Ch. 13 - Health & Accident

Under HIPAA requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if

a. there is a break in coverage of more than 33 days

b. there is a break in coverage of more than 43 days

c. there is a break in coverage of more than 53 days

d. there is a break in coverage of more than 63 days

A group health insurance policy is a contract between an

a. employee and insurance company

b. employee and employer

c. employer and insurance company

d. employer and producer

According to HIPAA regulations, which of the following may reduce a medical plan's pre-existing conditions exclusion?

a. an improvement in health over the previous three months

b. any period of prior coverage

c. any period of treatment in the twelve months prior to enrollment

d. passing a physical examination

Kate received a group accident and health termination notice. How many days does she have to apply for a converted policy?

a. 30

b. 31

c. 60

d. 90

Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?

a. Any benefits received will be tax-free

b. The premiums paid by the employer are not tax-deductible

c. The specified benefit amount is a percentage of his wages

d. Long-term policy benefits are not contributed with Social Security benefits

Which of the following does NOT help determine group health insurance premiums?

a. average age of group

b. claims experience of the group

c. income level of group members

d. the group's size

When disability buy-sell insurance benefits exceed a partner's cost basis, which of the following is correct?

a. the excess is taxed as a capital gain to the partner

b. the excess is taxed as ordinary income to the partner

c. the excess is partially taxable to the partner

d. the full amount is non-taxable to the partner

For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter

a. contract provisions

b. COBRA laws

c. eligibility standards

d. contribution percentages

What action can insurer take to discourage malingering and false disability claims?

a. the insurer can selectively refuse a disability claim for specific diseases

b. the probation period can be increased for specific injuries

c. limit the amount of benefits an insured can receive from two disability policies with the same insurer

d. a premium rating can be given to an insured with more than one policy with the same insurer

An employer pays the accident and health insurance premiums for its employees. The premiums paid by the employer are

a. deductible to the business

b. taxable to the employee

c. tax-deferred to the business

d. reimbursed as a tax credit

Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT

a. disability income

b. HMO

c. vision

d. major medical

ABC Corporation purchases and is beneficiary of an individual disability income insurance policy on a key employee. Which of the following statements is true?

a. premiums paid by the company are tax-deductible

b. benefits are taxable to the key employee

c. benefits are received tax-free by the company

d. premiums paid by the company are tax-deductible to the key employee

Pete is covered by a group health insurance plan which covers employees in multiple states. This plan is governed by the laws of which state?

a. where the certificate of coverage was mailed to

b. where most of the employees reside

c. where the master contract was issued

d. where the insurer's home office is located

For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter

a. contract provisions

b. COBRA laws

c. eligibility standards

d. contribution percentages

Trade association groups that are eligible for group medical benefits normally are

a. in the same industry

b. in different industries

c. formed for the sole reason of obtaining insurance

d. large businesses

How do birthing centers reduce medical costs?

a. Using gatekeepers

b. Using network providers

c. Using certified nurse midwives

d. Using ambulatory care

Under HIPAA, medical plan late enrollees may be excluded for pre-existing conditions for a maximum of

a. 6 months

b. 12 months

c. 18 months

d. 24 months

Which type of group plan is excluded from HIPAA rules?

a. PPOs

b. Disability income

c. HMOs

d. Major medical

Bert's spouse passed away recently. Bert was covered under his spouse's group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage?

a. No maximum

b. Maximum of 50%

c. Maximum of 100%

d. Maximum of 102%

Which of the following BEST describes a double indemnity provision in travel accident insurance?

a. Benefits are doubled under certain circumstances stated in the policy

b. If the claim is disputed in court and the insurer loses, the face amount will be doubled

c. Benefits cover two people when traveling

d. Accidents and illnesses are covered while the insured is traveling

What type of employee welfare plans are not subject to ERISA regulations?

a. church plans

b. major medical plans

c. corporate

d. qualified plans

According to the Pregnancy Discrimination Act of 1978, employers must treat pregnancy in the same manner as

a. any other medical disability

b. a suspension

c. an unpaid holiday

d. a pre-existing condition

A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?

a. key person

b. franchise disability

c. business overhead expense

d. disability income

ABC Partnership is a business with a limited number of partners. Which disability buy-sell agreement is best suited for this business?



