Deck 16: Medical Expense and Disability Insurance

Question 1

Jean's health insurance policy has a 70/30 participation deductible. The policy has no other deductible provisions,nor does it have an annual out-of-pocket maximum limit. If Jean has brain transplant surgery that results in medical bills of $300,000,how much of the medical bills will her insurer pay?

A)$210,000
B)$90,000
C)$300,000
D)Cannot be determined from the given information

Answer 1

A

Question 2

Granny Clampett's health insurance policy has a $500 annual aggregate deductible,and 80/20 cost sharing deductible,and a $5,000 maximum annual out?of?pocket cap of $5,000. She wrecks her Harley and breaks her hip,and her total medical bills for the injury are $122,721. How much will her insurer pay for this claim?

A)$5,500
B)$97,777
C)$98,177
D)$117,721

Answer 2

B

Question 3

Your personal health insurance policy provides the following coverage:
For all covered medical bills,you must pay a $100 annual aggregate deductible
After meeting that deductible,you must share in all additional expenses on a 90/10 basis
In any one year,your out?of?pocket maximum expenditure will not exceed $1,000
In 2009 you fall and crack your skull. The covered medical bills you incur total $7,100. How much will you have to pay for this loss,and how much will the insurer pay?

A)You pay $100, your insurer pays $7,000
B)You pay $800, your insurer pays $7,000
C)You pay $800, your insurer pays $6,300
D)You pay $1,000, your insurer pays $6,100

Answer 3

C

Question 4

The purpose of long term care insurance is to:

A)pay supplemental Medicare benefits when 60 days of coverage has been exceeded
B)pay for housekeeping services for elderly disabled retirees on Medicare or Medicaid
C)pay for short stays in a hospital for the purpose of rehabilitation
D)pay for services in a long tem care facility such as custodial care, skilled nursing care, intermediate care, or hospice care

Question 5

The preexisting condition clause in health insurance:

A)makes a preexisting insurance contract pay for prior medical conditions
B)eliminates coverage for conditions that existed before the effective date of the current contract
C)coordinates the payment of already existing conditions among multiple policies
D)provides blanket coverage for preexisting conditions

Question 6

The waiting period in disability income insurance:

A)eliminates payment for minor illness
B)provides larger benefits to the insured
C)provides indirect loss coverage
D)integrates employment sick days with the disability plan

Question 7

Which of the following clauses are associated with major medical coverage?

A)subrogation
B)mortgagee
C)replacement cost
D)deductible

Question 8

Criticisms of the American health care system include all of the following except:

A)waiting to repair the system will make cost control and universal access worse
B)the current system is more consistent with the American political philosophy than socialized medicine
C)Americans pay too much for health care
D)too many Americans do not have adequate access to health care

Question 9

JoEllen has a major medical policy with a $500,000 lifetime aggregate limit,a $1,000 annual deductible and 80% coinsurance.Her health losses for the year include the following: hospital bills of $42,000;surgeon's fees of $14,000,prescription medication expenses of $5,000. How much will JoEllen's insurance pay for this loss?

A)$48,000
B)$48,800
C)$60,000
D)$61,000

Question 10

Major medical insurance:

A)always provides the same benefits as basic medical, but has higher limits
B)is designed for low income consumers
C)is sold only to groups
D)has a high limit of coverage

Question 11

Which one of the following is not a reason for the increase in U.S.health care costs?

A)more expensive medical equipment and buildings
B)increased medical malpractice insurance costs
C)hospital labor operating costs
D)increased cost of funeral expenses

Question 12

The strictest definition of "disability" used in disability insurance products is the:

A)inability to engage in any occupation
B)inability to make the same income earned before the onset of the disability
C)inability to earn non wage income
D)inability to engage in one's regular occupation

Question 13

Critics of HMO's say that:

A)HMO members have too many choices of doctors they can use and services they can receive
B)HMO doctors waste money because they have no incentive to control costs
C)The 10% deductible required for every procedure is cost prohibitive for most citizens
D)none of the above

Question 14

How does Blue Cross health insurance cover hospitalization?

A)by covering a specific number of days in the hospital
B)it pays up to 80% of all usual and customary charges in a semi-private room
C)it pays a flat dollar amount per day of hospitalization, regardless of the actual charges incurred
D)hospitalization coverage is not provided by Blue Cross policies

Question 15

Which of the following is a cost shifting technique in health insurance?

A)utilization review
B)generic drugs
C)second opinions
D)increased deductibles

Question 16

Which is the most desirable type of health insurance renewability feature?

A)nonrenewable
B)noncancellable
C)guaranteed renewable
D)optionally renewable

Question 17

Granny Mayberry's health insurance policy has a $500 annual aggregate deductible,80/20 cost sharing deductible,and a $5,000 maximum annual out?of?pocket cap of $5,000. She wrecks her Harley and breaks her hip,and her total medical bills for the injury are $12,890. How much will her insurer pay for this claim?

A)$7,890
B)$10,312
C)$9,912
D)$12,890

Question 18

Which of the following is not a type of health insurance coverage?

