Deck 15: Individual Health Insurance Coverages

Question 1

Which of the following statements is (are)true concerning benefit payments under long-term care insurance?
I.Reimbursement policies pay for actual charges up to a specified daily limit.
II.Per diem policies pay a specified daily benefit regardless of the charges incurred.

A)I only
B)II only
C)both I and II
D)neither I nor II

Answer 1

C

Question 2

All of the following are reasons for the increase in health care expenditures in the U.S.EXCEPT

A)Cost insulation because of third-party payers
B)Employment-based health insurance
C)Universal health insurance coverage
D)Technological advances in health care

Answer 2

C

Question 3

Which of the following statements about disability and disability income insurance is (are)true?
I.Most disability income policies replace 100 percent of gross earnings.
II.The probability of being disabled before age 65 is much higher than commonly believed,especially at younger ages.

A)I only
B)II only
C)both I and II
D)neither I nor II

Answer 3

B

Question 4

Kristen has a major medical insurance policy with a $500 calendar-year deductible,a $5,000 out-of-pocket limit,and 80-20 coinsurance.Kristen was hospitalized for a surgical procedure in March,her first health care treatment received during the year.The total bill was $20,000.Considering the deductible and coinsurance,how much of this amount must Kristen pay?

A)$3,900
B)$4,400
C)$5,000
D)$5,100

Question 5

All the following are common exclusions in a major medical insurance policy EXCEPT

A)routine dental care.
B)surgeons' fees.
C)expenses covered by workers compensation laws.
D)cost of eyeglasses.

Question 6

Which of the following statements about physician's services benefits under major medical insurance is true?

A)Most insurers use a schedule approach to determine reimbursement for surgical procedures.
B)Coverage is limited to a primary care physicians--no coverage is provided for consultation with specialists,anesthesia,or physician assistants,or therapists.
C)Surgeons are usually reimbursed on the basis of reasonable and customary charges.
D)Office visits to see a doctor are usually not covered.

Question 7

Which of the following statements is (are)typically covered under the inpatient hospital services coverage under major medical insurance?
I.The cost of a semi-private hospital room
II.Miscellaneous hospital expenses,such as X-rays and lab tests

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 8

Major medical insurance is characterized by which of the following?

A)internal limits for all categories of expenses
B)high lifetime limits
C)no exclusions
D)first-dollar coverage

Question 9

Purposes of the coinsurance provision in major medical insurance policies include which of the following?
I.To reduce premiums.
II.To prevent overutilization of policy benefits.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 10

All of the following statements about long-term care insurance are true EXCEPT

A)Premiums can be reduced by electing shorter elimination periods.
B)A common benefits trigger is the inability to perform a certain number of activities of daily living.
C)Protection against inflation is usually made available as an optional benefit.
D)Policies currently sold are guaranteed renewable.

Question 11

Problems with the current health care system in the United States include which of the following?
I.A large number of people are without health care coverage.
II.Considerable waste and inefficiency in the health care system.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 12

Martin purchased a health insurance policy.In exchange for $10,the policy will pay $100 per-day for up to 60 days if Martin is hospitalized.The type of health insurance Martin purchased is called

A)major medical insurance.
B)long-term care insurance.
C)specified disease insurance.
D)hospital confinement indemnity insurance.

Question 13

Which of the following statements about individual disability income policies is true?

A)Benefits are typically paid only for disabilities resulting from sickness.
B)Benefits paid for partial disabilities are usually greater than benefits paid by the same policy for total disabilities.
C)Most policies pay a benefit equal to 100 percent of the disabled person's lost income.
D)Newer policies often provide or make available a residual disability benefit for persons who are able to work but at a reduced income.

Question 14

Dirk suffered a heart attack and was rushed to the hospital where heart surgery was performed.His total bill for medical services was $50,000.Dirk has a major medical policy with 80-20 coinsurance,a $1,000 calendar-year deductible,and a $5,000 out-of-pocket limit.The out-of-pocket limit applies to coinsurance only.Assuming this hospitalization was the first medical care that Dirk received during the year and that all of the hospital services were eligible for coverage under the policy,how much of the $50,000 bill will the insurer pay?

A)$39,000
B)$39,200
C)$40,000
D)$44,000

Question 15

The effect of an out-of-pocket limit in a major medical insurance policy is to

A)limit the lifetime benefits payable under the policy.
B)put a cap on annual benefits that will be paid.
C)prevent the insured from receiving duplicate benefits if medical expenses are also covered under workers compensation insurance.
D)cover 100 percent of eligible medical expenses after an insured has incurred a specified amount of out-of-pocket expenses.