a. optional buy-back agreement

b. entity purchase agreement

c. cross purchase agreement

d. organizational group agreement

A comprehensive group policy also covers expenses related to vision care. Which of the following is not typically covered under a vision plan?

a. cataract surgery

b. routine eye exam

c. corrective vision glasses

d. corrective contact lenses

Laura is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?

a. authorize for payroll deductions

b. agree to a physical examination

c. sign an enrollment card

d. register with her state of residency

Which of the following is NOT a function of accident and health insurance?

a. pays a death benefit as a result of natural causes

b. covers the loss of income from a disability

c. covers the cost of medical care as a result of an accident

d. pays for hospice in the event of a terminal illness

Notice of information practices must be given to a policyholder at least

a. every year

b. every two years

c. every three years

d. every four years

In regards to health insurance, employees age 65 or older are typically required to

a. be offered the same group health benefits offered to the younger employees

b. provide evidence of insurability for medical insurance offered by the employer

c. choose Medicaid as their primary provider

d. choose Medicare as their primary provider

James owns a business and purchased a policy that covers the business expense of finding a permanent or temporary employee to replace a disabled one. This type of disability coverage is called

a. key business coverage

b. key maintenance coverage

c. key employee coverage

d. key employer coverage

A certificate of coverage for a group health policy is best described as

a. a contract between the employer and employee

b. a contract between the employer and the insurer

c. proof of coverage for the employee

d. proof of coverage for the employer

Which of the following statements is BEST describes employer contributions for employer provided health insurance?

a. employer is given tax credits for contributions paid

b. employee can deduct contributions by the employer

c. employer contributions are deductible

d. employer contributions are taxable to the employee

If group Health benefit levels are too high, what could be the end result?

a. underutilization of the plan

b. overutilization of the plan

c. normal utilization of the plan

d. adverse selection

What is the name of the period of time during which a new employee is ineligible for group Health insurance coverage?

a. free-look period

b. elimination period

c. probationary period

d. noncontributory period

Which of the following statements is NOT true concerning the relationship between group health insurance plans and Medicare? (assuming the business has more than 20 employees)

a. group health coverage is NOT available for workers over the age of 65

b. group health coverage is available for workers over the age of 65

c. An active employee's group health plan is primary and Medicare is secondary, unless the employee chooses otherwise

d. group health coverage is available to an employee's spouse that also happens to be Medicare-eligible

In a disability buy-sell agreement, the policies funding the agreement are owned by the

a. business entity

b. officers

c. shareholders

d. employees

The health insurance premiums paid for each partner in a partnership is considered to be

a. non-deductible

b. 50% tax deductible

c. 75% tax deductible

d. 100% tax deductible

Accident and health insurance claim handling is made more convenient to the insured by utilizing

a. inspection reports

b. attending physician statements

c. Medical Information Bureau (MIB) statements

d. assignment of benefits

Nonqualified medical expense distributions from a Health Savings Account (HSA) have a tax penalty of

a. 7.5%

b. 10%

c. 20%

d. 30%

The main role of accident and health and disability insurance is to

a. protect against on-the-job injuries and illnesses

b. protect against medical care costs and the loss of earning power

c. protect against the premature death of the insured

d. protect against accidents

Mike recently lost sight in both eyes. He has a policy that pays a lump sum benefit for this injury. What type of insurance does Mike have?

a. catastrophic

b. accidental death and dismemberment

c. major medical

d. hospital expense

Which of the following statements BEST describes disability buy-sell insurance policies?

a. benefits are taxable to the business entity

b. premiums are typically tax-deductible

c. policy proceeds are typically received income tax-free

d. benefits are paid to the disabled insured

Which of these is NOT a factor that influences group health insurance underwriting?

a. physical exams of group members

b. number of individuals in the group

c. group's claims experience

d. type of occupation group is involved in

How do birthing centers reduce medical costs?

a. Using gatekeepers

b. Using network providers

c. Using certified nurse midwives

d. Using ambulatory care

Group accident and health insurance may be offered by an insurer when the sponsoring group

a. was formed to purchase insurance

b. provides individual evidence of insurability of its group members

c. provides an employer-employee relationship

d. consists of unrelated members

Mary is an employee who is covered with a disability income policy through her employer. She pays for the portion of the premium attributable to the cost of residual disability benefits, while her employer pays for the remainder. What are the tax implications of this policy?

