State: Florida | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. 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.
2. What distinguishes a Health Maintenance Organization (HMO) from a Preferred Provider Organization (PPO) regarding gatekeeping?
HMOs typically require a gatekeeper (PCP) and referrals for specialty care, while PPOs generally offer more open access to specialists without mandatory referrals. The other options misstate the typical gatekeeping practices.
3. How does a critical illness policy define covered illnesses?
CI policies define coverage by listing specific illnesses on the policy. If an illness is not listed, it is typically not covered unless the policy states otherwise.
4. How do pre-existing conditions typically affect DI coverage?
Pre-existing condition clauses exclude or limit coverage for conditions that existed before the policy was issued.
5. A policy that pays a fixed daily benefit regardless of actual hospital charges is known as a
Indemnity-based hospital coverage pays a fixed cash amount per day, not a reimbursement of actual charges.
6. If a policy pays per day, it can also be written to pay per admission. This means:
Some hospital indemnity policies offer either a per-day or per-admission benefit structure, depending on the policy.
7. 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.
8. In a managed care setting, what is a formulary and how does it relate to gatekeeping?
A formulary is a curated list of preferred drugs used to manage pharmaceutical benefits; prescribers may be guided or required to prescribe formulary medications, which ties into overall utilization management and gatekeeping goals.
9. 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).
10. If a critical illness policy lapses and is later reinstated, what is commonly required?
Lapsed policies may be reinstated, but typical terms require evidence of insurability and payment of any back premiums; a new waiting period may apply.
11. Open enrollment is important because
Open enrollment allows selection of coverage without underwriting and enables changes due to life events that affect needs and costs.
12. In individual health insurance planning, risk management strategies include
Effective risk management combines retention (self-insuring small losses), transfer (insurance), and reduction (mitigating likelihood or impact of losses).
13. Which statement best describes the tax treatment of benefits paid under a qualified long-term care (LTC) insurance contract when they are used to pay for qualified LTC services?
Qualified LTC benefits used for qualified LTC services are generally excluded from gross income, meaning they are tax-free for the recipient.
14. If a health insurance policy lapses, what is required for reinstatement according to typical policy provisions?
Reinstatement usually requires a new application, evidence of insurability, and payment of overdue premiums (often with interest) within a defined reinstatement period (commonly up to 3 years).
15. 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.
16. Which statement best describes a deductible in a health insurance plan?
A deductible is the amount the insured must pay for covered services before benefits begin. It does not include premiums, and after it is met, coinsurance or copays may apply.
17. What is moral hazard in health insurance?
Moral hazard occurs when being protected by insurance leads to riskier behavior or higher usage of services.
18. 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.
19. How does misstatement of age or sex affect benefits under a health policy?
If a misstatement of age or sex is discovered, the insurer typically adjusts benefits to what the premium would have bought had the correct information been stated. Premiums may also be adjusted retroactively.
20. Which document is primarily considered to govern the insurer-insured relationship in a health insurance contract?
The policy and attached riders constitute the primary governing document, along with any endorsements, that define coverage and obligations.