Chapter Two: Types of Health Policies Flashcards
(171 cards)
1
Q
What is accidental bodily injury?
A
An unforeseen and unintended injury that resulted from an accident rather than a sickness.
2
Q
What is cancellation?
A
Termination of an in-force insurance policy, by either the insured or the insurer, prior to the expiration date shown in the policy.
3
Q
What is comprehensive coverage?
A
Health insurance that provides coverage for most types of medical expenses
4
Q
What is a deductible?
A
A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.
5
Q
What is a lump sum?
A
A payout method that pays the beneficiary the entire benefit in one payment.
6
Q
What does nonrenewal mean?
A
The termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy.
7
Q
What are riders?
A
Riders are added to the basic insurance policy to add, modify or delete policy provisions.
8
Q
What is the definition of sickness?
A
An illness, which first manifests itself while the policy is in force
9
Q
What does it mean if something is tax exempt?
A
Not subject to taxation
10
Q
What does it mean if something is taxable?
A
Subject to taxation
11
Q
What is the definition of underwriting?
A
Risk selection and classification process
12
Q
Basic hospital, Surgical and medical policies, and major medical policies are commonly grouped into what kind of insurance?
A
Medical expense insurance.
13
Q
What are the three basic coverages under medical expense insurance?
A
Hospital
Surgical
Medical
14
Q
What type of coverage is medical expense insurance?
A
First-dollar coverage
15
Q
What is first-dollar coverage?
A
First-dollar coverage refers to the three types of basic coverage under medical expense insurance and they do not require the insured to pay a deductible.
16
Q
How does major medical expense work?
A
The insurance company reimburses the medical service provider for any amount due
17
Q
What does basic hospital expense coverage actually cover?
A
Hospital room and board
Miscellaneous hospital expenses
18
Q
Are there deductibles for basic hospital expense coverage?
A
No.
19
Q
Does basic hospital expense coverage have a limit for room and board?
A
Yes. Room and board are set at a specified dollar amount per day up to a maximum number of days.
20
Q
Do miscellaneous hospital expenses have limits?
A
Yes, outlined in the policy.
21
Q
What is another name for basic medical expense coverage?
A
Basic physicians’ nonsurgical expense coverage
22
Q
Does basic medical expense coverage usually cover visits to patients in the hospital or office visits?
A
Hospital visits.
23
Q
Are there deductibles with basic medical expense coverage?
A
No.
24
Q
Can basic medical expense coverage be purchased to cover emergency accidents?
A
Yes
25
Can basic medical expense coverage be purchased to cover maternity events?
Yes
26
Can basic medical expense coverage be purchased to cover mental and nervous disorders? Hospice Care? Home health care? Outpatient care? Nurses' expenses?
Yes
27
What are two major drawbacks of basic medical expense coverage?
These policies usually offer only limited benefits and are subject to time limitations.
28
Does basic surgical expense coverage have deductibles?
No.
29
What does basic surgical expense coverage cover?
Surgeons' fees
Anesthesiologist
Operating room when not covered as miscellaneous medical item
30
What is a surgical schedule?
Within a contract the surgical schedule lists the types of operations covered and their assigned dollar amounts.
31
What is the relative value approach?
It is an approach that assigns a number of points that are relative to the number of points assigned to the maximum benefit.
32
What factor is multipled by the relative value to calculate the total amount paid by an insurance company for a surgical procedure under a basic surgical expense coverage?
The relative value (number assigned to a surgical procedure) is multiplied by the CONVERSION FACTOR
33
What is a conversion factor?
A number that represents the total amount the insurance company is willing to pay per point (relative value)
34
An insured person has a basic surgical expense coverage policy and they go in for an open-heart surgery. The relative value for the open-heart surgery is 2000 points and the conversion factor is 15. How much is the maximum benefit?
Maximum Benefit= relative value * conversion rate
2000 (relative value) * 15 (conversion rate)= 30,000
So the maximum benefit is $30,000
35
What is the big difference between basic medical expense policies and major medical expense policies?
Major medical expense policies offer a BROAD RANGE OF COVERAGE under one policy.
36
What kind of coverage does major medical expenses policies cover?
