Health Insurance

Limited Coverage

Only pays for specific perils

Comprehensive Coverage

Designed to pay for any reasonable and necessary medical care

Co-Insurance

Applies after the deductible has been satisfied.
-Typically 80/20
-Insurer pays 80% of all expenses that exceed the deductible
-Insured pays 20% of all expenses that exceed the deductible

HMO

Collects subscriber fees, accepts all sorts of risks, even catastrophic ones, and subscribers pay a flat monthly fee in exchange for access to medical services

Open-panel HMO

A network of physicians who work out of their own offices and participate in the HMO on a part-time basis

Closed-panel HMO

Features health care providers that work in the HMO's facilities and are salaried employees of the HMO

HMO Benefits

-Preventive Care (physicals, etc.) no co-pay
-Physician services = small co-pay
-Primary care physician (PCP) also called gatekeeper
-Referral (specialty) physician
-Emergency Care - if out of network the subscriber must notify the HMO within 72 hours

PPO

Combines the characteristics of an HMO and a major medical plan. The health care is actually delivered by the PPO. The PPO is a group of doctors who have agreed to reduce their fees for insurance companies that contract with them.
-If the subscriber sees

Point of Service Plan (POS)
-Sometimes referred to as an open-ended HMO

Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.

Pure Loss of Income

Pays a % of lost income when unable to work. The benefit is usually capped at 60-80% of the insured's pre-disability earnings.
-Commonly used with group disability policies

Indemnity Disability Income

Pays a flat monthly benefit when the insured cannot work due to an accident or illness.
-Commonly used with individual disability policies

Recurrent Disability Benefit

If the insured returns to work after a qualifying disability, and the disability recurs within 6 months, the insured is eligible to restart benefits immediately

Own Occupation

Heart surgeon who can't perform heart surgery

Any Occupation

Defines a total disability as the insured's inability to perform any occupation for which the insured is reasonably qualified by education, training, or experience

Presumptive Disability

Three circumstances automatically presumed to be disabled.
-Blindness in both eyes
-Loss of speech or hearing
-Loss of use of both hands, feet, or one hand and one foot

At work" disability

-Covers wages lost when the insured is working less or making less upon returning to work

Partial Disability

Pays a flat dollar amount per month (usually 50% of the total disability benefit) for a limited period of time - short term

Residual Disability

The insurance company pays a % of the total disability benefit

Required Policy Provisions for Long-Term Care

-All long term care policies must have 30 day free look
-Must be guaranteed renewable or better
-No LTC policy may exclude preexisting conditions for longer than 6 months
-Must give the insured the right to designate one person other than themselves to re

MN Reg's for LTC

-Provide shoppers guide to LTC insurance
-Disclose compensation
-8 hour initial training course before being able to sell

Taxation of LTC

Deductible and tax-free benefits

Standard Provisions of Individual Health Insurance Policies

-Entire contract
-Time limit on certain defenses (2 years)
-Grace period: 7/10/31
-Reinstatement (insurer may collect no more than 60 days of past due premiums, insured is auto covered if app not rejected within 45 days, coverage begins immediately but th

11 Optional Provisions

-Change of occupation
-Misstatement of Age
-Illegal Occupation

Delivery of Policy

30 days.
All changes to the application must be initialed by the applicant

Increased Persistency

These rates always lead to lower premiums

Open Enrollment Period

The time an employee may make changes to the insurance benefits.
-Needs to be a qualifying event like change in number of dependents or employment status

Changing Group Insurance Carriers

All money spent to satisfy a deductible or co-insurance requirement must be carried over to new plan.
-No loss, no gain

COBRA

Applies to employees who lose eligibility for health insurance coverage for any reason except gross misconduct.
-Notification period: 14 days
-Decision period: 60 days
Continuation period: Qualified benny pays 102% to continue coverage
-Lasts 18 months fo

Conversion period for COBRA

A qualified benny has 30 days to convert
-MN regulations require a 10 day notification period rather than the 14 days required by federal law

HIPPA

Puts substantial restrictions on the ability of insurance companies to impose preexisting condition limitations on group health insurance plans
-Creditable coverage: had coverage within last 63 days

Small Employer Medical Plans

Co payment type
-Doctor services is $15
-ER is $50
-Hospital admission is $300
Insurer must pay at least 80% of charges that exceed the co-payment amount

