Chapter 3 Review (Health): Medical Expense Insurance

Question 1

Basic medical expense insurance is sometimes called _____ _____ _____. Unlike major medical expense insurance, it provides benefits up front without having to satisfy a deductible

Answer 1

“first dollar insurance”

Question 2

The benefits provided by basic medical expense insurance are _____ than the actual expenses incurred

Answer 2

lower

Question 3

A particular fee charged by a physician or other health professional is called a

Answer 3

usual, customary, and reasonable expense

Question 4

There is no deductible and the limits on room and board are set at a specified dollar amount per day up to a maximum number of days in a

Answer 4

Hospital Expense Policy

Question 5

_____ _____ is a method of utilization review that takes place on-site when a patient is confined to a hospital. A typical result of a ____ _____ is that the length of stay in the hospital is monitored.

Answer 5

Concurrent review

Question 6

Under the _____ _____ _____, every surgical procedure is assigned a dollar amount by the insurer

Answer 6

surgical schedule approach

Question 7

Under the _____ _____ _____, the surgical expense is compared to what is deemed reasonable and customary for the geographical part of the country where the surgery was performed. If the charge is within the reasonable and customary parameters, the expense is normally paid in full. If the charge is more than what is reasonable and customary, the patient must absorb the difference

Answer 7

reasonable and customary approach

Question 8

_____ _____ _____ charges are the maximum amount the insurer will consider eligible for reimbursement under a health insurance plan. It is based primarily on average charges within a geographic area

Answer 8

Usual, customary, and reasonable (UCR)

Question 9

The _____ _____ _____ is similar to the surgical schedule method. The difference is that instead of a flat dollar amount being assigned to every surgical procedure, a specified set of units is assigned. The policy will carry a stated dollar-per-units amount (known as the conversion factor) to determine the benefit

Answer 9

relative value approach

Question 10

Unlike the basic medical expense plans, these policies usually carry deductibles, coinsurance requirements, and have large benefit maximums

Answer 10

Major Medical Expense plans

Question 11

The list of prescription drugs covered by a pharmacy benefit is called a

Answer 11

drug formulary

Question 12

• These policies are used to supplement the coverage payable under a basic medical expense policy
• After the basic policy pays, the _____ _____ _____ will provide coverage for expenses that were not covered by the basic policy, and expenses that exceed the maximum
• If the time limitation is used up in the basic policy, the supplemental coverage will provide coverage thereafter

Answer 12

supplemental major medical

Question 13

• Combines the features of basic expense coverage and major medical coverage, sold as one policy
• Cover practically all medical expenses, hospital, physicians, surgical, nursing, drugs, laboratory tests, etc.
• include a deductible (usually a single deductible per person and per family, but corridor deductible may also apply), coinsurance, and are generally sold on a group basis. An example of a comprehensive health policy is a major medical policy.
• most of these plans contain a “lifetime maximum benefit” that limits the insurer’s total exposure under a contract, while few contain a “per cause maximum benefit” which limits the medical expenses covered for each cause
• More expensive plans are characterized by an unlimited lifetime limit

Answer 13

Comprehensive major medical policies

Question 14

The amount of coverage restored is usually a percentage of the used benefit when dealing with _____ _____ _____ in a major medical policy.

Answer 14

Restoration of used benefits

Question 15

This form of deductible is a stated dollar amount that applies to a covered loss (for example $500). This deductible is applied per occurrence, per insured individual.

Answer 15

Flat (initial) deductible

Question 16

This form of deductible covers the gap between basic coverage and major medical. When a major medical policy is supplementing basic coverage (that contains no deductible), the deductible is not applied until the basic coverage has been exhausted

Answer 16

Corridor deductible

Question 17

This form of deductible is used when a major medical plan is supplementing basic coverages. For example, If the major medical has a $500 deductible and the insured has basic coverage of $500 or more, then, in the event of a claim, the amount paid by the basic coverage satisfies the major medical deductible. However, if the basic does not cover the entire deductible amount of the major medical plan, the insured is required to make up the difference

Answer 17

Integrated deductible

Question 18

In a _____ deductible, the insured must satisfy a deductible for each accident or illness.

