State: New York | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 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.
2. 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.
3. 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.
4. In NY, the producer's information must appear on the application or policy. Is this required?
New York requires the producer’s name and license information to appear on enrollment materials and policy documents to ensure proper accountability.
5. 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.
6. 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.
7. 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).
8. 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.
9. 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.
10. Are critical illness policies typically guaranteed renewable, and what does that mean for premiums?
Many CI policies are guaranteed renewable; insurers cannot cancel due to age, but premiums may increase with age or attained age as specified in the policy.
11. If a claim is denied, the insurer must provide a written explanation within how many days in NY?
Under NY rules, claim denials must include a written explanation of the reasons and must be provided within 30 days of receipt when possible.
12. 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.
13. 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.
14. 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.
15. 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).
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. 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.
18. 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.
19. 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.
20. 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.
21. If an employer has 15 employees, which law governs continuation rights in New York?
Small employers (2-19 employees) fall under NYSCOBRA in New York; federal COBRA would apply to larger groups (20+).
22. 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.
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).