FIN Final Ch. 15

All of the following statements about optional disability income benefits are true EXCEPT

Adding a return of premium rider results in a lower initial premium.

Which of the following statements about individual disability income policies that use a two-part definition of total disability is (are) true?

After the initial period of disability, the insured must be unable to perform the duties of any occupation for which he or she is reasonably fitted by education, training, and experience.

Which of the following statements about eligibility requirements for qualified Health Savings Accounts (HSAs) is (are) true?

Applicants must be covered by a high deductible health plan and not be covered by any other comprehensive health plan to establish a qualified HSA.

Which of the following statements regarding health care expenditures in the United States is (are) true?

As a nation, the U.S. spends significantly more on health care than most other industrialized nations.

All of the following statements about the tax treatment of Health Savings Accounts (HSAs) are true EXCEPT

Distributions from a qualified HSA used to fund medical expenses are taxable income.

One provision of the Affordable Care Act creates in each state a transparent and competitive insurance marketplace where individuals and small firms can purchase affordable and qualified health coverage. This marketplace is called a

Health Insurance Marketplace

Which of the following statements about high deductible health insurance plans is (are) true?

I. Coverage under a high deductible health plan is necessary to establish a qualified health savings account (HSA). II. High deductible health plans provide a maximum limit on annual out-of-pocket expenses.

Which of the following statements is (are) true concerning benefit payments under long-term care insurance?

I. Expense-incurred policies pay for actual charges up to a specified daily limit. II. Indemnity policies pay a specified daily benefit regardless of the charges incurred.

Under the Affordable Care Act, which of the following statements are true?

I. Health insurers cannot use pre-existing conditions exclusions. II. Health insurers cannot impose annual benefit limits and lifetime benefit limits.

Which of the following statements concerning individual medical expense insurance is (are) correct?

I. Once a calendar year deductible is satisfied, no additional deductible is payable during the calendar year. II. Family deductibles are substantially higher than individual deductibles.

Major defects in the health care system in the United States health care system include

I. Rising healthcare expenditures II. Considerable waste and inefficiency in the healthcare system

Purposes of the coinsurance provision in medical expense insurance policies include which of the following?

I. to reduce premiums II. to prevent overutilization of policy benefits

Which of the following statements is true regarding disability income insurance?

Increasing the elimination period reduces the premium for disability income insurance.

Which of the following statements about individual disability income policies is true?

Many policies provide or make available a residual disability benefit for persons who are able to work but at a reduced income.

The Affordable Care Act has a provision that expands a public assistance program designed to make health coverage available to low-income individuals by increasing the maximum amount of income that can be earned and still qualify for benefits. As a result, millions of individuals are eligible for coverage under this program. This public assistance program is called

Medicaid.

All of the following statements about individual disability income policies are true EXCEPT

Most disability income insurance policies contain an elimination period of 10 or fewer days.

Which of the following statements about health savings accounts (HSAs) is true?

Once an individual has reached age 65 or is covered by Medicare, no additional contributions to the HSA may be made.

All of the following statements about long-term care insurance are true EXCEPT

Premiums can be reduced by electing shorter elimination periods.

Which of the following statements about long-term care insurance is (are) true?

Purchasers have a choice of daily benefits and benefit periods.

Kristen has an individual medical expense policy with a $1,000 calendar-year deductible, a $5,000 annual out-of-pocket limit, and 80-20 coinsurance. Kristen was hospitalized for a surgical procedure in March, her first health care treatment received during the year. The total bill was $20,000. Considering the deductible and coinsurance, how much of this amount must Kristen pay?

$4,800

Dirk required surgery for a kidney impairment. His total bill for medical services was $50,000. Dirk has a medical expense policy with a $1,000 calendar-year deductible and a $5,000 annual out-of-pocket limit. His coinsurance percentage is 20 percent. The out-of-pocket limit applies to coinsurance only. Assuming this surgery and hospitalization were the first medical care that Dirk received during the year and that all of the hospital services were eligible for coverage under the policy, how much of the $50,000 bill will the insurer pay?

$44,000

Which of the following statements is (are) true regarding provisions of the Affordable Care Act (ACA)?

The ACA requires medical expense insurance policies to provide a comprehensive package of essential health benefits.

Which of the following statements about disability and disability income insurance is (are) true?

The probability of being disabled before age 65 is much higher than commonly believed.

Which statement is true regarding the advanced premium tax credits for individuals and families under the Affordable Care Act?

