Personal Finance Chapter 9 Test

Health insurance is a form of protection that eases the financial burden people may experience as a result of someone's death.

All group health insurance plans provide the same level of protection.

The Health Insurance Portability and Accountability Act of 1996 set new federal standards to ensure that workers would not lose their health insurance if they changed jobs.

Surgical expense insurance pays all or part of the surgeon's fees for an operation in a doctor's office.

A deductible is a set amount you must pay toward medical expenses before the insurance company pays benefits.

Long-term care insurance is used to pay for a stay in a nursing home but not for help at home.

The copayment provision deals with the amount that someone will pay for a bill such as 20% coinsurance.

The benefit limits provision identifies the minimum benefits that will be paid for days spent in the hospital.

With a guaranteed renewable provision in a health insurance policy, the insurer is permitted to raise premiums for all members of a group.

A health insurance policy that pays you back for actual expenses is called an indemnity policy.

A health insurance policy that pays you back for actual expenses is called a reimbursement policy.

Some policies consider the average fee for a service in a particular geographical area. They then use that amount to set a minimum payment for policyholders.

Blue Cross and Blue Shield are two types of HMOs

A PPO is a group of doctors and hospitals that agree to provide health care at rates approved by the insurer

A PPO is another name for an HMO.

An employer self-funded health plan requires a low level of financial assets.

A flexible spending account (FSA) is funded by an employer.

A health reimbursement account (HRA) is funded solely by your employer and gives you a pot of money to spend on health care.

FSAs and HSAs provide tax advantages for health care expenses.

A Medicare Advantage Plan (Part C) combines your Part A (Hospital) and Part B (Medical) coverages into one plan.

Medicare typically covers routine checkups.

Medicare is offered to certain low-income individuals and families.

Disability income insurance covers your medical expenses when you are disabled.

A good disability income insurance plan will pay you if you cannot work at any job.

The financial problems caused by death are greater than those caused by disability.

Workers are considered disabled if they have a physical or mental condition that prevents them from working and that is expected to last for at least 12 months or to result in death.

The period before you can receive benefits in a disability plan is called the probationary period.

A disability policy with a longer elimination period typically charges lower premiums than a policy with a short elimination period.

Disability income insurance policies are required to provide benefits for disabled policyholders until age 65.

The United States has the fifth highest per capita medical expenditures of any country in the world.

Administrative costs in the United States consume half of the health care dollars spent.

Health care costs have decreased because of aging baby boomers using fewer health care services.

A summary plan description outlines the disadvantages of your health plan along with your legal rights under the Employment Retirement Income Security Act.

Everyone qualifies for COBRA.

The Health Insurance and the Patient Protection and Affordable Care Act of 2010 requires health insurance companies to submit justification for all requested premium increases.

36. What is the primary purpose of medical expense insurance? A. Protect against death expenses. B. Provide payments to make up for some income of a person who cannot work as a result of injury or illness. C. Pay actual medical costs for illness or injury. D. Pay a salary if an employee is disabled. E. Repay loans if an employee cannot work because of illness or injury.

37. Which of the following is correct? A. A premium reimburses you for hospital stays, doctors' visits, and medications. B. A premium is the amount your employer will pay for your health insurance coverage. C. Disability income insurance pays actual medical costs. D. Medical expense insurance provides payments to make up for income of a person who cannot work as a result of injury or illness. E. Health insurance plans may reimburse an individual for hospital stays, doctors' visits, and medications.

38. Most people receive health insurance under a group plan from A. Individual plans. B. Their bank or lending institution. C. Their employer. D. COBRA. E. All of the above.

39. The Health Insurance Portability and Accountability Act of 1996 A. Sets federal standards to ensure that workers do not lose their health insurance if they change jobs. B. Sets state standards to ensure that workers do not lose their health insurance if they change jobs. C. Applies to individual health insurance policies. D. Prevents employees from moving from one group health plan to another without a lapse in coverage. E. Is a replacement for the Consolidated Omnibus Budget Reconciliation Act of 1986.

