Life & Health Insurance Exam Life & Health Insurance Health Insurance Fundamentals 4 — Questions and Answers
Question 1: Which type of health savings account can only be used with a High Deductible Health Plan (HDHP)?
- FSA
- HRA
- HSA (Correct answer)
- MSA (non-Archer)
Correct answer: HSA
An HSA (Health Savings Account) is only available to individuals enrolled in a qualified HDHP and offers triple tax advantages.
Question 2: What is the term for the list of prescription drugs covered by a health insurance plan?
- Benefit schedule
- Formulary (Correct answer)
- Drug indemnity list
- Covered substance registry
Correct answer: Formulary
A formulary is the plan's list of covered prescription drugs, typically organized into tiers that determine the member's cost-sharing level.
Question 3: An insured receives a bill for $1,000 after the deductible is met. The policy has an 80/20 coinsurance clause with a $2,000 out-of-pocket max already half-met. How much does the insured owe?
- $80
- $200 (Correct answer)
- $1,000
- $0
Correct answer: $200
With an 80/20 coinsurance split, the insured pays 20% of $1,000, which equals $200, assuming the out-of-pocket max has not yet been fully reached.
Question 4: Which health insurance provision prevents an insurer from reducing or denying a claim on the grounds that an application contained a misstatement after the policy has been in force for two years?
- Incontestability clause (Correct answer)
- Free-look provision
- Waiver of premium rider
- Guaranteed insurability clause
Correct answer: Incontestability clause
The incontestability clause bars the insurer from contesting the policy based on misstatements in the application after the policy has been in force for a specified period, typically two years.
Question 5: What distinguishes an Exclusive Provider Organization (EPO) from a PPO?
- EPOs cover out-of-network care at reduced rates; PPOs do not cover it at all
- EPOs require a PCP; PPOs do not
- EPOs do not cover out-of-network care except in emergencies; PPOs do at higher cost (Correct answer)
- EPOs are only available to large employers; PPOs are available to individuals
Correct answer: EPOs do not cover out-of-network care except in emergencies; PPOs do at higher cost
An EPO restricts coverage to in-network providers (except emergencies), while a PPO allows out-of-network use with higher cost-sharing.
Question 6: A blanket health policy is most commonly used to cover:
- Individual employees in a large corporation
- Members of a group whose composition changes frequently, such as students or sports teams (Correct answer)
- Retirees under Medicare supplement plans
- Self-employed individuals
Correct answer: Members of a group whose composition changes frequently, such as students or sports teams
Blanket policies cover a group of people exposed to the same risk without naming individuals, commonly used for school athletic teams, airline passengers, or camp participants.
Question 7: Under the mental health parity law (MHPAEA), employer group health plans must ensure that mental health benefits are:
- Equal to or more generous than medical/surgical benefits in financial requirements and treatment limits (Correct answer)
- Offered only if the employer also offers a dental plan
- Subject to a separate deductible from medical benefits
- Voluntary and optional for all employees
Correct answer: Equal to or more generous than medical/surgical benefits in financial requirements and treatment limits
MHPAEA requires that financial requirements and treatment limitations for mental health/substance use disorder benefits be no more restrictive than those applied to medical and surgical benefits.
Life & Health Insurance Exam Life & Health Insurance Health Insurance Fundamentals 4
Which type of health savings account can only be used with a High Deductible Health Plan (HDHP)?