The tax credit is based on income and is designed to limit the amount spent on health insurance premiums to make the insurance affordable.

Which of the following statements about mandatory provisions in individual health insurance policies is true?

Under the reinstatement provision, a health insurance policy that has lapsed can be put back in force.

All of the following are typical characteristics of individual medical expense coverage EXCEPT

annual benefit limits

The effect of an annual out-of-pocket limit in an individual medical expense policy is to

cover 100 percent of eligible medical expenses after an insured has incurred a specified amount of annual out-of-pocket expenses.

The Affordable Care Act requires all new medical expense plans to provide a comprehensive set of coverages and services. This comprehensive set of coverages and services that must be provided are called

essential health benefits.

Ellen purchased a health insurance policy. Under the provisions of the Affordable Care Act, which of the following renewal provisions must the insurer use in the policy?

guaranteed issue

Because of the Affordable Care Act, all new medical expense plans that offer individual and group coverage must accept all individuals and employers in the state who apply for coverage. These insurers are required to continue to renew the coverage at the option of the individual or plan sponsor. Thus, under the Affordable Care Act, the renewal provision is

guaranteed issue.

Kevin has an individual disability income policy that his insurer agrees to keep in force until age 60. However, the company has the right to increase the premium each year for the underwriting class in which Kevin has been placed. Which renewal provision is found in Kevin's policy?

guaranteed renewable

Greta purchased a long-term care policy. Under a typical policy, Greta's eligibility for benefits may be triggered by

inability to perform activities of daily living.

The Affordable Care Act has provisions that improve the quality of health care and lower costs. All of the following are examples of these provisions EXCEPT

increasing the number of medical specialists and reducing the number of primary care physicians.

The Affordable Care Act required that most U.S. citizens and legal residents have qualifying health insurance or pay a financial penalty. This provision of the Affordable Care Act was known as the

individual mandate.

Under the Affordable Care Act, if a health insurer does not meet the minimum medical loss ratio requirement, the insurer must

issue rebates to the people the insurer covered.

The generic name for a medical expense plan that is designed to provide covered medical services to its members in a cost-effective manner is a

managed care plan.

Individual medical expense insurance sold in the Health Insurance Marketplace is characterized by which of the following?

no lifetime benefit limits

Barb was injured in an auto accident. She was totally disabled and collected disability income benefits for 8 months. She would like to return to work on a part-time basis to see if her recovery is complete. During this period, her insurer will pay reduced disability income benefits. This type of disability is called

partial disability.

The inability of the insured to perform some but not all of the important duties of his or her occupation is called

partial disability.

Prior to passage of the Affordable Care Act, insurance policies typically contained a provision excluding coverage for impairments that were present or were treated during a specified period prior to the effective date of the policy. This provision is a(n)

preexisting-conditions clause.

Some managed care plans use physicians, hospitals, and health care organizations that agree to make medical services available to insureds at discounted fees. Insureds are not required to use these entities, but if they do, health care costs are less than if these entities are not used. Such health care entities are called

preferred provider organizations (PPOs)

Beth's disability income insurance policy provides benefits for accidental death, dismemberment, and loss of sight. The maximum amount payable under this benefit is known as the

principal sum.

One provision of the Affordable Care Act is designed to benefit young adults up to age 26. This provision allows these young adults to

remain covered under their parents' health insurance policies.

Prior to passage of the Affordable Care Act, insurers could go back to the date a health insurance policy became effective and render the policy void due to a clerical error. This practice, which is prohibited under the Affordable Care Act except in cases of fraud or intentional misrepresentation of a material fact, is called

rescission.

One long-term care insurance benefit trigger considers whether the insured needs supervision to protect against threats to health or safety due to memory loss or disorientation. This benefit trigger is referred to as a(n)

severe cognitive impairment trigger.

All the following are common exclusions in a medical expense insurance policy EXCEPT

surgeons' fees.

The Affordable Care Act includes a provision designed to help small employers make health insurance coverage available to their employees. This provision allows small employers to reduce their federal income tax by a percentage of the employer's contribution to health insurance for employees. This subsidy, in the form of reduction of income taxes, is called a

tax credit

All of the following are methods used to fund the Affordable Care Act EXCEPT

tort reform measures that reduce medical malpractice claims.

All of the following are historical reasons for the increase in health care expenditures in the U.S. EXCEPT

universal health insurance coverage.