a. residual benefits will be received income tax-free

b. residual benefits will be taxable to Mary

c. premiums paid by the employer are NOT tax-deductible

d. premiums paid by Mary are tax-deductible

Under which circumstance can an insurance company offer group Health insurance?

a. the sponsoring group is composed of totally unrelated members

b. the sponsoring group was formed for illegal purposes

c. the sponsoring group provides an employer-employee relationship

d. the sponsoring group was formed to purchase group insurance at reduced rates

Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another?

a. reduces or eliminates any pre-existing conditions excluded under the new plan

b. requires that an employer pays for health coverage

c. reduces or eliminates the deductible under the new plan

d. allows the employee to convert to individual coverage

An accident and health insurance policy defines an injury as "bodily injury by accidental means". For an injury to be covered on this policy, what is required?

a. the accident must be external and violent

b. the cause of the accident must be intentional

c. only the injury resulting from an accident must be unintentional

d. both the cause and resultant injury must be accidental

Which of the following incidents would NOT be covered by an Accidental Death and Dismemberment policy?

a. deafness in one ear as a result of an accident

b. loss of vision as a result of a hunting incident

c. suicide

d. killed from an accident while being a passenger in a taxicab

Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?

a. limited

b. special risk

c. reimbursement

d. blanked

Jill has a group health plan with an employer that covers employees in more than one state. Which of the following is NOT affected by the state regulatory jurisdiction established for this plan?

a. eligibility requirements

b. required provisions

c. minimum enrollment percentage

d. continuation of coverage under COBRA

Typically, states will permit the grouping of two or more small employers in the same industry for obtaining group health insurance at a favorable rate. This grouping of employers is known as a multiple employer

a. welfare association

b. trust

c. consortium

d. alliance

When group benefits under COBRA have expired, a fully insured group policy can be converted to a(n)

a. individual health policy

b. blanket policy

c. group policy with another insurer

d. disability policy

Which parties are directly involved in a group accident and health insurance contract?

a. insurer and employees

b. insurer, employees, and employer

c. employer and insurer

d. employer and employees

Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she were to become disabled?

a. a decrease in the company's valuation

b. business property rental expense

c. Tina's salary

d. dividends owed to shareholders

Under a key person disability income policy, benefits will be received as

a. taxable income to the key employee

b. tax-free to the key employee

c. tax-free income to the business

d. taxable income to the business

Kim is covered under two medical expense plans. Plan A pays up to $5,000. Plan B pays up to $4,000. If she incurs $7,000 in expenses, the coordination of benefits provision dictates that

a. plan A pays up to $7,000

b. plan A pays up to $3,500 and plan B pays up to $3,500

c. plan A pays 80% and plan B pays 20%

d. plan A pays up $5,000 and plan B pays to $2,000

What is the federal income tax liability of a death benefit paid from a health insurance policy to a named beneficiary?

a. benefits are not taxable

b. benefits are partially taxable

c. benefits are tax-deferred

d. benefits are fully taxable

Steve has a group disability income policy where the premiums are paid by his employer. He elected to pay for additional residual disability coverage. Which of the following statements is true?

a. Steve's disability benefits are received tax free

b. the premiums for Steve's disability policy are tax-deductible for Steve

c. Steve can deduct the premium for the amount he paid for the additional residual disability coverage

d. Steve will pay taxes on the disability benefit received from his employer, but will receive any residual disability benefits tax-free

Typically, working individuals age 65 or over must be

A. offered the same Health benefits as the younger employees

B. covered by Medicare exclusively

C. paying a higher premium than younger employees

D. covered by a Medicare Supplement policy

Laura has an employer-based preventative health care plan that focuses on an enrollee's problems, such as drug abuse or stress. These plans are called

a. wellness programs

b. preventative managed care

c. employee utilization plans

d. employer-based initiatives

How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply?

a. at least 10

b. at least 15

c. 20 or more

d. 100 or more

Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?

a. A pregnant woman is entitled to sick-leave under the same guidelines as any other type of disability

b. pregnancy must be covered under medical benefits the same as any other illness

c. post-termination extensions of medical benefits must apply equally to pregnancy

d. abortion complications are covered if the woman's life is in danger

How are benefit payments from individually-owned medical expense policies treated for tax purposes?

a. exempt from income taxes

b. taxed as ordinary income

c. taxed as a dividend

d. tax credit given for amount of benefit payment