Chapter 9 - Other Health Insurance Concepts

Question 1

What does the coordination of benefits provision do?

Answer 1

It ensures that benefits are not paid in excess of the total losses incurred

Question 2

Occupational vs nonoccupational policies

Answer 2

• Occupational: accidents or sicknesses that occur on or off the job
• Nonoccupational: accidents or sicknesses occurring off the job

Question 3

What is partial disability and what does it cover?

Answer 3

A partial loss of income for disabled insureds who are unable to perform some, but not all, of their regular job duties

Question 4

What is residual disability and how is it calculated?

Answer 4

Residual disability is partial disability where you can still work, but at a diminished capacity

It’s calculated as a percentage, determined by current earnings and earnings prior to disablement

Question 5

What are the five basic characteristics of managed care?

Answer 5

• Controlled access to providers
• Comprehensive case management
• Preventive care
• Risk sharing
• High quality care

Question 6

What four types of benefits does workers compensation provide?

Answer 6

• Medical benefits
• Income benefits
• Death benefits
• Rehabilitation benefits

Question 7

What is subrogation?

Answer 7

The legal process by which an insurance company seeks recovery of the amount paid to the insured from a third party who may have caused the loss

Question 8

Are disability premiums tax deductible as a business expense?

Answer 8

Yes

Question 9

Are disability benefits taxable income for employees?

Answer 9

Yes - they are taxable in proportion to the percent of the premium paid by the employer

Question 10

What percent of medical expenses is tax deductible for sole proprietors and partners?

Answer 10

100%

Question 11

To what age must children of an insured be covered under the parent’s health plan?

Answer 11

26

Question 12

Does the Affordable Care Act (ACA) require all individual and group health insurance plans be issued on a guaranteed issue basis?

Answer 12

Yes

Question 13

Under the ACA, are premium discounts awarded to low-income individuals, regardless of the chosen metal levels?

Answer 13

Yes, all metal levels apply

Question 14

Contributory vs noncontributory health plan taxation

Answer 14

Contributory (employee contributes) is tax deductible and taxed as ordinary income in proportion to the contributions made by each

Noncontributory is tax deductible to the employer taxed to the employee as ordinary income

Question 15

What are the four requirements for ACA participation?

Answer 15

• Citizenship
• Living in the US
• Not incarcerated
• Not on medicare

Question 16

What are the four main features of ACA?

Answer 16

• Guaranteed issue
• No exclusions for preexisting conditions
• Coverage for children to age 26
• No limits on coverage

Question 17

What are the essential ACA benefits covered that cannot be limited?

Answer 17

ambulatory patient services
prescription drugs
rehabilitative services/devices
emergency services
hospitalization
lab services
mental health and substance
preventive and wellness
abuse treatment
maternity and newborn care
pediatric services

Question 18

What two types of ACA appeals are there?

Answer 18

Internal and external

Question 19

When must an internal ACA appeal be filed and how long does the insurer have to respond?

Answer 19

Appeal must be filed within 180 days of claim denial

Insurer must respond within 30 days of pre-service claim and 60 days if insured has received service

Question 20

When must an external ACA appeal be filed and how long does the insurer have to respond?

Answer 20

Appeal must be filed within 60 days of internal appeal outcome

Reviews must be completed within 48 hours

Question 21

What is the birthday rule in the coordination of benefits provision?

Answer 21

The “birthday rule” in the coordination of benefits provision refers to a method used to determine which parent’s health insurance plan is primary when a child is covered by both parents’ plans, where the parent with the earlier birthday in the calendar year is considered the primary payer, while the other parent’s plan is secondary

Question 22

How are key person insurance premiums and benefits taxed?

Answer 22

Since key person insurance premiums are paid after-tax, they are not tax deductible and benefits are tax-free

Question 23

How are individually-owned disability income benefits taxed?

Answer 23

Premiums are paid after-tax so premiums are not tax deductible and benefits are tax-free

Question 24

Under what employer-provided plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

Answer 24

Disability income

Question 25

For how long do short-term disability group plans pay benefits?

Answer 25

Up to 52 weeks

Question 26

What is the tax advantage of the employer paying premiums for its employees for disability income insurance?

Answer 26

Premiums are deductible as a business expense

Question 27

What type of health insurance is sold to small business owners to reimburse them for the overhead expenses?

Answer 27

BOE - Business Overhead Expense insurance

Question 28

What is the purpose of managed care health insurance plans?

Answer 28

To control health insurance claims expenses

Question 29

The provision that prevents the insured from collecting twice for the same loss is called?

Answer 29

Subrogation

Question 30

When a disabled dependent child reaches the age limit for coverage, how long does the policyowner have to provide proof of dependency in order for the dependent to remain covered under the policy?

Answer 30

31 days

Question 31

An insured is covered under 2 group health plans – under his own and his spouse’s. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?

Answer 31

$500 Once the primary insurer has paid the full available benefit, the secondary insurer will cover what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out-of-pocket costs.

Question 32

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy?

Answer 32

When the expenses exceed a certain percentage of the insured’s adjusted gross income

Question 33

How much can the sole proprietor of a business deduct in regards to his medical expenses?

Answer 33

Up to the full amount of his gross income that year

Question 34

To comply with the requirements of the Affordable Care Act, if an insurer rescinds coverage, they must provide the insured advance notice of at least

Answer 34

30 days

Question 35

What percents are covered by the employer under the various ACA metal levels?

Answer 35

Platinum - 90% Gold - 80% Silver - 70% Bronze - 60%

Question 36

Under workers compensation, what benefits are NOT included?

Answer 36

Legal

Question 37

In all health care plans under ACA, how many essential benefit categories are there?

Answer 37

10

Question 38

What is true regarding the taxation of Business Overhead Expense insurance?

Answer 38

Premiums are paid for with pre-tax dollars and are tax deductible as a business expense. However, if the insurance is used, the benefit payments are taxable

Question 39

Under which condition would an employee's group medical benefits be exempt from income taxes?

Answer 39

An employee's group medical benefits are generally exempt from taxation as income

Question 40

Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income?

Answer 40

7.5%