Health

All of the following are examples of medical cost management EXCEPT: A) denying claims. B) ambulatory surgery. C) precertification review. D) mandatory second opinion.

A) denying claims. Medical cost management is an effective means of controlling costs. It is the process of controlling how policyholders utilize their policies. There are five general approaches insurers use for cost management: mandatory second opinion, precertification review, ambulatory surgery, case management, and utilization management. Denying claims outright is not a legal or ethical method of controlling costs.

Before issuance of a broker's license, the applicant must obtain a bond in an amount NOT less than: A) $15,000.00 B) $10,000.00 C) $20,000.00 D) $5,000.00

A) $15,000.00 A broker is a licensed agent who obtains insurance for third parties through an agent of an insurer for which the broker is not authorized to act as agent. A broker's license will be issued to cover only those kinds of insurance authorized by his agent's license. In addition, the broker must keep a bond of at least $15,000 in force in favor of North Carolina for the use of aggrieved parties.

If a licensed agent no longer maintains a residence in North Carolina, the agent must deliver her insurance license to the Commissioner within how many days after terminating residency? A) 30 days. B) 10 days. C) 20 days. D) 31 days.

A) 30 days. Any licensee who ceases to maintain her residency in North Carolina must deliver her insurance license to the Commissioner within 30 days after terminating residency.

All of the following statements about workers' compensation are true EXCEPT: A) A worker receives benefits only if the work-related injury was not his fault. B) Benefits include medical care costs and disability income. C) All states have workers' compensation laws. D) Workers' compensation laws are designed to return injured persons to work.

A) A worker receives benefits only if the work-related injury was not his fault. All states have workers' compensation laws that are designed to help injured workers recover and return to work. They are based on the principle that the employer should compensate the injured employee for work-related injuries, regardless of fault.

Scott is an employee who recently joined the business and, because of a preexisting health problem, did not realize he could enroll in the company's health plan. He now wishes to join. Which of the following statements about his eligibility under HIPAA rules is CORRECT? A) As a late enrollee, he may have to wait up to 18 months before he can be covered. B) As a late enrollee, he may have to wait up to 12 months. C) He can be denied coverage until he can provide proof of insurability. D) He must be eligible immediately.

A) As a late enrollee, he may have to wait up to 18 months before he can be covered. Under HIPAA rules, Scott can be denied coverage for up to 18 months as a late enrollee. Coverage cannot be denied beyond that point based on his preexisting health condition.

Which of the following statements about nonresident licenses is CORRECT? A) If the Commissioner revokes a nonresident's license, he must notify the Commissioner in the licensee's home state. B) A nonresident may not be licensed without taking a written exam even though she has passed a similar written exam in her home state. C) A licensed resident agent must countersign an insurance application on behalf of a nonresident agent for the transaction to be valid in North Carolina. D) A person may qualify for a nonresident license if she holds a similar license in at least two other states.

A) If the Commissioner revokes a nonresident's license, he must notify the Commissioner in the licensee's home state. If the North Carolina Commissioner revokes a nonresident's license, he must promptly notify the Commissioner in the licensee's home state. A person may qualify for a nonresident license if she holds a similar license in one other state, not two. A nonresident agent is exempt from taking the written exam in North Carolina if she has passed a similar written exam in her home state. It is not necessary to have a resident agent countersign the applications procured by the nonresident agent.

In the United States, the primarily regulatory authority for the insurance industry is the: A) States. B) U.S. Supreme Court. C) National Association of Insurance Commissioners. D) U.S. Senate.

A) States. The insurance industry is regulated primarily by the states, rather than by the federal government or a national insurance association. The U.S. Supreme Court first placed this authority in the hands of the states in the 1868 case of Paul v. Virginia.

All of the following organizations may be classified as service organizations EXCEPT: A) a health insurance company. B) a health maintenance organization. C) a Blue Cross/Blue Shield organization. D) a preferred provider organization.

A) a health insurance company. Service organizations offer health insurance and health care services. A health insurance company sells only health insurance and not health care services.

A contract based on the principle of indemnity: A) attempts to return the insured to his original financial position. B) allows the insured to sue the insurer if the full value of the contract is not paid when a claim occurs. C) does not attempt to value the insured's actual financial loss. D) pays a stated sum, regardless of the actual loss incurred.

A) attempts to return the insured to his original financial position. An indemnity contract pays an amount equal to the loss - it attempts to return the insured to his original financial position. In contrast, a valued contract pays a stated sum, regardless of the actual loss incurred, when the contingency insured against occurs.

All of the following statements characterize long-term care insurance EXCEPT: A) it must provide for an automatic adjustment to correspond to changes in Medicare's long-term care coverage. B) it provides coverage for at least 12 consecutive months. C) it provides coverage for care provided in a setting other than an acute care unit of a hospital. D) it may be issued as a group policy or as individual policies.

A) it must provide for an automatic adjustment to correspond to changes in Medicare's long-term care coverage. Long-term care insurance provides coverage for care provided in a setting other than a hospital acute care unit for at least 12 consecutive months. It may be issued as a group policy or as individual policies.

An incorporated insurer that does not have permanent stock is a: A) mutual insurer. B) reciprocal insurer. C) domestic insurer. D) stock insurer.

A) mutual insurer. A mutual insurer is an incorporated insurer without permanent stock. Its governing body is generally elected by its policyowners. A stock insurer is an incorporated insurer that divides its capital into shares, which are owned by its stockholders. A reciprocal insurer is an unincorporated group of subscribers who provide reciprocal insurance among themselves.

