Tennessee Health Insurance License Review ExamFX

Unless otherwise extended, how soon from the proof of loss must an insurer advise the insured of the acceptance or denial of a claim?

60 days - After proof of loss has been submitted and a receipt has been acknowledged, an insurer must conduct an investigation and submit a notice to the insured of the acceptance or denial of the claim within 60 days. This time requirement may be extended for an additional 60 days if a reason for the extension is provided to the insured.

If more than one family member covered under the same major medical policy is injured in the same accident, the family only has to pay one deductible. This is due to the

Common accident provision. - Under the common accident provision, only one deductible applies for all family members involved in the same accident.

How quickly must an insurance company pay a claim?

45 days from submission of information

What is the typical deductible for basic surgical expense insurance?

$0

The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses?

$50,000 - The proprietors of a business may deduct the cost of a medical expense plan because they are considered to be self-employed individuals instead of employees. The deduction cannot legally exceed the taxpayer's earned income for the year even if the cost of the medical expense plan exceeds this amount (in this scenario, $50,000).

In all health care plans under the Affordable Care Act (ACA), how many essential benefit categories are there?

10 - There are ten essential benefit categories under the ACA.

What is the required minimum notice of health policy cancellation that the insurer must mail to the insured's last known address?

5 days - The insurer may cancel the policy at any time by mailing notice to the insured's last known address stating that the cancellation will be effective in no less than 5 days.

In insurance, an offer is usually made when

An applicant submits an application to the insurer.

Under a Key Person disability income policy, premium payments

Are made by the business and are not tax-deductible.

To be eligible for tax credits under the ACA, individuals must have income that is what percent of the Federal Poverty Level?

Between 100% and 400% - Legal residents and citizens who have incomes between 100% and 400% of the Federal Poverty Level (FPL) are eligible for the tax credits.

What are the 2 types of Flexible Spending Accounts?

Health Care Accounts and Dependent Care Accounts

Which provision states that the insurance company must pay Medical Expense claims immediately?

Time of Payment of Claims - The Time Payment of Claims provision requires that claims will be paid immediately upon receipt of proofs of loss except for periodic payments, which are to be paid as specified in the policy.

Which of the following is NOT a feature of a guaranteed renewable provision? a)The insured has a unilateral right to renew the policy for the life of the contract. b)Coverage is not renewable beyond the insured's age 65. c)The insured's benefits cannot be reduced. d)The insurer can increase the policy premium on an individual basis.

d)The insurer can increase the policy premium on an individual basis. Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

10 days - The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income?

10% - Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those that are not covered by health insurance, that exceed 10% of their adjusted gross income.

A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?

15 days - A probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days.

In addition to annual pap smears, individual and group health insurance policies must also provide coverage for chlamydia screenings, up until what maximum age of the covered insured?

29 - Health insurance policies must cover chlamydia screenings, in conjunction with annual pap smears, to insureds under the age of 29.

An insurer must notify the consumer in writing that an investigative consumer report has been requested within how many days of the initial request?

3 days

Upon receipt of notice of appointment, the Commissioner must verify the insurance producer is eligible for appointment within how many days?

30 days - The Commissioner must verify eligibility within 30 days

The HMO Act of 1973 required employers to offer an HMO plan as an alternative to regular health plans if the company had more than 25 employees. How has this plan since changed?

Employees are no longer forced to offer HMO plans.

In a group health policy, a probationary period is intended for people who

Join the group after the effective date - The probationary period is the waiting period new employees must satisfy before becoming eligible for benefits.

An insured is covered under a Medicare policy that provides a list of network healthcare providers that the insured must use to receive coverage. In exchange for this limitation, the insured is offered a lower premium. Which type of Medicare policy does the insured own?

Medicare SELECT - Medicare SELECT policies require insureds to use specific healthcare providers and hospitals, except in emergency situations. In return, the insured pays lower premium amounts.

An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply?

No coverage will apply, since the injury could have been forseen.

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

Residual disability - A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.

Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that the contributions are

Tax deductible - Contributions to HSAs by individuals are deductible, even if the taxpayer does not itemize. Contributions by an employer are not included in the individual's taxable income.

Which of the following does the Insuring Clause specify?

The Insuring Clause lists the insured, the insurance company, what kind of losses are covered, and for how much the losses would be compensated.

The regulation of the insurance industry primarily rests with

The State. Each state regulates the business of insurance conducted within that state.

Who is personally liable for all contracts of insurance unlawfully made within Tennessee on behalf of an unauthorized insurer?

The individual making the contract on behalf of the unauthorized insurer is liable. The person who makes a contract of insurance on behalf of an unauthorized insurer is personally liable for the contract.