Group term life insurance

The employer offers and pays for an amount of annually renewable term life insurance equal to the employee's annual salary. Usually doesn't require proof of insurability
If fired, just like COBRA, 18 months of continuation, then 31 days to convert

Group Credit Life Insurance

Protects a lender in the event a debtor dies before repaying a loan balance.
-The premium is paid by the lender (bank)

LTDI

For the first two years of disability, the policy uses the own occupation definition of total disability

Health Savings Account (HSA)

A tax-advantaged personal savings account, set up to be used exclusively for medical expenses; must be paired with a high-deductible health insurance policy

Health Reimbursement Account (HRA)

Are established and funded by employers for employees as a source to cover eligible health care cost

Medical Savings Account (MSA)

Alternative means of health care in which individuals make tax-deductible contributions to a special account that can be used to pay medical expenses.

Flexible Spending Account (FSA)

An employer-sponsored benefit that allows the employee to pay for eligible medical expenses and/or dependent and child care expenses on a pre-tax basis
-They can't be used to reimburse health insurance premium costs, including premiums for a LTC policy

Medicare

A federal gov health insurance program for individuals
-65 and older
-Have permanent kidney failure
-Have been entitled to SS disability benefits for the past 24 months
Administered by the Centers for Medicare and Medicaid Services (CMS)

Medicare Part A-Hospital Insurance (Mandatory)

Inpatient hospital care-90 day benefit period
-Insured satisfies initial deductible, medicare then pays 100% of first 60 days
-Skilled nursing facility-100 day benefit period. 3 days in hospital rule
-No bennys past day 100

Medicare Part B-Medical Insurance (optional)

Pays for a wide variety of outpatient doctor and medical services received anywhere in the US
-Insured pays calendar year deductible, 80/20 coinsurance

Medicare Part C-Medicare Advantage

PREPAID HEALTH PLANS THAT OFFER PART A AND PART B IN ADDITION TO OTHER SERVICES
-No outside coverage unless emergency

Medicare Part D

Subsidizes the costs of prescription drugs
-Participants pay an additional monthly premium for the coverage

A policy or rider designed to provide coverage for at least 12 consecutive months for diagnostic, preventive or personal care services provided in a setting other than the acute care unit of a hospital is called:
A)
Medicare supplement insurance.
B)
preex

C

Joy, age 50, owns an individual long-term care insurance policy and pays $1,000 a year in premiums. After getting injured in a car accident, Joy needed skilled nursing care, for which her policy paid $150 a day in benefits. Which of the following statemen

D

Which of the following statements about Medicare supplement (Medigap) policies is NOT correct?
A)
Medigap policies supplement Medicare benefits.
B)
Medigap policies cover the cost of extended nursing home care.
C)
Medigap policies pay for some health care

B

Which of the following is NOT available to Medicare beneficiaries through the Medicare Advantage Program?
A)
Medicaid.
B)
PPOs.
C)
HMOs.
D)
PSOs.

A

After a health insurance policy is in force, the initial period that often must pass before a loss due to sickness can be covered is known as:
A)
the preexisting interval.
B)
the elimination period.
C)
the probationary period.
D)
the trial term.

C

Under the standard cancellation provision, an insurance company has the right to cancel a policy at any time with how many days' written notice to the insured?
A)
30 days.
B)
5 days.
C)
15 days.
D)
60 days.

B

Beth's health insurance policy contains a provision that allows her to renew coverage up to age 65. However, the policy also states that should Beth lose her job, the insurance company will cancel the policy, regardless of Beth's age. In terms of renewabi

C

A

A waiver of premium provision may be included with which kind of health insurance policy?
A)
Disability income.
B)
Hospital indemnity.
C)
Basic medical.
D)
Major medical.

D

An agent soliciting long-term care insurance in Minnesota must deliver the outline of coverage:
A)
as soon as the application is completed and the initial premium paid.
B)
prior to accepting the initial premium from the applicant.
C)
at the time the agent

D

An applicant for health insurance completes the application and satisfies all of the conditions of the conditional receipt. If the policy is eventually issued as applied for, coverage takes effect:
A)
as soon as the policy has been delivered to the applic

D

Medicare supplement (or Medigap) policies pay:
A)
Benefits to those who cannot afford Medicare Part B coverage.
B)
Benefits provided under Medicare Part A.
C)
Medical costs arising from extended custodial (nursing home) care.
D)
All or most of Medicare's

A

For situations where no initial premium was paid when the application was taken, when delivering that policy the agent is generally required to do all of the following EXCEPT:
A)
present the insured with a conditional receipt.
B)
collect any premium due.

