Preferred Provider Organizations (PPOs) Quiz & Flashcards

Questions and Answers

In Major Medical Expense policies, what is the intent of a Stop Loss provision?

Limits an insurer's premium increases

Limits an insured's out-of-pocket medical expenses (correct)

Limits an insurer's liability

Limits an insured's coverage for pre-existing conditions

Which of the following costs would a Basic Hospital/Surgical policy likely cover?

Lost income caused by a hospital stay

Surgically removing a facial birthmark (correct)

Care given at a nursing home

Treating a wound from a soldier injured at war

How much will Q be responsible for paying on a claim if hospitalized for 3 days with a bill of $10,100 and a Major Medical policy that has a $100 deductible and 80/20 coinsurance?

$2,100

For which of the following expenses does a Basic Hospital policy pay?

Hospital room and board Signup and view all the answers

In order to establish a Health Reimbursement Arrangement (HRA), it MUST

Be established by the employer Signup and view all the answers

Which of the following situations does a Critical Illness plan cover?

Leukemia Signup and view all the answers

Basic Hospital and Surgical policy benefits are

Lower than the actual expenses incurred Signup and view all the answers

Which of these options can an individual use their medical flexible spending account to pay for?

Prescription drugs Signup and view all the answers

A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will

Continue coverage but exclude the heart condition Signup and view all the answers

Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deductible?

Carryover provision Signup and view all the answers

Which of the following BEST describes a Hospital Indemnity policy?

Coverage that pays a stated amount per day of a covered hospitalization Signup and view all the answers

How much will the insured be responsible to pay with $11,000 in covered medical expenses under a group Major Medical plan with a $1,000 deductible and an 80/20 coinsurance clause?

$3,000 Signup and view all the answers

Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy?

Discourages overutilization of the insurance coverage Signup and view all the answers

Deductibles are used in health policies to lower

Overuse of medical services Signup and view all the answers

Which of the following health insurance coverages is BEST suited for meeting the expenses of catastrophic illness?

Major Medical Signup and view all the answers

What would be this family's out-of-pocket medical expenses for 2013 if they have a Hospital/Surgical Expense policy with a $500 deductible and a limit of four deductibles per calendar year?

$1,000 Signup and view all the answers

Which of the following phrases refers to the fees charged by a healthcare professional?

Usual, customary, and reasonable expenses Signup and view all the answers

Which of the following types of health coverage frequently uses a deductible?

Major Medical policy Signup and view all the answers

Which of the following individual health insurance policies will provide the broadest protection?

Major Medical Signup and view all the answers

N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as

Coinsurance Signup and view all the answers

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a

High-deductible health plan Signup and view all the answers

What is the MAXIMUM C will pay if the covered medical expenses are $2,000 with an 80/20 coinsurance clause and a $400 deductible?

$720 Signup and view all the answers

Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT?

If the employee paid for qualified medical expenses, the reimbursements may be tax-free Signup and view all the answers

With a Basic Medical Expense policy, what does the hospitalization expense cover?

Hospital room and board Signup and view all the answers

Which of these is NOT a characteristic of a Health Reimbursement Arrangement (HRA)?

Employee funds the HRA entirely Signup and view all the answers

Which of the following is NOT a limited benefit plan?

Life insurance policies Signup and view all the answers

Which of the following services is NOT covered under a hospitalization expense policy?

Surgeon's fees Signup and view all the answers

A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for

Experimental and investigative services Signup and view all the answers

If J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause, how much would J pay if hospitalized and receives a bill for $10,000?

$3,600 Signup and view all the answers

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?

Dread disease insurance Signup and view all the answers

How much will the insured have to pay if a Major Medical policy has a $5,000 deductible and an 80/20 Coinsurance clause, with a total of $15,000 in covered medical expenses incurred?

$7,000 Signup and view all the answers

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?

The maximum amount considered eligible for reimbursement by an insurance company under a health plan Signup and view all the answers

M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for?

Determined by the terms of the policy Signup and view all the answers

Basic Medical Expense insurance

Has lower benefit limits than Major Medical insurance Signup and view all the answers

Which of the following medical expenses does Cancer insurance NOT cover?

