Chapter 15 "Medical Expense Insurance, Purpose, Base Plans" Insurance Questions

Which is not a characteristic of basic medical plans? Select one: a. Coinsurance b. First-dollar coverage c. Dollar maximum benefit per visit d. Low limits for catastrophic coverage

(A) Coinsurance Base plans provide first-dollar coverage, which means they do not have coinsurance or deductibles.

Which policy combines a base plan with major medical coverage? Select one: a. Comprehensive major medical b. AD&D c. Basic hospital d. All of the above

(A) Comprehensive major medical

Which of the following terms is an amount of the claim the insured must pay before the health insurance policy will pay benefits? Select one: a. Deductible b. Coinsurance c. Copayment d. Inside limit

(A) Deductible

POS plans are a mix of: Select one: a. HMOs and PPOs b. Base plans and comprehensive plans c. Major medical and base plans d. Open and closed panel

(A) HMOs and PPOs Point-of-Service (POS) plans are a mix of the PPO and HMO arrangement. Members of a POS plan can choose whether they want to use in-network or out-of-network providers. The member will pay higher costs for using out-of-network providers, except in an emergency situation. Physicians are typically paid by capitation, or a fixed fee per person, no matter how many medical services are performed.

Which term correctly describes a nonscheduled plan of charges for basic surgical plans? Select one: a. Usual, customary and reasonable b. Relative value c. Absolute value d. None of the above

(A) Usual, customary and reasonable

Gerald has a major medical policy with a $500 deductible and 80/20 coinsurance. He incurs a $20,000 covered loss. How much does Gerald pay on the claim? Select one: a. $500 b. $4,400 c. $16,100 d. $19,500

(B) $4,400

Frank has a major medical policy with a $300 deductible and 80/20 coinsurance. The policy has $10,000 stop-loss coverage. How much is paid by the policy on a covered loss of $7,500? Select one: a. $2,160 b. $5,760 c. $6,000 d. $7,500

(B) $5,760

How is the miscellaneous expenses coverage under basic hospital medical expenses paid? Select one: a. A fraction of the room and board benefit b. A multiple of the room and board benefit c. the room and board benefit d. None of the above LH151019 Feedback

(B) A multiple of the room and board benefit The miscellaneous or ancillary benefit under basic hospital medical expense policies covers all other costs aside from room and board. The miscellaneous benefit is stated as a multiple of the daily room and board limit.

Which peril is covered by AD&D policies? Select one: a. Premature death b. Accident c. Sickness d. Accident and sickness

(B) Accident

Which of the following plans covers non - surgical physician's fees? Select one: a. Basic hospital b. Basic medical c. Basic surgical d. All base plans

(B) Basic medical

Which is not an eligible expense under a major medical policy? Select one: a. Prosthetics b. Custodial care c. Physical therapy d. Durable medical equipment

(B) Custodial care

Which of the following is false regarding flexible spending accounts? Select one: a. Withdrawals from a flexible spending account can be made through a flexible spending account debit card. b. Flexible spending account funds are not subject to the use-it or lose-it rule. c. Flexible spending accounts are tax-advantaged savings accounts in which funds are used for qualified medical expenses and dependent care. d. Flexible spending accounts can be offered with an employer cafeteria plan. LH154007 Feedback

(B) Flexible spending account funds are not subject to the use-it or lose-it rule. Withdrawals from a flexible spending account (FSA) can be made through an FSA debit card. Funds in an FSA are subject to the use-it or lose-it rule, where all the funds must be used in the plan year.

In what plan arrangement(s) can Consumer Driven Health Plans (CDHPs) be offered? Select one: a. FSA or HSA b. HRA or HSA c. HSA only d. HRA only

(B) HRA or HSAd

Which basic plan covers costs an insured incurs while confined to a hospital, including room and board, nursing care, X-rays, lab fees, operating and treatment room, oxygen, blood, medications and general anesthesia? Select one: a. Medical b. Hospital c. Surgical d. Medical, hospital and surgical

(B) Hospital Basic hospital covers costs an insured incurs while confined to a hospital, including room and board, nursing care, X-rays, laboratory fees, operating and treatment room, oxygen, blood, medications, and general anesthesia. Basic hospital plans essentially cover all costs on a hospital bill except for physician's fees and surgeries.

All of the following are covered costs under a basic hospital plan, EXCEPT: Select one: a. Room and board b. Infertility treatment c. General anesthesia d. Medications

(B) Infertility treatment

What type of insurance plan covers medical care costs, such as physician's fees, surgical fees, and prescription drugs? Select one: a. Life insurance b. Medical expense insurance c. Property insurance d. Disability income insurance

(B) Medical expense insurance

All of the following are true regarding PPOs, EXCEPT: Select one: a. PPOs are a group of medical facilities, physicians and practitioners in a designated geographic area that agree to provide medical services at a discount. b. PPO members typically pay more than non-PPO members. c. Compared to an HMO, members of a PPO have more options and choices in the medical providers from which they can utilize. d. No matter where a member under a PPO receives emergency care, it is covered by the plan.