In major medical and comprehensive medical expense policies, a coinsurance provision: A) provides for percentage participation by the insured. B) helps to satisfy the deductible amount. C) does not apply until benefit amounts exceed $2,000. D) has no effect on claims.

A) provides for percentage participation by the insured. In major medical and comprehensive medical expense policies, a coinsurance provision provides for percentage participation by the insured. For example, a 75/25 coinsurance provision means the insurance company will cover 75% of the allowable medical expenses, and the insured pays the remaining 25%. Coinsurance provisions apply after any required deductible has been paid.

All Medicare supplement policies must cover 100% of the Part A hospital coinsurance amount for each day used from: A) the 61st through the 90th day in any Medicare benefit period. B) the 45th through the 90th day in any Medicare benefit period. C) the 30th through the 90th day in any Medicare benefit period. D) the 1st through the 60th day in any Medicare benefit period.

A) the 61st through the 90th day in any Medicare benefit period. All Medicare supplement policies must cover the core basic benefits that Plan A cover. This includes covering 100% of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period and 100% of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period.

If a company pays the premiums on a disability income policy covering a key employee: A) the company receives benefits from the policy income tax free. B) the company cannot deduct the premium if benefits are paid to the key employee. C) the company can deduct the premium if the benefits are payable to the company. D) the benefits received by the employee are not subject to tax.

A) the company receives benefits from the policy income tax free. If a company pays the premiums on a disability income policy covering a key employee, the company cannot deduct the premium if the monthly benefit is payable to the corporation. The benefits received from the policy are not taxed.

The calendar year deductible provision of a major medical policy means that: A) the deductible is applied only once during the calendar year. B) the deductible is applied against each claim during the first calendar year the policy is in effect. C) the insurer pays a higher percentage of the medical expenses than the insured. D) all claims submitted during the calendar year are subject to the amount of the deductible.

A) the deductible is applied only once during the calendar year. A major medical policy's calendar year deductible means that when the deductible amount is met during the calendar year, all claims submitted will be treated for the balance of the year without meeting any new deductibles. Dividing the costs of medical expenses between the insured and insurer is known as percentage participation, or coinsurance.

If a broker diverts funds belonging to an insurer to his or her own use, he or she has committed the illegal act of: A) theft. B) fraud. C) embezzlement. D) commingling.

A) theft.

Disability income benefits for partial disability typically are payable to eligible insureds for a MAXIMUM of: A) three to six months. B) two years. C) one to three months. D) one year.

A) three to six months. Disability income benefits for partial disability (an inability to perform one or more important job duties) typically are payable to eligible insureds for a maximum of three to six months.

Medicare supplement insurance is designed for persons who have reached the age of: A) 65 or older. B) 60 or older. C) 50 to 65. D) 70 to 80.

A)65 or older. Medicare supplement insurance fills the gaps in coverage left by Medicare, which provides hospital and medical expense benefits for persons aged 65 and older.

All of the following home health care services will be covered by group plans EXCEPT: A) emergency surgery. B) occupational therapy. C) nutritional consultation. D) physical therapy.

A)emergency surgery. Group medical benefits contracts must cover home care services. Home care services mean services provided in a patient's residence and not in a hospital or skilled nursing or rehabilitation facility. These services must be approved by a physician and include: nursing and physical therapy, occupational therapy, speech therapy, medical social work, nutritional consultation, services of a home health aid, and use of durable medical equipment and supplies.

All of the following provisions are optional in individual health insurance policies EXCEPT: A) incontestability provision. B) unpaid premium provision. C) change of occupation provision. D) illegal occupation provision.

A)incontestability provision. Every individual health insurance policy must include an incontestability provision, which states that after a policy has been in force for two years, the insurer cannot contest the statements in the application. Optional provisions include a change of occupation provision, which states that if the insured changes to a more hazardous occupation than the one listed in the policy and then suffers a loss, the insurer will provide coverage only to the extent that the premiums paid would have purchased for the less hazardous job. An unpaid premium provision is also optional and provides that any unpaid premiums may be deducted from a claim payment when a claim is paid. An illegal occupation provision (also optional) states that the insurer is not liable for any losses suffered while the insured was committing a felony or engaged in an illegal occupation.

Which of the following is committed to maintaining state supervision of the insurance industry? A) NCOIL. B) ERISA. C) NAIC. D) State Insurance Guaranty Association.

C) NAIC. The National Association of Insurance Commissioners (NAIC) is a collaberative body composed of 54 state and territorial insurance commissioners that meet several times a year to discuss common concerns relating to insurance regulation. One of the NAIC's stated goals is to advance the continued regulation of insurance at the state level.

How many days notice must the Commissioner give an individual to appear before an administrative hearing on a charge of violating North Carolina insurance law? A) 7 days. B) 10 days. C) 60 days. D) 30 days.

B) 10 days.

Which of the following statements regarding insurance sold in connection with sales and loans is CORRECT? A) A lender cannot require a borrower to purchase insurance to obtain a consumer loan. B) A lender cannot require a borrower to purchase insurance from a specific insurer. C) Lenders may recommend a specific insurer but are prohibited from giving out information about how to contact the insurer. D) Under no circumstances may a lender disapprove insurance provided by an insurer.

B) A lender cannot require a borrower to purchase insurance from a specific insurer. A borrower may freely choose an agent or broker at any time because a lender cannot require a borrower to purchase insurance from a specific insurer.