Arthritis Signup and view all the answers

Comprehensive Major Medical policies usually combine

Major Medical with Basic Hospital/Surgical coverage Signup and view all the answers

The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the

Initial deductible Signup and view all the answers

A Health Reimbursement Arrangement MUST be established

By the employer Signup and view all the answers

The phrase 'This policy will only pay for a semi-private room' is an example of a(n)

Internal limit Signup and view all the answers

All of the following are limited benefit plans EXCEPT

Life insurance policies Signup and view all the answers

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards. How will the insurer likely consider this condition?

Insurer will likely treat as a pre-existing condition which may not be covered for one year Signup and view all the answers

Major Medical policies typically

Contain a deductible and coinsurance Signup and view all the answers

A characteristic of Preferred Provider Organizations (PPOs) would be:

Discounted fees for the patient Signup and view all the answers

All of the following statements about Major Medical benefits are true EXCEPT

Benefits have no maximum limit Signup and view all the answers

A major medical policy typically

Provides benefits for reasonable and necessary medical expenses, subject to policy limits Signup and view all the answers

If M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause, how much will M receive in payment for a $2,200 claim for an eligible medical expense?

$1,600 Signup and view all the answers

Which of the following statements BEST describes dental care indemnity coverage?

Services are reimbursed after insurer receives the invoice Signup and view all the answers

Study Notes

Major Medical Expense Insurance Key Concepts

Stop Loss Provision: Limits an insured's out-of-pocket medical expenses, protecting them financially.
Basic Hospital/Surgical Coverage: Typically covers surgical procedures like removing facial birthmarks but may not cover care given in nursing homes or lost wages.
Claims and Payments: Hospitalized individuals need to understand deductible and coinsurance calculations to determine personal responsibility. For example, a $10,100 bill with an 80/20 coinsurance and $100 deductible results in a $2,100 payment by the insured.
Coverage Types: Basic Hospital policies generally cover hospital room and board, while major medical policies cover a broader range of health expenses.

Health Reimbursement Arrangements (HRA)

An HRA must be established by the employer and often comes along with other health benefits. It allows for tax-free reimbursements for qualified medical expenses.
An HRA lacks employee contributions; it is fully funded by the employer.

Coinsurance and Deductibles

Coinsurance clauses in major medical policies discourage overutilization by requiring insureds to share in medical costs.
Deductibles serve to reduce overuse of services by making insureds accountable for initial expenses before insurance payments kick in.

Types of Health Insurance

Major Medical Insurance: Provides extensive coverage for medical expenses and typically includes deductible and coinsurance factors.
Dread Disease Insurance: Covers specific illnesses exclusively, such as cancer or stroke.

Important Policy Features

Usual, Customary, and Reasonable Charges (UCR): Refers to the maximum amount an insurer will consider for reimbursement for a provided medical service.
Internal Limit: Refers to certain policy stipulations like coverage for semi-private rooms within hospitalization expense policies.
Hospital Indemnity Policy: Provides a per-day benefit during hospitalization, regardless of incurred expenses.

Exclusions and Limitations

Certain policies will not cover pre-existing conditions for a defined period, and specific expenses (e.g., arthritis) may not fall under designated coverage, such as cancer policies.

Payment Calculations

Examples demonstrate how to calculate insurer payments based on deductibles. For instance, with an $11,000 medical expense and an $1,000 deductible, the insured pays $3,000 after coinsurance calculations.

Additional Coverage Characteristics

Dental care indemnity coverage functions with reimbursement after service completion, emphasizing accuracy in billing and service delivery.

Specialty Coverages

Policies like critical illness plans specifically cater to serious conditions such as leukemia, emphasizing the targeted nature of such plans compared to broader coverage options.

Conclusion

Understanding the various types of medical insurance, their definitions, and how they function—including terms like coinsurance, deductibles, HRAs, and specific coverage—enables individuals to make informed insurance decisions and manage their healthcare expenses effectively.

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Description

Test your knowledge on key concepts related to Major Medical Expense policies and Basic Hospital/Surgical coverage. This set of flashcards covers important definitions and provisions that play a vital role in medical expense insurance. Improve your understanding and prepare effectively for your studies in this area.

Medical Expense Insurance Flashcards