of a managed care plan.

C

All group health insurers must renew existing health insurance coverage unless one of the following circumstances exists. Which one does not apply? A. The plan sponsor failed to pay premiums or the issuer of health insurance coverage failed to receive timely premiums. B. The plan sponsor performed an act of fraud or made an intentional misrepresentation of material fact under the terms of the coverage. C. The coverage was lost because of loss of eligibility under the other coverage. D. The employer is no longer a member of the association that sponsors a plan.

C

All of the following are exclusions under hospital expense contracts, EXCEPT: A. occupational injury or disease benefits provided by worker=s compensation laws. B. cosmetic surgery, unless used to correct a condition resulting from an accidental injury, while insured under the contract. C. pre-admission testing D. private-duty nursing

C

All of the following items are typically covered under a major medical contract EXCEPT: A. artificial limbs and organs. B. ambulance services. C. eye refraction and the fitting of eye glasses. D. prescription drugs.

C

All the following statements concerning the eligibility requirements of insured disability income plans are correct EXCEPT? A. Most plans require an employee to be actively at work before coverage will commence. B. Long-term plans often limit eligibility to salaried employees only. C. Short-term plans tend to have longer probationary periods than do long-term plans. D. Short-term plans sometimes limit eligibility to union employees only.

C

Benefit objectives should be determined by which of the following: A. a firm's employees. B. a union(s) representing a firm's employees. C. a firm's board of directors or owners. D. the Federal government.

C

When a patient does not follow the pre-admission certification procedures most plans reduce benefits by? A. 70% B. 30% C. 50% D. 100%

C

When compared with insurance companies, Blue Cross and Blue Shield tend to have which of the following? A. Higher premium taxes B. Higher Federal Income Taxes C. Larger hospital discounts D. Larger acquisition expenses

C

Which of the following is Not covered in room-and-board charges in a hospital expense contract? A. Routine nursing care B. Services normally provided to all inpatients C. Televisions D. Meals

C

Which of the following room-and board charges is usually NOT covered under inpatient benefits? A. cost of the hospital room B. meals C. telephones and television D. routine nursing care

C

Which of the following statements concerning basic hospital expense coverage is correct? A. Room-and-board benefits are usually paid for an unlimited time period. B. Room-and-board benefits are frequently subject to a deductible. C. Benefits for care in an intensive care facility are usually subject to either a time limit or an overall dollar maximum. D. Benefits are typically provided for convalescent care following hospitalization.

C

Which of the following statements concerning prescription drug plans is correct? A. Nonprescription drugs are typically covered as long as they are ordered by a physician on a prescription form. B. Benefits are usually provided for the administration of drugs that cannot be self-administered. C. Most plans have a small deductible for each prescription. D. These plans are used only when the covered persons lack major medical coverage.

C

All of the following are provisions of the Health Insurance Portability and Accountability Act, EXCEPTwhich of the following? A. Increased tax-deductibility of medical expense premiums for the self-employed. B. Increased availability of medical expense coverage. C. Favorable income tax treatment for long-term care insurance. D. Decreased eligibility for COBRA benefits.

D

All of the following have been traditional approaches for determining employee benefit needs EXCEPT: A. Doing what competitors are doing. B. Using employer perceptions to determine needs. C. Using benefits for salaried employees based on the benefits negotiated for union employees. D. Using cafeteria plans to let employees determine their own needs.

D

All of the following statements concerning coverage contained in group hospital expense insurance contracts are correct EXCEPT: A. outpatient benefits include the use of emergency room facilities. B. miscellaneous charges are typically covered in full, subject to some maximum amount and/or duration of benefits. C. inpatient benefits include the cost of laboratory expenses and X-rays. D. private duty nursing is usually covered.

D

Long-term disability income plans are usually integrated with all of the following EXCEPT: A. Social Security. B. Worker's Compensation laws. C. earnings from other employment. D. individual disability income contracts purchased by employees.

D

Most hospital expense contracts do NOT usually cover expenses resulting from: A. elective cosmetic surgery. B. private duty nursing care. C. occupational injury. D. All of the above

D

The following are procedures for pre-admission certification EXCEPT: A. authorization for non-emergency hospitalization. B. determination of whether hospitalization or alternative care is appropriate. C. reduction of benefits if the pre-admission procedure is NOT followed. D. all of the above are correct.