Which of the following is a mandatory minimum benefit for Medicare supplement policies? A) Supplemental coverage for 80% of all eligible hospital expenses not covered by Medicare. B) Coverage of Medicare Part A eligible hospital expenses to the extent not covered by Medicare from the 61st through the 90th day in any Medicare benefit period. C) Coverage of the 30% coinsurance amount under Medicare Part B, subject to a calendar year deductible of $100. D) A $1,000 death benefit.

B) Coverage of Medicare Part A eligible hospital expenses to the extent not covered by Medicare from the 61st through the 90th day in any Medicare benefit period. The benefits in Plan A, which is known as the core plan, must be contained in all other plans sold. Among the core benefits this plan provides is coverage of Medicare Part A eligible expenses for hospitalization, to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period.

Gene, Tom, Barry, and Mark are all applicants for health insurance and each has a different occupation. Gene is an attorney. Tom is a carpenter. Barry is an electrician. Mark is a waiter. Based on this, which applicant poses the LEAST occupational risk to the insurer? A) Barry. B) Gene. C) Tom. D) Mark.

B) Gene. For health insurance underwriting, insurers classify occupations according to the risk they pose. The classes range from AAA, which include professional and office workers (the least hazardous occupations) to AA, A, B, and C. Classifications of B or C indicate more hazardous jobs.

Becky wants to make sure that she has insurance to protect herself if she eventually needs long-term custodial or nursing home care. Which type of policy will cover these types of care? A) Medicare. B) Long-term care insurance. C) Medicare supplement insurance. D) Medicaid.

B) Long-term care insurance. Although Medicare and Medicare supplement insurance help protect the elderly against the costs of medical care, neither program covers long-term custodial or nursing home care. Medicaid covers some of the costs associated with long-term care, but it is available only to individuals without significant assets. Long-term care insurance is designed to cover the costs of long-term custodial or nursing home care.

A Medicare supplement policy that contains restricted network provisions is known as a: A) long-term care policy. B) Medicare SELECT policy. C) HMO. D) individual health policy.

B) Medicare SELECT policy. A Medicare select policy or Medicare select certificate mean respectively a Medicare supplement policy or certificate that contains restricted network provisions.

With what provision of a standard health insurance policy would the following clause be associated: "The insured and the insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium." A) Cancellation provision. B) Reinstatement provision. C) Time limit on certain defenses provision. D) Grace period provision.

B) Reinstatement provision. The reinstatement provision provides that when a policy lapses due to nonpayment of premium, but the insured subsequently pays the renewal premium (which the insurer accepts without requiring an application for a new policy), the policy will be reinstated with the same provisions and rights as before (with the exception of coverage for sickness-related losses within the first ten days after reinstatement).

Which of the following types of plans integrates its coverage with a basic medical expense coverage, providing benefits in excess of those specified in the basic plan? A) Comprehensive major medical. B) Supplementary major medical. C) Basic umbrella. D) Hospital indemnity.

B) Supplementary major medical. A supplementary major medical plan is coordinated with a basic plan and is designed to pick up coverage where the basic plan leaves off. It covers expenses not included under a basic plan and provides coverage for expenses that exceed the basic plan's dollar limits.

Which of the following statements regarding coverage of mammograms is NOT correct? A) If a woman is considered at risk, yearly mammograms must be covered. B) The first time a baseline mammogram is covered is when the woman is 50 years old. C) Accident and health insurance policies must provide coverage for low-dose screening mammography. D) The same deductible, coinsurance, and other limitations that apply to similar services apply to mammograms.

B) The first time a baseline mammogram is covered is when the woman is 50 years old. For a woman who is not considered at risk, mammogram coverage begins when she receives a baseline mammogram sometime between the ages of 35 and 39. During the years 40 through 49, one mammogram every two years is covered, or more frequently on a physician's recommendation. One mammogram a year is covered for women over the age of 50.

Tom is talking to his client about replacing an existing health insurance policy. Which of the following statements about the planned replacement is NOT correct? A) Tom's commissions on the replacement policy will be no higher than the renewal commissions on the policy being replaced. B) The new policy should put the insured in a position of financial gain. C) Tom and his client should carefully review provisions on benefits, limitations, and exclusions. D) The new insurer's underwriting requirements should not be greater than those for the existing policy.

B) The new policy should put the insured in a position of financial gain. Under the no gain/no loss statutes, the new policy must not put the insured in a position of profit in the event of a loss. It is important to review all key policy provisions before the replacement. There are limits on compensation requiring that commissions for the replacement policy not exceed the renewal commissions paid on the policy being replaced.

Long-term care insurance can limit or exclude coverage for all of the following EXCEPT: A) participation in crimes. B) chronic respiratory ailments. C) mental or emotional disorders, alcoholism and drug addiction. D) medical conditions arising out of war or war-like activities.

B) chronic respiratory ailments. As a general rule, long-term care policies may not limit or exclude coverage by type of illness. They may, however, limit or exclude preexisting conditions or diseases and mental or nervous disorders. Loss from Alzheimer's disease, senile dementia and other organic brain syndromes or senility diseases cannot be excluded or limited.

The core policy (Plan A) developed by NAIC as a standard Medicare supplement policy includes all of the following EXCEPT: A) coverage for the first 3 pints of blood each year. B) coverage for the Medicare Part A deductible. C) coverage for the Part A coinsurance amounts. D) coverage for the 20% Part B coinsurance amounts for Medicare-approved services.

B) coverage for the Medicare Part A deductible. The Medicare Plan A supplement policy does not provide coverage for the Medicare Part A deductible. All the other answer choices are included in the core benefits that all medicare supplement policies must provide, including Medicare Plan A supplement policies.