All of the following are true about group disability Income insurance EXCEPT a) The longer the waiting period, the lower the premium. b) Coverage applies both on and off the job. c) Benefits are usually short term. d) The waiting period starts at the onset of the injury or sickness.

b) Coverage applies both on and off the job. - Employees who are injured on the job are covered by Workers Compensation insurance. Group Disability Income insurance is designed to cover employees only while they are off the job, so the coverage is considered to be nonoccupational in nature.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)An offer to share in commissions generated by the sale. b)Dividends from a mutual insurer. c)An offer of employment. d)Stocks, securities, or bonds.

b)Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.

When delivering a policy, which of the following is an agent's responsibility? a) Approve or decline the risk b) Collect medical statement from physician c) Collect payment at time of delivery d) Issue the policy if the applicant is present

c) Collect payment at time of delivery

Which of the following is correct regarding the taxation of group medical expense premiums and benefits? a) Premiums are not tax deductible and benefits are not taxed. b) Premiums are tax deductible and benefits are taxed. c) Premiums are tax deductible and benefits are not taxed. d) Premiums are not tax deductible and benefits are taxed.

c) Premiums are tax deductible and benefits are not taxed. - Premiums paid by employers for Group Medical Expense insurance are tax deductible for the employer as a business expense. Also, policy benefits paid out to employees are not taxable as income to the employee.

Which of the following is true about the requirements regarding HIV exams? a)Results may be disclosed to the agent and the underwriter. b)Prior informed oral consent is required from the applicant. c)HIV exams may not be used as a basis for underwriting. d)The applicant must give prior informed written consent.

d)The applicant must give prior informed written consent. A separate written consent form must be obtained prior to an HIV exam. HIV exam results may be disclosed to underwriters, but not agents.

Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days?

20 - Following hospitalization for at least three days, if medically necessary, Medicare pays for all covered services during the first 20 days in a skilled nursing facility. Days 21 through 100 require a daily copayment.

What is a penalty tax for nonqualified distributions from a health savings account?

20% - An HSA holder who uses the money for a nonhealth expenditure pays tax on it, plus a 20% penalty.

Within how many days from the termination of enrollment in another plan must an eligible person apply for enrollment under Medicare supplement insurance?

63 - Eligible persons for Medicare supplement insurance must apply to enroll under the policy no later than 63 days after the date of the termination of enrollment in another plan, and must also submit evidence of the termination or disenrollment when they apply for a Medicare supplement policy.

Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within

90 days - Most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs within 90 days.

Any of the following would be considered an Unfair Trade Practice, EXCEPT A) Attempting to settle a claim by the use of arbitration. B) An insurer failing to affirm or deny coverage within a reasonable time after proof of loss statements have been received by the company. C) Attempting to settle a claim on the basis of an application which was altered without notice to, or knowledge and consent of the insured. D) Attempting to settle a claim for less than the amount to which a reasonable person would have believed he was entitled by reference to written or printed advertising material used in the sale.

A) Attempting to settle a claim by the use of arbitration. Insurance policies provide a means of settling a claim, in lieu of litigation, by using a neutral third party to settle a dispute concerning the amount of damage.

A Limited Insurance Representative is an individual, other than an insurance producer, who may solicit or negotiate contacts for certain types of insurance which includes all of the following EXCEPT A) Automobile physical damage insurance B) Crop hail insurance C) Portable electronics insurance D) Mortgage guaranty insurance

A) Automobile physical damage insurance - A property insurance license is required to write automobile physical damage coverage

In which of the following locations would skilled care most likely be provided? A) In an institutional setting B) At the patient's home C) In an outpatient setting D) At a physician's office

A) In an institutional setting - Skilled nursing care is performed under the direction of a physician, usually in an institutional setting.

Which of the following is NOT a Medicaid qualifier? A) Insurability B) Income level C) Age D) Residency

A) Insurability

Medicare Part A services do NOT include which of the following? A) Outpatient Hospital Treatment B) Post hospital Skilled Nursing Facility Care C) Hospitalization D) Hospice Care

A) Outpatient Hospital Treatment - Outpatient Treatment is covered under Part B

All of the following are covered by Part A of Medicare EXCEPT A) Physician's and surgeon's services. B) In-patient hospital services C) Post-hospital nursing care D) Home health services

A) Physician's and surgeon's services. Physician's and surgeon's services are covered under Part B

HMOs are known as what type of plans? a) Service b) Health savings c) Consumer driven d) Reimbursement

A) Service - HMO provides benefits in forms of service rather than reimbursement for services

Chapter: Other Insurance Concepts Question 13 of 15 The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses? A) Subrogation B) Arbitration C) Salvage D) Appraisal

A) Subrogation - After the insured accept payment from the insurer, they have been indemnified. Insurance policies require the insured to transfer any right to recovery to the insurer so that they may seek recovery up to the amount they paid as loss.

