Chapter 18 - Health Insurance Underwriting

Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible?

100%

Which of the following best describes the tax treatment of medical expense policies for the self-employed?

100% of medical expense plan premiums are tax deductible

The initial premium for an accident and health insurance policy is typically paid in what way?

It is typically obtained by the agent and forwarded to the insurer

All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT

Leave a conditional receipt with client

Which of these is NOT used as selection criteria in the underwriting process of an accident and health insurance application?

National origin

The disability income policy most likely to have been issued on a substandard basis is

Non-cancelable with a health condition exclusion rider

How does an underwriter take into account an applicant's marital status?

When determining who is eligible for dependent coverage

A producer gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

The Medical Information Bureau consists of members from which group?

Insurance companies

An attending physician's statement is best described as

a summary of medical history from the physician listed on the application

Reductions in coverage are one feature of _______ in Health insurance policies.

cost containment

A health insurance underwriter will most likely view alcohol abuse as a(n)

increased exposure to risk

After a health insurance application has been originated, the producer normally

is the major personal contact to the insured

Health care costs can be better controlled by utilizing preadmission testing. Preadmission testing can reduce the

length of hospitalization

An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT

living in a rural area

Which of the following situations would a medical exam NOT be required for an individual health insurance applicant?

Applicant's family members have a history of cancer

What is a Pap test designed to detect?

Cervical cancer

What must be given to an accident and health insurance applicant when the producer receives an application and the initial premium?

Conditional receipt

Which report contains information regarding an individual's general reputation and credit standing?

Consumer report

What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?

Containment of the employer's premium cost

When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?

Give notice, explain, and allow opting out

Which of the following statements regarding hospital pre-admission authorization is NOT true?

It encourages weekend admission

Which of the following is NOT a basic underwriting action for accident and health insurance?

Removing uniform policy provisions

Which of these is NOT considered the responsibility of a producer in the underwriting process?

Selecting the final approval date

Reductions in coverage are one feature of _______ in health insurance policies

cost containment

Where is the difference between a standard risk and a substandard risk reflected?

premium charges

In what situation could an insurance policy's coverage be modified?

Applicant is a substandard risk

To which of the following group plans do HIPAA rules NOT apply?

Disability income

Which of the following are used by most insurers when determining the premiums for large groups?

Experience rating

Which of these is NOT a factor during the health insurance underwriting process?

Former residence

The type of health insurance in which underwriting procedures are the most restrictive is

Individual

Which statement is true regarding hospital preadmission certification for emergency situations?

Notification is required to be given after insured is admitted to the hospital

A signed good health statement may be collected by a producer at the time of

Policy delivery

When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?

Producer

Which of these is a typical result of a concurrent review?

The length of time spent in the hospital is monitored

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

a false statement could lead to loss of coverage

What does the term "field underwriting" refer to in the health insurance industry?

A producer's contact with the applicant

What is normally the consequence for NOT obtaining preadmission certification prior to receiving inpatient medical care?

A reduction in benefits

Which of these noncontributory group plans would a claim likely result in the payment of federal income taxes?

Disability income

Which of these is NOT an underwriting responsibility of an insurance producer?

Determining the final rate classification

A health insurance applicant is notified that a physical examination is required. Which of the following statements is correct?

Physical examinations are performed at the expense of the insurer

When does the producer give a premium receipt for an accident and health insurance application?

When the initial premium has been collected with the application

In what situation would disability income insurance premiums be a deductible expense?

Corporation paying for group disability income coverage for its employees

Tim is in need of surgery. Before being hospitalized, he is referred to an outpatient clinic for diagnostic tests. What is this an example of?

Pre-admission testing

Which of the following best describes a point-of-service (POS) plan?

A plan which combines indemnity plan features with those of an HMO

An applicant submits an accident and health insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?

Applicant has a right to receive a copy of the report

An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application?

Good health statement

Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?

He may be reimbursed for the surgical procedure at a reduced benefit level

Lamont has a point-of-service plan and is seeking to obtain health services outside the network. What will likely be the end result?

Higher out-of-pocket costs

Who must sign a rider attached to a health insurance policy in order for it to be valid?

Insured and producer

An applicant for accident and health insurance has a risk factor that is similar to a majority of the insurer's other applicants. What will be the likely outcome of this applicant?

Issued with a standard premium rate

Julie is an employee with a group health plan that contains the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place?

Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one

Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?

Point-of-service

A disability income insurance policy was recently issued with a rating. What does this mean?

Policyowner will be charged an additional premium

K is an agent who takes an application for individual accident and health insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

The date the producer delivered the policy, collected the initial premium, and obtained a good health statement from the insured

How is a community rating used for underwriting purposes?

The same rates are charged for individual and group plans in the same geographical area

Field underwriting by a producer

may result in the disclosure of hazardous activities of the applicant

When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must

seek a second opinion for specified elective surgeries

In accident and health insurance, field underwriting is very important because of

the risk of a moral hazard