Personal Finance Chapter 9

Internal limits are constraints placed on insurance agents stipulating the level of risk for which they can write a policy. False
Medicare provides health care coverage to persons age ____ and those who are ____. 65 and over; collecting disability under Social Security
A point-of-service (POS) plan is a hybrid HMO that allows members to go outside of network. True
Which of the following best describes a custodial care facility? a place that provides meals, housekeeping, and personal care services.
Typically group health insurance plans provide substantially less comprehensive coverage than the average individually underwritten policy. False
Medicare is a government-sponsored health care plan composed of Part A and Part B. Part A covers hospital expenses
Hospital insurance policies will pay for all hospital expenditures most of the time. false
Many health insurance policies offer only reduced benefits for treatment of mental disorders. True
Medicare Advantage supplemental benefits include all of the following except hospitalization
Disability income benefits under social security will be paid as long as you cannot perform the duties of the job you were holding when the disability began. False
Which of the following changes would tend to increase the premium on a disability policy? a shorter elimination period
A presumption disability clause presumes total disability with certain types of injuries even if the injured can work in some capacity. True
Most people do not need protection against a specific dread disease
A “coordination of benefits” provision in a health insurance policy may possibly provide which of the following benefits? Often results in lower-cost insurance premiums.
Major medical plans are characterized by deductibles, internal limits, and participation or coinsurance.
Terms of payment and terms of coverage are two sets of provisions that should be carefully scrutinized when evaluating an insurance program. True
If you lose your job, COBRA permits you to continue your group health insurance coverage permanently as long as you pay the premium within 36 months of the termination of employment. False
Which of the following is a public assistance program that provides health insurance benefits only to those who are unable to pay for healthcare? Medicaid
Bob and Barbara Castle are each 39 years old and have sought your advice with regard to their financial affairs. Bob is a school administrator making $75,000 per year and Barbara is not employed outside of the home. The Castles’ net worth is approximately $190,000. They have three kids, ages 6, 10, and 14. You have determined that the Castles currently have adequate life, health, auto, and homeowner’s insurance. Which of the following forms of insurance is likely to fulfill their highest-priority remaining risk-management need? disability income insurance
The Affordable Care Act’s expenditures are financed by -an 0.9% additional Medicare tax on high earnings.-an excise tax on certain “Cadillac” policies.-a 3.8% net investment tax.
Activities of daily living (ADLs) are important in determining ____ for long-term care insurance. eligibility
Insurers are required to cover people with pre-existing medical conditions without limiting or setting unrealistically high insurance rates. True
Under the ACA, family health care insurers must allow parents to retain their children on their health plans up to age 28. false
Long-term care insurance can cover both nursing home and home health care. true
About 13% of Americans are not covered by health insurance. true
Which of the following statements is true about the means (income) testing for Medicare? Medicare is not income tested.
Your bill for consultation with a specialist would ordinarily be paid by physician’s expense coverage. True
Surgical expenses now generally are reimbursed on the basis of usual, reasonable, and customary expenses.
Your right to continue a health insurance policy if you choose is known as renewability
An Individual Practice Association differs from an HMO in that associated doctors operate from their own offices.
Hospital insurance will pay daily room and board charges up to a specified number of days and reimbursement for ancillary charges up to a specified dollar amount. true
Medicare Advantage policies require payment from the policyholder in the form of a Copayment
Hospital indemnity policies would make payment for per-day hospital charges.
Health insurance policies automatically cover all family members. False
If your employment is terminated, COBRA provides for temporary continuation of group insurance benefits; you pay premiums.
Terms of payment under your health insurance are governed by policy limits.deductibles.coordination of benefits.set maximums for types of services.
Disability income insurance will provide income to a disabled or ill person with a waiting period before income is received.
Which of the following is not a desirable feature in a long-term care policy? optional renewability clause
Major medical plans supplement the basic coverage of hospital, surgical, and physician’s expense insurance. True
Which of the following is characteristic of social security disability income coverage? Benefits are payable only if the disability is expected to last one year or be fatal.
You have a better chance of choosing your own doctor with a PPO than with an HMO. true
Nick has a comprehensive health care policy with a $250 per-calendar-year deductible, an 80% co-insurance provision, and a $1,000 copayment cap per calendar year. In January, Nick had a $600 claim for which the insurance company paid $280. Nick experiences another unrelated claim in October resulting in total bills of $5,000. How much will Nick have to pay for the second claim? $930
Disability benefits are almost always taxable, so you typically need to purchase coverage that will replace gross pay. False
Long-term care insurance provides protection against the cost of extended hospital stays. False
Medicare Advantage plans are administered by the government and supplementary to original Medicare. False
Supplementary Medical Insurance (SMI) provides health care protection beyond basic hospital coverage for Medicare recipients who pay for SMI on a voluntary basis.