40. Coordination of benefits (COB) provision applies to A. Combining health insurance and disability insurance coverage. B. Combining all group and individual insurance coverages. C. Combining the Health Insurance Portability and Accountability Act of 1996 and COBRA. D. Combining three or more disability policies issued for an individual. E. Combining the benefits of two insurance policies issued for a married couple.

41. Which of the following about individual health insurance policies is correct? A. They are used by employees of large organizations. B. All insurance companies that offer this type of policy are required to charge the same rates. C. They are primarily for employees of small companies. D. They are permitted for individuals only, not for families. E. They are available for the self-employed or others who are dissatisfied with the coverage that their group plan provides.

42. Which of the following about individual health insurance policies is NOT correct? A. They can cover individuals. B. They are used by the self-employed. C. They can provide family coverage. D. All insurance companies that offer this type of policy are required to charge the same rates. E. They can be purchased directly from the company of your choice.

43. COBRA stands for A. Coverage of Benefits Reduction Act. B. Continuation of Benefits for Retirees Act. C. Consolidated Omnibus Budget Reconciliation Act. D. Coverage of Benefits for the Retired Act. E. Consolidation of Benefit Reapplication Act.

44. The type of health insurance coverage that pays for some or all of the daily costs of room and board during a hospital stay is A. Dental expense. B. Surgical expense. C. Hospital expense. D. Physician expense. E. Major medical expense.

45. The type of health insurance coverage that may cover routine doctor visits, X-rays, and lab tests is A. Dental expense. B. Surgical expense. C. Hospital expense. D. Physician expense. E. Major medical expense.

46. The type of health insurance coverage that may specify the maximum payment amount for each type of operation is A. Dental expense. B. Surgical expense. C. Hospital expense. D. Physician expense. E. Major medical expense.

47. The type of health insurance coverage that takes up where basic health insurance coverage leaves off is A. Dental expense. B. Surgical expense. C. Hospital expense. D. Physician expense. E. Major medical expense.

48. Fran is interested in purchasing a major medical policy that limits the total out-of-pocket amount that she will have to pay. She should consider a A. Copay. B. Coinsurance. C. Stop-loss provision. D. Hospital indemnity policy. E. Dread disease policy.

49. Jenny wants health insurance that sets the amount that she must pay toward medical expenses before the insurance starts paying benefits. She is concerned about a A. Deductible. B. Coinsurance. C. Vision care policy. D. Hospital indemnity policy. E. Dread disease policy.

50. Miguel is concerned that the health insurance option he is considering plays upon unrealistic fears. He is most concerned about a A. Deductible. B. Coinsurance. C. Stop-loss provision. D. Hospital indemnity policy. E. Dread disease policy.

51. Nancy is studying the health insurance plan options offered by her employer. She wants a policy that will have the insurance pay a percentage of her medical expenses after she meets her deductible. She should review the A. Deductible. B. Coinsurance. C. Stop-loss provision. D. Hospital indemnity policy. E. Dread disease policy.

52. The insurance that helps pay hospital, surgical, medical, and other bills with a low deductible is known as a(n) A. Basic health insurance policy. B. Individual policy. C. Comprehensive major medical policy. D. Hospital indemnity policy. E. Dread disease policy.

53. Which of the following is NOT a type of health insurance available to individuals or employees? A. Dental expense insurance B. Hospital indemnity policy C. Dread disease policy D. Minor medical indemnity insurance E. Vision care insurance

54. This health insurance provision lets your insurer make direct payments to your doctor or hospital. A. Assigned benefits B. Benefit limits C. Exclusions and limitations D. Internal limits E. Service benefits

55. Which of the following is TRUE about long-term care insurance? A. It covers help at home but not in a nursing home. B. It covers a stay in a nursing home but not help at home. C. The older you are when you enroll, the higher the annual premium. D. Insurance plans are sold primarily to individuals in the 20-40 age group. E. These plans typically pay for all costs.

56. This health insurance provision sets specific levels of repayment for certain services. A. Assigned benefits B. Copayment C. Exclusions and limitations D. Internal limits E. Service benefits

57. A health insurance policy with this provision lists coverage in terms of services, not dollar amounts. A. Assigned benefits B. Benefit limits C. Exclusions and limitations D. Internal limits E. Service benefits

58. Which of the following is INCORRECT about dread disease policies? A. They are illegal in many states. B. Each policy covers a wide range of conditions. C. They play upon unrealistic fears. D. These policies are usually sold through the mail, in newspapers, and magazines, or by door-to-door salespeople. E. They cover diseases that are already covered if you are insured under a major medical plan.

59. What is a typical copayment amount for individuals? A. $0-5 B. $20-30 C. $35-50 D. $75-100 E. $100-200

60. A policy that pays you back for actual expenses is called A. A coinsurance plan. B. A reimbursement plan. C. A deductible plan. D. An indemnity plan. E. A reasonable and customary plan.

61. After you have reached a certain limit that you must pay for the deductible and coinsurance, the insurance company covers 100% of any additional cost. This is called A. Reimbursement. B. Out-of-pocket limit. C. Deductible. D. Internal limit. E. Indemnity.

62. The set amount that you must pay toward medical expenses before the insurance company pays benefits is called A. Reimbursement. B. Reasonable and customary charges. C. Deductible. D. Internal limit. E. Indemnity.

63. A provision in a health insurance policy that sets specific levels of repayment for certain services is called A. Reimbursement. B. Out-of-pocket limit. C. Deductible. D. Internal limit. E. Indemnity.

64. Brittany and Brandon are both charged $250 for an office visit to the same specialist. Brittany's reimbursement policy has a deductible of $300. Once she has met the deductible, the policy will cover the full cost of her visits. Brandon's indemnity policy will pay him $150, the maximum amount his plan provides for a visit to any specialist. Which of the following is correct? A. Brittany will pay less because the policy will cover up to $300 for her visit. B. Brittany will pay more because she must pay the entire bill since she has not met her deductible while Brandon will have part of his bill paid by his policy. C. Brandon will pay $150 and his insurance company will pay $100. D. Brandon will pay more because Brittany will have the first $300 paid by her policy. E. None of these is correct.

65. A health insurance plan should include all of the following "must-haves" except A. Offer basic coverage for hospital and doctor bills. B. Impose no unreasonable exclusions. C. Limit out-of-pocket expenses to no more than $3,000 to $5,000 per year. D. Provide at least 120 days' hospital room and board in full. E. Provide a lifetime maximum level of coverage of up to $50,000.

66. Which of the following is a government health care program? A. Health maintenance organization (HMO) B. Home health care agency C. Hospital and medical service plan D. Medicare E. Preferred provider organization (PPO)

67. Blue Cross and Blue Shield are A. Health maintenance organizations (HMO). B. Private insurance companies. C. Statewide organizations. D. Types of Medicare. E. Preferred provider organizations (PPO).

68. Steve's employer offers a health plan that stresses preventive services and covers routine immunizations and checkups, screening programs, and diagnostic tests. What kind of plan does his employer offer? A. Health maintenance organization (HMO) B. Public insurance company C. Hospital and medical service plan D. Medicare E. Medicaid

69. Yvonne's employer offers a health plan that has a group of doctors and hospitals that agree to provide specified medical services to members at prearranged fees. This health plan offers some flexibility since members can either visit a physician from a list or go to their own doctors. What kind of plan does her employer offer? A. Medicaid B. Public insurance company C. Hospital and medical service plan D. Medicare E. Preferred provider organization (PPO)

70. This type of plan combines features of HMOs and PPOs. It uses a network of participating physicians and medical professionals who have contracted to provide services for certain fees. A. Home health care agency B. Hospital and medical service plan C. Medicare D. Point-of-service (POS) plan E. Public insurance company

71. Who is most likely to use a home health care agency? A. A mother who is looking for a plan to cover immunizations for her children. B. A healthy young adult. C. A family with teenagers who need annual check-ups for sports at school. D. An elderly neighbor. E. All of these would be likely to use a home health care agency.

