Chapter 9—Insuring Your Health
78. ____ are required by many insurance plans to reduce the number of unnecessary surgeries.
a. Deductibles
b. Waiting periods before the surgery is performed
c. Second opinions
d. Meetings with company surgical committees
e. Approval by hospital surgical committees
79. Terms of payment under your health insurance are governed by
a. policy limits.
b. deductibles.
c. coordination of benefits.
d. set maximums for types of services.
e. all of the above.
80. A “coordination of benefits” provision in a health insurance policy may possibly provide which of the following
benefits?
a. Allows the policy holder to be double-covered for the same loss.
b. Provides broader coverage than a policy without such provision.
c. Often results in lower-cost insurance premiums.
d. Drops pre-existing conditions clauses from a policy.
e. All of the above
Chapter 9—Insuring Your Health
81. Which of the following best describes a “pre-existing condition“?
a. An exclusion
b. Cancer, heart condition, or other serious diseases
c. An injury that results from an accident
d. Something not covered by the insurance policy
e. A physical or mental problem you had at the time you bought the policy
82. Your right to continue a health insurance policy if you choose is known as
a. policy exclusions.
b. persons covered.
c. continuation.
d. duration of benefits.
e. renewability.
83. The insurance designed to help with nursing home or in–home care due to chronic illness is called
a. Medicare
b. major medical insurance
c. comprehensive major medical insurance
d. nursing home care insurance
e. long-term care insurance
84. Which of the following statements is true about a guaranteed renewable long-term care policy?
a. benefits are taxable.
b. premiums are never tax deductible.
c. the policy is noncancelable.
d. premiums cannot be increased by the insurer unless they are increased for the entire rating class.
Chapter 9—Insuring Your Health
e. premiums cannot increase for any reason.
85. One drawback of long-term care insurance is its
a. high annual premiums.
b. overlap with Medicare.
c. inability to cover custodial care.
d. relatively high deductible.
e. relatively high coinsurance requirement.
86. Activities of daily living (ADLs) are important in determining ____ for long-term care insurance.
a. type of care
b. services covered
c. waiting period
d. eligibility
e. benefit duration
87. Which of the following is not a desirable feature in a long-term care policy?
a. inflation protection
b. optional renewability clause
c. duration of benefits of 6 years
d. coverage for Alzheimer’s disease
e. coverage for preexisting conditions
Chapter 9—Insuring Your Health
88. Which of the following best describes a custodial care facility?
a. a place that provides meals, housekeeping, and personal care services.
b. a place that provides limited medical attention and supervision, largely by nonmedical professionals.
c. a place with licensed medical professionals that assist residents regularly with medically necessary care.
d. a place that provides regular assistance with chronic health conditions that are acute in nature.
e. a hospital wing where surgical facilities are always available nearby.
89. 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?
a. supplemental major medical insurance
b. disability income insurance
c. critical illness insurance
d. long-term care insurance
e. additional life insurance
90. Disability income insurance provides benefits that are designed to
a. pay for hospital care costs from injuries.
b. substitute for lost income.
c. cover hospital care costs from illness.
d. substitute for social security disability benefits.
e. supplement retirement income for the elderly.
Chapter 9—Insuring Your Health
91. Which of the following changes would tend to increase the premium on a disability policy?
a. a shorter elimination period
b. use of “any occupation” definition of disability instead of “own occupation to which one is reasonably suited”
c. decreasing the benefit level from 66% to 50% of prior earnings
d. decreasing the payment period from until age 65 to a maximum of 2 years
e. none of the above
92. An elimination period in disability income insurance is most closely analogous to which of the following cost-sharing
provisions in health insurance?
a. deductible
b. coinsurance
c. limit
d. cap
93. All of the following except a ____ are highly recommended for a long-term disability income policy.
a. guaranteed renewable clause
b. cost-of-living adjustment
c. long duration of benefit
d. short waiting period
e. waiver of premium
94. Suppose Janet, a skilled neurosurgeon, became unable to perform surgery because of severe arthritis. Which of the
following is true?
Chapter 9—Insuring Your Health
a. If Janet has a disability policy with an “own occupation” definition of disability, she will probably collect some
benefits.
b. If Janet has a disability policy with an “own occupation” definition of disability, the insurer will provide coverage
only if Janet would not be able to perform another type of job such as teaching or consulting.
c. 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.
d. If Janet has a disability policy with a presumptive disability clause for loss of hands, she will probably collect
some benefits.
e. Both a and c are true.
95. Disability income insurance will provide income to a disabled or ill person
a. without a waiting period.
b. with unlimited funds for years.
c. with a waiting period before income is received.
d. with payments made to the recipient for up to age 70.
e. none of the above.
