Chapter 8
Which of the following is not part of the Affordable Care Act?
$5,000,000 Lifetime and $1,000,000 annual benefit limits
Jay receives an annual disability benefit of $10,000. His employer contributed 75% of the premium. How much of Jay's benefit is subject to income tax?
$7,500
Provisions of PPACA
- Minimum health standards identified as Essential Health Benefits - Under the individual mandate, all individuals without minimum essential coverage, either group or individual, will be assessed a penalty called the Shared Responsibility payment - Prohibited insurers offering group or individual health insurance coverage from imposing lifetime or annual limits on the dollar value of the mandatory essential health benefits - Eliminated copayments, coinsurance, or deductibles for preventive care and medical screenings Extended dependent children's coverage through age 25 (up to age 26) based strictly on the parent - child relationship - Health insurance exchanges must be available to individuals and small businesses as a resource to learn about healthcare options, compare and choose between those options and enroll in health plans - Cost Sharing Reductions must be available on policies purchased through an exchange by consumers with income above 138% of the Federal Poverty Line (FPL) up to 250% of the FPL - Employers with more than 50 employees that don't offer an affordable health plan that provides the minimum essential benefits will be required to pay an Employer Shared Responsibility penalty if the government has to subsidize at least one employee's individual plan purchased through an exchange
Actuarial Value
- The percentage of average costs that a health insurance plan will cover. - If a health plan had an average actuarial value of 60%, insured individuals would be responsible for paying 40% of the costs of covered benefits.
All health plans, group and individual, offered through a Health Insurance Exchange must provide, at a minimum, essential health benefits in ______ categories of care and services.
10 categories of care and services.
Consumer-driven health care allows individuals to use a _____-tiered approach to funding the costs of medical services and treatment.
3-tiered approach
The PPACA requires the medical loss ratio to be ______% for individual and small group plans.
80% for individual and small group plans.
The PPACA requires the medical loss ratio to be ______% for large group plans.
85% for large group plans
Qualified Health Plan (QHP)
A health insurance plan that has passed a federal certification process to be offered on a Marketplace.
High Deductible Health Plan
A health plan that combines a savings option with a health insurance plan carrying a high deductible.
The __________ value of a health plan equals the percentage of the total average costs that a plan pays for Essential Health Benefits.
Actuarial
Under the Patient Protection and Affordable Care Act, rates are strictly based on regional costs and the ______ of the insured.
Age
One of the changes following passage of the ACA was to allow children to remain covered under a parent's policy to age:
Age 26 under their parents' health insurance policy.
The Patient Protection and Affordable Care Act, referred to as the Affordable Care Act (ACA), consists of all of the following, except:
All employers are required to provide health insurance to their employees
Essential Health Benefits
Ambulatory patient services Mental health and substance use disorders, including behavioral health treatment Emergency services Hospitalization Laboratory services Maternity and newborn care (including prenatal and delivery care) Prescription drugs Pediatric services, including dental and vision care Preventive, wellness, and chronic disease management Rehabilitative and habilitative services and devices
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
All of the following are ways consumers can insure themselves with 'minimum essential coverage' without having to pay a penalty under the Affordable Care Act, except:
Be self-insured
Under which of the following business-related plans are benefits taxable as income to the owner?
Business Overhead Expense
Under which business-related use of Disability Income Insurance would the premiums be tax-deductible?
Business Overhead Expense Coverage
Which of the following plans could generate a taxable event to the recipient?
Business overhead expense
Under the PPACA, ___________ plan premiums are lower than a Qualified Health Plan, but the out-of-pocket costs are higher.
Catastrophic
All individuals licensed as a Life Licensee to transact in accident and health insurance are eligible to apply to become a __________ Insurance Agent to write applications for Qualified Health Plans through Covered California.
Certified
Health Savings Accounts and Health Reimbursement Arrangements are both types of what form of health insurance?
Consumer-driven health plans
An Essential Health Benefits package provides levels of coverage offered through all health exchanges, based on all of the following plans, except:
Copper
The Individual Exchange and Small Business Health Options Exchange (SHOP) will coordinate with the Department of Health Care Services (DHCS) and California _________ to ensure that individuals are seamlessly transitioned between coverage programs if their eligibility changes.
Counties
A Certified Insurance Agent is certified by the Individual Exchange and Small Business Health Options Exchange (SHOP) to transact in the individual and Small Business Health Options Program (SHOP) to write applications for Qualified Health Plans through:
Covered California
Consumers in California must purchase a Qualified Health Plan through __________ in order to obtain Premium Tax Credits.
Covered California
Group Accidental Death and Dismemberment premiums are _______ by the company paying the premiums as a business expense.
Deductible
_______ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable.
Disability
All health plans, group and individual, offered through a Health Insurance Exchange must provide, at a minimum, essential health benefits in all of the following categories of care and services, EXCEPT:
Elective cosmetic surgery
Premium Tax Credits are available from the ________ government to help lower the cost of health coverage for individuals and small employers who meet certain income requirements and do not have affordable health insurance that meets the minimum essential coverage requirements.
Federal
An Essential Health Benefits package is required to provide coverage for at least one of _____ levels of coverage offered through all health exchanges.
Four levels (Metal Tiers)
By eliminating an insurer's right to refuse to insure anyone under the Affordable Care Act, health insurance in America can essentially be referred to as ___________________.
Guaranteed issue
Under the PPACA, the _________ provision is designed to eliminate discrimination based on health status by insurers.
Guaranteed issue
All health plans, group and individual, offered through a __________ must provide, at a minimum, essential health benefits.