72. Anna contributes pretax dollars to an account managed by her employer for her health care expenses. If she does not spend all of her money by the end of the year, she may forfeit it. What kind of plan does she have? A. FSA B. HRA C. Medicaid D. Medicare E. Self-funded health plan

73. Monica's employer offers a health insurance plan with a very high deductible. In addition, her employer provides a fund for her to spend specifically on health care. What kind of plan does she have? A. FSA B. HRA C. HSA D. Medicare E. Self-funded health plan

74. Jacob is concerned that his out-of-pocket health care expenses will be quite high, so he is considering adding contributions to a tax-free account that he can use with his high-deductible policy to cover catastrophic expenses. What kind of plan does he have? A. FSA B. HRA C. HSA D. Medicare E. Self-funded health plan

75. Individuals over the age of 65 who are eligible for medicare may also be interested in purchasing more coverage called A. Medicare Part A. B. Medicare Part B. C. Medicaid. D. Medigap. E. Statewide health coverage.

76. Jack needs comprehensive medical coverage. However, his income is very low. What plan should he investigate? A. Medicare Part A B. Medicare Part B C. Medicaid D. Medigap E. Medicare Part C

77. Medicare (Part A) covers A. Dental care. B. Routine checkups. C. Most immunizations. D. Inpatient hospital care. E. None of these are covered.

78. A Medigap policy fills the gap between medicare payments and medical costs not covered by A. Home health care agencies. B. Hospital and medical service plans. C. Medicare. D. Medicaid. E. Private insurance companies.

79. Medicaid covers A. Lab services. B. Skilled nursing and home health services. C. Prescription drugs. D. Eyeglasses. E. All of these.

80. Which of the following is incorrect? A. Disability income insurance provides regular cash income when you're unable to work because of a disability. B. Disabilities can include pregnancy, a non-work-related accident, or an illness. C. The exact definition of disability varies from insurer to insurer. D. A bad disability policy pays you if you cannot work at your regular job. E. Disability can cause even greater financial problems than death.

81. All of the following are sources of disability income except A. Worker's compensation. B. Employer plans. C. Social Security. D. Private income insurance programs. E. All of these are sources of disability income.

82. How much does a private income insurance program pay for loss of normal income from a disability? A. 0% B. 10-30% C. 40-60%, with some plans paying up to 75% D. 50-70%, with some plans paying up to 100% E. 100%

83. Katrina was injured in an accident at work. The benefits she will receive to cover part of her income will come from A. A public income insurance program. B. Her health insurance plan. C. Medicare. D. Social Security. E. Worker's compensation.

84. Mark was severely injured while on vacation and expects to be unable to work for at least 12 months. Because of his injury, he should expect to be eligible for disability income from A. A public income insurance program. B. Medicaid. C. Medicare. D. Social Security. E. Worker's compensation.

85. Cameron, age 25, sustained a debilitating hand injury and was unable to perform his job as a viola player in the local orchestra for 45 days. His employer has a disability income insurance policy that pays 70% of take-home pay with an elimination period of 60 days and coverage to age 65. Given this information, which of the following is true for Cameron? A. He will receive disability income for 15 days. B. His employer will pay 70% of his current income for 40 years. C. He will not be eligible for any disability income because his disability ended before the elimination period ended. D. He will receive disability income for 45 days. E. His employer will estimate his average salary through age 65 to determine his disability income.

86. Which of the following is true about an elimination period? A. Premiums for a plan with an elimination period of 30 days will be less than premiums for a plan with an elimination period of 45 days. B. Premiums for a plan with an elimination period of 50 days will be the same as premiums for a plan with an elimination period of 75 days. C. Premiums for a plan with an elimination period of 40 days will be less than premiums for a plan with an elimination period of 75 days. D. Premiums for a plan with an elimination period of 90 days will be the same as premiums for a plan with an elimination period of 60 days. E. Premiums for a plan with an elimination period of 90 days will be less than premiums for a plan with an elimination period of 60 days.

87. The duration of benefits for a disability income insurance plan can be A. For only a few years. B. Until age 65. C. For life. D. All of these are possibilities. E. None of these is correct.

88. If you are concerned that your disability insurer may try to cancel your coverage if your health becomes poor, you should look for a plan that offers A. Duration of benefits to age 65. B. A plan that provides 70-80% of your take-home pay. C. Accident and sickness coverage. D. Guaranteed renewability. E. A short elimination period.

