Health Iii

Front 1

Brian is the sole proprietor of a book store and paid $5,000 last year in premiums for medical expense coverage. He incurred $6,000 in medical expenses and was reimbursed for these costs under his health plan. Which of the following statements is CORRECT?

* A) Brian can take a partial deduction for the amount of premiums paid.
* B) Brian must include the benefits received from his health plan in income.
* C) Brian must include part of the benefits received from his health plan in income.
* D) Brian can take a deduction for the entire amount of premiums paid.

Back 1

a

Self-employed individuals can take an income tax deduction for all amounts paid for medical care, including insurance premiums. As a result, Brian will be able to deduct the entire amount paid for premiums ($5,000). The benefits received under the plan are not included in income.

Front 2

Which of the following types of dental insurance plan is characterized in part by the fact that dentists are effectively pre-paid for the care and treatment they provide their patients under the plan?

* A) A direct reimbursement plan.
* B) A preferred provider organization dental plan.
* C) An indemnity plan.
* D) A dental health maintenance organization.

Back 2

D

Like any HMO plan, a DHMO plan operates on the basic principle of prepaid care. Dentists are paid annually a per capita fee that covers many routine forms of care at no charge to the insured above a copayment requirement.

Front 3

Medicare is an example of:

* A) commercial insurance.
* B) debt insurance.
* C) social insurance.
* D) casualty insurance.

Back 3

C

Front 4

Medical Savings Accounts are designed to:

* A) enable senior citizens to create tax-favored accounts to defray unreimbursed medical expenses.
* B) help employees of small businesses and self-employed individuals pay for unreimbursed health care expenses on a tax-favored basis.
* C) provide health insurance coverage to employees of small businesses and self-employed individuals.
* D) help uninsured individuals pay for health care expenses on a tax-favored basis.

Back 4

B

Medical Savings Accounts are designed to help employees of small businesses and self-employed individuals pay for unreimbursed health care expenses on a tax-favored basis. MSAs are also designed to cover routine medical expenses; they are not meant to provide catastrophic coverage. Consequently, participation in an MSA is conditioned on being covered by a high-deductible contribution plan.

Front 5

A patient insured under a dental plan receives treatment and pays the dentist the full amount of the bill. The insured's employer then pays the insured a predetermined percentage of the cost. This payment plan is referred to as a:

* A) capitation fee schedule plan.
* B) direct reimbursement plan through a self-funded plan.
* C) schedule of allowances plan.
* D) usual, customary, and reasonable payment schedule plan.

Back 5

B

A direct reimbursement plan is a self-funded plan in which the patient pays the dentist for services rendered. The plan sponsor (usually the insured patient's employer) then reimburses the patient (usually an employee) for a predetermined percentage of the cost. The patient bears the burden of covering the cost for services.

Front 6

Major medical policies may include any of the following types of deductibles EXCEPT:

* A) per cause.
* B) corridor.
* C) decreasing.
* D) flat.

Back 6

C

Front 7

Which of the following statements pertaining to recurrent disabilities for disability income insurance is NOT correct?

* A) A recurrent disability is one that the insured experiences more than once.
* B) A new elimination period may or may not be required for a recurrent disability.
* C) A recurrent disability may begin a new benefit period.
* D) A recurrent disability policy provision would have no effect on the payment of benefits.

Back 7

D

Policy provisions dealing with recurrent disabilities determine how and when benefits are payable.

Front 8

According to the National Association of Insurance Commissioners' standardized model Medicare supplement policy, insurers must offer coverage for all of the following core benefits EXCEPT:

* A) coverage under Medicare Parts A and B for the first 3 pints of blood or equivalent (unless replaced according to federal regulations).
* B) the Medicare Part A deductible.
* C) Medicare Part A-eligible hospital expenses not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period.
* D) the coinsurance amount of Medicare Part B eligible expenses, regardless of hospital confinement, subject to the Medicare Part B deductible.

Back 8

B

All Medicare supplement policies must provide certain core benefits, including coverage for Medicare Part A-eligible hospital expenses not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period, the coinsurance amount of Medicare Part B eligible expenses, and coverage under Medicare Parts A and B for the first 3 pints of blood. Although Plan A does not provide coverage for the Medicare Part A deductible, other Medicare supplement policies (Plans B through J) cover this deductible.

Front 9

Which of the following qualifies as a high-deductible health plan?

* A) HMO.
* B) PPO.
* C) POS.
* D) HSA.

Back 9

D

Health savings accounts (HSAs) are tax-free bank accounts that hold money earmarked for health care. They offer two sources of coverage for health care expenses: the account itself and a high-deductible insurance policy that backs up the account with an annual deductible and a required annual out-of-pocket expense limit. The deductible and the expense limit differ for individual and family coverage, and are scheduled to increase each year.

Front 10

Which of the following methods of determining benefits under a surgical expense policy assigns a set of points to surgical procedures?

* A) Surgical schedule.
* B) Reasonable and customary costs.
* C) Relative value.
* D) Corridor offset.

Back 10

C

The relative value approach to determining benefits assigns a number of points to different surgical procedures, relative to the number of points assigned to a maximum procedure, such as a heart bypass. If a heart bypass were assigned, say, 1,000 points, every other procedure's point assignment would be relative to that. For example, an appendectomy might be assigned 200 points; setting a broken finger might be assigned five points. A dollar-per-point conversion factor is then applied to determine dollar benefits.

Front 11

The purpose of Medicare supplement insurance is to provide:

* A) coverage for certain medical expenses before the insured becomes eligible for Medicare.
* B) coverage for certain expenses not fully covered by Medicare.
* C) an alternative insurance plan for people who do not want to use Medicare.
* D) coverage to elderly people who are not covered under a corporate plan for retired employees.

