Prepare for the Health Insurance license exam with these flashcard questions and answers. This guide covers HMOs, PPOs, deductibles, copays, and policy provisions.
Q: This insurance pays for bills associated with illness, injury, or other medically related needs for those individuals covered under a policy.
Answer: Health Insurance
Q: Jackson has a health insurance policy that will ONLY provide coverage while he is using in-network services. He must choose a primary care physician that participates with this plan and unless there is a medical emergency will have no medical costs covered by this insurance that are provided while Jackson is out-of-network. What type of policy does Jackson have?
Answer: HMO
Q: Mark has a doctor that he prefers to see for his regular medical visits. Mark’s doctor does not participate with Mark’s Insurance’s network of health care providers. Because Mark has this type of plan, he can still get his insurance to pay for some of the medical costs associated with this doctor. Mark has a _________ plan.
Answer: PPO
Q: Georgette only uses doctors that participate with her health insurance’s network of doctor’s. This means that whenever Georgette receives medical services they are considered to be___________.
Answer: In-Network
Q: Edward needs to travel to many unusual places. He often has no doctors that participate with his health insurance plan in the area he is visiting. If his health insurance provides coverage it will be considered ________________________ services.
Answer: Out-of-Network
Q: Payden has to visit his doctor. Luckily, his doctor is part of his health insurance network of health care providers. Payden’s doctor charges $100 for an office visit, but Payden’s health insurance will pay for $90. Payden is left with a $10 __________ every time he visits his primary care doctor.
Answer: Co-Payment
Q: Nancy’s daughter Susan was very ill last year. When Susan went into the hospital, before health insurance would starting sharing ANY of the cost of medical treatment, Nancy was required to pay this amount.
Answer: Deductable
Q: Francois is the father of two sons. Francois took a nasty fall and broke his ankle. Two months later, his eldest son Pierre caught a nasty cold and visited the doctor. Each needs to reach their own ___________________ before the insurance contributes to medical expenses.
Answer: Individual Deductable
Q: Mara is married and has five children. Unfortunately, Mara and her youngest two children became ill during the week of Christmas and required hospitalization. Between these three members, so much money was paid by the family, that if ANY member of the family requires medical care this year, health insurance will start contributing costs because they have met their ____________________.
Answer: Family Deductable
Q: Johan was diagnosed with cancer last year. He ended up paying so much money out of pocket that finally, insurance was required to pay for any remaining costs last year. This is known as John paying the ______________.
Answer: Maximum Out of Pocket
Q: Leopold was in a car accident in March that left him in a coma for two weeks. He required multiple surgeries and was in the hospital for a month. Because his medical bills were so high, he met his deductible early and for the first time ever, he met his _______________ for the year.
Answer: Individual Maximum Out of Pocket Expense
Q: The Nguyen family suffered a spectacularly horrible year for their family’s health. By April they had met their family deductible and by June they had reached their _________________. The only good news is that for the rest of the calendar year, health plan benefits kick-in and will pay 100 percent of the allowed amount for covered health care services.
Answer: Family Maximum Out of Pocket Expense
Q: Morgan has held an individual health insurance plan since 2008. There have been no substantial changes in the last 6 years. Unfortunately, Morgan has had severe re occurring health problems due to cancer. This year, his health insurance reached the $1 million dollar mark in benefits paid. Mark has sadly reached his _______________.
Answer: Maximum plan dollar limit.
Q: Jose was backpacking through the Blue Ridge Mountains and suffered a severe knee injury. He wanted to go see a joint specialist regarding the damage to his knee, but before he went, he made sure to call his health insurance company and ask if he needed a _____________________.
Answer: Referral
Q: A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured. Health insurance can either reimburse the insured for expenses incurred from illness or injury or pay the care provider directly.
Answer: Health insurance
Q: HMO means “Health Maintenance Organization.” HMO plans offer a wide range of health care services through a network of providers that contract exclusively with the HMO, or who agree to provide services to members at a pre-negotiated rate. As a member of an HMO, you will need to choose a primary care physician (“PCP”) who will provide most of your health care and refer you to HMO specialists as needed. Some HMO plans require that you fulfill a deductible before services are covered. Others only require you to make a copayment when services are rendered. Health care services obtained outside of the HMO are typically not covered, though there may be exceptions in the case of an emergency.
