Health Insurance Exam-Illinois

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Risk type expenses

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Risk type expenses

cannot be planned and is unintended

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Purpose of health insurance is

to protect a insured against the risk of financial loss he/she cannot individually afford caused by illness, injury, or diability

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Coordination of Benefits provision

is in some health insurance policies; allows insurance companies to reduce benefits so that the insured will be paid no more that his/her actual loss. prevents the insured from collecting under multiple policies more than his/her actual loss

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Coordination policy

is a policy that includes a coordination of benefits provision

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Non-coordinating policy

is a policy that does not include a coordination of benefits provision

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Accepted questions on application to base premiums

age, family composition, geographic region of residency, tobacco use

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unacceptable question on application to base premiums

past medical history, gender, occupation, ethnicity

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Attending Physician Statement

the underwriter contacts physician who has treated the applicant in the past for an evaluation; it's purpose is to confirm information on the medical report

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Errors and Changes on the Application

if error on application, underwriter may require it be corrected and changes must be approved and initialed by the applicant

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Medical information bureau (MIB) report

it is a clearing house for medical information for insurance companies that belong to it

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Credit Report

Determines if total benefits are reasonable compared to applicant's income so as to avoid disincentive

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Inspection report

to verify that the producer completed the application accurately and completely is the first purpose of an inspection report

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Incontestability Clause

after the policy has been in effect two years the insurance company cannot contest a policy doe to any misstatement or concealment unless it can prove fraud

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(tax) premiums on ind. hospital/medical expense policies

can sometimes be tax deducted; depends on whether an ind is self-employed and if ind. itemizes on tax returm

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(tax) premiums paid by an ind. on ind. diability income policies

usually cannot be tax deducted (non qualified)

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(tax) ind. expense policies, ind disability income policies, are usually

tax free and have no tax on the benefits

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(tax) premiums paid by employer usually

can be tax deducted by the employer (tax qualified)

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(tax) group expense coverage is usually

no tax on benefits (tax free)

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Private Health Insurance Companies were originally established to

issue risk indeminity policies

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Private Health Insurance Companies have the _____ restrictions to where the insured can go for service


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Service Organizations

the subscriber is entitled to obtain hospital/medical services from any hospital/doctor service provider that is a member of the network; outside network will not be covered

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Blue Cross originally assured payment of

hospital charges

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Blue Shield originally assured payment of

physician's charges

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Preferred Provider Organizations (PPO's)

provides medical services at negotiated discounted rates and offer lower deductibles and co-insurance requirements to apply if the insured receives service from a hospital in network

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Health Maintenance Organization (HMO's) entitle individuals

to obtain medical services from hospital service providers that are part of the plan network

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If HMO insured obtains servie from a hospital or physician service provider that is not in network...

insured is not covered unless in an emergency situation

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HMO's have the ______ restrictions on where the insured can go for service

greatest/most limitations

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HMO's have the _____ premium rates


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HMO's practice manage healthcare to the ______extent


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Managed Health Care (MHC) requires participants to

see a primary care physician referred to as a "gatekeeper"

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Capitated fee basis (define and purpose)

pays the service provider a flat fee for each participant instead of a fee-for-service purpose to provide financial incentive to avoid unnecessary treatment and to contain costs

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Point of Service (POS) plans are issued by


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the managed health care practiced by the HMO the insured receives

lower premium rates compared to private insurance risk indemnity plans, Blue Cross/Blue Shield service plans and PPO plans

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POS benefit for network

The insured has the benefit of being able to go to hospital/medical service providers outside of the HMO network with higher deductables and coinsurance requirements applying

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Workers Compensation Insurance

is a type of casualty insurance not health insurance; Private, Blue Cross/Blue Shield, PPOs and HMO plans usually exclude expenses covered by Workers Comp

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is when after an insurance org pays a claim

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Affordable care act ___contain impairment riders


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Impairment Rider excludes

particular health conditions, or group of health conditions by name

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The purpose of hospital/medical expense insurance is

to protect insureds against the financial risk of illness or injury expenses they cannot individually afford

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Essential Health Benefits (10 items)

  1. outpatient care

  2. emergency room treatment

  3. hospital inpatient care

  4. maternity leave

  5. mental health and substance use disorder services

  6. prescription drugs

  7. rehabilitative and habilitative therapy

  8. laboratory tests

  9. preventative health care

  10. pediatric care services including children's dental and vision care

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Hospital expense coverage

pays benefits for only hospital expenses. Deductibles, coinsurance and/or co-payments may apply

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Daily hospital benefits

pays for hospital room, board, general nursing care, and other routine services

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Miscellaneous Hospital Expense benefits

pays for hospital laboratory, x-ray, anesthetic, operating room, and medicine and dressing expenses

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Surgical Expense benefits

expressed according to a surgical schedule or a surgical relative value table

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Physicians expense benefits

pays doctor charges incurred in the hospital and sometimes after being discharged for conditions treated in the hospital

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Major Medical covers

usual, reasonable, and customary eligible expenses

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When Hospital Expense and Major Medical coverage are combined they are referred to as

Comprehensive Medical Expense coverage

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is an initial amount of loss which the insured must pay before the insurance company will begin to indemnify; most often annually

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Coinsurance also known as

Policyholder participation; insurance co pays a % and the insured pays the rest

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Stop Loss

the stated level of eligible expenses where the insurance company begins indeminifying 100% of the insured's expenses and where the insured's losses stop

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Maximum Out-of-Pocket

is the max the insured will be required to pay under both the deductible and policyholder participation requirements

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is a small, specific amount that the insured must pay before the insurance company begins to indemnify for a particular type of expense

