Chapter 9—Insuring Your Health
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
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
c
Easy
PFIN.BILL.17.9-1 – LO: 9-1
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
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.
Moderate
PFIN.BILL.17.9-2 – LO: 9-2
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
108. The Affordable Care Act requires insurance companies to set premiums based on all of the following
except
a.
b.
c.
d.
e.
PFIN.BILL.17.9-2 – LO: 9-2
United States – BUSPROG: Reflective Thinking
Chapter 9—Insuring Your Health
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].
PFIN.BILL.17.9-1 – LO: 9-1
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
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].
PFIN.BILL.17.9-2 – LO: 9-2
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
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].
PFIN.BILL.17.9-2 – LO: 9-2
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
112. Traditional indemnity policies reimburse the insured based on the [amount charged | usual, customary, and
reasonable charges] for the medical services received.
PFIN.BILL.17.9-2 – LO: 9-2
United States – BUSPROG: Reflective Thinking
United States – AK – DISC: Risk and return
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
Chapter 9—Insuring Your Health
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.
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].
Chapter 9—Insuring Your Health
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.
121. Scheduled surgical benefits tend to be [very close to | way below] what most surgeons will charge.
Chapter 9—Insuring Your Health
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].
130. Your health insurance will usually pay [the same | less] for mental health problems compared to physical problems.
Chapter 9—Insuring Your Health
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].
Chapter 9—Insuring Your Health
144. In recent years, HMOs have become [more | less] flexible regarding out–of-network coverage.
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.
Chapter 9—Insuring Your Health
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?
1
Challenging
PFIN.BILL.17.9-4 – LO: 9-4
United States – BUSPROG: Reflective Thinking
United States – AK – DISC: Risk and return
Bloom’s: Analyzing
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
Moderate
PFIN.BILL.17.9-6 – LO: 9-6
United States – BUSPROG: Reflective Thinking
United States – KS – DISC: Risk and Return
Bloom’s: Remembering
Chapter 9—Insuring Your Health
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
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?
Tommy’s HMO
Amanda’s Major Medical
6 × $ 75 =
100 Emergency clinic
2 × $ 300 =
600 Emergency clinic
0 Hospital
1 × $1,250 =
1,250 Hospital
180 Prescriptions
$2,300
$ 400 Out-of-pocket costs
$1,800
1,260 Annual premiums
1,080 Annual premiums
500 Deductible
360 Coinsurance
$1,660 Total cost
$2,480 Total cost
Challenging
PFIN.BILL.17.9-4 – LO: 9-4
United States – BUSPROG: Reflective Thinking
United States – AK – DISC: Risk and return
Bloom’s: Analyzing