Those who choose not to enroll in Part B when first applying for Medicare may do so: A) at any time after enrolling in Part A. B) during an annual open enrollment period. C) between July and September of each year. D) on the anniversary of his Part A enrollment date.

B) during an annual open enrollment period. Applicants can choose to enroll in Part B of Medicare during the open enrollment period each year from January 1 through March 31. Coverage then begins the following July 1.

To be considered qualified, a long-term care insurance policy must conform to requirements concerning all of the following EXCEPT: A) policy replacement. B) premium charges. C) policy conversion. D) marketing standards.

B) premium charges. To be considered a qualified contract, a long-term care insurance policy must follow NAIC's long-term care insurance model regulations, which address the following: policy replacement, conversion, marketing standards, prohibitions on limits and exclusions, and policy renewability, among other things.

In the standardized Medicare supplement policy, Plan A is characterized by: A) offering the widest coverage. B) providing the least comprehensive coverage. C) availability only to Medicare recipients younger than age 75. D) duplicating Medicare benefits for maximum security.

B) providing the least comprehensive coverage. In the 12 standardized Medicare supplement plans, Plan A provides the least coverage and is referred to as the core plan. Plan J has the most comprehensive coverage. Plans K and L provide basic benefits similar to plans A-J, but cost-sharing is at different levels.

If a disabled Medicare enrollee is also covered by an employer-provided health plan as a family member: A) the employer's health plan will always be considered the secondary payor because the plan participant is a family member, not an employee. B) the employer's health plan will be the primary payor if it covers 100 or more employees. C) Medicare will always be considered the primary payor. D) Medicare will only provide disability income benefits since the plan participant is covered by an employer-provided health plan.

B) the employer's health plan will be the primary payor if it covers 100 or more employees. If a disabled Medicare enrollee is also covered by an employer-provided health plan as a family member:

All of the following approaches are used by insurers to determine benefits payable under basic surgical expense insurance EXCEPT: A) relative value scale approach. B) traditional net cost method. C) reasonable and customary approach. D) surgical schedule method.

B) traditional net cost method. There are 3 different approaches used by insurers to determine benefits payable for surgical services: surgical schedule approach, the reasonable and customary approach, and the relative value scale approach. Under the surgical schedule method, every surgical procedure is assigned a dollar amount by the insurer. The reasonable and customary approach is more open in its determination of benefits payable. The relative value scale is similar to the surgical schedule method, except that instead of a flat dollar amount being assigned to every surgical procedure, a set of points is assigned. The number of points assigned to any one procedure is relative to the number of points assigned to a maximum procedure. The traditional net cost method is a way of comparing costs of similar policies.

Skilled nursing care differs from intermediate care in which of the following ways? A) Skilled care is typically given in a nursing home, while intermediate care is usually given at home. B) Skilled care must be available 24 hours a day while intermediate care is daily, but not 24-hour care. C) Skilled care must be performed by skilled medical professionals whereas intermediate care does not require medical training. D) Skilled care encompasses rehabilitation, while intermediate care is care given to meet daily personal needs, such as bathing and dressing.

B)Skilled care must be available 24 hours a day while intermediate care is daily, but not 24-hour care. Skilled care is daily nursing care ordered by a doctor and performed by skilled medical personnel. It is available 24 hours a day, and is typically administered in nursing homes. Intermediate care is occasional or rehabilitative care ordered by a doctor and is also performed by skilled medical personnel, typically in nursing homes. It is provided for stable conditions that require daily, but not 24-hour, supervision.

What is the minimum required grace period in a group accident and health insurance policy? A) 30 days. B) 31 days. C) 10 days. D) 7 days.

D) 7 days. Each accident and health insurance policy must contain a grace period of no less than 7 days for weekly premium policies, 10 days for monthly premium policies, and 31 days for all other policies.

A person who engages in the insurance business without the requisite insurance license may be fined up to: A) $100.00 B) $500.00 C) $5,000.00 D) $10,000.00

C) $5,000.00 Anyone conducting insurance business without the proper insurance license is committing a misdemeanor. If convicted, the individual may be fined between $1,000 and $5,000, serve from one to two years in prison, or both.

A company has 1,200 eligible employees for its group life insurance program, and the company pays the total premium. How many employees must be insured to initiate the plan? A) 600 employees. B) 1,000 employees. C) 1,200 employees. D) 900 employees.

C) 1,200 employees. If a group life insurance plan is noncontributory, 100% of eligible persons must be insured.

Under the required claim forms provision of a health insurance policy, an insurer must furnish the claim form to the insured within how many days after receiving a notice of claim? A) 30 days. B) 10 days. C) 15 days. D) 21 days.

C) 15 days. Under the required claim forms provision of a health insurance policy, an insurer must furnish its claim form to the insured within 15 days after receiving notice of a claim. Otherwise, the claimant may submit proof of loss in any form that explains the occurrence, the character, and extent of the loss.

All individual health insurance policies must include a notice of claim provision requiring that a written notice of claim must be given to the insurer within how long after the occurrence of the loss? A) 5 days. B) 24 hours. C) 20 days. D) 10 days.

C) 20 days. All individual health insurance policies must include a notice of claim provision. According to this provision, written notice of a claim must be given to the insurer within 20 days after a covered loss starts, or as soon as possible thereafter. The insurer must provide a claims form to the insured within 15 days of receiving notice of a claim. Failure to do so means that the insured may meet the time requirement for proof of loss by giving the insurer a written statement verifying the loss.

In the case of Medicare supplement policies, how long is the free look period in which the policyholder has the right to return the policy for a full refund of premium? A) 10 days. B) 15 days. C) 30 days. D) 21 days.

