Chapter 16: Group Life & Health Insurance Coverages

Question 1

What do underwriting principles do?

Answer 1

Makes sure the loss experience of the group overall is favorable

Question 2

Fundamental Underwriting Principles

Answer 2

• Insurance is incidental to the group
• Flow of persons through the group
• Automatic determination of benefits
• Minimum participation requirements
• Efficient administration

Question 3

Why does having requirements for employees before they participate in the plan important?

Answer 3

So adverse selection is reduced

Question 4

Eligible groups for healthcare plans

Answer 4

• Employers
• Unions
• Fraternities/Sororities
• Credit/Debit

Question 5

Eligible employers for healthcare plans

Answer 5

• Be a full time employee
• Satisfy a probationary period (if any)
• Apply during eligibility period
• Be actively at work on effective date

Question 6

Group Life Insurance

Answer 6

A benefit that provides inexpensive life coverage. It is popular and accounts for 41% of insurance in force

Question 7

Coverage options as an employee benefit

Answer 7

• Group term life
• Accidental death & dismemberment (AD&D)
• Insurance on spouse and children
• Option to convert to permanent coverage

Question 8

Credit Life

Answer 8

These are group plans offered through banks and lending institutions to protect loans

Question 9

Group Medical Expense Insurance

Answer 9

An employee benefit that pays the cost of hospital care, physicians’ and surgeons’ fees and related medical expenses

Question 10

Coverage for group medical expense insurance is available through:

Answer 10

• Managed Care Organizations
• Commercial Insurers
• Blue Cross Blue Shields Plans
• Self-Insured Employer Plans

Question 11

Types of Health Maintenance Organizations

Answer 11

• Staff Model
• Group Model
• Network Model
• Individual Practice Association (IPA)

Question 12

Staff Model

Answer 12

Physicians are employees of the HMO and are paid a salary or a salary and an incentive bonus to hold down costs

Question 13

Group Model

Answer 13

Physicians are employees of another group that has a contract with the HMO

Question 14

Network Model

Answer 14

The HMO contracts with 2 or more independent group practices

Question 15

Individual Practice Association (IPA)

Answer 15

An open panel of physicians who work out of their own offices and treat HMO members at reduced fees, or on a fee-for-service basis

Question 16

Preferred Provider Organization (PPO)

Answer 16

Plan that contracts with healthcare providers to provide certain medical services to members at discounted fees

Question 17

PPO Basics

Answer 17

• Paid on a fee-for-service basis
• Patients not required to use a preferred provider, but the deductible and co-payments are lower if they do
• If the provider’s actual charge exceeds the negotiated fee, the provider absorbs the excess
• Most PPO do not use a gatekeeper physician

Question 18

Point-of-Service (POS)

Answer 18

Structured as an HMO, but members are allowed to go outside the network for medical care

Question 19

POS Basics

Answer 19

• Establish a network of preferred providers
• Participants select a primary care provider (PCP)
• If patients see providers who are in the network, they pay little or nothing out of pocket
• Deductibles and co-payments are higher if patients see providers outside the network