96. Disability income policies usually have ____ that is a time delay from the date of the issuance of the policy until
benefit privileges are activated.
a. waiting periods
b. probationary periods
c. elimination periods
d. internal limit periods
e. outer limits
97. When trying to determine your disability income needs, you should consider available sick leave, income needs, and
a. social security benefits.
Chapter 9—Insuring Your Health
b. surgical expense protection.
c. Medicare.
d. life insurance.
e. income tax bracket.
98. In order to qualify for disability insurance under social security, a person must be
a. unable to carry out the duties of the current job.
b. unable to carry out the duties of any job.
c. ill for at least two years.
d. willing to undergo rehabilitation.
e. none of these
99. Which of the following is characteristic of social security disability income coverage?
a. There is a one-year waiting period.
b. It uses the “own occupation” definition of disability.
c. Benefits are payable only if the disability is expected to last one year or be fatal.
d. a and b
e. a, b, and d
100. Most people do not need protection against
a. the loss of income because of time spent away from work.
b. a specific dread disease.
c. medical and rehabilitation expenses.
d. nursing home costs.
e. in hospital services.
Chapter 9—Insuring Your Health
101. Which of the following is a public assistance program that provides health insurance benefits only to those who are
unable to pay for healthcare?
a. Medicare
b. Medicaid
c. Blue Cross/Blue Shield
d. Social Security disability benefits
e. Worker’s compensation
102. 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?
a. The policy has a deductible of $600.
b. The elimination period is 15 days.
c. The policy has a 50% coinsurance clause.
d. Joe is considered to be only 50% disabled.
e. Joe has only owned the policy for 6 months.
103. Medicare Advantage supplemental benefits include all of the following except
a. Vision
b. Dental
c. General checkups
d. Hospitalization
e. Wellness programs
Chapter 9—Insuring Your Health
104. Medicare Advantage policies require payment from the policyholder in the form of a
a. Deductible b. Co-insurance
c. Copayment d. Excess charge
e. a and b
105. About ___ of Americans lack health insurance.
a. 10%
b. 13%
c. 20%
d. 35%
e. 50%
106. The United States spends about ___ the average of other rich economies on health care.
a. half
b. the same as
c. twice
d. three times
e. four times
107. The Affordable Care Act’s expenditures are financed by
a. an 0.9% additional Medicare tax on high earnings.
b. an excise tax on certain “Cadillac” policies.
c. a 3.8% net investment tax.
d. all of these.
e. none of these.
Chapter 9—Insuring Your Health
108. The Affordable Care Act requires insurance companies to set premiums based on all of the following
except
a. family size.
b. where you live.
c. tobacco use.
d. gender.
e. age.
INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first
item, B for the second item, and C if neither item will correctly complete the statement.
109. The average age of the American population is [decreasing | increasing].
110. One complaint about HMOs in the past, as compared to traditional indemnity plans, is that [the cost was expensive |
members couldn’t always choose their physicians].
111. One difference between health maintenance organizations (HMOs) and individual practice associations (IPAs) is that
[HMOs cost much less | IPAs do not provide services from a central location].
Chapter 9—Insuring Your Health
112. Traditional indemnity policies reimburse the insured based on the [amount charged | usual, customary, and
reasonable charges] for the medical services received.
113. [Medicare | Medicaid] makes health care payments available for anyone over age 65.
114. Medicare [hospital | supplemental medical] insurance requires those covered to pay a monthly premium.
115. Medicare would pay [the entire | part of the] hospital bill for a covered person.
Chapter 9—Insuring Your Health
116. Workers’ compensation insurance makes payments to an injured worker [if he has been hurt on the job | only if he
can prove negligence on the part of his employer].
117. Premiums for workers’ compensation are paid by [employees | employers].
118. [Medicare | Workers’ compensation] pays for medical expenses that are the result of on-the-job injuries and job-
related illnesses.
119. Hospital insurance pays the costs for room and board and [the use of an operating room | the fee charged by the
surgeon].
120. Having your “reasonable and customary” surgical expenses paid is an example of [fee-for-service | scheduled]
benefits.
Chapter 9—Insuring Your Health
121. Scheduled surgical benefits tend to be [very close to | way below] what most surgeons will charge.
122. Physician’s expense insurance [would | would not] pay for the cost of a routine office call.
123. Surgical expense insurance will pay for cosmetic surgery [if so desired by the insured | if deemed medically
necessary].
