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Which of the following types of plans integrates its coverage with a basic medical expense coverage, providing benefits in excess of those specified in the basic plan?

* A)
Basic umbrella.* B) Hospital indemnity.* C) Supplementary major medical.* D) Comprehensive major medical.

c

A supplementary major medical plan is coordinated with a basic plan and is designed to pick up coverage where the basic plan leaves off. It covers expenses not included under a basic plan and provides coverage for expenses that exceed the basic plan"s dollar limits.


All of the following medical expenses generally are excluded from coverage under individual medical expense policies EXCEPT:

* A)
nursing care in a hospital.* B) custodial care in a convalescent facility.* C) treatment for drug and alcohol abuse.* D) nursing care at home.

A

Individual medical expense policies cover nursing care in a hospital, but usually exclude treatment for drug or alcohol abuse, custodial care in a convalescent home, and nursing care at home.


When separate deductibles are required for each illness or accident, what kind of deductible is in effect?

* A)
Revolving.* B) Per benefit.* C) Per cause.* D) Flat.

C

If a policy defines causes of loss on the basis of each sickness or injury, separate (per cause) deductibles must be satisfied every time a claim is submitted to the insurer.


Major medical policies that pay 100% of covered expenses above a specified amount and after the insured"s deductible contain what kind of a provision?

* A)
Blue sky.* B) Stop-loss.* C) Maximum benefit.* D) Umbrella.

B

Some major medical policies contain a stop-loss provision, meaning that the insurer pays 100% of covered expenses after the insured"s out-of-pocket payments for eligible expenses reach a specified level, such as $1,000 or $2,000. The definition of a stop-loss cap will depend on the policy.


Prescription drug coverage can be offered as an optional benefit under which of the following arrangements?

* A)
Group medical expense plans.* B) HMOs.* C) PPOs.* D) COBRAs.

A

While HMOs and PPOs include coverage for prescription drugs, insureds in a group medical expense plan must buy the coverage as an optional benefit. COBRA is federal legislation that protects the benefits of insureds who have lost coverage because of termination of employment.


Fees for all of the following items typically are covered under a medical expense policy"s miscellaneous expense benefit EXCEPT:

* A)
surgeon"s fees.* B) x-rays.* C) laboratory fees.* D) use of the operating room.

A

The miscellaneous expense benefit covers hospital "extras," such as x-rays, laboratory fees, and use of the operating room. It does not cover a surgeon"s fees, which would be covered under a surgical expense policy.


Which kind of deductible is entirely or partially absorbed by a basic medical expense policy?

* A)
Integrated.* B) First dollar.* C) Corridor.* D) Decreasing.

A

All or part of the integrated deductible is absorbed by, or integrated into, the basic medical expense policy. Then major medical benefits are payable.


All of the following statements regarding preexisting conditions are correct EXCEPT:

* A)
specifying exclusions for preexisting conditions helps an insurer to maintain reasonable premium rates.* B) medical expense policies frequently exclude benefits for losses due to such conditions.* C) by most policy definitions, a preexisting condition is one that was contracted by the insured within 1 year before a policy was issued.* D) disability income policies commonly include a probationary period to help control the risk of preexisting conditions.

C

A preexisting condition is one that first manifested or was treated within a stipulated period before the insured applied for the policy. This period is not necessarily limited to one year.


Margie’s medical expense policy will pay the actual hospital room and board charges for a semiprivate room. Her policy likely pays benefits on which basis?

* A)
Service.* B) Credit.* C) Indemnity.* D) Reimbursement.

D

In regards to room and board benefits, medical expense policies written on a reimbursement basis typically either pay for actual charges for a semiprivate room or a percentage of the actual charges, with no specific dollar limit.


Basic hospital expense insurance provides coverage for all of the following EXCEPT:

* A)
physician services.* B) anesthesia and use of the operating room and supplies.* C) hospital room and board.* D) drugs and X-rays.

A

Physicians" services are not covered under a basic hospital expense policy, even in the case of surgery. The cost for a physician is covered under a basic surgical expense or basic physician"s (nonsurgical) expense policy.


All of the following approaches are used by insurers to determine benefits payable under basic surgical expense insurance EXCEPT:

* A)
traditional net cost method.* B) reasonable and customary approach.* C) relative value scale approach.* D) surgical schedule method.

A

There are 3 different approaches used by insurers to determine benefits payable for surgical services: surgical schedule approach, the reasonable and customary approach, and the relative value scale approach. Under the surgical schedule method, every surgical procedure is assigned a dollar amount by the insurer. The reasonable and customary approach is more open in its determination of benefits payable. The relative value scale is similar to the surgical schedule method, except that instead of a flat dollar amount being assigned to every surgical procedure, a set of points is assigned. The number of points assigned to any one procedure is relative to the number of points assigned to a maximum procedure. The traditional net cost method is a way of comparing costs of similar policies.


All of the following home health care services will be covered by group plans EXCEPT:

* A)
occupational therapy.* B) emergency surgery.* C) physical therapy.* D) nutritional consultation.

B

Group medical benefits contracts must cover home care services. Home care services mean services provided in a patient"s residence and not in a hospital or skilled nursing or rehabilitation facility. These services must be approved by a physician and include: nursing and physical therapy, occupational therapy, speech therapy, medical social work, nutritional consultation, services of a home health aid, and use of durable medical equipment and supplies.


The miscellaneous medical expense benefit in a medical expense policy normally will cover:

* A)
the administration of anesthesia.* B) room and board.* C) drugs and medicine administered in the hospital.* D) physicians" bedside visits.

C

The miscellaneous medical expense benefit in a medical expense policy normally will cover drugs and medicine administered in the hospital as well as other incidental hospital expenses.


Which of the following methods of determining benefits under a surgical expense policy assigns a set of points to surgical procedures?

* A)
Surgical schedule.* B) Corridor offset.* C) Relative value.* D) Reasonable and customary costs.

C

The relative value approach to determining benefits assigns a number of points to different surgical procedures, relative to the number of points assigned to a maximum procedure, such as a heart bypass. If a heart bypass were assigned, say, 1,000 points, every other procedure"s point assignment would be relative to that. For example, an appendectomy might be assigned 200 points; setting a broken finger might be assigned five points. A dollar-per-point conversion factor is then applied to determine dollar benefits.


Leonard owns a major medical health policy which requires him to pay the first $200 of covered expenses each year before the policy pays its benefits. The $200 is the policy"s:

* A)
annual premium.* B) stop-loss amount.* C) deductible.* D) coinsurance amount.

C

A deductible is a stated initial dollar amount that the individual insured is required to pay before insurance benefits are paid.


A stop-loss feature in a major medical policy specifies the maximum:

* A)
amount the insured must pay in premiums.* B) benefit amount the policy provides each year.* C) amount the insured must pay toward covered expenses.* D) benefit amount the policy provides in a lifetime

C

To provide a safeguard for insureds, many major medical policies contain a stop-loss feature that limits the insured"s out-of-pocket expenses. This means that once the insured has paid a specified amount toward his or her covered expenses-usually $1,000 to $2,000-the company pays 100% of covered expenses after that point.


Comprehensive medical expense insurance covers all of the following EXCEPT:

* A)
hospital miscellaneous expenses.* B) hospital room and board.* C) loss of income resulting from sickness.

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* D) surgical fees.

C

Comprehensive medical expense insurance covers room and board, surgical fees and hospital miscellaneous expenses up to a dollar limit. Disability income insurance covers loss of income resulting from accident or illness.


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