1. Comprehensive coverage for hospital expenses (room and board and miscellaneous expenses, nursing services, and physicians' services)
2. Catastrophic medical expense protection
3. Benefits for prolonged injury or illness
37
Do major medical policies have deductibles?
Yes
38
Which type of medical policies usually require coinsurance?
Major medical policies
39
What are two common types of major medical policies?
1. Supplemental major medical policies
2. comprehensive major medical policies
40
What kind of policy is used to help pay expenses that basic medical expense policies did not?
Supplemental major medical policies
41
If there are time limitations associated with basic medical expense policies, what additional policy can cover the expenses accrued?
Supplemental major medical policies
42
What is a corridor deductible?
The amount of money a policy owner must pay after the limits of the basic policy are exhausted and before the major medical coverage pays benefits.
43
What does HMO stand for?
Health maintenance organizations
44
How many employees must an employer have to be required to provide employees with an HMO?
More than 25 employees
45
What is the major goal of HMO Act?
To increase preventative care by offering free annual check-ups for the entire family and free or low-cost immunizations to members
46
How do HMO provide benefits?
They pay for services rather than reimbursements for services
47
How do HMO designate who is eligible for coverage?
HMO offers services to those living within a specific geographical boundaries.
48
Can HMO limit choice of provider?
Yes. They have a list of physicians you can see that meet their standards.
49
What are copayments?
A copayment is a specific part of the cost of care or a flat dollar amount that must be paid by the member.
50
Are deductibles usually associated with HMOs?
No.
51
HMOs operate on a captivated basis. What does this mean?
The HMO receives a flat amount each month attributed to each member whether the member sees a phsycian or not.
52
If someone has an HMO policy and they don't see their PCP regularly, does the PCP still get paid?
Yes, the HMO will be regularly compensated for being responsible for the care of that member, whether care is provided or not.
53
What is necessary for a insured person with an HMO to see a specialty physician?
A referral from their PCP
54
Why may a PCP not want to refer a patient to a specialty physician when the patient has an HMO?
In many HMOs, there is a financial cost to the primary care physician for referring a patient to the more expensive specialist, thus the primary care physician may be inclined to use an alternative treatment before approving a referral.
55
What is the responsibility of a gatekeeper in an HMO?
To help control the cost of healthcare by only making the necessary necessary referrals.
56
Who plays the role of gatekeeper in an HMO?
The primary care physician
57
Do HMO provide inpatient hospital care out of the service area?
Yes.
58
What are some limits on HMOs in hospitals?
Treatment of mental, emotional, or nervous disorders, including alcohol or drug rehabilitation or treatment.
59
Will an HMO cover emergency care in an out-of-service area?
Yes, but they may make an effort o get the member back into the service area so that care can be provided by a salaried member physician.
60
Which type of health system pays physicians a fee for their services rather than a salary?
Preferred provider organizations (PPOs)
61
How do PPOs incentivize their consumers to pick a physician in network?
They will pay for a higher percentage of their services fees (90% for an in-network doctor vs 70% for an out-of-network doctor)
62
What is a PPO?
A group of physicians and hospitals that contract with employers, insurers, or third party organizations to provide medical care services at a reduced fee.
63
What two factors differentiate PPOs from HMOs?
PPOs do not provide care on a prepaid basis, but physicians are paid a fee for service.
Subscribers are not required to use physicians or facilities that have contracts with the PPO.
64
Can physicians and providers belong to multiple PPO groups?
Yes
65
In what kind of plan are employees free to choose a different plan every time a need arises for a medical services?
Point-of-service plan
66
True or False: PPO plans only allow consumers to see in-network doctors.
False. Members of a PPO plan are incentivized to see in-network providers because the plans are willing to pay a higher percentage for in-network providers, but a PPO plan member can see out-of-network providers.
67
Can members of POS plans see out-of-network providers?
Yes, but there may be member copays, coinsurance and deductibles that are substantially higher than in-network providers.
68
What are in-network providers called in a PPO?
Preferred
69
Where does the money in a flexible spending account come from?
Salary reduction and employer contributions,
70
What are two types of flexible spending accounts?
1. Health Care Account
2. Dependent Care Account
71
What is the purpose of a health care account?
Help pay for out-of-pocket health care expenses
72
What is the purpose of a dependent care account?