Which of the following is NOT covered under Plan A in Medigap insurance? A) The Medicare Part A deductible B) Approved hospital costs for 365 additional days after Medicare benefits end C) The 20% Part B coinsurance amounts for Medicare approved services D) The first three pints of blood each year

A) The Medicare Part A deductible - Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.

All of the following are characteristics of group health insurance plans EXCEPT A) The parties that hold a group health insurance contract are the employees and the employer B) The cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan C) Employers may require the employees to contribute to the premium payments D) The benefits under a group plan are more extensive than those under individual plans.

A) The parties that hold a group health insurance contract are the employees and the employer - The contract for coverage is between the employer and the insurance company. Only one policy is issued (master policy) to the employer, covered employees receive a certificate of insurance.

All of the following are true regarding Key Employee Disability Income insurance EXCEPT A) Premiums are not tax deductible for the employer. B) Benefits are taxable to the employer. C) The employer owns the policy. D) Benefits are paid to the employer to retrain a new person.

B) Benefits are taxable to the employer. Key person disability income premiums are not deductible to the business, but the benefits are received income tax free by the business.

An insured's cancelable health insurance policy is being cancelled. One day before the policy is scheduled to end, he is involved in a major accident and is hospitalized for a week. Which of the following best describes the coverage that he would receive? A) No benefits at all B) Full benefits as if the policy were still completely in effect C) One day of full benefits D) Minimal benefits for the duration of the hospital stay

B) Full benefits as if the policy were still completely in effect - If the insured is in the midst of a claim at the time of cancellation, the insurance company must continue to honor the claim.

Which of the following is correct regarding the taxation of group medical expense premiums and benefits? A) Premiums are tax deductible and benefits are taxed. B) Premiums are tax deductible and benefits are not taxed. C) Premiums are not tax deductible and benefits are taxed. D) Premiums are not tax deductible and benefits are not taxed.

B) Premiums are tax deductible and benefits are not taxed. Premiums paid by employers for Group Medical Expense insurance are tax deductible for the employer as a business expense. Also, policy benefits paid out to employees are not taxable as income to the employee.

Which of the following would basic medical expense coverage NOT cover? A) Hospice B) Surgeon's services C) Mental illness D) Maternity

B) Surgeon's services - Basic medical expense coverage offers a wide range of limited benefits that typically result in high out-of-pocket costs. Basic medical expense coverage provides coverage for nonsurgical services a physician provides and can be used for emergency accident benefits, maternity benefits, mental and nervous disorders, hospice care, home health care, outpatient care, and nurses' expenses.

All of the following statements about Medicare supplement insurance policies are correct EXCEPT A) They are issued by private insurers. B) They cover the cost of extended nursing home care. C) They cover Medicare deductibles and copayments. D) They supplement Medicare benefits.

B) They cover the cost of extended nursing home care. -Medicare supplement policies (Medigap) do not cover the cost of extended nursing home care. Medigap plans are designed to fill the gap in coverage attributable to Medicare's deductibles, copayment requirements, and benefit periods. These plans are issued by private insurance companies.

Social Security Supplement (SIS) or Social Security Riders would provide for the payment of income benefits in each of the situations below EXCEPT A) If the insured has been denied coverage under Social Security. B) When the amount payable under Social Security is more than the amount payable under the rider. C) When used to replace or supplement benefits payable under other social insurance programs. D) When the insured is eligible for Social Security benefits but before the benefits begin.

B) When the amount payable under Social Security is more than the amount payable under the rider. - These riders provide benefits when the amount payable under Social Security is less than the amount payable under the rider (in this case only the difference will be paid).

In addition to participation requirements, how does an insurer guard against adverse selection when underwriting group health?

By requiring that the insurance be incidental to the group - the group must be formed for some reason OTHER than getting insurance

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A) Stocks, securities, or bonds. B) An offer to share in commissions generated by the sale. C) Dividends from a mutual insurer. D) An offer of employment.

C) Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.

Long-term care coverage may be available as any of the following options EXCEPT A) Individual long-term care. B) Endorsement to a life policy. C) Endorsement to a health policy. D) Group long-term care.

C) Endorsement to a health policy. Long-term care insurance policies may be purchased on an individual or group basis, or as an endorsement to a life insurance policy.

A Medicare SELECT policy does all of the following EXCEPT A) Provide payment for full coverage under the policy for covered services not available through network providers. B) Provide for continuation of coverage in the event that Medicare SELECT policies are discontinued due to the failure of the Medicare SELECT program. C) Prohibit payment for regularly covered services if provided by non-network providers. D) Make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare SELECT policy to each applicant.