A)basic medical expense insurance
B)Medicare supplemental coverage insurance
C)double indemnity insurance
D)major medical insurance

Question 19

Which of the following is NOT typically included in a major medical insurance policy?

A)large deductible
B)participating provision
C)large number of exclusions
D)high face amount

Question 20

Which of these health insurers normally rewards its doctors through profit sharing?

A)Traditional Health Insurers
B)Blue Cross/Blue Shield Organizations
C)Health Maintenance Organizations
D)Preferred Provider Organizations

Question 21

In 2004 the U.S.spent _______ on health care.

A)$900 billion
B)$1.1 trillion
C)$1.9 trillion
D)$3.7 trillion

Question 22

Which statement is true?

A)Spending for physicians' services in the U.S. has increased
B)Spending for hospital services in the U.S. has increased
C)Health care spending in the U.S. has increased
D)All of the above

Question 23

Long-term care policies:

A)are not standardized
B)are purchased by more than 70% of U.S. senior citizens
C)provide coverage that is normally triggered by an inability of the insured to understand the ramifications of their actions
D)legal in only 38 states

Question 24

Major medical insurance has relatively large deductibles.

Question 25

An insured in a preferred provider organization pays less out of his pocket if he chooses to use:

A)an out-of-network physician
B)a preferred provider
C)his/her regular physician
D)a chiropractor

Question 26

Which statement is false?

A)Health spending rose 7.9% in 2004.
B)The share of personal health spending associated with hospital services has increased since 2000.
C)The percentage of the U.S. population without health insurance is 15.7%
D)The share of personal health spending growth associated with prescription drug spending has declined since 2000.

Question 27

Because medical expenses may be covered by more than one policy,health insurance policies normally contain a ______________ clause to prevent overpayment to the insured.

A)coordination-of-benefits
B)double indemnity
C)pro-rata
D)other insurance

Question 28

Which of the following is false?

A)Within the next two decades, about 50 million people born between 1946 and 1964 will retire
B)Medicare insurance currently finances over 60 percent of all long-term nursing home care expenses
C)The mobility of American families means that many disabled elderly persons will not have children living close enough to assist them
D)As our society ages and health care costs increase, long-term care facilities will become more necessary

Question 29

Medigap policies must:

A)have a six-month open enrollment period
B)provide a core group of minimum benefits
C)not exclude pre-existing conditions for more than six months
D)all of the above

Question 30

The term "HMO" means:

A)Health Maintenance Organization
B)Health Management Organization
C)Healthy Mamas Organization
D)Hospital Management Organization

Question 31

Major medical insurance usually requires the insured to pay a percentage of all losses after a deductible up to an out?of?pocket limit.

Question 32

All of the following are individually-purchased health insurance products except:

A)Medicaid insurance
B)Long-term care insurance
C)Basic medical insurance
D)Major medical insurance

Question 33

Medical expense insurance,such as that provided by Blue Cross,has relatively large deductible provisions.

Question 34

More than half of all health insurance in the U.S.is provided by:

A)Blue Cross Plans
B)Traditional Health Insurers
C)HMOs & PPOs
D)HMOs only

Question 35

HMOs:

A)are the same as PPOs but cover only groups of individuals
B)collect a capitation payment for each insured and provide "comprehensive" health and preventive care
C)tend to be found mostly in rural areas
D)provide a reduced fee if the insured has zero claims during the preceding policy year

Question 36

Preadmission testing in health insurance is a form of:

A)utilization review
B) cost containment
C)catastrophe prevention
D)adverse selection

Question 37

The term "PPO" means:

A)Preferred Participation Organization
B)Participating Physician Organization
C)Physicians Participation Organization
D)Preferred Provider Organization

Question 38

A "guaranteed renewable" health insurance policy is also known as a "noncancellable" policy.

Question 39

Blue Cross is

A)owned by the doctors
B)owned by Blue Shield
C)not sold on a group basis
D)a hospital service prepayment plan

Question 40

Disability income insurance generally requires an elimination or waiting period before benefits begin.

Question 41

Less than half of the U.S.population is covered by health insurance.

Question 42

Explain why the definition of disability is important in disability income contracts. Provide some examples of disability showing the range of definitions.

Question 43

Explain how a typical major medical contract works.

Question 44

HMOs are health insurers specializing in cancer insurance.

Question 45

Individual Medigap policies sold today must return in benefits at least 60 percent of the premium earned.

Question 46

A common exclusion in health insurance policies is any preexisting condition.

Question 47

Disability income insurance replaces income that cannot be earned while a person is disabled according to the contract's definition of disability.

Question 48

Group Medigap policies sold today must return in benefits at least 90 percent of the premium earned.

Question 49

Insurers cannot sell a Medigap policy to someone who already has such a policy,unless the new policy will replace the existing one.

Question 50

What is the difference between an HMO and a PPO in providing health care?

Question 51

Distinguish between a guaranteed renewable and a noncancellable health insurance contract.

Question 52

Distinguish between cost shifting and cost containment in health care.

Question 53

Traditional Blue Cross benefits are expressed in terms of services rather than dollars.

Question 54

The participation provision is generally associated with major medical insurance.