Help pay for dependent's care expenses
73
What kind of people will a dependent care account provide money related to medical and dental expenses?
1. Dependent under 13 years of age and who is claimed on federal income tax
2. A spouse who was physically or mentally not able to care for themselves
3. A dependent who was physically or mentally not able to care for themselves
74
When can an insured make changes to their benefits?
During open enrollment
75
Can an insured make changes to their benefits IF it is outside of open enrollment?
Yes, they can make changes to their benefits IF they have qualified life event changes.
76
What events are considered QUALIFIED LIFE EVENTS?
1. Marital status
2. Number of dependents
3. One of the dependents becomes eligible for or no longer satisfies the coverage requirements under the Medical Reimbursement plan for unmarried dependents due to attained age, student status, or any similar circumstance
4. The insured, the insured's spounse's or qualified dependents employment status that affects eligibility under the plan
5. Change in dependent care provider
6. Family medical leave.
77
Who sets the limits for the annual contribution for Dependent Care Accounts?
The IRS
78
What can consumers use to help pay for high deductible health plans (HDHPs)?
A health savings account.
79
What must a consumer have in order to qualify for a Health Savings Account?
1. The individual must be covered. y a high deductible el health plan (HDHP)
2. Must not be covered by other insurance
3. Must not be eligible for Medicare, and cannot be claimed as a dependent on someone else's tax return.
80
How much can a taxpayer aged 55 or older add to their HSA when opening it?
Up to $1000
81
Can Health Savings Account holders use their money towards non healthcare expenses?
Yes, but the amount withdrawn will be taxed AND if the account owner is under the age of 65 there is a 20% penalty added.
82
What is a health reimbursement account (HRA)?
Consists of funds set aside by employers to reimburse employees for qualified medical expenses.
83
Can health reimbursement accounts be rolled over to the next year?
Yes, unlike flexible savings accounts
84
Are HRAs taxable?
They are not
85
What is one benefit for employers to offer HRA?
They get tax deductions
86
Can an HRA rollover unused balances at the end of the year?
Yes
87
Does the employee contribute to a HRA?
No just the employer
88
How many employees must a company have in order to offer HRA to their employees?
Companies of all sizes can offer a health reimbursement account
89
Who determines eligibility and contribution limits for a health reimbursement account?
The employer
90
91
Who provides the funds for a health reimbursement account?
The employer solely
92
What size company can offer their employees health reimbursement accounts (HRAs)?
Companies of all sizes
93
Do HRAs have statutory limits?
Not necessarily. It is up to the employers discretion.
94
Do retirees lose their HRA when they retire from their job?
Not necessarily. It is up to the employers discretion.
95
Can HRAs transfer from employer to employer (effectively following the employee)?
No.
96
What is disability income insurance?
Insurance designed to replace lost income in the event of this contingency and is a vital component of a comprehensive insurance program.
97
What is the elimination period?
A waiting period that is imposed on the insured from the onset of disability until benefit payments commence. A deductible measured in days, instead of dollars.
98
What is the purpose of an elimination period?
It is designed to eliminate coverage for short-term disabilities, and reduce the filing of excessive claims.
99
What does a longer elimination period correlate to?
A lower premium
100
What is a probationary period?
A waiting period, often 10 to 30 days, from the policy issued date during which benefits will not be paid for illness-related disabilities.
101
Does the porbationary period apply to injured people?
No just sickness.
102
What is the purpose of the probationary period?
Reduce the chances of adverse selection against the insurer
103
What is the benefit period?
Refers to the length of time over which the monthly disability benefit payments will last for each disability after the elimination period has been satisfied.
104
Which type of policy has broader coverage one that uses "accidental bodily injury" or one that uses "accidental"?
Accidental bodily injury definition will provide broader coverage.
105
What are some examples of presumptive disability?
Dismemberment
Total and permanent blindness
Loss of speech or hearing
106
What factor determines how much you get paid a month if you have disability insurance?
How much you were earning through income
How much they are receiving from social security or workers compensation
107
What three situations would social insurance supplement (SIS) pay for?
1. When the insured is eligible for social security benefits mb but before the benefits begin.
2. If the insured has been denied coverage under social security
3. When the amount payable under social security is less than the amount payable under the rider
108
List a few situations in which disability income would not cover losses?
