Deck 12: Health and Disability Insurance

Question 1

Health insurance protects net worth by minimizing the chance that you will have to reduce savings or incur debt when you require medical attention.

Answer 1

True

Question 2

Since health insurance is expensive

A)most employers pay for the entire cost as an employee benefit.
B)employees are usually required to pay the entire cost of the insurance.
C)the employer and employee typically share the cost of the health insurance.
D)the government along with the employer helps to subsidize employee health insurance costs.

Answer 2

the employer and employee typically share the cost of the health insurance.

Question 3

Health care providers who are part of an HMO are paid a predetermined amount of compensation per month for each patient who participates in the plan.

Answer 3

True

Question 4

Although indemnity plans are less flexible than managed care plans,they charge lower rates.

Question 5

Indemnity health care plans have

A)more flexibility and choices than managed care plans.
B)lower costs than managed care plans.
C)fewer health care professionals to choose from compared to HMOs.
D)less bill-related paperwork than other plans.

Question 6

Most people obtain health insurance through group plans offered by employers.

Question 7

Technological advances are one of the things helping to keep the cost of health care from escalating further.

Question 8

Which of the following is not true as it relates to the cost of health care?

A)Fraudulent claims by patients and health care providers add to the cost.
B)People are living longer and their health care costs are higher.
C)Better claim handling and processing has helped reduce the cost of health care.
D)Technology used in medicine is very expensive and has added to the cost.

Question 9

Which of the following is usually not offered as part of a benefits package to employees?

A)Auto insurance
B)Health insurance
C)Retirement benefits
D)Disability insurance

Question 10

Compared to indemnity plans,managed health care plans impose more restrictions on the specific health care providers.

Question 11

Private health insurance plans contain hospital insurance,physician insurance,and surgical insurance.

Question 12

Indemnity health plans

A)greatly restrict the choice of health care providers.
B)require you to pay the doctor and then get reimbursed.
C)require you to get approval to see a specialist.
D)are the least expensive of all health care plans.

Question 13

The cost of health care has risen dramatically in recent years due to all except

A)people living longer and requiring attention for longer periods of time.
B)the high cost of technology in health care.
C)reduced litigation costs.
D)the bureaucratic processes of reimbursement and claim handling.

Question 14

Hospitals,doctors,and patients have enough incentive to make the most economical use of health care services.

Question 15

Buying health insurance through employer-sponsored plans is somewhat more expensive than buying your own policy individually.

Question 16

Private health insurance plans contain all of the following coverage except

A)hospital insurance.
B)nursing home insurance.
C)physician insurance.
D)surgical insurance.

Question 17

In most HMOs,if a person sees a specialist without being referred by the primary care physician,the HMO will not pay for the treatment.

Question 18

Which one of the following benefits is most often available through an employer?

A)Disability insurance
B)Health insurance
C)Dental insurance
D)Vision insurance

Question 19

A PPO health insurance plan allows individuals a better selection of health care providers,but is more expensive than an HMO.

Question 20

Comparing auto insurance and health insurance,

A)you have fewer options with health insurance than with auto insurance.
B)both types of policies have deductibles.
C)the government has very little involvement in either of these areas.
D)All of the above

Question 21

How much would be owed by the patient on a $3,000 bill if a PPO uses a discount on charge arrangement wherein the percentage paid to the provider is 70 percent and the patient's co-pay,as specified by the PPO,is 20 percent?
(a)$600
(b)$700
(c)$420
(d)$200

Question 22

One of the problems with changing jobs is that you will immediately lose your health insurance and may not be able to get new insurance right away.

Question 23

How much of a $2,000 medical bill would you pay if your policy contains a $400 deductible and a 10 percent coinsurance clause?
(a)$200
(b)$400
(c)$160
(d)$560

Question 24

Which of the following is an advantage of a PPO compared to an HMO?

A)The premiums are lower.
B)There are more choices of specialized health care providers.
C)There are no out-of-pocket expenses.
D)No approval is needed to see a specialist.

Question 25

A(n)________ plan requires that individuals pay health care providers and then put in a claim for reimbursement.

Question 26

Which of the following statements about an HMO is not true?

A)You will pay the same monthly premium whether you use the plan or not.
B)You need to be referred to see a specialist or the HMO will not pay.
C)Individuals usually pay a small fee for a visit to a physician or for a prescription.
D)The health care providers are compensated on the basis of each visit by a patient.

Question 27

The federal law that allows you to continue health insurance coverage through your former employer's plan for 18 months after you stop work is

A)HIPAA
B)COBRA
C)Social Security
D)Medicare

Question 28

Medicare is a government health insurance program for those over 65 years of age who can show need for financial assistance.

Question 29

Medigap insurance,intended to supplement Medicare,is sold and serviced by the federal government.

Question 30

________ insurance serves as a backup for expenses not covered by basic health insurance.

A)Excess hospitalization insurance
B)Surgical expense insurance
C)Major medical insurance
D)Physician expense insurance

Question 31

The managed health care plan with higher costs,but a greater choice of health care providers is the ________.

Question 32

Regarding a flexible spending account,which of the following is not true?

A)You may put a predetermined amount of your pre-tax salary in the account monthly.
B)The money may be used throughout the year to pay medical or dental expenses tax-free.
C)If you don't use the funds during the year,you lose them.
D)Your employer will match your funds dollar-for-dollar.

Question 33

Having money taken out of your paycheck and put in a flexible spending account is one of the ways you can avoid paying taxes on the amount you spend for health care expenses.

Question 34

The managed health care plan with the lowest premiums and also the least choice of health care providers is the ________.

Question 35

When considering an HMO or PPO,which of the following questions would you not consider asking regarding the cost of the plan?

A)Monthly premiums
B)Coinsurance
C)Number of doctors accepting new patients
D)Maximum out-of-pocket expenses per year

Question 36

What would be the out-of-pocket cost to an individual whose health care policy includes a 20 percent co-pay for all long-term illnesses.The policy has a stop loss provision of $40,000.A current long-term illness has resulted in total expenses of $250,000.
(a)$8,000
(b)$40,000
(c)$50,000
(d)$210,000

Question 37

Compared to indemnity plans,what is an advantage of managed health care plans?

A)You will have lower insurance premiums.
B)There are no out-of-pocket expenses required.
C)You have greater choices of health care providers.
D)They are very efficient in their handling of paperwork.

Question 38

An account that allows employees to use pre-tax income to pay for medical expenses is a

A)HMO.
B)PPO.
C)flexible spending account.
D)medical savings account.

Question 39

Which of the following is not true regarding government regulations to allow individuals who change jobs to maintain health insurance coverage?

A)You may continue your health insurance provided through an employer's plan for 18 months after you stop working for that employer.
B)Even if you retire,you may continue coverage for 18 months unless you qualify for Medicare.
C)If you change jobs,a new insurance company cannot deny you coverage based on your health,medical condition,previous claims,or disability.
D)When changing jobs,you are allowed to stop and start health care plans whenever you need to and still be guaranteed insurance coverage by a new provider.

Question 40

If a person is diabetic and is applying for a new health care insurance policy,s/he might be most concerned with which of the following?

A)Cancellation options
B)Stop loss provision
C)Preexisting conditions
D)Deductible

Question 41

Additional types of insurance commonly offered through employers include

A)dental insurance.
B)fitness insurance.
C)vision insurance.
D)Both A and C

Question 42

________ insurance is provided by private insurance companies to cover medical expenses that are not covered by Medicare.

Question 43

Regarding Medicaid,which of the following is true?

A)It is a program totally funded and run by each state.
B)It provides free unlimited health care for low income individuals and families.
C)It is a federal program administered by each state.
D)It is a program funded and run by the federal government.

Question 44

Long-term care policies

A)commonly have an elimination period (waiting period)of between 60 and 90 days before the policies will begin to pay
B)are relatively inexpensive and are a good value for those over 60
C)are not adjusted for inflation,so care must be taken to estimate future costs
D)All of the above

Question 45

You must have Parts A and B of Medicare in order to qualify for Part D.

Question 46

Part D of Medicare represents a combination of Part A and Part B provided through private insurance companies.

Question 47

Policy premiums for long-term care insurance are relatively low,even for those over 60 years old.

Question 48

The best disability plans pay you if you are not able to work at any job,not just your regular job.

Question 49

Medicaid is health insurance for the poor and is administered by each state within certain broad federal requirements and guidelines.

Question 50

All of the following will lower the premium of long-term care insurance except

A)having a longer waiting period before the policy goes into effect.
B)having a higher stop-loss provision.
C)waiting until you are retired to obtain the insurance.
D)choosing to receive benefits for a limited period.

Question 51

Generally,disability income policies with shorter waiting periods have lower premiums.

Question 52

What are some of your considerations in choosing a long-term care insurance policy?

Question 53

Usually plans such as dental insurance and vision insurance are good deals if they are offered through employers.

