State: California | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. Which provision provides vocational rehabilitation or retraining to help the insured return to work?
Rehabilitation benefits cover retraining or other services to help the insured re-enter the workforce.
2. If a long-term care contract is not a 'qualified' LTC contract under IRC 7702B, how are the benefits generally taxed?
Non-qualified LTC benefits are generally taxed as ordinary income to the extent they exceed the premiums paid (the investment in the contract).
3. Which statement correctly describes a copayment?
A copayment is a fixed amount due at the time of service (e.g., $20 for a doctor visit). Coinsurance, by contrast, is a percentage of the allowed charge after any applicable deductible.
4. Which feature helps individuals budget for medical costs by providing predictable costs at the point of service?
Copayments are fixed amounts paid at the time of service, providing predictable costs; coinsurance is a percentage of costs after the deductible.
5. What does the Incontestability provision generally provide for after a policy has been in force for a specific period (usually 2 years)?
The incontestability provision generally states that after the policy has been in force for a specified period (commonly 2 years), the insurer cannot contest the policy based on misstatements, with fraud as an exception.
6. Do most hospital indemnity policies require proof of confinement to trigger benefits?
Benefits are typically triggered by verifiable confinement, supported by hospital records.
7. Group DI policies may include a 'conversion' provision. What does this allow?
Conversion allows converting a group DI policy to an individual policy without underwriting, subject to terms.
8. What does the parol evidence rule generally prohibit when interpreting a health insurance policy?
The parol evidence rule bars extrinsic oral or written statements that would modify or contradict the written contract.
9. A plan that includes both per-claim stop-loss and per-year stop-loss limits is describing:
Stop-loss protections limit out-of-pocket costs either per claim (per-claim) or for the policy year (per-year).
10. Which scenario best illustrates 'case management' in a provider network?
Case management involves coordinating care for complex conditions across multiple providers to optimize outcomes and costs. The other options describe less coordinated or inappropriate actions.
11. What does the term confinement usually mean in hospital indemnity policies?
Confinement refers to a period of inpatient hospital admission for which benefits are payable.
12. Can a dependent remain eligible for Cal-COBRA after aging out due to age?
Dependents aging out may remain eligible for Cal-COBRA for up to the maximum 36 months from the event, subject to plan terms.
13. During open enrollment, enrollment in a major medical policy typically occurs without:
Open enrollment typically allows enrollment without individual medical underwriting, though some plans may still apply guaranteed issue rules in certain markets.
14. What is a pre-existing condition exclusion?
A pre-existing condition exclusion is a condition diagnosed or treated before policy issue that may be excluded or limited for a specified period, depending on the policy.
15. What is the purpose of subrogation in disability policies?
Subrogation gives the insurer the right to pursue recovery from a third party responsible for the disability.
16. At the time of application for a health policy in California, applicants must be provided with copies of which items?
Applicants should receive copies of the application and all riders or endorsements to ensure they understand the exact terms they are agreeing to.
17. What happens if the employer’s workforce grows to 25 employees?
Cal-COBRA applies to 2-19 employees; if the employer exceeds 19, Cal-COBRA typically no longer applies and federal COBRA (if applicable) would govern continuation.
18. What is a copayment (copay)?
Copays are fixed dollar amounts paid per visit or service, typically due at the time of service, and are separate from the deductible.
19. Which of the following is most commonly excluded or limited in many critical illness policies?
A common exclusion is coverage for pre-existing conditions during an initial waiting period. Some policies also exclude non-listed conditions or apply limits on certain illnesses.
20. Cal-COBRA eligibility for dependents includes which individuals?
Eligible dependents typically include the employee’s spouse and dependent children who were covered under the plan at the time of the qualifying event.
21. When replacing health coverage in California, the Replacement Disclosure Statement must include which of the following?
The Replacement Disclosure Statement should identify the policies involved (names and numbers) so the consumer can compare benefits and limits before replacing coverage.
22. What is moral hazard in health insurance?
Moral hazard occurs when being protected by insurance leads to riskier behavior or higher usage of services.
23. The Outline of Coverage (or EOC) delivered in California must include which of the following?
The OOC/EOC provides essential terms such as benefits, cost-sharing, and network information to help consumers understand their coverage.