C) 30 days. The free look periods for Medicare supplement policies and long-term care insurance policies differ from the free look periods of other accident and health insurance policies. Insureds are given a 30-day, rather than a 10-day, free look period. The notice of the 30-day free look period must be printed prominently in the policy.

After proof of loss is submitted, legal actions may be brought to recover on an individual health insurance policy only during what time period? A) Between 30 and 60 days. B) Between 30 days and 1 year. C) Between 60 days and 3 years. D) Between 60 days and 10 years.

C) Between 60 days and 3 years. After a proof of loss is submitted, a claimant cannot sue to recover on the policy until at least 60 days have passed. A claimant is barred from instituting an action, however, after three years have passed from the date of the incident that gave rise to the claim.

The Medicare Advantage Program offers all of the following to Medicare beneficiaries EXCEPT: A) health maintenance organizations (HMOs). B) preferred provider organizations (PPOs). C) Medicaid. D) provider-sponsored organizations (PSOs).

C) Medicaid. The Medicare Advantage Program (Medicare Part C) gives Medicare beneficiaries a variety of alternatives from which to obtain Medicare-covered services. Medicare participants are also able to take advantage of tax-free health savings accounts (HSAs) for routine medical bills and a government-funded, high-deductible health plan (HSA plan) for catastrophic expenses. The program also offers a combination of private fee-for-service health plans, self-funding, and private contracts with doctors for particular services. Medicaid offers assistance with medical costs to low-income individuals.

Which of the following is an optional provision in an individual accident and health insurance policy? A) Time limit on defenses. B) Change of beneficiary. C) Misstatement of age. D) Reinstatement.

C) Misstatement of age. Individual accident and health insurance policies must contain provisions for reinstatement, time limit on defenses, and change of beneficiary. A misstatement of age provision is optional. However, if it is included in a policy, the Commissioner must approve the wording.

Which of the following falls under the definition of a limited policy? A) Accidental death & dismemberment (AD&D) insurance. B) Long-term care insurance. C) Prescription drug plan. D) A flat-benefit disability policy.

C) Prescription drug plan. Prescription drug policies may be sold as supplements to individual policies or as stand-alone limited plans. LTC insurance covers a broad range of expenses involving long-term care. AD&D insurance generally also covers numerous perils related to accidental injury. A flat-benefit DI plan pays a fixed benefit for disabling accidents and injuries.

Regarding long-term care insurance, the existence of symptoms that would cause an ordinarily prudent person to seek diagnosis or treatment, or a condition for which medical advice or treatment was recommended by or received from a provider of health care services within six months before the effective date of an insured's coverage is known as: A) previous symptoms. B) the 6-month rule. C) a preexisting condition. D) pre-coverage warranty.

C) a preexisting condition. The most restrictive definition allowed for a preexisting condition in long-term care insurance is the existence of symptoms that would cause an ordinarily prudent person to seek diagnosis or treatment, or a condition for which medical advice or treatment was recommended by or received from a provider of health care services within 6 months preceding the effective date of an insured's coverage.

For a long-term care insurance policy to begin paying benefits, the insured must: A) be diagnosed as terminally ill. B) be hospitalized for at least 3 days. C) be diagnosed as chronically ill. D) receive skilled nursing care for at least 3 days.

C) be diagnosed as chronically ill. As a result of the Health Insurance Portability and Accountability Act of 1996, prior hospitalization can no longer be used as a benefit trigger for long-term care policies. Instead, the individual must be diagnosed as chronically ill. A diagnosis of chronic illness can be made on 2 levels: physical and cognitive.

The time of payment of claims provision requires that: A) the insured must submit proof of loss within a specified time, or the claim may be denied. B) the insured must periodically submit proof of loss in order to receive the claim. C) claims must be paid after the insurer is notified and receives proof of loss. D) claims must be paid after the insurer is notified of a loss.

C) claims must be paid after the insurer is notified and receives proof of loss. The time of payment of claims provision provides for immediate payment of the claim after the insurer receives notification and proof of loss.

All of the following are levels of long-term care EXCEPT: A) custodial care. B) skilled nursing care. C) hospital care. D) intermediate nursing care.

C) hospital care. The three levels of long-term care are skilled nursing care, custodial care, and intermediate nursing care. Skilled nursing care is continuous, around-the-clock care provided by licensed medical professionals under the direct supervision of a physician. Custodial care provides assistance in meeting daily living requirements, such as bathing, dressing, getting out of bed, and toileting, which is given under a doctor's order. Intermediate nursing care is provided by RNs, licensed practical nurses and nurses' aids under the supervision of a physician.

All of the following statements pertaining to the conversion privilege in group health insurance policies are correct EXCEPT: A) a conversion privilege applies when a group health policy is terminated. B) an insured who is terminated from the plan can obtain a conversion policy without evidence of insurability within a specified time. C) insureds who resign or are terminated have 365 days in which to convert their coverage to individual policies. D) some states specify minimum benefits for conversion policies.

C) insureds who resign or are terminated have 365 days in which to convert their coverage to individual policies. Concerning the conversion privilege in group health insurance, an insured employee who resigns or is terminated has 31 days in which to take out a conversion policy without having to show evidence of insurability.

Generally, the consideration clause does all of the following EXCEPT: A) defines the initial term of the policy. B) lists the effective date of the contract. C) lists the insured's beneficiaries. D) states the amount of premium payments.

C) lists the insured's beneficiaries. The consideration clause frequently lists the effective date of the contract, defines the initial term of the policy and states the amount of premium payments. In addition, it may specify the insured's right to renew the policy.