Answer: HMO
Q: PPO means “Preferred Provider Organization.” Like the name implies, with a PPO plan you’ll need to get your medical care from doctors or hospitals on the insurance company’s list of preferred providers if you want your claims paid at the highest level. You will probably not be required to coordinate your care through a single primary care physician, as you would with an HMO, but it’s up to you to make sure that the health care providers you visit participate in the PPO. Services rendered by out of network providers may not be covered or may be paid at a lower level. A broad variety of PPO plans are available, many with low monthly premiums.
Answer: PPO
Q: This term refers to providers or health care facilities that are part of a health plan’s network of providers with which it has negotiated a discount. Insured individuals usually pay less when using an in-network provider, because those networks provide services at lower cost to the insurance companies with which they have contracts.
Answer: In Network
Q: This term refers to a patient seeking care outside the network of doctors, hospitals or other health care providers that the insurance company has contracted with to provide care. It usually applies to health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
Answer: Out of Network
Q: A form of medical cost sharing in a health insurance plan that requires aninsured person to pay a fixed dollar amount when a medical service is received. The insurer is responsible for the rest of the reimbursement.♦ There may be separate copayments for different services.♦ Some plans require that a deductible first be met for some specific services before a copayment applies. A form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. The insurer is responsible for the rest of the reimbursement.♦ There may be separate copayments for different services.♦ Some plans require that a deductible first be met for some specific services before a copayment applies.
Answer: Co-payment
Q: A fixed dollar amount during the benefit period – usually a year – that aninsured person pays before the insurer starts to make payments for covered medical services. Plans may have both per individual and family deductibles.♦ Some plans may have separate deductibles for specific services. For example, a plan may have a hospitalization deductible per admission.♦ Deductibles may differ if services are received from an approved provider or if received from providers not on the approved list.
Answer: Deductable
Q: If an person meets his or her _______________, health plan benefits kick-in and begin to pay health care expenses for that person only, but not for the other family members.
Answer: Individual Deductable
Q: If the ______________ is met, health plan benefits kick-in for every member whether or not they’ve met their own individual limit.
Answer: Family Deductable
Q: A maximum out-of-pocket is the most you’ll have to pay during a policy period (usually a year) for health care services. Once you’ve reached your out-of-pocket maximum, your plan begins to pay 100 percent of the allowed amount for covered services.
Answer: Maximum Out of Pocket
Q: If an individual meets his or her individual ____________ for this calendar year, health plan benefits kick-in and begin to pay 100 percent of the allowed amount for covered health care services for that individual only, but not for the other family members.
Answer: Individual Maximum Out of Pocket Expense
Q: If a family meets their _________________, their health plan benefits kick-in for every member of the family whether or not they’ve met their own individual limit.
Answer: Family Maximum Out of Pocket Expense
Q: The maximum amount payable by the insurer for covered expenses for the insured and each covered dependent while covered under the health plan.♦ Plans can have a yearly and/or a lifetime maximum dollar limit.♦ The most typical of maximums is a lifetime amount of $1 million per individual.♦The Affordable Care Act prohibits health plans from putting annual or lifetime dollar limits on most benefits you receive.♦ Plans can put an annual dollar limit and a lifetime dollar limit on spending for health care services that are not considered essential health benefits.♦Grandfathered individual health insurance policies are not required to follow the rules on annual limits. (Grandfathered plans are those that are either offered through an employer before March 23, 2010 and haven’t been changed in ways that substantially cut benefits or increase costs for consumers, OR purchased by an individual prior to March 23, 2010.)
Answer: Maximum Plan Dollar Limit
Q: A written order from your primary care doctor for you to see a specialist or get certain medical services. On some health insurance plans, you need to get a referral before you can get medical care from anyone except your primary care doctor and on others you do not. If your health insurance plan requires a referral and you don’t get one before you receive healthcare from a specialist, your insurance plan may not pay for the services.
Answer: Referral
Q: Health Insurance
Answer: Broad term used to describe policies that cover loss of income due to accident or sickness and health care expenses.
Q: Perils of Health Insurance
Answer: 1. Accidental injury is an unforeseen and unintentional bodily injury resulting from an accident.2. Sickness is a medical condition, disease or illness.
Q: Disability Income Insurance
Answer: Pays periodic benefits when an insured cannot work because of accident or injury.
Q: Medical Expense Insurance
Answer: Covers the cost of medical treatments, physician’s fees, hospitalization and other medical costs that ensue when the insured incurs an accidental injury or sickness.
Q: Medicare
Answer: Government health insurance coverage for individuals over the age of 65, and special needs individuals.
