State: Georgia | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. Which statement best describes the Consideration clause in a health insurance policy?
In insurance contracts, the insured provides consideration (premium payments) and the insurer provides consideration (the promise to pay covered benefits when losses occur).
2. What is moral hazard in health insurance?
Moral hazard occurs when being protected by insurance leads to riskier behavior or higher usage of services.
3. What is the standard grace period for late COBRA premium payments?
The standard COBRA premium payment grace period is typically 30 days; coverage may be terminated if payment is not received within the grace period.
4. 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.
5. 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.
6. 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.
7. If the employer’s group health plan is terminated entirely, what happens to COBRA rights?
If the plan terminates entirely, COBRA continuation rights end for all qualified beneficiaries since there is no plan to continue.
8. Which concept describes the insurer's right to contest or void a policy for misstatements or concealment during the policy's early years?
Contestability allows the insurer to challenge or void the contract for misstatements or concealment within a specified period, typically the first two years.
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 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.
11. Do most hospital indemnity policies require proof of confinement to trigger benefits?
Benefits are typically triggered by verifiable confinement, supported by hospital records.
12. 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.
13. 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.
14. 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.
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. 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. 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).
18. Which document is commonly used to summarize a health insurance policy's benefits, costs, and coverage terms for consumers in Georgia, and is typically provided with the application or at policy issuance?
Outline of Coverage provides a plain-language summary of coverage and costs.
19. To qualify for the 29-month extension, when must Social Security determine disability?
Disability must be determined by the Social Security Administration within the first 60 days of COBRA for the 29-month extension to apply.
20. 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.
21. 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.
22. For a premium paid for a long-term care insurance policy to be deductible as a medical expense, which condition must be met?
Only premiums paid for a qualified LTC insurance contract may be deductible as medical expenses, subject to the medical expense deduction threshold.
23. Which document related to consumer privacy must Georgia health insurers provide to applicants at or before policy delivery?
HIPAA privacy rules require insurers to provide a Notice of Privacy Practices to consumers.
24. What is the general timing requirement for the general notice of COBRA rights to be given to participants?
General notice must be provided within 90 days after the individual becomes covered under the plan, informing them of COBRA rights.