State: Texas | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. Do most hospital indemnity policies require proof of confinement to trigger benefits?
Benefits are typically triggered by verifiable confinement, supported by hospital records.
2. 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.
3. 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.
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. 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.
6. 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.
7. 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.
8. 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.
9. Which is a primary responsibility of a gatekeeper in a managed care plan?
Gatekeepers coordinate care by approving referrals and ensuring appropriate utilization. The other options describe roles outside the gatekeeper function.
10. 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.
11. 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.
12. 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.
13. 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).
14. 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.
15. 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.
16. 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.
17. 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.
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. 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).