C

In writing group insurance, insurance companies use all of the following underwriting procedures to guard against adverse selection EXCEPT:
A)
benefits determined by formula.
B)
careful group selection.
C)
medical examinations for prospective insureds who

C

The optional provision Other Insurance in This Insurer is specifically designed to:
A)
discount the premiums if more than 1 policy is issued to insure the same individual.
B)
avoid issuing 2 policies on an insured person.
C)
limit the risk with any one in

C

Which of the following statements regarding the Minnesota Life and Health Insurance Guaranty Fund is CORRECT?
A)
Its purpose is to protect Minnesota residents and nonresidents who own or are beneficiaries of life or health insurance policies issued by ins

B

Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide medical services at a prearranged cost to the insured?
A)
MIB.
B)
PPO.
C)
HMO.
D)
DPO.

C

When a group disability insurance plan is paid entirely by the employer, benefits paid to disabled employees are
A)
deductible income to the employee
B)
deductible income to the employer
C)
taxable income to the employee
D)
taxable income to the employer

B

Which of the following statements concerning federal income taxation of annuities is CORRECT?
A)
Premiums are taxable; distributions are not taxable.
B)
Annuity death benefits, in whole or in part, are taxable to the beneficiary.
C)
Annuity death benefits

D

Under COBRA, the right to continue existing group health coverage is NOT available to an individual who
A)
voluntarily leaves employment
B)
has the number of working hours reduced
C)
is a covered dependent who reaches the age of ineligibility
D)
is termin

B

The cost-of-living adjustment (COLA) rider found in many disability income policies automatically increases the monthly benefit when
A)
the insured qualifies for Social Security disability benefits
B)
the insured is disabled and receiving benefits
C)
the

C

The type of policy that is paid up after a specified period of years and endows at age 100 is
A)
a whole life policy
B)
a single premium policy
C)
a limited pay policy
D)
an endowment policy

B

In the absence of any other election, the automatic settlement option in a life insurance policy is
A)
life income with period certain
B)
extended term insurance
C)
reduced paid-up insurance
D)
lump sum in cash

A

All of the following are characteristics of a disability buy-sell plan EXCEPT
A)
a relatively long elimination period
B)
the option to select a lump-sum payment
C)
it is often used to protect the partners in a business
D)
the premiums are not tax deductib

A

What type of insurance would a person select as the most efficient method of paying the outstanding debt on their home in the event of death?

D

Which of the following statements is CORRECT about an immediate annuity?
A)
Payments fluctuate according to the performance of the investments in the separate account.
B)
Immediate annuities typically have a long accumulation period.
C)
Immediate annuitie

A

The waiting period to qualify for Social Security disability benefits is
A)
5 months
B)
3 months
C)
12 months
D)
6 months

A

In life insurance, the entire contract is considered to be
A)
the policy and application
B)
the insuring clause and riders, if any
C)
the specification pages and application
D)
the insuring clause, application, and riders or endorsements referred to in th

B

Which of the following premium payment modes is the most expensive?
A)
Semiannual
B)
Monthly
C)
Annual
D)
Quarterly

C

The period immediately following the onset of a disability, during which time benefits are not payable, is called the
A)
delayed disability period
B)
probationary period
C)
elimination period
D)
residual period

D

A universal life policy may be surrendered for its cash value
A)
only if there are no outstanding loans
B)
only when the cash value equals the death benefit
C)
within 30 days of an interest payment
D)
at any time

B

In an employer-paid group disability policy, if the employee becomes disabled and the benefit is $2,000/month, which of the following is CORRECT?
A)
Benefits are tax deductible to the employer.
B)
Benefits are fully taxable to the employee.
C)
Premiums ar

B

The process by which a mutual insurer is transformed into a stock insurer is known as
A)
participation
B)
demutualization
C)
liquidation
D)
acquisition

B

Which of the following statements concerning the elimination period under a disability income policy is CORRECT?
A)
It describes the time after the policy is issued before benefits will be paid.
B)
It can be thought of as a time deductible.
C)
Only 1 elim