Question 54

________ is the government program that provides health insurance to individuals who are 65 years of age or older.

A)Medicaid
B)Medicare
C)HMO
D)Blue Cross and Blue Shield

Question 55

The part of Medicare that provides coverage for prescription drugs is

A)Part A.
B)Part B.
C)Part C.
D)Part D.

Question 56

Medicare basic coverage (Part A)covers

A)hospital expenses,including surgeries.
B)outpatient hospital care.
C)physical therapy.
D)All of the above.

Question 57

Basic health insurance policies and Medicare will not cover stays in nursing homes or assisted living centers for very long.

Question 58

One of the newest types of health care insurance is ________ insurance,which provides coverage to those in a nursing home,assisted living facility,or at home.

Question 59

Which of the following is true regarding Medicare?

A)Eligibility for the plan is based on both need and age.
B)The entire plan is free to qualified participants.
C)Part of the program is optional and has a charge.
D)Virtually all medical expenses are paid for those covered.

Question 60

Which of the following is not a true statement?

A)More than half of all individuals in the United States will need long-term care in some period during their life.
B)Medicare covers most of the expenses associated with long-term care.
C)The cost of an aide providing basic care at home can exceed $1,000 per week.
D)For individuals who enter a nursing home,the cost is about $46,000 per year on average.

Question 61

In purchasing disability insurance,you should consider all of the following except the

A)waiting period.
B)probationary period.
C)length of the benefits.
D)cost of the policy.

Question 62

Based on the following information,how much disability insurance coverage per month would be required:
∙ Mortgage payment -$1,600/month
∙ Household insurance -$100/month
∙ Car insurance -$200/month
∙ Gas and oil -$90/month ($30 commuting to and from work)
∙ Food -$200/month ($70 represents lunch at work which would be reduced by half if the meals were prepared at home)
Employer disability insurance would provide $500/month and it is doubtful that anything would be received from either Social Security or worker's compensation.
(a)$1,525
(b)$2,190
(c)$1,495
(d)$1,625

Question 63

Which of the following is not true regarding employer disability insurance?

A)Disability benefits are provided for very long periods,usually up to 30 years.
B)About half of all large and medium-sized firms offer an optional disability plan through an insurance company.
C)The premiums charged through group plans are normally low.
D)A typical disability policy covers about 60 percent of the employee's salary.

Question 64

Disability insurance would probably cost the most for which of the following people?

A)A certified public accountant (CPA)
B)An office worker
C)A construction worker
D)A telemarketer

Question 65

If you are disabled and have insurance,what types of resources,including those from your present job,do you have to cover the waiting period?

Question 66

Which of the following statements is not true of disability insurance?

A)You should have it even if you are retired and living on a pension.
B)The amount of coverage should equal your disposable income.
C)If you are self-employed you should have disability insurance.
D)All of the above are true of disability insurance.

Question 67

Tom purchased disability insurance that will provide $1,400 per month in benefits.His employer carries a disability policy on Tom that will provide an additional $600 per month in benefits.If Tom's monthly budget is $2,500 and Tom is anticipating no additional disability benefits from any other source,what is Tom estimating as his work-related monthly expenditures.
(a)$500
(b)$600
(c)$2,000
(d)$2,500

Question 68

Since most workers have employer-sponsored disability coverage and are also eligible for Social Security and worker's compensation,there is very little demand or need for individual disability insurance.

Question 69

Disability income is

A)taxed at the long-term capital gains rate.
B)taxed as ordinary income.
C)tax-free.
D)taxed at the short-term capital gains rate.

Question 70

Before you decide to take out an individual disability policy,you should consider all of the following except

A)amount of home mortgage.
B)cost of gasoline commuting to and from work.
C)employer disability insurance policy.
D)dividends received from stock portfolio.

Question 71

Regarding the definition of disability,

A)it is the same for all disability policies.
B)it varies from one disability policy to another.
C)the same definition is used by the insurance industry and Social Security.
D)the meaning can change over the life of your disability policy.

Question 72

Disability insurance policies usually cover

A)actual expenses incurred.
B)a minimum dollar amount.
C)a percentage of your income before you were disabled.
D)Any of the above.

Question 73

What could happen to you if you had a serious health problem and no health insurance?

Question 74

Social Security is the easiest disability coverage to qualify for benefits.

Question 75

Sources of disability income do not include

A)federal disability insurance.
B)individual disability insurance.
C)employer disability insurance.
D)insurance from Social Security.

Question 76

What steps would you take to evaluate and choose health care insurance options?