Concerning the free look provision, all of the following statements are correct EXCEPT: A) a policyowner does not need to give any reason for returning a policy in accordance with the provision. B) most states require a free look provision in health insurance policies. C) most states require a 30-day free-look provision in health insurance policies. D) it permits policyowners to return their policies within a specified time and receive full premium refunds.

C) most states require a 30-day free-look provision in health insurance policies. Most health insurance policies contain a 10- or 20-day free look provision. The common exception is Medicare supplement policies, which are required by state law to allow a 30-day free look period.

None of the following can be considered qualifying expenses for purposes of determining an individual's medical tax deduction EXCEPT: A) premium contributions paid by an employer to a group medical expense plan. B) premium contributions paid by an employer to a group disability plan. C) premium contributions paid by an individual to a group medical expense plan. D) premium contributions paid by an individual to a group disability plan.

C) premium contributions paid by an individual to a group medical expense plan. Individual premium contributions to a group medical expense plan are deductible only when they and other unreimbursed medical expenses exceed 10% of an individual's adjusted gross income. Premium contributions made by an employer and those made by an employee for group disability coverage cannot be considered for purposes of determining a medical tax deduction.

Insured losses are covered immediately after a health policy is reinstated when: A) all back premiums have been paid. B) hospitalization is required. C) the losses result from accidental injuries. D) claim forms are submitted with proof of loss.

C) the losses result from accidental injuries. Insured losses are covered immediately after a health policy is reinstated when the losses result from accidental injuries. Insured losses from sickness will not be covered unless they occur at least ten days after reinstatement. This is to prevent adverse selection against the insurer.

Applicants for Medicare supplement licenses must complete how many hours of prelicensing education? A) 40 hours. B) 20 hours. C) 30 hours. D) 10 hours.

D) 10 hours.

A disabled worker's unmarried dependent child who is younger than 18 years is eligible for monthly benefits equal to how much of the worker's primary insurance amount (PIA)? A) 100%. B) 25%. C) 75%. D) 50%.

D) 50%. A disabled worker's unmarried dependent child who is younger than 18 years, or who is disabled before reaching age 22, is eligible for monthly benefits equal to 50% of the worker's PIA.

When agents act on behalf of insurers, they are acting under which legal principle? A) Reasonable expectations. B) Utmost good faith. C) Estoppel. D) Agency.

D) Agency. By legal definition, an agent is a person who works for another person or entity (known as the principal), with regard to contractual arrangements with third parties. An authorized agent has the power to bind the principal to contracts, and to the rights and responsibilities of those contracts.

Which of the following would most likely be reduced due to the presence of other available disability benefits? A) Social Security benefits. B) Workers' compensation payments. C) Accidental death and dismemberment (AD&D) benefits. D) Disability income benefits under a group policy.

D) Disability income benefits under a group policy. Group disability policies often coordinate, and thereby reduce, the payment of benefits if Social Security and other government benefits are paid.

Marilyn is enrolled in Medicare Parts A and B. She lacks prescription drug coverage. Her insurance agent recommends that she purchase Medicare supplement Plan J as a comprehensive means of covering her prescription drug costs. What should Marilyn do? A) Purchase Plan J, but with limited coverage for prescription drugs. B) Consider the purchase of Plans H or I as alternative means of obtaining this coverage. C) Consider the recommendation if she trusts her agent. D) Ignore the recommendation because Plan J is no longer available with prescription drug coverage.

D) Ignore the recommendation because Plan J is no longer available with prescription drug coverage. Three of the standard Medicare supplement plans-H, I, and J-include coverage for prescription drugs. However, as of January 1, 2006, they cannot be sold with coverage for prescription drugs. Instead, Medicare beneficiaries who do not already have coverage for prescription drugs under Plans H, I, or J (bought before January 1, 2006) must obtain this coverage through Medicare Part D. A beneficiary who has Plan H, I, or J and enrolls in Part D will have the drug coverage eliminated from the Medicare supplement plan. 23.5.1

Which kind of deductible is entirely or partially absorbed by a basic medical expense policy? A) Corridor. B) Decreasing. C) First dollar. D) Integrated.

D) Integrated. All or part of the integrated deductible is absorbed by, or integrated into, the basic medical expense policy. Then major medical benefits are payable.

Which of the following statements about Medicare Part D is CORRECT? A) It helps cover the costs of hospitalization. B) Some plans offer basic drug coverage. C) Benefits are available only through Medicare Advantage plans. D) It is available to anyone enrolled in Medicare Part A or B.

D) It is available to anyone enrolled in Medicare Part A or B. Medicare Part D helps cover the cost of prescription drugs. It is available to anyone enrolled in Medicare Part A or B. Benefits are available through private prescription drugs plans or Medicare Advantage plans. All plans must offer basic drug coverage.

Which of the following types of health insurance coverage is always available on a group basis? A) Medical expense. B) Disability income. C) Accidental death and dismemberment. D) Maternity care.

D) Maternity care. Disability income, medical expense, and AD&D insurance can all be written on both an individual and a group basis. It is a federal requirement, however, that all group plans offer maternity care. Most individual plans do not offer maternity benefits.

A disabled 65-year-old employee of a company with 90 employees suffers a heart attack and, as a result, becomes totally disabled. Which of the following statements describes how his health benefits will be paid? A) Because he is over age 65, Medicare is responsible for paying all benefits. B) Because he is an active employee, his employer-sponsored health insurance is responsible for paying all benefits. C) His employer-sponsored health insurance pays full benefits. After that, Medicare pays the remainder. D) Medicare pays all or the majority of benefits. After that, his employer-sponsored health insurance may pay an additional benefit.