Question 16

Under one health care reform proposal,a government entity would be created that would compete with private insurance plans.This alternative is called the

A)health insurance exchange option.
B)public option.
C)individual health care mandate.
D)premium subsidy option.

Question 17

All of the following statements about individual disability income policies are true EXCEPT

A)Premiums are often waived while a person is disabled but must be resumed if the insured recovers.
B)At the time of purchase,the insured can choose the length of the benefit period from among several available options.
C)In order to encourage rehabilitation,benefits may be continued during periods of vocational training.
D)Most disability income insurance policies contain an elimination period of 15 or fewer days.

Question 18

Which of the following statements about a common accident provision in a major medical insurance policy is true?

A)It specifies the types of accidents that are covered without deductibles or coinsurance.
B)It specifies the method for apportioning insurance coverage among two or more policies covering an accident.
C)It specifies that only one deductible has to be satisfied if two or more family members are injured in the same accident.
D)It provides disability income benefits if an insured is disabled from an accident that also results in medical expenses.

Question 19

Which of the following statements about long-term care insurance is (are)true?
I.Long-term care insurance is inexpensive,especially if purchased at older ages.
II.Purchasers have a choice of daily benefits and benefit periods.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 20

Which of the following statements about major medical insurance policies that reimburse physicians on the basis of reasonable and customary charges is (are)true?
I.To determine if a fee for a medical procedure is reasonable and customary,it is compared to what other physicians in the same area charge for the procedure.
II.A schedule of surgical procedures and dollar amounts payable is included in the policy and all surgeons are paid the scheduled amount for the same procedure.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 21

The inability of the insured to perform one or more important duties of his or her occupation is called

A)residual disability.
B)total disability.
C)recurrent disability.
D)partial disability.

Question 22

All of the following are typical characteristics of major medical insurance EXCEPT

A)first-dollar coverage.
B)broad coverage.
C)high maximum limits.
D)coinsurance.

Question 23

Kevin has an individual major medical policy that his insurer agrees to keep in force until age 65.However,the company has the right to increase the premium each year for the underwriting class in which Kevin has been placed.Which renewal provision is found in Kevin's policy?

A)noncancellable
B)guaranteed renewable
C)conditionally renewable
D)nonrenewable for stated reasons only

Question 24

Ellen purchased a health insurance policy.Under the renewal provision in the policy,the insurer has the right to terminate coverage on the policy anniversary date.This renewal provision is

A)cancellable.
B)optionally renewable.
C)guaranteed renewable.
D)noncancellable.

Question 25

Which of the following statements about shopping for health insurance is (are)true?
I.Always select the policy with the lowest premium.
II.Consider group health insurance first.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 26

Some physicians,hospitals,and other health care organizations agree to make medical services available to insureds at discounted prices.Insureds are not required to use these entities,but if they do,care costs are less than if these entities are not used.Such health care entities are called

A)preferred providers.
B)high deductible health plans.
C)Blue Cross/Blue Shield Plans.
D)health savings accounts (HSAs).

Question 27

Consumer experts generally recommend all of the following when shopping for individual health insurance EXCEPT

A)Insure for the large loss.
B)Avoid limited policies.
C)Consider individual insurance before group insurance.
D)Use deductibles and elimination periods to reduce premiums.

Question 28

An individual health insurance policy provision excluding coverage for impairments that were present or were treated during a specified period prior to the effective date of the policy is called a(n)

A)time limit on certain defenses.
B)preexisting-conditions clause.
C)benefit period provision.
D)elimination (waiting)period.

Question 29

One long-term care insurance benefit trigger considers whether the insured needs supervision to protect against threats to health or safety due to memory loss or disorientation.This benefit trigger is referred to as a(n)

A)activities of daily living trigger.
B)medical necessity trigger.
C)needs test trigger.
D)severe cognitive impairment trigger.

Question 30

Greta purchased a long-term care policy.Greta's eligibility for benefits under the policy may be triggered by

A)how long premiums have been paid.
B)inability to perform activities of daily living.
C)continuous hospitalization for at least 60 days.
D)eligibility for Medicare benefits.

Question 31

Which of the following statements about provisions in individual health insurance policies is true?

