Life and Health California Exam Health Insurance Policies 2 — Questions and Answers
Question 1: A Preferred Provider Organization (PPO) differs from an HMO primarily because:
- PPO members must choose a primary care physician
- PPO members can see out-of-network providers at a higher cost (Correct answer)
- PPOs do not require any cost-sharing from members
- PPOs only cover inpatient hospital services
Correct answer: PPO members can see out-of-network providers at a higher cost
Unlike HMOs, PPOs allow members to use out-of-network providers, though doing so results in higher out-of-pocket costs.
Question 2: Under a Health Maintenance Organization (HMO), which of the following best describes the role of the primary care physician (PCP)?
- The PCP sets the member's premium rate
- The PCP acts as a gatekeeper coordinating and authorizing specialist referrals (Correct answer)
- The PCP only treats emergency conditions
- The PCP approves claims for reimbursement
Correct answer: The PCP acts as a gatekeeper coordinating and authorizing specialist referrals
In an HMO, the PCP coordinates all of the member's care and must provide referrals before the member can see a specialist.
Question 3: What is the purpose of the 'stop-loss' provision in a major medical policy?
- It stops the insurer from canceling the policy
- It limits the insured's total out-of-pocket coinsurance to a specified maximum (Correct answer)
- It prevents the insured from filing more than one claim per year
- It stops coverage after a lifetime maximum is reached
Correct answer: It limits the insured's total out-of-pocket coinsurance to a specified maximum
The stop-loss (out-of-pocket maximum) provision caps the insured's coinsurance payments so that once reached, the insurer pays 100% of remaining covered expenses.
Question 4: Under California law, what is the minimum grace period for health insurance policies paid on a monthly basis?
- 7 days
- 10 days
- 31 days (Correct answer)
- 60 days
Correct answer: 31 days
California law requires a minimum 31-day grace period for monthly health insurance premiums before the policy lapses.
Question 5: A health insurance policy that covers all medical expenses—hospital, surgical, and physician—under a single plan is known as:
- Basic hospital expense policy
- Comprehensive major medical policy (Correct answer)
- Blanket policy
- Supplemental health policy
Correct answer: Comprehensive major medical policy
A comprehensive major medical policy combines hospital, surgical, and physician expense coverage into one plan with a single deductible and coinsurance requirement.
Question 6: Which of the following is NOT typically excluded from a standard individual health insurance policy?
- Cosmetic surgery for appearance only
- Treatment for a pre-existing condition after the waiting period expires (Correct answer)
- Self-inflicted injuries
- Injuries sustained during the commission of a felony
Correct answer: Treatment for a pre-existing condition after the waiting period expires
After the applicable pre-existing condition waiting period expires, treatment for that condition is a covered benefit under the policy.
Life and Health California Exam Health Insurance Policies 2
A Preferred Provider Organization (PPO) differs from an HMO primarily because: