Deck 19: Employee Benefits: Life and Health Benefits

Question 1

The possibility of adverse selection is an important consideration in group underwriting.

Answer 1

True

Question 2

If an employer makes a contribution toward the cost of an employee benefit program, then the program is said to be contributory.

Answer 2

False

Question 3

A wage continuation plan is a form of health expense coverage provided by an employer.

Answer 3

False

Question 4

Benefits from disability plans are usually less than 100 percent of salary.

Question 5

Since coordination of benefit provisions is a mandatory part of employer provided health insurance plans, employees should be relatively unconcerned about the effect of these provisions.

Question 6

Federal and state regulations leave employers very little room to add cost containment provisions within the employer provided health coverage.

Question 7

An insured plan will provide employees more flexibility when choosing doctors than an HMO, but HMOs generally require less cost sharing at the time that the services are rendered.

Question 8

It has been a trend that the more time passes, benefits that used to be expected are later seen as unexpected "fringes" for which to be grateful.

Question 9

Because of the complexities involved, group insurance plans generally involve a higher administrative cost to the insurer than do individual plans.

Question 10

A slight majority of group death benefits are funded with group term insurance.

Question 11

When an insurer, a Blue Cross and Blue Shield association, or a self-funding arrangement is used, employees generally have more freedom with respect to choice of physicians than if an HMO or PPO is used.

Question 12

When an employee who is covered by a PPO uses a doctor who is not affiliated with the PPO, the cost sharing provisions are the same as for the regular insurance plan offered by the employer.

Question 13

Hospice care is generally reserved for those with a terminal illness because a hospice generally specializes in aggressive treatment that would tend to extend the life of the patient.

Question 14

Blue Cross and Blue Shield associations require services to be performed by participating physicians in order to obtain complete coverage.

Question 15

Employee contributions toward the cost of employee benefits are treated in several different ways for tax purposes.

Question 16

Match the descriptions with their terms:

-_________________ generally are designed to pay the full amount of an employee's salary during relatively short periods of temporary disability.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 17

Match the descriptions with their terms:

-A/An _________________ is a health problem that exists prior to the point when health expense coverage becomes effective.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 18

Match the descriptions with their terms:

-Employer sponsored programs designed to provide security and other services for employees are _________________.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 19

Match the descriptions with their terms:

-_________________ have maximum benefit periods of longer than two years.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 20

Match the descriptions with their terms:

-A/An _________________ employee benefit does not require employees to pay any of the cost of the benefit.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 21

Match the descriptions with their terms:

-_________________ replaces a portion of a disabled employee's earnings for a maximum benefit period of two years.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 22

Match the descriptions with their terms:

-If an employee benefit meets the ______________, then the benefit plan will be enjoy the tax advantages associated with that benefit.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 23

Match the descriptions with their terms:

-A/An _________________ employee benefit requires employees to pay at least a part of the cost of the benefit.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 24

Match the descriptions with their terms:

-The _________________, a method of calculating group death benefits, involves multiplying the current annual salary by a specified factor.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 25

Match the descriptions with their terms:

-_________________ coverage is sometimes used to supplement employers' group term plans and involves a benefit paid only if the death results from an accident.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 26

Match the descriptions with their terms:

-An employee who has terminated employment can use the _________________ to convert the group coverage to an individual life insurance policy.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 27

Match the descriptions with their terms:

-In a/an _________________ arrangement, retiree health care benefits are reduced by the amount of Medicare payments received.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 28

Match the descriptions with their terms:

-_________________ requires that certain nonemergency medical services be authorized prior to treatment.

A) contributory
B) conversion clause
C) earnings multiple approach
D) employee benefits
E) Group accidental death and dismemberment
F) Long-term disability income plans
G) medicare carve-out
H) noncontributory
I) Precertification
J) pre-existing condition
K) qualification rules
L) Short-term disability income
M) Sick-leave plans

Question 29

Employers do not commonly offer employee benefits to

A) improve employee relations,
B) take advantage of the special tax status granted to many benefit programs,
C) reduce the overall cost of employee compensation,
D) improve employee morale.

Question 30

Which of the following is not one of the tax advantages associated with employee benefits?