D) Medicare pays all or the majority of benefits. After that, his employer-sponsored health insurance may pay an additional benefit. The Medicare Secondary Rule (which requires the private insurer to first pay benefits) does not apply to groups of fewer than 100 persons. Therefore, it is likely that Medicare will pay benefits up to maximum eligibility. Thereafter, if the employee is covered under the group plan, that plan will then pay additional benefits.

The right to continue group health insurance after termination of employment extends to which of the following benefits? A) Dental benefits. B) Vision benefits. C) Prescription drugs. D) Surgical expenses

D) Surgical expenses

Which one of the following statements about the Consolidated Omnibus Budget Reconciliation Act of 1985 is NOT correct? A) The employer must provide the terminated employee with a 60-day period in which to exercise any option under COBRA. B) The maximum duration of coverage for a deceased employee's dependents is 36 months. C) COBRA legislation does not apply if the employer has fewer than 20 employees. D) The terminated employee must pay the group premium to the insurer within a 60-day grace period.

D) The terminated employee must pay the group premium to the insurer within a 60-day grace period. COBRA requires that upon death, divorce, or employment termination, an employer must provide a 60-day period during which the employee and his dependents may continue group health insurance coverage at the participant's own expense. However, COBRA does not apply if the employer has fewer than 20 employees. The maximum duration of continued coverage is 18 months for terminated employees and 36 months for eligible dependents of a deceased employee. Coverage terminates for non-payment of premium if payment is not made by the end of a 30-day grace period.

All of the following statements are correct regarding long-term care insurance EXCEPT: A) a policyholder may return a policy within 30 days and receive a refund of the premium. B) a policy may not condition eligibility on a prior hospitalization requirement. C) all policies must be filed with and approved by the Commissioner before being used. D) a policy may be terminated because of the insured's age.

D) a policy may be terminated because of the insured's age. A long-term care insurance policy may not be terminated because of the insured's age or deteriorating health.

Sarah pays $250 each month in premiums for her personal dental insurance policy and earns $300,000 a year as CEO of a small company. If she incurs $500 in dental expenses and the insurer reimburses her for these costs, Sarah: A) can take an income tax deduction for the amount of premiums paid for dental insurance and for the $500 in expenses. B) can take an income tax deduction for the amount of premiums paid for the dental insurance. C) can take an income tax deduction for the $500 in dental expenses. D) cannot take an income tax deduction for either the premiums paid or the $500 in dental expenses.

D) cannot take an income tax deduction for either the premiums paid or the $500 in dental expenses. Premiums that Sarah pays on a personal dental insurance policy are not deductible unless they exceed 10% of her adjusted gross income. The same rule applies to unreimbursed medical expenses. Because Sarah was reimbursed for the full amount of her dental costs, she cannot take an income tax deduction. In addition, because the amount of premiums does not exceed 10% of her adjusted gross income, she cannot deduct the premium costs.

All of the following are optional provisions in a health insurance policy EXCEPT: A) illegal occupation. B) unpaid premium. C) misstatement of age. D) change of beneficiary.

D) change of beneficiary. All health insurance policies must contain a change of beneficiary provision, which gives the insured the right to change the beneficiary unless the insured makes an irrevocable beneficiary designation. Optional provisions include a misstatement of age provision, which provides that if the insured's age was misstated, the amount payable will be equal to what the premium paid would have purchased at the correct age. An unpaid premium provision is also optional, and allows the insurer to deduct the amount of any unpaid premium or any note or order written against the policy. An illegal occupation provision, which states that the insurer is not liable for losses occurring while the insured committed a felony or engaged in an illegal occupation, is also optional.

The term of office of the Commissioner of Insurance is: A) one year. B) three years. C) unlimited. D) four years.

D) four years. The Commissioner of Insurance is elected by the people of North Carolina. The Commissioner's term begins on January 1 following the election and lasts for 4 years or until a successor is elected. The Commissioner is the head of the North Carolina Insurance Department, which regulates the insurance industry in the state.

With an accidental death and dismemberment (AD&D) policy, the capital sum would most likely be paid as the result of: A) loss of sight caused by a self-inflicted gunshot wound. B) the death of the insured from an accident. C) the death of the insured following the amputation of both legs. D) loss of sight caused by an accident.

D) loss of sight caused by an accident. The capital sum is the amount paid for accidental loss of sight or accidental dismemberment. The principal sum is the death benefit. Most policies do not pay a benefit for self-inflicted injuries.

Anyone acting without the proper insurance license: A) can be fined up to $10,000. B) can be imprisoned for up to 3 years. C) is guilty of a felony. D) may be guilty of a misdemeanor.

D) may be guilty of a misdemeanor. Anyone acting without the proper insurance license may be deemed guilty of a misdemeanor. Upon conviction, she must pay a fine of at least $1,000 but not more than $5,000, be imprisoned for at least one year but not more than two years, or both.

Individuals claiming a need for Medicaid must prove that they cannot pay for their own nursing home care. In addition, the potential recipient must: A) be at least 70 years old. B) be receiving Social Security. C) be a long-term care insurance policyowner. D) need the type of care that is provided only in a nursing home.

D) need the type of care that is provided only in a nursing home. To qualify for Medicaid nursing home benefits, an individual must be at least 65 years old, blind, or disabled; be a U.S. citizen or permanent resident alien; need the type of care that is provided only in a nursing home; and meet certain asset and income tests.