D

Under outpatient benefits, it is usually common to find coverage for such expenses arising from which of the following: A. surgery. B. pre-admission testing. C. emergency room treatment. D. All of the above E. None of the above

D

Which is (are) a provider of traditional health care coverage? A. Blue Cross and Blue Shield plans. B. Insurance companies C. Employers using self-funded arrangements D. All of the above

D

Which of the following is NOT one of the basic medical expense coverage? (Note: did not say traditional for this question). A. hospice expense coverage B. home health care C. birthing centers D. office calls

D

Which of the following statements about vision-care expense benefits is (are) correct? A. Coverage is provided by insurance companies only. B. Benefits are usually provided for eye surgery. C. Benefits are provided for sunglasses if a prescription is needed. D. Benefits are usually provided on the basis of a benefit schedule.

D

Which of the following statements concerning insured group disability income benefits is correct? A. Short-term plans typically pay benefits for a duration of between 2 and 5 years. B. Short-term plans usually reduce either the duration or periodic amount of benefits for older workers. C. Most long-term plans have a shorter waiting period for disabilities arising from accidents than for disabilities arising from sickness. D. Both long-term and short-term plans usually place a dollar maximum on periodic benefits, regardless of worker=s earnings.

D

Which of the following statements concerning the typical group short-term disability insurance contract is correct? A. Partial disabilities are covered. B. Occupational injuries are covered. C. There is a waiting period of 30 to 60 days before benefits for sickness begin. D. The maximum benefit period applies to each separate disability.

D

Which of the following types of medical expense plans has the highest degree of managed care? A. Independent practice association HMOs B. Preferred-provider organizations C. Point-of-service plans D. Closed-panel HMOs

D

While a certain degree of cost containment is within the control of employers, proper control of costs is an ongoing process that requires participation by: A. consumers. B. government. C. providers of health care services. D. All of the above E. None of the above

D

A supplemental major medical plan most often covers the following expenses EXCEPT: A. expenses not within the scope of the basic coverage. B. expenses no longer covered under the basic coverages because those benefits have been exhausted. C. expenses in excess of the dollar maximum provided under the basic coverages. D. expenses specifically excluded under the basic coverages. E. None of the above

E

The Health Insurance Portability and Accountability Act prohibits any of the following health related factors as a reason to exclude an employee or department from coverage under a group health insurance plan EXCEPT: A. medical history. B. disability. C. claims experience. D. genetic information. E. All of the above are prohibited by The Health Insurance Portability and Accountability Act

E

Which of the following Federal Legislation Acts that were passed in the 1970's most affected the growth of HMO's? A. The Social Security Act B. The Americans with Disabilities Act (ADA) C. The Civil Rights Act D. Employee Retirement Income Security Act (ERISA) E. Health Maintenance Organization Act of 1973

E

Which of the following is NOT a characteristic of major medical coverage? A. Broad range of covered expenses B. Deductibles C. High overall maximum benefits D. Co-insurance E. All of the above are correct

E

Salary continuation plan

Eligibility: 1. Full time 2. Satisfying probationary period 3. Often limited to specific classes of employees

Most salary continuation plans are designed to provide benefits equal to no more than 50 percent of an employee's regular pay.

False

Personal interviews to determine employee needs are a very effective technique even when used with a large number of employees.

False

Premiums for salary continuation plans (sick leave) are usually paid by the employer.

False

Short-term disability income contracts most often provide coverage for partial disabilities.

False

Short-term disability plans are often integrated with other disability income benefits.

False

Short-term plans usually have a benefit reduction for older employees.

False

When a company has different benefit plans, administrative costs are unaffected.