Q: Medicaid
Answer: State and federally-funded medical assistance program for financially disadvantaged individuals.
Q: TRICARE
Answer: Health insurance coverage for active duty and retired members of the uniformed services and their dependents.
Q: Morbidity
Answer: The rate at which accident, sickness or disability will occur.
Q: Reserves
Answer: Funds insurance companies set aside to pay future claims. Two types of reserves:1. premium reserves2. loss reserves (claims reserves)Reserves are considered a liability for insurance companies, not an asset.
Q: Reimbursement Basis
Answer: The insured pays the medical providers for services, and the insurer reimburses the insured. Commercial insurers use this payment method.
Q: Limited Policies
Answer: Health insurance policies that provide specialized limited coverage, such as AD&D and dread disease.
Q: Usual, Reasonable and Customary charges
Answer: The insurer pays an amount for each procedure or treatment based on the average charges in that geographic area. Payment method for nonscheduled plans.
Q: Scheduled Plan
Answer: Medical expense plans may pay benefits based on the type of procedure, or a fixed amount.
Q: Franchise Insurance
Answer: Health plans that cover a small group of individuals; however, unlike group insurance each individual is issued an individual policy.
Q: Government Insurance
Answer: Provides protection against fundamental risks by redistributing income to help people who cannot afford to pay the cost of incurring such losses themselves.
Q: Commercial Insurers
Answer: Insurers who sell insurance to make a profit including stock and mutual insurers.
Q: Service Providers
Answer: Such as Blue Cross and Blue Shield. They differ from commercial insurers in that they pay benefits on a service basis, which means that the insurer pays benefits directly to the medical providers instead of the insured.Furthermore, service providers contract with physicians (Blue Cross) and hospitals (Blue Shield) to provide medical services at agreed upon charges to their subscribers.
Q: Producer Cooperatives (aka Service Providers)
Answer: The doctors and hospitals that sponsor Blue Cross and Blue Shield also supply the insurance coverage. Blue Cross provides hospital service and Blue Shield provides doctor’s service.
Q: Dual-eligible
Answer: People that qualify for both Medicaid and Medicare. Medicaid provides coverage for medical care and services that Medicare only partially covers.
Q: Workers Compensation
Answer: Insurance to cover accidental injury and sickness employees incur as a result of employment.If the disability extends beyond the elimination period, then disability income benefits will be paid in an amount of 66 2/3 % of weekly wages for a permanent total or temporary total disability.
Q: Self-Funded Plans
Answer: Self-Fundedthe employer provides funding for claims payments for its employees and their dependents.An employer may create a self-funded plan through an administrative services only (ASO) contract. In this scenario, the employer provides the funding, and the insurer handles all claims processing. Or, an employer can contract out the claims processing to a third party administrator (TPA), which will lower the administrative coasts that would have been charged by the insurance company.
Q: 501(c)(9) Trusts
Answer: Can be used by charitable organizations to fund employee health benefit plans. Unlike traditional self-funded plans, contributions to a 501(c)(9) trust are immediately tax deductible, and earnings grow tax-deferred.
Q: Cafeteria Plans
Answer: Allow employees to choose which health care benefits and coverages they want from a list of options. Best utilized by larger employers since they are more costly to operate.
Q: Worksite Plans
Answer: Employer-sponsored plans, such as wellness plans which foster healthier lifestyles for employees. Such wellness plans focus on healthy diets and physical exercise (e.g. Weight Watchers or Biggest Loser). Some worksite plans ban tobacco usage on site, while other plans educate employees about stress management.
Q: Blanket Plans
Answer: Health plans that insure a group of individuals participating in the same activity, such as a group of high school seniors going on a class trip, or a soccer team.
Q: Fiduciary
Answer: A person in a position of financial trust and responsibility. Producers are fiduciaries.
Q: Uniform Individual Accident and Sickness Policy Provisions Law
Answer: Provides standardization for all individual health insurance policy provisions and identify the rights of the insurer and policyowner. There are 12 mandatory provisions and 11 optional provisions.
Q: Required Provision 1: Entire Contract; Changes
Answer: The entire contract between the parties consists of the policy, any endorsements and the application, if attached.
Q: Required Provision 2: Time Limit; Incontestability
Answer: The policy becomes incontestable and cannot be voided or claims denied after two years (three years in some states) except in the case of fraud.
Q: Required Provision 3: Grace Period
Answer: A grace period of at least seven days for weekly premium policies, 10 days for monthly premium policies and 31 days for all other policies, will be granted for the payment of each premium falling due after the first premium, during which grace period the policy coverage will continue in force.