Losses arising from:
War
Military service
Intentionally self-inflicted injuries
Overseas residence
Injuries suffered while committing or attempting to commit a felony
109
True or False: Group plans usually specify the benefits based on a percentage of the worker's income, while individual policies usually specify a flat amount.
True
110
True or False: Short-term plans are renewable
False
111
How long do short-term group plans usually last?
Group 13-52 weeks
Individual 6 months to 2 years
112
How are short-term plans maximum benefit calculated?
Weekly benefits of 50% to 100% of the individual's income
113
How is long-term plans maximum benefit calculated?
Monthly benefits usually limited to 60% individuals income.
114
What is business overhead expense (BOE)?
An insurance sold to the BUSINESS OWNER in case of injury of the BUSINESS OWNER to help them pay for rent, utilities, employee salaries, installment purchases, or leased equipment.
115
What is a buy-sell agreement used for?
A legal agreement that specifies how the business will pass between owners when one of the owners dies or becomes disabled.
116
Do buy-sell agreements have a long or short elimination period?
Long.
117
What is the disability buyout agreement?
A document that specifies who will purchase a disabled partner's interest and legally obligates that person or part to purchase such interest upon disability.
118
Are disability buyout agreement payouts taxable?
No they are not taxable.
119
What are three types of disability income policies used for businesses?
Business Overhead Expense
Disability Buy-Sell Insurance
Key Person Disability
120
What is a key person disability policy?
Insurance purchased by the employer on the life of a key employee that has economic value to the business
121
Who controls the key employee policy?
The contract is owned by the business, the premium is paid by the business, and the business is the beneficiary.
122
Does a business need consent by the key employee to get an insurance policy on them?
Yes
123
How is accidental death and dismemberment coverage payments disbursed?
Lump-sum
Accidental Death- principal sum = full payout
Blindness or dismemberment- percentage of principal sum called CAPITAL SUM
124
What is a limited risk policy?
A type of Accidental death and dismemberment (AD&D) that defines the specific risk in which accidental death or dismemberment benefits will be paid.
Example: Travel Accident Policy
125
What is a Special Risk Policy?
A type of Accidental Death and Dismemberment (AD&D) that will cover unusual types of risks that are not normally covered under AD&D policies. It covers only the specific hazard or risk identified in the policy, such as a racer driver test-driving a new car.
126
What is a long-term care policy?
It is a policy that provides coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility.
127
True or False: Under a long-term care policy it is REQUIRED for the policy to provide coverage for at least 12 consecutive months in a setting other than an acute care unit of a hospital.
True
128
Are there elimination periods in most long-term care policies?
Yes, ranging from 0-365 days
129
How long is the average benefit period for long-term care policies?
2-5 years
Some being lifetime
130
True or False: Most LTC (long-term care) policies are guaranteed renewable.
True, but the insurer does have the right to increase the premiums.
131
Would it be okay to cancel a LTC policy on the grounds of the insured's age or the deterioration of mental or physical health?
No, it is considered a prohibited provision
132
Can an agent establish a new waiting period when they are covering over the coverage or an insured, without consent?
No. If the insured is going to make a change that will change the waiting period then that change has to be both voluntary and show increased benefit.
133
Is covering ONLY skilled nursing care, or providing significantly more coverage for skilled care than lower care a prohibited provision in LTC policies?
Yes
134
Can LTC policies exclude a POTENTIAL insured on the basis of a pre-existing condition or disease?
Yes
135
Can a LTC policy exclude a potential insured due to the presence of mental and nervous disorders or diseases?
Yes
136
Name three exclusions often seen in LTC policies.
1. Alcoholism and drug addiction
2. Treatment or illness caused by war, participation in criminal activities or attempted suicide
3. Treatment payable by the government, Medicare, workers compensation or similar coverage
137
Who is eligible for benefits under a long-term care policy?
Insured that are unable to perform some of the activities of daily living (ADLs) such as bathing, dressing, toileting, transferring positions, continence, and eating.
138
What three LEVELS of care are often seen in LTC policies?
1. Skilled nursing care
2. Intermediate care
3. Custodial Care
139
Describe a skilled nursing care.