Under the ACA, all Americans are required to have or buy health insurance or pay a penalty. true
The definition of “disability” is standardized in disability income policies. False
About ___ of Americans lack health insurance. 13%
All of the following except a ____ are highly recommended for a long-term disability income policy. short waiting period
A stop-loss provision places a cap on the amount of participation required. true
Disability income policies usually have ____ that is a time delay from the date of the issuance of the policy until benefit privileges are activated. Probationary periods
An elimination period is the number of days that must pass before disability policies pay proceeds. true
In recent years, which of the following groups paid the largest percentage of national health care expenditures? households (consumers)
The insurance designed to help with nursing home or in-home care due to chronic illness is called long-term care insurance
Which of the following best describes a “pre-existing condition”? A physical or mental problem you had at the time you bought the policy
Comprehensive major medical insurance provides the most complete coverage available. True
When you are hospitalized for surgical care, surgical expense coverage will pay the hospital bill. False
HSAs are funded solely by employers, while HRAs are funded solely by employees. False
Suppose a person has a health insurance policy with a $500 calendar-year deductible, a $2,000 out-of-pocket cap, and an 80% coinsurance provision. If this person suffers a $600 covered loss, how much will the insurance company pay? (Assume no previous losses have occurred.) $80
The Affordable Care Act requires insurance companies to set premiums based on all of the following except gender
Suppose Janet, a skilled neurosurgeon, became unable to perform surgery because of severe arthritis. Which of the following is true? -If Janet has a disability policy with an “own occupation” definition of disability, she will probably collect some benefits.-If Janet has a disability policy with an “any occupation for which reasonably suited” definition of disability, the insurer will attempt to determine if there is another job for which Janet is suited and is still able to perform.
A characteristic of dental insurance is low maximum limits
Given a $250 annual deductible, an 80% co-insurance provision, and a $5,000 copayment cap, how much of a $27,500 medical bill will be paid by the insured? $5,250
One drawback of long-term care insurance is its high annual premiums
Question 6 0 / 1 pointWhen trying to determine your disability income needs, you should consider available sick leave, income needs, and social security benefits
A preferred provider organization has characteristics of both an IPA and an indemnity plan. true
For most people, a managed care plan is a cheaper option compared to an indemnity plan. true
Living a healthy lifestyle is an example of loss prevention and control. true
The major emphasis of dental insurance is to cover only extractions and x-rays. False
Workers’ compensation is a state program that provides benefits for -workers injured on the job.-workers who become ill from work-related causes.
Blue Cross provides hospital coverage and Blue Shield provides prescription pharmacy coverage. False
Disability occurs only when someone is completely incapable of doing any type of work. False
The ACA eliminates lifetime limits on total health care insurance payments by insurers. True
The “O” in COBRA stands for which of the following words? Omnibus
Medicare is a government-sponsored health care plan composed of Part A and Part B. Part B coverage includes doctors bills
The United States spends about ___ the average of other rich economies on health care. Twice
An elimination period is a term that applies to disability insurance but not long-term care insurance. False
Blue Cross/Blue Shield provides prepaid health care to participants. True
Joe has a disability income policy that pays a monthly benefit of $1,200. Joe has been disabled for 30 days, but he only received a check in the amount of $600 from his disability insurance. What is probably the reason that he only received $600? The elimination period is 15 days.
Ben’s health coverage charges a low ($15) deductible each time he visits the doctor or hospital. Other than the low per-service deductible, there is very little cost sharing. However, Ben must go to the health care providers listed by the provider of the health coverage. If he goes to a provider that is not on the list, there is very little coverage. Which of the following types of entity most likely provides Ben’s health coverage? HMO
In insurance terminology, “participation” and “co-insurance” mean the same thing. True
Jackie pays $20 every time she visits her doctor. She is covered by a(n) HMOIPAPPO
Your health insurance has an 80% co-insurance clause. Once the deductible is satisfied, your insurance company will pay 80% of your covered losses up to the stated limits. True
A group HMO employs a group of doctors to provide healthcare services to members in a central facility. True
Medicare and Medicaid are hospital and physicians coverage, respectively. False
Which of the following statements is true about a guaranteed renewable long-term care policy? premiums cannot be increased by the insurer unless they are increased for the entire rating class.
An elimination period in disability income insurance is most closely analogous to which of the following cost-sharing provisions in health insurance? deductible
Miscellaneous sources of health care coverage include homeowners insurance.automobile insurance.veterans benefits.
Choosing insurance plans with deductibles and waiting periods is a form of risk assumption. True
As an HMO member, you may have co-payments but no deductibles. True
Hospital expense coverage is adequate for long-term or catastrophic medical needs of most people. False
In order to qualify for disability insurance under social security, a person must be unable to carry out the duties of any job.
Losing your job triggers a “qualifying life event” that allows you to obtain new insurance outside the normal enrollment window. True
Gabe is 58 years old and has been dependent on a cane for a couple of years. Gabe fears that he may need long-term care services some day in the future. His net worth is $400,000 and he receives $50,000 per year in a pension. He considers himself to be in excellent health and has never had a serious health scare like a heart attack, stroke, or cancer. He eats lots of bran and exercises regularly. Which of the following policies would you recommend to Gabe? Gabe should buy a long-term care policy with a long elimination period, lifetime benefits, and a COLA.
Disability income insurance provides benefits that are designed to substitute for lost income.
With a managed care plan, an insurance company may not be involved. True
Comprehensive major medical simply increases the policy limits of major medical insurance without changing the coverage. False
____ are required by many insurance plans to reduce the number of unnecessary surgeries. Second opinions
If your employer offers access to a group health insurance plan, you may still be better off going with an individual policy. True
Some surgical expense insurance pays a specific amount for each type of surgery listed on a schedule of benefits. True
Advances in medical technology, prescriptions drugs, and treatments have substantially reduced health care costs in recent decades. False
Only 10% of American adults have purchased long-term care insurance. False
Supplementary medical insurance (SMI) is a voluntary participatory program, commonly known as Medicare Part B. True
With a COLA provision, the monthly long-term disability benefit is adjusted upward each year, often in line with the CPI. True
Medicare deductibles and co-insurance amounts are revised annually to reflect changing medical costs. True
Most major medical insurance plans feature a calendar-year, all-inclusive deductible. True
Most surgical expense plans fully reimburse the cost of second opinions. True

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