False

Which of the following statements about second opinions is(are) correct? I. Mandatory provisions often apply only to a specified list of procedures. II. Voluntary provisions require the insured to accept the final opinion or face financial consequences. A. I only B. II only C. Both I and II D. Neither I nor II

I

Which of the following statements concerning employee benefit objectives is (are) correct? ● I. They usually establish guidelines rather than specific performance goals. II. They are usually developed for each type of benefit rather than for all overall benefit plan. A. I Only B. II Only C. Both I and II D. Neither I nor II

I

Which of the following statements concerning health insurance purchasing cooperatives (HIPCs) is (are) correct? I. They negotiate alternative plans of coverage on the basis of price and quality. II. Their use has been encouraged by federal antitrust laws. A. I only B. II only C. Both I and II D. Neither I nor II

I

Which of the following statements concerning salary continuation plans is (are) correct? I. Most plans require an employee to satisfy a probationary period before becoming eligible for benefits. II. Most plans are designed to provide benefits equal to no more than 50 percent of an employee's regular pay.

I

Which of the following statements concerning the effect of the Health Insurance Portability and Accountability Act on group health plans is (are) correct? I. The act allows premium discounts or other financial benefits to persons who adhere to programs of health promotion or disease prevention. II. The act allows higher premiums to be charged for any person covered under a group health plan if his or her physical or mental condition is below prescribed standards. A. I only B. II only C. Both I and II D. Neither I nor II

I

Which of the following statements concerning the use of a marketing-research approach for determining employee needs, is (are) correct? I. It is most commonly used for union employees only. II. It may have a negative effect on employee morale unless the employer is committed to using the results in its decision making A. I only B. II only C. Both I and II D. Neither I nor II

II

3 months to 1 year

Long-term disability probationary period

Which of the following statements about determining the needs of employees, is (are) correct? I.Simplified questionnaires are ineffective if employees are given the opportunity to make general comments. II.Personnel interviews are most effective if conducted by an employee's supervisor. A. I only B. II only C. Both I and II D. Neither I nor II

None

Which of the following statements concerning temporary disability laws is (are) correct? I. Benefits must be equal to 100 percent of an employee=s average weekly wage for some period prior to disability. II. The entire cost of coverage must be borne by the employer.

None

Which of the following statements concerning the definition of disability under long-term disability income plans is (are) correct)? I. The definition during early years is usually the same as the definition used by social security. II. The definition usually becomes less restrictive after an employee has been disabled for a period of time.

None

0 days to 3 months

Short-term disability probationary period

A majority of long-term disability plans use a dual definition of disability that is more liberal at first and becomes more restrictive after 24 to 36 months.

True

A person is more likely to be disabled for at least 90 days before age 65 than to die.

True

Benefit objectives may be very general and part of a firm's overall compensation objectives or may focus specifically on the types and levels of benefits to be provided.

True

Employer contributions for disability income insurance do not result in taxable income to an employee.

True

Employer contributions to disability income plans are fully deductible as an ordinary and necessary business expense as long as the overall compensation of the employee is reasonable.

True

Employers are less likely to provide disability coverage than either life insurance or medical expense benefits.

True

In primary integration, the LTD (long-term disability) benefit is reduced only by the amount the disabled worker receives from Social Security, not by the amount his/her family receives.

True

Lower paid employees who are in a modest tax bracket may have a preference for certain benefits even though they will result in some currently taxable incomes.

True

Most salary continuation plans require an employee to satisfy a short (1-3 month) probationary period before becoming eligible for benefits.

True

One problem with determining benefit needs by looking at the needs of a competitor's employees is that the make-up of the work force of the two firms may be different and the employees may have different needs.

True

Salary continuation plans usually replace 100 percent of salary at least in the short term.

True

The cost of state Worker's Compensation plans are placed completely on employers

True

The cost of state Worker's compensation plans are experience rated and vary according to the risks of the various occupations of the employees, the actual experience of the employer and, to some extent, by the size of the firm's work force.

True

The primary reason for coordinating group disability income benefits with other sources of disability income benefits is that the lack of coordination can lead to such a generous level of benefits that absences from work because of disability might either be falsified or unnecessarily prolonged.

True

Usually sick leave plans are uninsured by definition.

True

Without proper objectives, it is difficult for an agent, broker, benefit consultant or third-party administrator to make recommendations about the benefit plan.

True

Worker's compensation plans provide complete medical care for work-connected injuries with no waiting period.

True

In most short-term disability contracts, there is no waiting period for disabilities resulting from accidents.

True (1-7 days)