89. Rising health costs are due to all of the following except A. Costs of prescription drugs. B. The growing number of uninsured. C. Advancements in medical technology. D. Baby boomers using fewer health care services. E. The overweight population.

90. Which of the following is NOT correct regarding why Health Care costs so much? A. The use of sophisticated and expensive technologies. B. Victims of accidents and crimes require fewer emergency medical services than in the past. C. Regulations that shift costs instead of reducing costs. D. Duplication of tests. E. Limited competition and restrictive work rules in the health care delivery system.

91. Which of the following activities is NOT a step being taken to reduce health care costs? A. Community health education programs motivate people to take better care of themselves. B. Physicians encourage patients to pay cash for routine medical care and lab tests. C. Programs to carefully review health care fees are available. D. Involvement in community health planning can help achieve a better balance between health needs and health care resources. E. All of these activities can reduce health care costs.

92. Under the Patient Protection and Affordable Care Act of 2010, which of the following is NOT correct? A. Requires new health care plans to allow adult children to remain on their parents' insurance policy until age 26. B. Most insurers must provide preventive care screenings without charging deductibles or co-pays. C. Employers must offer continuing coverage through COBRA for up to 24 months after you leave your job. D. Prohibits denying coverage to children with preexisting medical conditions. E. Expands the Medicaid program for the nation's poorest individuals.

93. The Patient Protection And Affordable Care Act of 2010 A. Prohibits denying coverage to children with preexisting medical conditions. B. Bans insurance companies from dropping people from coverage when they get sick. C. Eliminates co-pays for preventive services. D. Ensures consumers have access to an effective appeals process to appeal decisions by the health insurance plan. E. All of these are true.

94. In which circumstances may the right to elect continued coverage under COBRA exist for a covered spouse or dependent? A. Divorce. B. Legal separation. C. Loss of dependent child status. D. The covered employee's death. E. All of these.

95. Which of the following is correct about your health plan's summary plan description? A. It contains information about the coverage of dependents. B. It contains information about what services will require a co-pay. C. It contains information about circumstances when your employer can terminate your health plan benefits. D. All of these are correct. E. None of these is correct.

96. Georgia is considering between two health insurance policies. One includes a deductible of $600 and the other includes a coinsurance of 20%. If a bill is $4,000, how much will she be required to pay under the policy with the coinsurance? A. $0 B. $120 C. $600 D. $800 E. $4,000

97. Georgia has a health insurance policy that includes a deductible of $500. If her total bill is $3,000, how much will her insurance pay? A. $0 B. $3,500 C. $5,000 D. $3,000 E. $2,500

98. Larry has a health insurance policy that includes a deductible of $1,000 and a coinsurance of 20%. If his total bill is $7,000, how much will his insurance pay? A. $800 B. $1,000 C. $2,200 D. $4,800 E. $6,000

99. Peter has a health insurance policy that includes a deductible of $1,000, a coinsurance of 20%, and a stop-loss of $4,000. If his total bill is $20,000, how much will he pay? A. $1,000 B. $3,800 C. $4,000 D. $4,800 E. $19,000

100. Sandy went to the doctor three times, and each appointment cost $200. Her copayment was $25 per visit. How much was Sandy required to pay in total for her three visits? A. $25 B. $75 C. $175 D. $200 E. $525

Two-thirds of all health insurers use prescription data to deny coverage to some individuals (and families) and to charge higher premiums to others. (True or False)

102. Cynthia was charged $300 for a specialist office visit. Her indemnity policy will pay $125. What amount will she have to pay? A. $425 B. $300 C. $175 D. $125 E. None of the above

103. Managed care health plans include HMOs, PPOs, and POSs.

104. As health care costs continue to grow, it is projected that the Medicare program will be bankrupt by the year 2035 if no changes are made.

If you or any of your dependents do not have minimum essential coverage and you do not have an exemption, then you will have to make an individual shared responsibility payment on your tax return equal to $95 per adult and $47.50 per child in your family (up to a maximum of $500 per family).

You may be exempt from the requirement to maintain minimum essential coverage if you have no affordable coverage options, because the amount you must pay for the annual premium is more than 8% of your household income.