State: Illinois | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. 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.
2. 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).
3. 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).
4. What is the general rule about preexisting conditions under most modern health plans?
Under many modern health plans, preexisting conditions cannot be denied coverage; waiting periods or limitations may be subject to plan rules, not blanket denial.
5. If a new employer’s group health plan begins providing coverage that is substantially equivalent to the former plan, COBRA may end:
If the beneficiary becomes covered under a new group health plan that is substantially equivalent, COBRA coverage ends when the new coverage begins (subject to timely election and other rules).
6. The Illinois Outline of Coverage must include information about the insurer's grievance and appeals process and the insured's right to appeal a denial.
The OOC should outline the insurer's complaint procedures and the insured's rights to appeal to ensure accessible recourse.
7. 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.
8. 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.
9. Do most hospital indemnity policies require proof of confinement to trigger benefits?
Benefits are typically triggered by verifiable confinement, supported by hospital records.
10. 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).
11. 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.
12. 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.
13. A copayment is best described as:
A copayment is a fixed dollar amount paid by the insured at the time of service, often for office visits or prescriptions.
14. 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.
15. Illinois law requires that insurers provide advance notice of premium increases or nonrenewals to policyholders.
Advance notice helps policyholders understand upcoming changes to coverage and costs.
16. 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.
17. 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.
18. 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).
19. 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.
20. 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.
21. 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.
22. If a covered employee later becomes eligible for another employer’s group health plan, COBRA coverage:
COBRA coverage ends when the individual becomes eligible for another group health plan, and the new coverage begins.
23. 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.
24. What is moral hazard in health insurance?
Moral hazard occurs when being protected by insurance leads to riskier behavior or higher usage of services.