A)If a policy is issued with a "guaranteed renewable" renewal provision,under no circumstances can the insurer raise the premium when the policy is renewed.
B)After a policy is in force for 3 months,the time limit on certain defenses provision prohibits the insurance company from denying a claim based on a fraudulent misstatement in the application.
C)The usual length of the grace period is 90 days.
D)Under the reinstatement provision,a health insurance policy that has lapsed can be put back in force.

Question 32

Barb was injured in an auto accident.She was totally disabled and collected disability income benefits for 8 months.She would like to return to work on a part-time basis to see if her recovery is complete.During this period,her insurer will pay reduced disability income benefits.This type of disability is called

A)recurrent disability.
B)presumptive disability.
C)permanent disability.
D)partial disability.

Question 33

Marcus does not have any health insurance.All of the following are guidelines that Marcus should follow when shopping for individual health insurance EXCEPT

A)Insure for the large (catastrophic)loss.
B)Consider first-dollar coverage.
C)Consider group health insurance first.
D)Purchase a policy that has a preferred provider network.

Question 34

All of the following statements about optional disability income benefits are true EXCEPT

A)Under a cost-of-living rider,benefits are periodically adjusted for inflation.
B)A Social Security rider pays additional benefits if the insured is turned down for Social Security disability benefits.
C)Adding a return of premium rider results in a lower initial premium.
D)Under an option to purchase additional insurance,the insured has the right to buy additional insurance at specified times without evidence of insurability.

Question 35

Which of the following statements is (are)true regarding the calendar-year deductible used in most major medical policies?
I.Once the deductible is satisfied,no additional deductible is payable during the calendar year.
II.A carryover provision helps to avoid paying two deductibles in a short period of time.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 36

Which of the following statements about the dual definition of total disability typically found in many individual disability income policies is (are)true?
I.During the initial period of disability,the insured must be unable to perform the duties of any gainful occupation.
II.After the initial period of disability,the insured must be unable to perform the duties of any occupation for which he or she is reasonably fitted by education,training,and experience.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 37

Which of the following statements about eligibility requirements for qualified Health Savings Accounts (HSAs)is (are)true?
I.Only individuals who are eligible for Medicare benefits can establish a qualified HSA.
II.You must be covered by a high deductible health plan and not be covered by any other comprehensive health plan to establish a qualified HSA.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 38

Jan needed health insurance.She met with an agent who described the provisions of a health insurance policy.Jan purchased the policy.When she got home,she reviewed the policy and noted several provisions were different from what the agent described.She was not satisfied with the policy and immediately sent it back to the agent with a note stating her reasons for returning the policy.Jan is guaranteed a premium refund because of which policy provision?

A)waiting period
B)time limit on certain defenses
C)ten-day right to examine the policy
D)waiver-of-premium provision

Question 39

Beth's disability income insurance policy provides benefits for accidental death,dismemberment,and loss of sight.The maximum amount payable under this benefit is known as the

A)face value.
B)cash value.
C)principal sum.
D)monthly benefit.

Question 40

One guideline when purchasing individual health insurance is to avoid limited policies.All of the following are examples of limited policies EXCEPT

A)hospital confinement indemnity policy.
B)surgical policy using reasonable and customary charges.
C)cancer policy.
D)accident-only disability policy.

Question 41

All of the following statements about the tax treatment of Health Savings Accounts (HSAs)are true EXCEPT

A)Contributions to a qualified HSA are tax deductible.
B)Distributions from a qualified HSA used to fund medical expenses are taxable income.
C)Investment income in a qualified HSA accumulates income tax free.
D)Distributions from a qualified HSA prior to age 65 for nonmedical purposes are subject to a 10 percent penalty tax.

Question 42

Which of the following statements about health savings accounts (HSAs)is true?

A)There are no limits to annual contributions that an individual may make to his or her HSA.
B)Once an individual has reached age 65 or is covered by Medicare,no additional contributions to the HSA may be made.
C)The health insurance plan covering the HSA account beneficiary is not permitted to use a deductible.
D)HSAs offer no tax benefits for the account beneficiary.

Question 43

Which of the following statements about high deductible health insurance plans is (are)true?
I.Coverage under a high deductible health plan is necessary to establish a qualified health savings account (HSA).
II.High deductible health plans provide a maximum limit on annual out-of-pocket expenses.

A)I only
B)II only
C)both I and II
D)neither I nor II