CH 13

Gary participates in a group long-term care insurance program through his employer. The employer pays for a standard level of coverage for all employees, and Gary pays for an additional voluntary amount of coverage. In all, Gary's employer pays two thirds of the cost and Gary pays the remaining one third of the cost. If Gary makes a claim under this policy, what percentage of his benefits would be taxable based on the premium structure?

0% This is a long-term care insurance plan, not disability insurance. The tax-status of benefits does not depend on who pays the premium.

An employer may require a former employee who has COBRA coverage to pay up to _____% of the premium.

102%

Hicks Corp. wants to install a contributory group plan. It employs 200 people. How many employees must participate in order to install the plan?

150 Contributory plans require a participation percentage of 75%.

COBRA applies to employers with ______ or more employees.

20

COBRA applies to employers with:

20 or more employees COBRA states that employers with 20 or more employees must provide a health coverage continuation option to all covered employees and dependents.

COBRA is a federal law requiring employers with _____ or more employees to provide the option of continuing the employee's existing health coverage for dependents for up to _____ months following certain qualifying events such as death of the employee.

20, 36 The question specifies coverage for dependents (36 months), not the employee (18 months).

If a plan offers coverage to dependents, eligible dependents includes all children, natural and adopted, married and unmarried, up to age ______.

26 If a plan offers coverage to dependents, eligible dependents includes all children, natural and adopted, married and unmarried, up to age 26.

For an employee to be eligible to participate in an employer's group health insurance plan, he/she must be considered full-time and work a minimum of _____ hours as established by the Affordable Care Act.

30 To be eligible, an employee must be considered full-time and work a minimum of 30 hours as established by the Affordable Care Act.

Payment of the first premium and an application must be submitted to an insurer for individual coverage within how many days to convert group coverage to an individual policy not requiring proof of insurability?

31 days State insurance laws require a 30- or 31-day Conversion Period in group insurance policies.

The XYZ Company, which employs 800 workers, provides group disability insurance for the 400 employees who work 30 hours or more. If this group disability coverage is offered on a noncontributory basis, how many employees are participating?

400 Noncontributory plans requires 100% participation by eligible employees. In this example, only 400 employees qualify as eligible.

Experience rating utilizes _______ in determining the rate the insurer will charge for group coverage in each year of coverage.

Actual loss experience of the group Experience looks at claims experience. Creditworthiness of a business or its employees is not a factor in underwriting group insurance.

Which of the following is incorrect regarding the group underwriting process?

Adverse selection is not a concern for group contracts Adverse selection is a major underwriting concern for group contracts.

All of the following statements regarding a group Accidental Death and Dismemberment policy are incorrect, except:

Any benefits received are not taxable to the recipient

A group of individuals comes together with the objective of obtaining a lower collective insurance premium. This would

Be disallowed. Group formation must be for a reason other than reducing the cost of insurance. State insurance laws prohibit the issuance of group policies to groups formed primarily for the purpose of obtaining insurance.

A group of individuals comes together with the objective of obtaining a lower collective insurance premium. This would:

Be disallowed. Group formation must be for a reason other than reducing the cost of insurance. State insurance laws prohibit the issuance of group policies to groups formed primarily for the purpose of obtaining insurance.

Concerning COBRA, which of the following is correct?

Concerning COBRA, which of the following is correct? Federal law mandates that employers with 20 or more employees provide a COBRA option. Termination of employment provides only 18 months of continuation. Qualifying events for dependents only (not employees) permit continuation up to 36 months.

Which statement would be considered inaccurate regarding the underwriting of a group plan?

Contributory plans require 100% employee participation Contributory plans require both the employee and the employer to contribute to the premium, and 75% participation is required.

When a group member terminates employment, he or she has 31 days to purchase an individual policy without proof of insurability. This is referred to as the:

Conversion Privilege It is the Conversion Privilege, which affords a group member the right to purchase individual coverage without proof of insurability. The 31-day period also applies when COBRA continuation is exhausted.

Which provision in a health insurance plan is used to avoid overinsurance when a person is covered by more than one plan?

Coordination of Benefits The purpose of the Coordination of Benefits provision is to prevent overinsurance. The 'COB' provision appears in both group and individual health policies.

Group Accidental Death and Dismemberment premiums are _______ by the company paying the premiums as a business expense.

Deductible Group Accidental Death and Dismemberment premiums are tax deductible by the business owner. Benefits are paid income tax-free because they are not considered income.

Which of the following is consistent with group health underwriting?

Each member of the group is covered regardless of his or her health history Group health insurance does not usually require individual underwriting, and the group is either accepted or rejected as a whole. If accepted, all of the group members are covered, regardless of their health history.

When an insurer relies on the prior claims history of the group to be insured in determining the rate to be charged, it is called:

Experience Rating

All of the following are accurate statements, except:

Group insurance normally covers occupational injury or disease

All of the following groups are eligible for group rates, except:

Groups formed to reduce premiums A group cannot be formed for the express purpose of obtaining insurance. Employers, labor unions, and associations are eligible plan sponsors.

All of the following are true of the Coordination of Benefits Provision under a group plan, except:

In the event children are covered under two group plans, the insurer for the parent who is the oldest is primary, and the other parent's plan is secondary Under the Coordination of Benefits Provision, the insurer for the parent whose birthday is first in the calendar year is primary, not the plan for the parent who is oldest.

An employer group health insurance sponsor does all of the following, except:

Issue the policy

Regarding COBRA, which of the following is not true?

It covers participants who have resigned for 36 months following the date of their resignation Termination of employment other than for gross misconduct allows former employees and their dependents a maximum of 18 months of continuation.

Group health plans usually cover:

Nonoccupational injury or disease Group health plans usually only cover nonoccupational injury and disease. Workers' Compensation Insurance is designed to cover job-related injury or disease.

Coordination of Benefits is a provision designed to reduce ________ when an insured is covered under multiple health plans.

Overinsurance Overinsurance means having more than 100% of a claim paid. This could happen if a person were covered by more than one health plan.

When an individual carries more accident and health insurance than he/she would need for a loss, it is called:

Overinsurance Overinsurance usually occurs when a person is covered by more than one plan of insurance, such as when both spouses work and each is covered as a dependent under the other's employer-sponsored group health insurance plan.

Which of the following might be done to protect against adverse selection when underwriting group medical insurance?

Require a minimum percentage of the group to enroll

Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except:

Termination of the employee If the qualifying event under COBRA is termination of employment, the coverage may be continued only for 18 months.

Events that will cause termination of continuing health coverage under COBRA include all of the following, except:

The employee fails to convert to an individual health insurance plan on the day it is offered Events that will cause termination of continuing health coverage by COBRA include failure to pay premiums on time, cessation of group health coverage by the employer, and employee eligibility for Medicare benefits. Conversion is a separate benefit.

Which statement is incorrect regarding COBRA?

The employee or beneficiary must respond to the notification of his/her right to continue coverage within 90 days, if he/she wants to continue the coverage

If a child is covered under more than one group health insurance plan how is it determined which carrier is primary?

The plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage In the event children are covered by more than one group plan, the 'birthday rule' which says the plan covering the parent whose birthday occurs first in the calendar year will be the children's primary coverage.

Regarding group health insurance, which is true?

The plan sponsor is issued the Master Policy In group health insurance, only the plan sponsor receives a copy of the Master Policy. Covered individuals receive a Certificate of Insurance. The plan sponsor is responsible for paying the premiums.