All of the following medical expenses generally are excluded from coverage under individual medical expense policies EXCEPT: A) nursing care at home. B) treatment for drug and alcohol abuse. C) custodial care in a convalescent facility. D) nursing care in a hospital.

D) nursing care in a hospital. Individual medical expense policies cover nursing care in a hospital, but usually exclude treatment for drug or alcohol abuse, custodial care in a convalescent home, and nursing care at home.

A business disability buy-out insurance plan may include an "elective indemnity." This feature can be used to: A) reimburse other business owners or partners for the insured's loss of services to the business. B) enable the business owners to add other owners to the policy. C) pay a lump-sum death benefit to the insured's family. D) postpone payment of the benefit to the insured.

D) postpone payment of the benefit to the insured. Under the elective indemnity provision, the owners can elect to take either periodic payments or postpone the benefit until it is determined that the disabled owner will not recover sufficiently to return to work, thereby postponing the decision regarding the sale of the disabled owner's share of the business to the other owners.

An accident and health insurance policy must state all of the following EXCEPT: A) that there is a grace period of at least 7 days for weekly premium policies, 10 days for monthly premium policies, and 31 days for all other policies. B) the time the insurance takes effect and terminates. C) that there is a change of beneficiary provision. D) that liability is limited if the insured was engaged in an illegal occupation or used drugs.

D) that liability is limited if the insured was engaged in an illegal occupation or used drugs. Time taken for insurance to take effect and terminate, a grace period, and change of beneficiary provision are required provisions in every accident and health insurance policy issued in North Carolina. Engaging in an illegal occupation or drug use is an optional provision and may or may not be included in an accident and health policy.

Tom is covered under Medicare Part A. He spends 1 week in the hospital for some minor surgery and returns home on July 10. It was his first hospital stay in years. Which of the following statements is CORRECT regarding his Medicare coverage? A) Medicare will pay benefits, but Tom must make a daily copayment. B) After Tom pays the deductible, Medicare will pay 80% of all covered charges. C) Medicare will not cover Tom's hospital expenses because he was not hospitalized for 10 consecutive days. D) After Tom pays the deductible, Medicare will pay 100% of all covered charges.

D)After Tom pays the deductible, Medicare will pay 100% of all covered charges. Medicare pays 100% of covered services for the first 60 days of hospitalization after the deductible is paid.

Joy, age 50, owns an individual long-term care insurance policy and pays $1,000 a year in premiums. After getting injured in a car accident, Joy needed skilled nursing care, for which her policy paid $150 a day in benefits. Which of the following statements is CORRECT? A) Joy must include all of the LTC benefits received in her income because she is younger than age 65. B) Joy must include part of the LTC benefits received in income. C) Joy cannot take an income tax deduction for any of the LTC premiums paid. D) Joy can exclude all of the LTC benefits from income.

D)Joy can exclude all of the LTC benefits from income. Amounts received under a long-term care insurance contract are treated as amounts received for personal injuries and sickness and are generally not includable in gross income. However, the amount of LTC benefits that can be excluded from income is limited to the greater of the costs incurred for qualified LTC services (less payments received for reimbursement) or $260 per day (in 2007, with increases every year). 25.3.1

Which of the following statements about Medicare supplement (Medigap) policies is NOT correct? A) Medigap policies supplement Medicare benefits. B) Medigap policies pay most, if not all, Medicare deductibles and copayments. C) Medigap policies pay for some health care services not covered by Medicare. D) Medigap policies cover the cost of extended nursing home care.

D)Medigap policies cover the cost of extended nursing home care. Medigap policies do not cover the cost of extended nursing home care.

Under the optional illegal occupation provision, which of the following applies if a loss occurs while the insured is participating in a felony or an illegal occupation? A) The insured's policy is automatically canceled. B) Benefits are reduced by an amount specified in the policy. C) The policy is voided, as if it were never issued. D) The insurer is not liable for that specific loss.

D)The insurer is not liable for that specific loss. Under the optional "illegal occupation provision," the insurer is not liable for any loss sustained from the insured's commission of a felony or engagement in an illegal occupation.

Jane submits written notice of a health insurance claim to her insurance company. After a month has passed, the insurer still has not provided her with a claim form. Which of the following statements is CORRECT? A) Jane must resubmit her notice of claim since more than 30 days have passed. B) Jane should assume her claim has been denied. C) The insurer may not deny the claim since it did not timely supply a claim form. D) The insurer should have furnished Jane with a claim form no later than 15 days after receiving notice of the claim.

D)The insurer should have furnished Jane with a claim form no later than 15 days after receiving notice of the claim. All individual accident and health insurance policies must contain a claim forms provision. According to this section, the insurer is required to provide a claim form to Jane within 15 days of receiving her written notice of a claim.

All of the following provisions are optional in an individual health insurance policy EXCEPT: A) unpaid premium provision. B) misstatement of age provision. C) change of occupation provision. D) incontestability provision.

D)incontestability provision. An incontestability provision stating that 2 years after the date of issue, no misstatements on the application can be used to void the policy or deny a claim (except fraudulent misstatements), is a mandatory provision in all individual health insurance policies. Three optional provisions are change of occupation, misstatement of age, and unpaid premium. A change of occupation provision provides for a change in benefits or premiums if an insured changes his occupation from a high-hazard occupation to one that is less hazardous and vice versa. A misstatement of age provision provides that if the insured's age was misstated, the insured will receive the benefits that the premium paid would have purchased at the correct age. An unpaid premium provision states that when a claim is paid, any premium due and unpaid may be deducted from the claim payment.