Health Insurance Exchange
Health Reimbursement Arrangement (HRA)
Health plan in which the employer sets aside money in a health reimbursement account to help employees pay for qualified medical expenses.
By requiring a minimum medical loss ratio, an insurance company provides greater value to its policyholders when a ________ percentage of premiums is used for healthcare costs versus administrative expenses or profits.
Higher
To become a Certified Insurance Agent, to write applications for Qualified Health Plans through Covered California, eligible individuals must do all of the following, EXCEPT:
Hold a health insurance industry recognized professional designation
Minimum essential coverage is a standardized list of required coverages that must be present in a health insurance policy in order for the IRS to consider the policy satisfactory to meet the requirements of the:
Individual mandate provisions
What is a High Deductible Health Plan?
It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a much reduced out of pocket premium
What is the Health Insurance Marketplace?
It is a resource where consumers can learn about their health insurance coverage options and compare plans.
Which of the following statements is false regarding the Affordable Care Act?
It requires all employers to provide health insurance to their employees
Under the PPACA, insurers must provide health insurance to any person, regardless of:
Medical history or current state of health
An Essential Health Benefits package is required to provide levels of coverage offered through all health exchanges known as:
Metal Tiers
If a qualified health plan has an average _________ value of 60%, insured individuals would be responsible for paying 40% of the costs of covered benefits.
Minimum coverage plans are designed to cover excessive medical bills that occur above the limit that an insured would be able to manage financially and are offered to those up to age 65, or those individuals who prove they are without affordable coverage options or are experiencing financial hardship
What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums?
No tax
When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be _____________.
Nontaxable in full, regardless of the employee's wage
When the employer pays some or all of the cost of health insurance for its employees, the annual amount of each employee's claims is _______________.
Not taxable to the employee
Under the Patient Protection and Affordable Care Act, a(n) ______ enrollment period is the length of time during which any eligible person may enroll in a Qualified Health Plan offered through a health insurance exchange.
Open enrollment period
Under the PPACA, all health plans are prohibited from discriminating against or charging higher rates to any individual on the basis of:
Preexisting conditions
Advanced Premium Tax Credits
Premium Tax Credits are available from the federal government to help lower the cost of health coverage for individuals and small employers who meet certain income requirements and do not have affordable health insurance that meets the minimum essential coverage requirements. Consumers must purchase a QHP through Covered California to obtain Premium Tax Credits.
Which of the following best describes the general tax rules regarding employer sponsored group disability income insurance plans?
Premiums are deductible, the benefits are taxable
Which of the following best describes the general tax rules regarding individual disability health insurance plans?
Premiums are not deductible, the benefits are not taxable
A person may NOT fund an HSA unless they also do which of these?
Purchase a High Deductible Health Plan
A(n) ________ health plan is any plan which provides coverage for the 10 Essential Health Benefits and provides a minimum actuarial value of 60%.
Qualified
If an insurer fails the medical loss ratio test (the loss ratio is lower than the required minimum) in a calendar year for all plans in a given market segment (individual or group), the excess premium is to be:
Refunded to consumers enrolled in plans in that market segment
Under the PPACA individual mandate, all individuals without minimum essential coverage, either group or individual, will be assessed a penalty called the:
Shared Responsibility payment
The Essential Health Benefits plan category that provides coverage for 70% of the total amount an individual will spend for essential health benefits during a year is the:
Silver Plan
Which one of the following regarding individual or employer eligibility to buy insurance through the California Health Benefit Exchange is false?
Small employers with less than 1000 employees may purchase coverage through the exchange
Under the Patient Protection and Affordable Care Act, a(n) _______ enrollment period is the length of time during which a person may enroll in a Qualified Health Plan outside of open enrollment if a qualifying life event, such as marriage, divorce, or the birth of a child, takes place.
Special
Under the Patient Protection and Affordable Care Act, insurers may no longer rate and charge higher premiums for __________ risks.
Substandard
Health Savings Accounts (HSAs)
Tax-deferred savings accounts linked to low-cost, high-deductible health insurance policies
Karen, age 50, withdraws $1,000 from her Health Savings Account (HSA) for a purpose other than a qualified medical expense. As a result of this action:
The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied.
There are ____ different 'Metal Plans' offered through the health insurance exchanges.
The four Metal categories are bronze, silver, gold, and platinum.
When a disability buy-sell is funded by the partnership, what is the tax liability?
The premiums are not deductible and the value of the benefit is not taxable as income
Premiums paid by an individual for personally-owned medical expense insurance are only deductible to the extent that _____________.
They exceed 7.5% of adjusted gross income
Consumer-Driven Health Plans (CDHPs)
Tier 1: Pretax account, such as a Health Savings Account (HSA), Archer Medical Saving Account (MSA), Health Reimbursement Account (HRA), and Flexible Spending Account (FSA). Tier 2: The amount the individual chooses to pay, out-of-pocket, after the funds in the pretax account have been exhausted and before the health insurance plan's deductible is met. Tier 3: A high deductible health plan (HDHP), which is a health insurance plan that has been designed to coordinate with pretax accounts to help consumers manage spending for health care and insurance.
A qualified health plan is any plan which provides coverage for the 10 Essential Health Benefits and provides a minimum actuarial value of ______%.
actuarial value of 60%.
Under the PPACA, insurers are required to cover children under ______ with preexisting conditions and are prevented from dropping policyholders if they get sick.
children under 19
Under the Patient Protection and Affordable Care Act, the special enrollment period in the Small Business Health Options (SHOP) Marketplace lasts ______ days from the date of the qualifying event.
lasts 30 days
