Types of Health Policies (18%)

Question 1

Accidental Bodily Injury

Answer 1

unforseen and unintended injury that resulted from an accident rather than an illness

Question 2

Cafeteria plan

Answer 2

employee benefit plan that allows insureds to choose between different types of benefits

Question 3

Cancellation

Answer 3

Termination of an in-force policy prior to the expiration date

Question 4

Comprehensive Coverage

Answer 4

provides coverage for most types of mediacl expenses

Question 5

Nonrenewal

Answer 5

termination of an insurance policy at its expiration date

Question 6

Riders

Answer 6

added to the basic insurance policy to add, modify, or delete provisions

Question 7

Sickness

Answer 7

an illness which first manifests while the policy is in force

Question 8

Basic Hospital Expense Coverage

Answer 8

room/board and miscellaneous expenses. No deductible. Limits on R&B per day and total days. Limits on misc. expenses

Question 9

Basic Medical Expense Coverage

Answer 9

Covers nonsurgical services. No deductibles. Some limits on number of visits pre day

Question 10

Basic Surgical Expense Coverage

Answer 10

No deductible. Surgical Schedule lists types of operations covered and up to what amount.

Question 11

Relative value approach

Answer 11

Each type of surgery is given a point value, and a formula converts the value to the actual dollar amount covered per point.

Question 12

What do Major Medical Policies cover?

Answer 12

1. Comprehensive coverage for hospital expenses
2. Catastrophic medical expense protection
3. Benefits for prolonged injury or illness

Question 13

When to Major Medical Policies take over?

Answer 13

When Basic Medical Expense policies are exhausted.

Question 14

What are the two types of Major Medical Policies?

Answer 14

1. Supplementary
2. Comprehensive

Question 15

True or False: Major Medical Policies usually carry deductibles

Answer 15

True

Question 16

True or False: Basic Medical Policies usually carry deductibles

Answer 16

False

Question 17

Corridor deductible (Define)

Answer 17

A deductible that is paid after Basic coverage is exhausted in order to activate major medical coverage.

Question 18

What is the main focus of Health Maintenance Organizations (HMOs)?

Answer 18

Preventive care

Question 19

In an HMO, how do Primary Care Physicians control the cost of healthcare?

Answer 19

By only making referrals when necessary.

Question 20

What is a Preferred Provider Organization (PPO)?

Answer 20

A group of physicians and hospitals that contract with employers/insurers to provide medical care at a reduced fee.

Question 21

How are medical practitioners paid differentely in an HMO and a PPO?

Answer 21

HMO: paid a salary regardless of whether the patient receives care
PPO: paid only when a member visits the physician.

Question 22

Point of Service (POS) plan (defined)

Answer 22

A combination of HMO and PPO plans

Question 23

Flexible Spending Accounts (FSAs) (defined)

Answer 23

A cafeteria plan where employers deduct from salary and are reimbursed from it for medical/dental expenses.

Question 24

Two types of FSAs?

Answer 24

1. Health Care Account
2. Dependent Care Account

Question 25

High-Deductible Health Plans (defined)

Answer 25

Higher deductibles and out of pocket limits than traditional health plans, but with lower premiums. Annual deductible must be met before benefits kick in.

Question 26

How are deductibles typically paid in an HDHP?

Answer 26

From HSAs, MSAs, etc.

Question 27

What are the consequences of using HSAs for non-medical expenses?

Answer 27

Before Age 65: Taxes plus a 20% penalty After age 65: Taxes only (no penalty)

Question 28

Health Reimbursement Accounts (defined)

Answer 28

employer funds set aside to reimburse employees for medical expenses.

Question 29

True or False: HRA amounts roll over every year

Answer 29

True

Question 30

What is the elimination period (disability insurance)?

Answer 30

waiting period between injury/disability and benefit payments. A deductible measured in days instead of dollars.

Question 31

What is the purpose of elimination periods?

Answer 31

1. Reduce excessive claims 2. Limit effective coverage to only long-term disability.

Question 32

What is the Probationary period (disability insurance)?

Answer 32

A period of 10-30 days after policy issue date before the insured can claim benefits for illness. (Accident/injury are exempt)

Question 33

Accidental Bodily Injury vs. Accidental Means

Answer 33

ABI: damage to body is unexpected and unintended (broader) AM: cause of the accident must be unexpected and unintended (narrower)

Question 34

Presumptive Disability (Defined)

Answer 34

conditions that will automatically qualify for full disability benefits. E.g. dismemberment, blindness, loss of hearing/speech.

Question 35

Social Security Rider

Answer 35

Used when SS disability benefits are: 1. lower than disability insurance (pays difference) 2. denied 3. eligible but delayed (waiting period)

Question 36

Key Person Disability

Answer 36

Purchased by an employer on the life of a key employee (example of insurable interest)

Question 37

Difference between group disability plan benefits and individual benefits

Answer 37

Group: percent of income Individual: flat amount

Question 38

Hospital Indemnity Policy

Answer 38

Pays a fixed amount each day that the insured is in the hospital