Q: Required Provision 4: Reinstatement
Answer: If a policy lapses for failure to pay premiums and the insurer does not require an application to reinstate the policy, the insurer will reinstate the policy upon payment of a subsequent premium.
Q: Required Provision 5: Notice of Claim
Answer: Written notice of claim must be given to the insurer within 20 days of the loss, or as soon as reasonably possible.
Q: Required Provision 6: Claim Forms
Answer: The insurer, upon receipt of the notice, must furnish the forms for filing proofs of loss within 15 days.
Q: Required Provision 7: Proof of Loss
Answer: Written proof of loss must be provided to the insurer within 90 days after the date of loss.
Q: Required Provision 8: Time of Payment of Claims
Answer: Claims other than those providing periodic payment are payable immediately upon receipt of written proof of loss.
Q: Required Provision 9: Payment of Claims
Answer: Death benefits are payable to the designated beneficiary according to the policy provisions.
Q: Required Provision 10: Physical Exam and Autopsy
Answer: The insurer at its own expense has the right and opportunity to examine the person or autopsy of the insured when reasonably required while a claim is pending.
Q: Required Provision 11: Legal Actions
Answer: A required provision which places a limit on the period in which a claimant can file suit against an insurer, usually 60 days since the insurer received proof of loss and within 2 years from the date proof of loss was submitted to the insurer.
Q: Required Provision 12: Change of Beneficiary
Answer: The right to change a beneficiary is reserved to the policyowner and does not require the consent of the beneficiary.
Q: Optional Provision 1: Change of Occupation
Answer: If the insured is injured or contracts sickness after having changed occupations to one classified as more hazardous than that stated in the policy, the insurer must pay only the portion of the indemnities provided in the policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for such hazardous occupation.
Q: Optional Provision 2: Misstatement of Age
Answer: If the age of the insured has been misstated, all amounts payable under the policy will be modified to that which the premiums would have purchased at the correct age. A misstatement of age does not void the policy. The benefits are adjusted accordingly.
Q: Optional Provision 3: Other Insurance in this Insurer
Answer: If an insured has accident or sickness policies with one insurer in which the total indemnity for certain type(s) of coverage exceeds the policy’s maximum, the excess insurance will be void and all premiums paid for such excess coverage will be returned to the insured or to the insured’s estate.
Q: Optional Provision 4: Insurance with Other Insurers – Expense-Incurred
Answer: If the insured has other valid coverage providing benefits for the same loss on an expense-incurred basis and the insurer was not given written notice prior to the loss, each insurer is only liable for the proportionate share of the loss, and the insurer will return the premiums on a pro rata basis.
Q: Optional Provision 5: Insurance with Other Insurers – Not Expense-Incurred
Answer: If the insured has other valid coverage providing benefits for the same loss on a basis other than expense-incurred and the insurer was not given written notice prior to the loss, each insurer is only liable for the proportionate share of the loss, and the insurer will return the premiums on a pro rata basis.
Q: Optional Provision 6: Relation of Earnings to Insurance – Average Earnings Clause
Answer: The total monthly amount of loss of time benefits may not exceed the amount of monthly earnings of the insured at the time the disability began or the average amount of monthly earnings for the previous two years, whichever is greater. The average earnings clause may not reduce the total monthly amount of benefits payable to less than $200.
Q: Optional Provision 7: Unpaid Premium
Answer: Any premium due and unpaid may be deducted from the payment of a claim.
Q: Optional Provision 8: Cancelation
Answer: The insurer may cancel the policy at any time by written notice delivered to the insured stating cancelation is not effective until at least five days later. After the policy has continued beyond its original term, the insured may cancel the policy at any time by written notice stating cancelation is effective upon receipt or later.
Q: Optional Provision 9: Conformity with State Statutes
Answer: Any provision of the policy in conflict with the statutes of the state or territory in which the insured resides will be amended to conform to the minimum requirements of such statutes.
Q: Optional Provision 10: Illegal Occupation
Answer: The insurer is not liable for any loss to which a contributing cause was the insured’s commission of or attempt to commit a felony or to which a contributing cause was the insured’s being engaged in an illegal occupation.
Q: Optional Provision 11: Intoxicants and Narcotics
Answer: The insurer is not liable for any loss or injury in consequence of the insured’s being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.
Q: Insuring Clause
Answer: The insurer’s promise to pay covered losses as long as the insured pays the premiums and abides by the terms and conditions.
