chapter 14

A comprehensive major medical policy has a basic component that provides 100% coverage for the first $10,000 of medical expenses. The plan has a corridor deductible of $500 and 80/20 coinsurance thereafter. The insured incurs $25,500 in medical expenses. How much of this bill will be paid by the insured?

$3,500 The basic component will pay the first $10,000 of the bill, leaving a balance of $15,500. The insured is responsible to pay the $500 deductible, leaving a balance of $15,000. The insured is then responsible for paying 20% of the $15,000, or $3,000. $3,000 + $500 = $3,500.

David has a comprehensive major medical policy. Specifically, the policy has a basic plan that provides $10,000 worth of overall benefits. Once exhausted, the policy has an 80%/20% copayment following a $1,000 corridor deductible. David has a $21,000 hospital bill. How much of this would he be responsible for?

$3,000

An employee must convert her group insurance plan within ___ of her termination date.

31 days

Most medical insurance policies provide coverage for an insured's dependents. Which statement below is FALSE?

A 21-year-old, part time college student is covered.

Which of the following is not a characteristic of major medical?

Adult day care

What term is used to describe long-term continual conditions that generally have a negative impact on the premium charged to a group?

Chronic conditions

Basic medical and major medical combined into one coverage describes:

Comprehensive major medical

All of the following are characteristics of major medical EXCEPT:

Coverage for routine checkups

What is the name of the federal law that helps ensure that employers provide high quality medical and retirement plans to the plan participants and their dependents?

ERISA

Which of the following rating systems uses the past claim experience of the group to determine future group premiums?

Experience rating

What is the federal law that assists individuals in maintaining their group benefits, while also placing limitations on pre-existing condition definitions?

HIPAA

A basic plan is characterized by all of the following characteristics except:

High co-insurance provision

What premium impact would occur if a large company has much lower claims than anticipated?

Premiums will decrease.

Common exclusions found in most medical plans, including major medical plans, would include all of the following EXCEPT:

Reconstructive cosmetic surgery

All of the following are group rating factors used to determine group premiums, EXCEPT:

Religion

All of the following statements regarding a "self-funded" medical plan are TRUE, EXCEPT:

Small companies generally self-fund their medical plans.

Mike has a major medical policy. After paying $3,000 in copayments, his policy begins paying 100% of the bill thereafter. Mike's policy probably contains what feature?

Stop loss limit

In most cases, medical plan premiums ___ deductible to an employee, and ___ deductible to an employer.

are not, are

Why are hospitals, doctors and insurance companies concerned with managed care?

It helps control skyrocketing health care costs.

Which of the following groups would be the least likely to self-insure themselves?

Local family owned liquor store

Which of the following medical providers does not utilize a service approach?

Major medical

Which of the following would not be considered a limited policy?

Major medical

In this type of health care delivery system, doctors and hospitals are involved in financing, managing and delivering medical services. In addition, this type of plan requires providers to share in the overall risk of the plan. Which of the following plans are we describing?

Managed care

Bud is the owner of a small sheet metal fabrication company. What item below can be used to verify that his company has group insurance?

Master contract

Advantages of a "service" approach to billing would include all the following except:

More paperwork

If a child is covered under both of his parents' medical plans, and the parents are not separated or divorced, which parent's plan would be considered the primary policy?

The plan of the parent whose birth date falls first in the calendar year

If a person over the age of 65 is covered by both their group insurance plan at work and Medicare, which plan would normally be considered the primary provider of benefits?

There is no correct answer, as this is something that would be determined by a group arbitrator

How are medical expenses received by an insured with regard to taxation?

They are received tax-free since they are not considered income.

A probationary period in a group insurance plan is intended to eliminate coverage for a specific period of time for:

Those employees that enroll in the group plan after the effective date of coverage

Todd owns a major medical policy with a $5,000 annual deductible. In which of the following situations would Todd's bill exceed his deductible, thereby requiring his policy to provide or offset a portion of the bill?

Todd is diagnosed with artery blockage and must undergo open heart surgery.

Doris has a major medical policy with a $500 deductible and 80/20 coinsurance. If she has $8,000 worth of excluded expenses, how much of the bill will Doris be responsible for?

$8,000 (because its not reimbursable)

An insured is diagnosed as being terminally ill. Her insurance company provides palliative care at a local hospice facility. She is told that there are no surgical procedures that will assist her battle against cancer. This is an example of:

Cost containment

Which of the policies would only cover a particular illness, such as cancer?

Dread disease

A major medical policy deductible is designed to:

Eliminate small, unnecessary claims