Answer 18

per-cause

Question 19

In an _____ deductible, the insured only has to meet the deductible amount once during the benefit period.

Answer 19

all-cause

Question 20

With a _____ deductible, the deductible year begins on January 1st and ends on December 31st. These reset every January 1st. They require the insured to pay a specific sum out of pocket before any benefits are paid in a calendar year.

The carryover provision permits expenses incurred during the last 3 months of the calendar year to be carried over into the new year if needed to satisfy the deductible for the next year.

Answer 20

Calendar-year deductible

Question 21

Some major medical plans include a _____ _____ _____ _____ provision which states that only one deductible (usually equal to the individual deductible amount) need be satisfied when two or more insureds from the same family are injured in the same accident or suffer concurrently from the same illness.

Answer 21

common accident or sickness

Question 22

A deductible of this kind waives the deductible for all family members after some of them have satisfied individual deductibles within the same year. Once the family deductible is satisfied, future covered medical expenses of all family members are paid just as if each member of the family had satisfied his or her individual deductible.

Answer 22

family maximum deductible

Question 23

• This is a feature designed to limit the amount of expense the insured may be exposed to in a policy year
• Often, it will state that after the insured has paid a specific amount toward his covered expense, the insurer, will pay 100% of the remaining expenses for the remainder of the policy year, up to the maximum limit of the policy.

Answer 23

Stop - Loss feature

Question 24

• Most policies contain a benefit limitation on _____ _____ _____
• Limitations apply to all _____ _____ _____ whether or not the insured declared them on the application
• Unlike the impairment rider, the exclusion for _____ _____ _____ is subject to the time limit for certain defenses
• When considering the replacement of an individual accident and health insurance policy, a _____ _____ _____ exclusion in the new contract may reduce the insured’s benefits. The new policy may not cover the same health conditions under the new policy.

Answer 24

pre-existing conditions

Question 25

A tax-advantaged medical savings account available to individuals who are enrolled in a high-deductible health plan (HDHP). To be eligible, one must also 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

Answer 25

Health Savings Account (HSA)

Question 26

• The funds contributed to an account are not subject to federal income tax at the time of deposit and roll over and accumulate year to year if not spent.
• These are owned by the individual and are an alternate tax-deductible source of funds used to pay for qualified medical expenses at any time without federal tax liability or penalty.
• They are designed to help individuals save for qualified health expenses such as deductibles, coinsurance, prescription drugs etc. that they, their spouse, or their dependents incur

Answer 26

Health savings accounts (HSAs)

Question 27

Distributions other than for qualified medical expenses to a Health Savings Account are taxable and subject to a penalty of _____.

Answer 27

20%

Question 28

• Must be established by the employer
• Employer-funded, tax-advantaged health benefit plans that reimburse employees for out-of-pocket medical expenses and individual health insurance premiums.
• Unused amounts may be carried forward for reimbursement in future years.
• Reimbursements may be tax-free if the employee paid for qualified medical expenses or a qualified medical plan
• Employee does NOT contribute to an _____

Answer 28

Health Reimbursement Arrangements (HRA)

Question 29

• Created to help employees of small employers, as well as self-employed individuals, pay for their medical care expenses.
• _____ are tax-free accounts set up with financial institution such as banks and insurance companies.
• Qualified medical savings accounts are available for employers with no more than 50 employees

Answer 29

Medical Savings Accounts (MSA)

Question 30

• Tax-advantaged accounts that can be set up through a cafeteria plan of an employer.
• An _____ allows an employee to set aside a portion of earnings to pay for qualified medical expenses (such as prescription medication) as established in the cafeteria plan.

Answer 30

Flexible Savings Accounts (Flexible Spending Accounts)

Question 31

Deductibles are used in health policies to lower:

Answer 31

Overuse of medical services

Question 32

Which of the following services are NOT included under hospitalization expense coverage?

Answer 32

Surgical fees.

Question 33

Which of the following is NOT a limited benefit plan?

Answer 33

Life Insurance policy

Question 34

Which of the following BEST describes a Hospital Indemnity policy?

Answer 34

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