Life & Health Insurance Exam Life & Health Insurance Health Insurance Fundamentals 5 — Questions and Answers
Question 1: Which of the following best describes a 'stop-loss' provision in a major medical policy?
- It stops the insurer from raising premiums mid-year
- It is a cap on the insured's coinsurance payments, after which the insurer pays 100% (Correct answer)
- It prevents the insured from switching plans mid-year
- It limits the insurer's total lifetime payout
Correct answer: It is a cap on the insured's coinsurance payments, after which the insurer pays 100%
A stop-loss (or out-of-pocket maximum) provision limits the amount of coinsurance the insured must pay; once reached, the insurer covers 100% of remaining covered expenses.
Question 2: The 'birthday rule' in coordination of benefits determines which parent's plan is primary for a dependent child by:
- Using whichever parent is older as primary
- Using whichever parent's birthday falls earlier in the calendar year (Correct answer)
- Always making the father's plan primary
- Always making the mother's plan primary
Correct answer: Using whichever parent's birthday falls earlier in the calendar year
The birthday rule states that the plan of the parent whose birthday (month and day, not year) falls first in the calendar year is primary for dependent children.
Question 3: Which document must an insurer provide to a group health plan participant that summarizes benefits and coverage in plain language?
- Certificate of creditable coverage
- Summary Plan Description (SPD)
- Summary of Benefits and Coverage (SBC) (Correct answer)
- Schedule of benefits
Correct answer: Summary of Benefits and Coverage (SBC)
The ACA requires insurers and group health plans to provide a standardized Summary of Benefits and Coverage (SBC) in plain language before enrollment.
Question 4: A hospital bill totals $50,000. The insured's policy has a $1,000 deductible, 80/20 coinsurance, and a $5,000 out-of-pocket maximum. What is the insured's total liability?
- $1,000
- $5,000 (Correct answer)
- $9,800
- $10,000
Correct answer: $5,000
The insured pays $1,000 deductible plus 20% of the remaining $49,000 ($9,800), but the $5,000 out-of-pocket maximum caps total liability at $5,000.
Question 5: Which health insurance concept allows employees to set aside pre-tax dollars for medical expenses but the funds are forfeited if not used by year-end (with limited rollover options)?
- HSA
- HRA
- FSA (Correct answer)
- MSA
Correct answer: FSA
A Flexible Spending Account (FSA) is a 'use-it-or-lose-it' account funded with pre-tax salary deferrals, with only a limited rollover allowed under IRS rules.
Question 6: Under the ACA, individuals who are uninsured for more than how many consecutive months in a year face a penalty (when applicable)?
- 1 month
- 3 months
- 6 months
- No federal penalty applies after 2018 (Correct answer)
Correct answer: No federal penalty applies after 2018
The federal individual mandate penalty was reduced to $0 starting in 2019, so there is no federal penalty for being uninsured, though some states have their own mandates.
Question 7: When an individual covered by Medicare also has employer group health insurance, which plan is typically primary for an active employee at a company with 20 or more employees?
- Medicare is always primary
- The employer group health plan is primary (Correct answer)
- The plan the employee enrolled in first is primary
- They share costs equally as co-primary payers
Correct answer: The employer group health plan is primary
For active employees at employers with 20 or more workers, the group health plan is primary and Medicare is secondary under the Medicare Secondary Payer rules.
Life & Health Insurance Exam Life & Health Insurance Health Insurance Fundamentals 5
Which of the following best describes a 'stop-loss' provision in a major medical policy?