Q: Consideration Clause
Answer: A required provision in a life insurance policy stating that a policyowner must pay a premium in exchange for the insurer’s promise to pay benefits.
Q: Benefit Payment Clause
Answer: Optional provision in health insurance policies which describes how and when benefits are paid.
Q: Right to Examine (Free Look)
Answer: Each insurance policy must provide notice that during the period of 10 days from the date of delivery to the policyowner, such policy may be returned for cancelation to the insurer, the insurer will refund all premiums paid, including any policy fees or other charges, and the policy will be deemed void as if no policy had been issued. Most states require by law that all individual health insurance policies contain a free look period.
Q: Policy Face
Answer: The policy face provides the name of the insurer and insured, a summary of the policy coverage, conditions and exclusions, and the term of the policy with expiration date. The face also states whether or not and how the policy may be renewed.
Q: Military Suspense Provision
Answer: Policies containing a military service exclusion or provision for suspension of coverage must state whether premiums are reduced or refunded or coverage is suspended for the period of service.
Q: Probationary Period
Answer: The waiting period, prior to being eligible for coverage under a group plan, that individuals must undergo when they join a group with existing group coverage. For non-group policies, the time between the effective date of the policy and the date coverage begins. Prevents insurers from “buying a claim”.
Q: Elimination Period
Answer: Optional provision in health insurance policies which states the length of time between when sickness, accident, or disability begins and when benefits become payable. Often referred to as a “time deductible.” Common in disability income and long-term care policies.
Q: Waiver of Premium
Answer: Optional provision in health insurance allowing continuation of coverage without payment of premium in the event of permanent and total disability.
Q: Recurrent Disability
Answer: If the insured becomes disabled from the same or related event or condition caused from a prior disability.
Q: Coordination of Benefits
Answer: Claims payment process in which a person is insured under multiple health plans providing coverage for the same loss.
Q: Assignment
Answer: In medical expense insurance, the term assignment does not mean a transfer of ownership, instead it is a transfer of benefits from the policyowner to the medical provider. Under this arrangement, the insurer pays benefits directly to the medical providers.
Q: Occupational Coverage
Answer: Health insurance coverage that pays benefits for sickness or injury occurring only while on the job. Example: Workman’s Compensation.
Q: Nonoccupational Coverage
Answer: Health insurance coverage that pays benefits for sickness or injury occurring only while not on the job.
Q: Preexisting Conditions
Answer: Existing medical conditions for which the insured sought medical treatment or advice prior to policy issuance. Most states prohibit insurers from excluding preexisting conditions for a period exceeding six month to two years, depending on the state and policy.
Q: Renewability
Answer: Provision of policy specifying the insured’s and insurer’s rights to renew or terminate a policy during or after the expiration of the original policy term.
Q: Noncancellable Renewability Provision
Answer: The same as the guaranteed renewable provision except that premiums cannot be increased. A disability policy can be written as noncancellable because the benefits are not affected by inflation (i.e. the benefit amount will not change).
Q: Guaranteed Renewable
Answer: A policy that guarantees continuation of coverage for the insured until the insured reaches a specified age, as specified in the policy, but provides the insurer the right, at the time of renewal of a policy, to make changes in premium rates by classes of insureds, not individually.Premiums can be increased on policy anniversary dates. The insurer can only cancel or refuse to renew coverage for failure to pay premiums.
Q: Conditionally Renewable
Answer: Conditionally renewable policies allow the insurer the right not to renew the contract for a reason specified in the policy. Policy premiums can be increased.
Q: Optionally Renewable
Answer: Optionally renewable policies provide the insurer the right not to renew the contract for any reason.
Q: Cancellable Policies
Answer: Cancellable policies allow the insurer to cancel the policy at any time (some states require notice of at least 30 days), provided the insurer returns all unearned premiums.
Q: Term Policies
Answer: Only effective for a short period after which period the insurer cancels the policy. Term health coverages include travel accident policies and short term medical plans.
Q: Impairment Riders
Answer: Rider that exclude coverage for a specific condition that would otherwise be covered under the policy.
Q: Guaranteed Insurability Rider
Answer: Rider that permits the insured to purchase additional disability income coverage at future dates. Synonymous with future increase option.
Q: Multiple Indemnity Rider (Double, Triple)
Answer: Some policies may contain riders that provide for payment of double or triple the accidental death or dismemberment benefits based on the cause of death or specific type of dismemberment.