124. Most commonly, the deductible in a health insurance policy is on [an annual | a per-incident] basis.
125. When there is a co-insurance or participation clause in a health insurance policy, the amount the insurance will pay is
computed [before | after] the deductible is paid.
Chapter 9—Insuring Your Health
126. The amount of health insurance reimbursement actually paid may be reduced by [internal limits | co-payment caps].
127. Your health insurance stipulates that you will pay the first $500 of your health care expenses for the year. This is an
example of a [deductible | co-payment].
128. A coordination of benefits provision in a health care policy would [aid | prohibit] collecting multiple payments for
health care.
129. If you are laid off, your health insurance [can be continued at the employer’s option | may be continued if you pay the
premiums].
Chapter 9—Insuring Your Health
130. Your health insurance will usually pay [the same | less] for mental health problems compared to physical problems.
131. Long-term health care [does | does not] have a deductible.
132. “Long-term care” is a term used to describe [nursing home | extended hospital].
133. Medicare and Medicaid cover [more | less] than half of the total cost of long-term care.
134. [Men | Women] are more likely to need long-term care insurance.
Chapter 9—Insuring Your Health
135. When purchasing a long-term care policy, the [guaranteed renewability | optional renewability] provision is
recommended.
136. Disability insurance is designed to [replace some of your income | pay medical bills] when you are disabled.
137. The [“own occupation” | “any occupation”] definition of disability is more restrictive.
138. You would be more likely to receive [70 | 90] percent of your pre-disability income from a disability income policy.
139. The longer the elimination or waiting period in your disability income policy, the [higher | lower] the premiums.
Chapter 9—Insuring Your Health
140. Disability income benefits are taxable when the policy premiums were paid by the [employer | employee].
141. Unhealthy lifestyles can contribute to more than [40 | 60] percent of all diagnosed illnesses.
142. If an employee could afford additional health insurance coverage in addition to group coverage, most should
purchase [dental | disability income] insurance.
143. During the past few decades, the percent of our income that we as a nation spend on health care has [increased |
decreased].
144. In recent years, HMOs have become [more | less] flexible regarding out-of-network coverage.
Chapter 9—Insuring Your Health
145. Medicare Advantage supplemental benefits include [lab tests | wellness programs].
146. Medicare Advantage policies require payment from the policyholder in the form of [deductibles and coinsurance |
copayments].
147. The Medicare coinsurance payment is usually [10% | 20%].
148. About [one in five | one in seven] people between the ages of 35 and 65 will become disabled for five years or more.
149. Nick and Sheila Preston are married and have purchased a comprehensive major medical policy which covers them
and their two sons, Wally and Brent. The policy has a $500 calendar-year family deductible, a $2,500 stop-loss provision,
and an 80% coinsurance clause. The following losses occur: On January 1, Sheila was treated for an infection at a cost of
$200; on July 1, Wally was treated for an injury suffered while waterskiing at a cost of $10,000; on December 5, Nick
underwent eye surgery at a cost of $1,500; and on January 5 of the following year, Brent was treated for a broken leg at a
cost of $2,000.
How much will the insurer pay for each of these losses?
Chapter 9—Insuring Your Health
150. Tommy and Amanda Perez are a dual-earner couple with a young son, Bobby. Tommy and Amanda each receive
health care coverage for themselves from their respective employers. Their employers pay the premiums for the workers,
and coverage for dependents is available if the worker pays the premium cost. They are trying to decide under which
policy to cover Bobby for the upcoming year. The following is a brief description of their policies and projected medical
expenses for Bobby.
Tommy’s HMO Coverage
Amanda’s Major Medical Coverage
Maximum limits
unlimited
$500,000/year/person
Deductible/Copayment
$20/doctor’s visit,
$50/urgent care clinic visit,
$15/prescription,
$ 0/in-hospital charges
$500/year/person
Participation
not applicable
80/20 with a $2,500/year/person cap
Major exclusions
Dental and vision
Prescriptions, dental, and vision
Monthly premiums for dependents
$105/dependent/month
$90/dependent/month
Bobby is a healthy 8-year-old who is accident prone. Based on his past medical records, Tommy and Amanda expect the
following covered medical costs for the year:
6 trips to the doctor—average cost of $75 per trip
2 trips to the urgent care clinic—average cost of $300 per trip
1 broken bone—average cost of in-hospital surgery $1,250
12 prescriptions—average cost of $45 per prescription
Chapter 9—Insuring Your Health
What would the combined cost of premiums plus out-of-pocket medical costs be for Bobby under Tommy’s HMO?
What would the combined cost of premiums plus out-of-pocket medical cost be for Bobby under Amanda’s major medical
plan?