(B) PPO members typically pay more than non-PPO members. Preferred Provider Organizations, or PPOs, are a group of medical facilities, physicians and practitioners in a designated geographic area that agree to provide medical services at a reduced cost. The cost of care provided by a PPO is usually less than what non-PPO members are charged. Compared to an HMO, members of a PPO have more providers from which to choose. In an emergency situation, the PPO will pay the full cost, regardless of where and from whom the member receives emergency care.

Steven has a major medical policy with a $350 flat deductible and 80/20 coinsurance. If the covered loss is $5,500, how much will the insurer pay? Select one: a. $1,030 b. $1,100 c. $4,120 d. $4,400

(C) $4,120

Which health insurance contract pays a death benefit? Select one: a. Long-term care b. Medigap c. AD&D d. Hospital income

(C) AD&D

Which of the following is true regarding taxation of medical expense plans? Select one: a. Benefits are only taxable for individual policies. b. Benefits are only taxable for group policies. c. Benefits are not taxed. d. Benefits are taxable as ordinary income.

(C) Benefits are not taxed

Which medical savings plan is a combination of a savings account and a high deductible, where contributions are made by the plan participants and funds from the prior year may be rolled over into the following year? Select one: a. HRA b. FSA c. HSA d. All of the above

(C) HSA

Which of the following medical plans has essentially replaced the outdated base plans? Select one: a. Major medical b. Comprehensive c. Managed care d. Limited policies LH151009 Feedback

(C) Managed care

The two types of flexible spending accounts are: Select one: a. MSAs and HSAs b. HRAs and HSAs c. Qualified medical expense account and dependent care expense account d. None of the above

(C) Qualified medical expense account and dependent care expense account

What is the purpose of coinsurance in major medical policies? Select one: a. For risk selection b. For rating risks c. To prevent overutilization d. To exclude certain medical conditions

(C) To prevent overutilization

Which of the following is a managed care plan? Select one: a. HMO b. PPO c. POS plan d. All of the above

(D) All of the above

How do managed care plans control medical care costs? Select one: a. Requiring plan participants to obtain second surgical opinions b. Precertification c. Emphasizing preventative care d. All of the above

(D) All of the above Managed care health plans are focused on reducing the cost of medical care. Costs are contained by requiring plan participants to obtain second surgical opinions or precertification of certain services, so that the plans are not unnecessarily overused. Managed care plans also emphasize preventive care and keeping healthy by including annual physical exams for plan participants. Managed care plans include health maintenance organizations, preferred provider organizations and point-of-service plans.

Vision plans cover all of the following, EXCEPT: Select one: a. Annual eye exams b. Eyeglasses c. Contact lenses d. Eye surgery LH154031 Feedback

(D) Eye surgery

All of the following policies must have a prominent notice "THIS IS A LIMITED POLICY" printed on the policy face, EXCEPT: Select one: a. Blanket b. AD&D c. Vision d. HMO

(D) HMO

Which special savings medical plan combines high-deductible coverage with a savings account in which contributions are made by the plan participant, and funds roll over from year to year? Select one: a. HRA b. Group health insurance c. FSA d. HSA LH154001 Feedback

(D) HSA

Compared to basic medical expense plans, major medical policies have: Select one: a. No catastrophic coverage b. The same limits for catastrophic coverage c. Lower limits for catastrophic coverage d. Higher limits for catastrophic coverage

(D) Higher limits for catastrophic coverage

What term best describes a dollar limit placed on the room and board of a major medical policy? Select one: a. Exclusion b. Optional benefit c. Corridor deductible d. Inside limit

(D) Inside limit

What policy feature in major medical policies allows the maximum lifetime benefit to be restored to its original amount after a large portion of the benefits have been used? Select one: a. Out-of-pocket limit b. Stop-loss c. Deductible d. Restoration of benefits

(D) Restoration of benefits

All of the following are true regarding HMOs, EXCEPT: Select one: a. HMOs are managed care cost containment health care programs. b. HMOs provide health insurance coverage and medical services. c. HMOs are prepaid programs which focus on preventive care. d. Subscribers may see referral specialists without needing to see primary care physicians.

(D) Subscribers may see referral specialists without needing to see primary care physicians. Health Maintenance Organizations (HMOs), sometimes referred to as Health Insuring Corporations (HICs), are managed care cost containment health care programs. HMOs provide health insurance coverage and medical services. HMOs are prepaid programs that focus on preventive care. Subscribers must see their primary care physician before seeing referral specialists.

Which of the following is not characteristic of hospital indemnity coverages? Select one: a. The coverage pays a stated amount per day the insured is confined to the hospital. b. Premiums are low. c. Benefits can be used for non-medical purposes. d. The benefit amount is based on the insured's income earnings. LH154028 Feedback

(D) The benefit amount is based on the insured's income earnings.

All of the following are ways medical expense policies pay benefits, EXCEPT: Select one: a. Reimbursement b. Service basis c. Indemnity d. Valued

(D) Valued