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Purpose of co-payment, deductible, and policy holder participation...

is to encourage the insured to avoid unnecessary expenses and to eliminate small claims that the insured can afford and which would cost the insurance company to administer

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High Limit of Liability

Major medical coverage always has a high limit of liability except in the affordable care act

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Health Savings Accounts (HSAs)

cover hospital/medical expenses not covered by a high deductible health plan

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(tax) contributions to HSAs are

usually tax deductible

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Flexible Spending Accounts (FSA)

the employer reduces the employee's wages by an agreed amount; these amounts are credited to a Flex spending account

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Cafeteria plan

part of the FSA is used to pay premiums on the employee's health insurance. the employee can select coverage options. it allows the employee to tailor benefits to his/her personal or family needs

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is when a person is unable to work due to an illness or injury

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Disability income insurance protects

an insured against the financial risk of loss of income due to disability

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Disability income indemnifies when the insured

is permanently and totally disabled

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Disability income will be paid even if the insured

is not confined to a hospital

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Disability income are usually


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(tax)Individual Disability income policy premiums usually

cannot be tax deducted; no tax on ind. Disability income benefits (tax free)

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(tax) Group Disability income policy premiums usually

can be tax deducted by the employer; benefits usually are subject to tax

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Definitions of Total Disability: Insured's own occupation

the policy pays benefits as long as the insured is unable to perform functions of his/her own occupation (high premiums; very liberal; highly compensated or specialized positions)

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Definitions of Total Disability: Any occupation for which the insured is reasonably suited by education and background

most skilled, business, technical people

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Definitions of Total Disability: Any occupation

insured is unable to perform the functions of any occupation at all (low premiums; most conservative)

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Waiting (elimination) period provision

the longer the waiting period, the lower the premium. no benefits are payable during the waiting period

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Retroactive waiting (elimination) period provision

after the waiting period requirement is satisfied, the insurance company will pay the insured the benefits he/she would have been entitled to during the waiting period

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Nonretroactive waiting (elimination) period provision

will usually have a lower premium during waiting period

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Purpose of waiting (elimination) period

is to discourage avoidable, short-term disabilities and to eliminate small claims that the insured can afford and which would cost the insurance company to administer

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Probationary Period Provision

specified time requirement; usually a period of employment that must be satisfied before the prospective insured is eligible to apply for coverage

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Purpose of probationary period provision

is to avoid adverse selection

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Waiver of Premium Rider

extra premium charge; it waives premiums as long as the policy owner is disabled starting after a specified period, such as after the sixth month of disability

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Option to Purchase Additional Insurance Rider

also known as guaranteed insurability rider or inflation protection rider; if added for extra premium charge, it guarantees the insured the option to purchase additional amounts of insurance at the premium rate for the insured's attained age without evidence of insurability

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Partial Disability Rider

sometimes called residual disability rider; if added for an extra premium charge, this provision will pay benefits to the insured person only after a period of total disability

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Partial Disability Rider pays

a reduced benefit amount for a reduced benefit period

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Social Security Disability Benefits (fully insured status)

contributed to Social Security at least 40 quarters or 10 years

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Social Security Disability Benefits (partially insured status)

contributed to Social Security at least 20 quarter in the 40 quarters prior to the disability

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Social Security Disability qualification

must be expected to either last 12 months or result in death for a person to qualify for benefits

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Hospital Indemnity (income) coverage

it is a supplement to other coverages and pays a stated benefit amount each day the insured is confined in an hospital; non-coordinating

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Limited Disease coverage

It is a supplement to other coverages and pays benefits only if the insured incurs a disease specified in the policy (ex cancer or heart disease); pays a fix, stated amount and is non-coordinating

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Limited Disease coverage sold as

an individual policy or sold as a part of an employer sponsored plan at the worksite

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Accidental Death and Dismemberment coverage

non-coordinating; covers only total and irrevocable loss; pays a stated fixed benefit amount

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Accidental Death and Dismemberment covers

loss of hand at or above wrist loss of an arm at or above the elbow loss of foot at or above the ankle loss of leg at or above the knee

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Double Benefit provision

pays double the principal (capital) sum, if the insured dies in a specified type of accident, such as while a fare paying passenger on a common carrier; also called double indemnity

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Medicare Hospital Insurance Plan (Part A)

for anyone who is eligible for Social Security benefits at age 65; no charge to insured person

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eligible hospital expenses directly to the hospital service provider, subject to very large deductibles

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Medicare-skilled nursing home

no deductible for 1-20 days; has to have been in the hospital at least 3 days and be admitted to the skilled facility within 30 days of hospital discharge

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60 day benefit period (spell of illiness) provision

if a senior citizen has to go back to the hospital within 60 days, it will be classified as the same spell of illness, not as a new one. will pick up where left off on his or her benefit period

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Medicare Supplementary Medical Insurance Plan (Part B)

automatic when enrolling in Part A; fed gov pays part of the cost and insured pays rest;

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Part B after the annual deductible is satisfied

Part B pays 80% of reasonable and customary Medicare approved eligible medical expenses

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Employed senior citizen has less than 20 members

Medicare is primary and group plan is secondary

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Employed senior citizen has more than 20 members

group plan primary and medicare secondary

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State insurance regulations authorize #

14 Medicare supplement plans lettered A through N

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All insurance companies that offer Medicare Supplement Plans must offer

Plan A

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Medicare Part C-Medicare Advantage Plans

is an alternative to participating in Part A and B and buying a supplement policy

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Under Medicare Advantage Plan, Medicare pays

Part A and B costs to the insurance company

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