Accident and Sickness Insurance Flashcards

A group health insurance plan uses a 'stop-loss' provision. Which of the following BEST describes its function?

Answer: It limits the insured's out-of-pocket expenses to a defined maximum per year

A stop-loss (or out-of-pocket maximum) provision caps the total amount an insured must pay in cost-sharing each year, after which the insurer covers 100% of covered expenses.

Under an accidental death and dismemberment (AD&D) policy, the 'principal sum' refers to:

Answer: The benefit paid for loss of life due to an accident

The principal sum is the full face amount paid for accidental death or loss of two major body parts; lesser losses pay a percentage called the capital sum.

Which of the following is an example of a 'capitation' payment arrangement commonly found in managed care plans?

Answer: The provider receives a fixed monthly payment per enrolled member regardless of services used

Capitation pays healthcare providers a fixed per-member-per-month fee regardless of how many services that member uses, incentivizing preventive care.

An insured has both a group health plan through her employer and individual coverage. The coordination of benefits (COB) rule determines:

Answer: How benefits are shared between the two plans to prevent overpayment

COB rules coordinate payments between multiple health plans so the insured is reimbursed for actual losses without receiving more than 100% of covered expenses.

Which of the following provisions gives an insured the right to continue individual health coverage after losing group coverage, without proving insurability?

Answer: The conversion privilege

The conversion privilege allows an insured leaving a group plan to convert to an individual policy without undergoing a medical exam or proving insurability.

A health insurance policy's 'internal limits' clause most directly affects which type of expense?

Answer: Specific services like room and board or mental health visits, capping what the insurer pays per day or visit

Internal limits cap what the insurer will pay for specific services (e.g., $300/day for hospital room) even if the overall policy maximum has not been reached.

Under the LLQP, which of the following BEST describes the insurer's obligation under a 'guaranteed renewable' accident and sickness policy?

Answer: The insurer must renew the policy but may increase premiums for the entire class of insureds

A guaranteed renewable policy cannot be cancelled by the insurer as long as premiums are paid, but the insurer may raise premiums on a class-wide basis.