Chapter 3 Health

Question 1

M is insured under a Basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim amount M is eligible for?

Answer 1

Determined by the terms of the policy

Question 2

Which of the following can an individual use their medical flexible spending account to pay for?

Vitamins and supplements

Prescription drugs

Household expenditures

Cosmetic procedures

Answer 2

Prescription drugs

Question 3

The first portion of a covered expense that the insured is required to pay before Major Medical Coverage applies is called the

Answer 3

Initial deductible

Question 4

Which of the following BEST describes a Hospital Indemnity policy?

Coverage that reimburses an insured for surgeon expenses

Coverage that pays a stated amount per day of a covered hospitalization

Coverage that replaces lost income due to hospitalization

Coverage that pays for hospital room and board

Answer 4

Coverage that pays a stated amount per day of a covered hospitalization

Question 5

M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?

Answer 5

$1,600. In this situation, $2,200 - $200 deductible x 80% = $1,600.

Question 6

Which of these is NOT a characteristic of a Health Reimbursement Arrangement (HRA)?

Employee funds the HRA entirely

Employer funds the HRA entirely

HRA’s can be offered with other health plans

HRA’s allow reimbursement for eligible medical expenses

Answer 6

Employee funds the HRA entirely. This is inaccurate. HRA plans are employer-funded medical reimbursement plans.

Question 7

Which of the following health insurance coverages is BEST suited for meeting the expenses of catastrophic illness?

Major Medical

Hospital Expense

Surgical Expense

Hospital Income

Answer 7

Major Medical

Question 8

The phrase “This policy will only pay for a semi-private room” is an example of a(n)

Answer 8

internal limit. Certain types of expenses may have limits placed on the dollar amount of certain services or on the type of service provided.

Question 9

Which of the following individual health insurance policies will provide the broadest protection?

Hospital Expense

Surgical Expense

Major Medical

Limited Sickness

Answer 9

Major Medical

Question 10

A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will

Answer 10

Continue Coverage but exclude the heart condition. If the insured did not cite the condition on the application and the insurer did not exclude the condition, the pre-existing condition provision still applies. Exclusions are subject to the “time limit on certain defenses” provision, however.

Question 11

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a

Answer 11

High-deductible health plan. To be eligible for a Health Savings Account, an individual must be covered by a high-deductible health plan (HDHP), must not be covered by other health insurance (does not apply to accident insurance, disability, dental care, vision care, long-term care), must not be eligible for Medicare, and can’t be claimed as a dependent on someone else’s tax return.

Question 12

Which of the following statements BEST describes dental care indemnity coverage?

Services are reimbursed before the insurer receives the invoice

Services are reimbursed after insurer receives the bill

In-network dentists must always be used

Very limited list of providers

Answer 12

Services are reimbursed after insurer receives the bill

Question 13

Which of the following phrases refers to the fees charged by a healthcare professional?

Deductible

Coinsurance

Usual, customary, and reasonable expenses

Hospital expense

Answer 13

Usual, customary, and reasonable expenses

Question 14

All of the following statements about Major Medical benefits are true EXCEPT

The deductible can be expressed as a fixed dollar amount

The benefit period begins only after a specified amount of expenses have accrued

Benefits are generally expressed as a percentage of eligible expenses

Benefits have no maximum limit

Answer 14

Benefits have no maximum limit, They do have a limit

Question 15

A Health Reimbursement Arrangement MUST be established

Answer 15

By the employer. HRAs are employer-established benefit plans that must be funded by the employer.

Question 16

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?

Answer 16

Dread disease insurance. Dread disease insurance provides benefits for ONLY specific types of illnesses such as cancer or stroke.

Question 17

Which of the following types of policies frequently uses the term “deductible”?

Major Medical policy

Basic Surgical policy

Basic Hospital policy

Worker’s Compensation

Answer 17

Major Medical policy. Most major medical benefits begin to be paid after the deductible is satisfied.

Question 18

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

Answer 18

$3,000. In this situation, the insured is responsible for $1,000 deductible + 20% of the remaining bill = $3,000.

Question 19

In Major Medical Expense policies, what is the intent of a Stop Loss provision?

Answer 19

Limits an insured’s out-of-pocket medical expenses

Question 20

A characteristic of Preferred Provider Organizations (PPOs) would be

Answer 20

Discounted fees for the patient. Under Preferred Provider Organizations, patient fees are discounted in return for using listed providers.