C) Prohibit payment for regularly covered services if provided by non-network providers. A Medicare SELECT policy issued in this state must not restrict payment for covered services provided by non-network providers if the services are for symptoms requiring emergency care and it is not reasonable to obtain such services through a network provider.

Which of the following is NOT covered under Part B of a Medicare policy? A) Lab Services B) Physician expenses C) Routine Dental Care D) Home Health Care

C) Routine dental care - Medicare Part B only covers dental expense resulting from an accident only.

Which of the following special policies covers unusual risks that are NOT normally included under Accidental Death and Dismemberment coverage? A) Specified Disease Policy B) Credit Disability C) Special Risk Policy D) Limited Risk Policy

C) Special Risk Policy - The Special Risk Policy will cover unusual types of risks that are not normally covered under AD&D policies. It covers only the specific hazard or risk identified in the policy, such as a racecar driver test-driving a new car.

Which statement is NOT true regarding underwriting group health insurance? A) The cost of the policy is partially determined by the ratio of males to females in the group. B) Everyone in the group is covered, regardless of their medical history. C) The group is assessed individually for insurability. D) The premium can be made retroactive for the year.

C) The group is assessed individually for insurability. Group health insurance policies must cover everyone in the group, regardless of age, health history, and occupation. Because of this blanket coverage, the group as a whole is assessed for insurability. The size, average age, gender ratio, persistency, and industry of the group are considered, along with other factors, when determining premiums. Groups can be reassessed annually in order to adjust premium amounts.

Which of the following determines whether disability insurance benefits are taxed? A) Contract provisions B) If the total of benefits paid meets the minimum state taxation standard C) Whether the premiums were tax deductible D) State statutes

C) Whether the premiums were tax deductible - The taxation status of benefits is often determined by whether the premium has been tax deducted.

Who is responsible for approving informational booklets intended to educate senior citizens on the advantages and disadvantages of Medicare supplement coverage?

Commissioner

Which entity must approve a new group policy?

Commissioner - No policy of group accident and health insurance may be delivered or issued for delivery in this state unless the policy form has been filed with and approved by the Commissioner.

In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point?

Conversion factor - In order to determine the amount payable for a given procedure, the assigned points (relative value) of 200 are multiplied by a conversion factor. This conversion factor represents the total amount payable per point. For example, if the conversion factor is $10 and the point value is 200, the policy would pay $2,000 for the procedure (200 x 10).

Which of the following statements is CORRECT concerning the relationship between Medicare and HMOs? A) HMOs do not pay for services covered by Medicare. B) Medicare Advantage is Medicare provided by an approved HMO only. C) All HMOs and PPOs charge premiums beyond what is paid by Medicare. D) HMOs may pay for services not covered by Medicare.

D) HMOs may pay for services not covered by Medicare. The advantages of an HMO or PPO for a Medicare recipient may be that there are no claims forms required, almost any medical problem is covered for a set fee so health care costs can be budgeted, and the HMO or PPO may pay for services not usually covered by Medicare or Medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care.

Which of the following statements concerning Medicare Part B is correct? A) It is provided automatically to anyone who qualifies for Part A. B) It pays on a first dollar basis. C) It pays 100% of Medicare's standards for reasonable charges. D) It pays for physician services, diagnostic tests, and physical therapy.

D) It pays for physician services, diagnostic tests, and physical therapy. For those who have purchased the coverage, Part B pays 80% of out-patient medical cost after a deductible has been met. Part B covers physician and outpatient hospital services, and other medical and health services, such as diagnostic tests, and physical therapy.

An insured was diagnosed two years ago with kidney cancer. She was treated with surgeries and chemotherapy and is now in remission. She also has a 30-year smoking history. The insured is now healthy enough to work and has just started a full-time job. Which best describes the health insurance that she will most likely receive? A) She would be covered under her employer's group health insurance plan, but she would pay higher premiums than the other employees B) She would be denied coverage due to the risk posed by her prior medical history, C) She would be accepted under an insurance policy, provided that a rider excluding cancer-related conditions is attached D) She would be covered under her employer's group health insurance plan, without higher premiums.

D) She would be covered under her employer's group health insurance plan, without higher premiums. - Because the insured was hired for a fulltime job, she would be eligible for her employer's group health insurance plan. Group plans cover employees equally, regardless of their age, gender, and past medical history.

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?

No benefits - Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received?

No tax - Daily benefits from the LTC policy are received income tax free, as long as they do not exceed the daily cost of long-term care.

Which health insurance provision describes the insured's right to cancel coverage?

Renewal provision - Renewability provisions are included in each health insurance contract and outlines both the insurer's and insured's right to cancel or renew coverage. This is considered to be a very important provision required by HIPAA, the federal Health Insurance Portability and Accountability Act of 1996.