A) the ability of the employer to deduct the current cost from current taxable income,
B) the ability of employees to avoid recognizing the benefit costs as current taxable income,
C) the ability of employers to prefund some benefits with the taxes on the associated investment earnings either deferred or avoided completely,
D) the ability of employees to always avoid income taxes with respect to the benefit payments actually received.

Question 31

Which of the following is not generally used as a method of health care cost containment?

A) requiring that terminally ill employees use hospice care instead of more expensive hospital services,
B) carefully auditing medical bills to make certain that mistakes have not increased the amount of the bills,
C) requiring precertification of benefits,
D) development of wellness programs for employees.

Question 32

Which of the following is a true statement relating to the coordination of benefit rules suggested by the National Association of Insurance Commissioners?

A) When a person owns personal health insurance, the amount payable from this insurance does not lessen the amount payable from employer provided insurance,
B) The maximum reimbursement from all employer sponsored plans equals 100 percent of the charges less the cost sharing provisions of the plan that would cover the highest amount of benefits,
C) Expenses for dependent children are paid first by the parent whose birthday comes later in the year,
D) Insurer's typically make a corporate decision as to which coordination of benefit provisions to use without the interference of state regulations.

Question 33

Joe (born on April 27, 1974) has coverage for his son, Patrick (born on May 25, 2000), provided by his employer with an 80 percent coinsurance provision and a $100 deductible. Joe's wife, Elizabeth (born on November 3, 1977), also has dependent coverage provided by her employer with an 80 percent coinsurance provision and a $250 deductible. Patrick suffers a $5,000 loss that is covered by both policies. Assuming that the 1985 NAIC rules are in effect, Elizabeth's insurer will pay

A) $3,800,
B) $1,080,
C) $0,
D) $1,200.

Question 34

All of the following methods of handling pre-existing conditions in a health benefits plan are legal except:

A) excluding them for the first six months,
B) covering them without any exclusions,
C) excluding them for the first 18 months,
D) excluding them for the first 12 months, with credit for previous coverage.

Question 35

Most employers providing dental coverage handle pre-existing conditions by

A) providing no coverage for expenses that are incurred from the pre-existing condition for an initial period such as one year,
B) providing a reduced level of coverage for the expenses related to the pre-existing condition,
C) having a corporate policy never to hire someone with a pre-existing condition,
D) ignoring pre-existing conditions and providing full coverage for expenses incurred while enrolled in the plan.

Question 36

A disability benefit of $5,000 is received in a year from a contributory short-term disability plan in which the employer pays 25 percent of the cost of the plan. The amount of tax an employee in the 34 percent tax bracket would owe on this benefit is

A) $0,
B) $1,700,
C) $425,
D) $1,275.

Question 37

Another term for a salary continuation plan is

A) COBRA benefits,
B) a sick leave plan,
C) a short-term disability plan,
D) severance pay.

Question 38

Short-term disability plans are plans with a maximum benefit period of

A) 5 years,
B) 6 months,
C) 2 years,
D) 1 year.

Question 39

The effect of an elimination period most closely resembles

A) a health insurance deductible,
B) a probationary period before eligibility,
C) the period of time that must be waited before full coverage of pre-existing conditions,
D) a coinsurance clause.

Question 40

The amount of salary most often covered by long-term disability insurance is

A) 100 percent,
B) 85 percent,
C) 67 percent,
D) 50 percent.

Question 41

The type of plan that is most often contributory is a

A) sick leave plan,
B) short-term disability plan,
C) long-term disability plan,
D) salary continuation plan.

Question 42

Which of the following best describes the taxation of benefits paid from a contributory disability plan?

A) The benefits are excluded from taxable income,
B) The benefits are included in taxable income,
C) A percentage of the benefits is excluded from taxable income with the exclusion percentage equal to the percentage of total plan cost paid by employer contributions,
D) A percentage of the benefits is excluded from taxable income with the exclusion percentage equal to the percentage of total plan cost paid by employee contributions.

Question 43

COBRA is a law dealing with

A) the continued participation of terminated employees in group plans,
B) the taxation of employee benefits,
C) employment discrimination against elderly and handicapped individuals,
D) qualification rules for employee benefits.