State: Texas | Category: Health Insurance | All tests in this Category:
Practice Test 1 Practice Test 21. 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.
2. 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.
3. 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.
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. 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.
6. 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.
7. 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.
8. What is moral hazard in health insurance?
Moral hazard occurs when being protected by insurance leads to riskier behavior or higher usage of services.
9. If LTC benefits are used to pay for both qualified and non-qualified expenses, how are the benefits taxed?
Benefits used for qualified LTC services are generally tax-free, while amounts used for non-qualified expenses are taxable.
10. 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).
11. Which scenario best illustrates 'case management' in a provider network?
Case management involves coordinating care for complex conditions across multiple providers to optimize outcomes and costs. The other options describe less coordinated or inappropriate actions.
12. 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.
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. Which statement best describes the tax treatment of benefits paid under a qualified long-term care (LTC) insurance contract when they are used to pay for qualified LTC services?
Qualified LTC benefits used for qualified LTC services are generally excluded from gross income, meaning they are tax-free for the recipient.
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. 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).
17. 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.
18. 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.
19. 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.
20. 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.