State: North Carolina | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. 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).
2. 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.
3. 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.
4. 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).
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. What happens if a COBRA premium is not paid within the grace period?
If the premium is not paid within the grace period, continuation coverage may be terminated retroactively to the last day for which a premium was paid.
11. 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.
12. 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.
13. When is the first COBRA premium typically due after election?
The first premium is generally due within 45 days after the election. Subsequent premiums are due monthly.
14. Before using a rate increase for a NC health policy, what is required?
Rate changes generally require regulatory review and approval to protect consumers from unfair increases.
15. 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.
16. 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.
17. In NC, health insurance policies must include a grace period for late premium payments.
A mandated grace period protects insured individuals by providing a window to pay overdue premiums without immediate lapse of coverage.
18. Do most hospital indemnity policies require proof of confinement to trigger benefits?
Benefits are typically triggered by verifiable confinement, supported by hospital records.
19. 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.
20. 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).
21. Are self-funded (self-insured) group health plans subject to COBRA continuation requirements?
COBRA applies to most group health plans, including self-funded (self-insured) plans, under federal rules adopted in NC.
22. 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.
23. 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).