The highest level of care in a LTC and is characterized by daily nursing and rehabilitative care that can ONLY be provided by medical personnel, under the direction of a physician.
140
Describe intermediate care.
The midrange level of care in a LTC and is characterized by the need for occasional nursing or rehabilitative care provided for stable conditions that require daily medical assistance on a less frequent basis than skilled nursing care.
141
In which settings can intermediate care take place?
Nursing home
Intermediate-care unit
Patients Home
142
Describe custodial care.
The lowest level of care in a LTC policy and is characterized by care for meeting personal needs such as assistance in eating, dressing, or bathing, which can be provided by nonsensical personnel, such as relatives or home health care workers.
CARING FOR ADL
CAN BE A NONMEDICAL PERSONNEL
143
Describe home health care.
A type of care that is often covered by LTC and is characterized by care provided by a skilled nursing or other professional services IN ONE'S HOME
144
Who creates a home health plan for the insured under a home convalescent care policy?
The attending physician
145
What is residential care?
Coverage that is provided while the insured resides in a retirement community or a residential care facility for the elderly (RCFE).
146
What care is included in an adult day care plan?
Care includes transportation to and from the day care center, and a variety of health, social and related activities. Includes meals
147
What is respite care?
Care designed to provide relief to the family caregiver, and can include a service such as someone coming to the home while the caregiver takes a nap or goes out for a while.
148
What type of LTC is more common: individual or group?
Individual
149
What are two types of groups that are eligible for group insurance?
1. Employer-sponsered
2. Association-sponsored
150
Is employer-sponsored group insurance contributory or noncontributory?
Either
151
How many members must be part of an association group to get covered by group insurance?
At least 100 members
152
How long must an association group be active to get group insurance?
Two years. They must also have a constitution, by-laws, and must hold at least annual meetings.
153
What is the master contract?
The group policy for group health insurance. It is issued to the group sponsor.
154
Who gets certificates of insurance as proof of their coverage?
Members of group insurance that are not the group sponsor
155
How can underwriters avoid ADVERSE SELECTION when evaluating an association for group insurance?
-MUST BE INCIDENTAL
-Old being replaced by young
- Persistency (do they change insurers a lot)
156
What does COBRA stand for?
The Consolidated Omnibus Budget Reconciliation Act of 1985
157
What does COBRA do?
Requires any employer with 20 or more employees to extend group health coverage to TERMINATED EMPLOYEES AND THEIR FAMILIES after a qualifying event.
158
Name three qualifying events that would allow an employee to still receive group coverage.
1. Voluntary termination of employment
2. Termination of employment for reasons other than gross misconduct
3. Employment status change: Fulll time to part time.
159
How long can COBRA cover a terminated employee?
Up to 18 months
160
How long does a terminated employee have to exercise extension of benefits under COBRA?
60 days
161
Can the employer collect the a premium from the terminated employee?
Yes. They can take up to 102% of the premium
162
How long will COBRA cover the employees family in the event of a death or divorce?
Up to 36 months
163
What are some disqualifying events that would cause a terminated employee to lose COBRA benefits?
Failure to pay premium
New group plan- terminated employee joins new group plan or employer terminates all group health plans.
Becoming eligible for Medicare.
164
What is short-term medical insurance?
Insurance plans that are designed to provide temporary coverage for people in transitions (between jobs or early retire)
165
What is accident-only insurance?
Insurance that provide coverage for death, dismemberment, disability or hospital and medical care resulting from an ACCIDENT
166
What is a critical illness policy?
A policy that covers multiple illnesses and pays a lump-sum benefit to the insured upon the diagnosis and survival of any other illnesses covered by the policy.
167
Can a patient who has cancer insurance use the lump-sum payment to pay for things other than medical bills?
Yes
168
How does hospital indemnity policies work?
Provides a specific amount on a daily, weekly, or monthly basis while the insured is confined to a hospital.
169
If a dental plan is INTEGRATED with a medical plan (like one provided from an employer) is there one or two deductibles?
There can be either one deductible for both or individuals.
170
True or False: Under the affordable care act any health plan for a child 18 years or younger must have a pediatric dental coverage as part of the health plan.
True
171
Is pediatric vision mandatory under the Affordable Care Act?
Yes