Back 11

B

The primary purpose of Medicare supplement insurance is to augment Medicare by paying hospital, medical, or surgical expenses that Medicare does not cover because of the deductibles, coinsurance amounts, or other limitations. Medicare supplement policies cannot contain benefits that duplicate those provided by Medicare.

Front 12

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 days and 1 year.
* B) Between 60 days and 10 years.
* C) Between 30 and 60 days.
* D) Between 60 days and 3 years.

Back 12

D

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.

Front 13

Sidney makes $3,000 a month as a machine shop supervisor. His disability income policy provides for a monthly payment of $2,500 in the event of total disability. If Sidney were to become partially disabled, but continued to work at 60% of his pay, what would the policy pay, assuming it had a residual disability provision?

* A) $1,200 a month.
* B) $2,500 a month.
* C) $0, since Sidney was not fully disabled.
* D) $1,000 a month.

Back 13

D

A residual disability income policy ties the benefit payments directly to the proportion of actual earnings lost. In this problem, since Sidney is earning 60% of his predisability pay, the residual benefit would be 40% of the full benefit, or $1,000, calculated as .40 x $2,500.

Front 14

Insurers generally pay a maximum benefit of 60% of predisability income for disability income benefits for all the following reasons EXCEPT:

* A) because benefits paid to individual insureds are generally income tax free.
* B) because benefits are based on net, after-tax earnings.
* C) to assure that the insured does not receive more than his predisability income while disabled.
* D) to discourage malingering.

Back 14

B

Insurers require that there be a relation of earnings to insurance benefit. Benefits are based on a percentage of the insured's gross income. The benefit reflects the insured's projected take home pay, based on the gross amount.

Front 15

Blanket health insurance refers to a type of:

* A) individual accident insurance.
* B) group health and life insurance.
* C) individual health and life insurance.
* D) group accident insurance.

Back 15

D

Blanket health insurance refers to a form of group accident insurance that covers accidents only under very specific conditions. Generally, these insurance policies are limited to cover passengers on a common carrier such as an airplane or train, employees at a social function such as a company picnic, members of a school's athletic team, summer camp attendees, and volunteer firefighters while on duty.

Front 16

Which of the following workers are protected under the Age Discrimination in Employment Act?

* A) Those over age 55.
* B) Those over age 62.
* C) Those over age 65.
* D) Those over age 40.

Back 16

d

Under the Age Discrimination in Employment Act (ADEA), employers cannot discriminate against or give preference to employees age 40 or older.

Front 17

Ned recently injured his back. The insurance company might legitimately deny his claim for disability income benefits for which of the following reasons?

* A) He is not under a doctor's care.
* B) His income from investments is adequate to replace his income.
* C) His wife's income is adequate to support both of them.
* D) He injured his back while snowboarding on vacation.

Back 17

a

To qualify for benefits, the insured must be under a doctor's care. His wife's income is not a factor in his benefit, nor is the fact that he receives income from investments.

Front 18

Under Medicare Part B, the participant must pay:

* A) a yearly premium.
* B) 20% of covered charges above the deductible.
* C) a per benefit deductible.
* D) 80% of covered charges above the deductible.

Back 18

b

Part B participants are required to pay a monthly premium and are responsible for an annual deductible. After the deductible, Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges.

Front 19

Louis has 3 individual health insurance policies and is concerned that the benefits may overlap. What is likely to happen in the event he makes a claim for coverage under all three policies?

* A) If one insurer covers the risk, it will pay the claim and any premiums that apply to any excess will be returned to Louis.
* B) If two insurers cover the same risk, they will divide claims equally and refund any excess premiums to Louis.
* C) If the claim is made after the policies have been in force for at least two years, the insurer is obligated to pay all claims and pay any excess premiums directly to Louis or his beneficiary, regardless of the number of insurers covering the risk.
* D) If two or more insurers cover the same risk, there is a presumption of fraud. All policies will be canceled and all premiums will be refunded.

Back 19

a

Regardless of the number of insurers involved or how long the policies have been in force, the insurers will refund excess premiums to the insured. If one insurer covers the risk, the insurer will either pay up to a specified maximum or pay benefits under the policy elected by the insured. The payment that applies will be determined by the Other Insurance with This Insurer provision that is included in the insurer's policies. If 2 insurers cover the risk, benefits will be prorated. They will not be divided equally.

Front 20

A health insurance policy can exclude coverage for all of the following EXCEPT:

* A) preexisting conditions.
* B) pregnancy.
* C) dental care.
* D) cancer.

Back 20

d

As a general rule, a health insurance policy cannot limit or exclude coverage by type of illness, accident, treatment or medical condition, subject to certain exceptions. A policy that does not cover medical treatment for cancer would exclude coverage by type of illness.

Front 21

People age 65 or older who enroll in Medicare Part B may also select Medigap coverage during a(n):

* A) open enrollment period.
* B) free-look period.
* C) grace period.
* D) free-enrollment period.

Back 21

a

People age 65 or older who enroll in Medicare Part B are afforded a 6-month open enrollment period for purchasing Medigap insurance coverage. The coverage becomes effective the following July 1.

Front 22

Claire's employer is self-insured and establishes an exclusive provider organization (EPO) in town. When Claire goes to the doctor, which of the following is most likely to happen?

* A) She will have a deductible and will need to pay coinsurance.
* B) All of her expenses will be covered if she uses a physician who is approved under the plan.
* C) All her outpatient expenses will be covered, but hospital costs will be covered on a per diem basis.
* D) Her care will be provided through a nationwide network of HMOs.

Back 22

a

EPOs require insureds to use only approved providers, who offer care at a discount. The insured is likely to have to meet deductibles and pay coinsurance amounts.