Question 1

You are trying to help your aunt figure out how much she owes on a recent flurry of medical bills that resulted from her recent bypass surgery.Her company provided PPO plan includes the following provisions,$2,400 deductible,10% co-pay and a $6,000 maximum out-of-pocket limit.You have summarized her bills as follow: doctor visits $1,500,surgeon and other docs $16,000,operating room $15,000,hospital stay $21,000,rehabilitative service $10,000.How much does she owe in total on these enormous bills?

Accepted Answer

First, add all the medical bills: $1,500 (doctor visits) + $16,000 (surgeon and other docs) + $15,000 (operating room) + $21,000 (hospital stay) + $10,000 (rehabilitative service) = $63,500. The plan includes a $2,400 deductible, which must be paid first. After the deductible, the co-pay is 10% of the remaining costs. However, there's a $6,000 out-of-pocket maximum, which includes the deductible. Given the total costs far exceed this limit, the maximum amount she would owe is $6,000, regardless of the total bill amounts.

Question 2

Assuming you were in the 25% federal and 5% state income tax brackets last year,and you allocated $200 per month to your flexible spending account,how much did you save if there was $1,000 remaining in the account at the end of the year?

Accepted Answer

The answer of Assuming you were in the 25% federal...

Question 3

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.

Accepted Answer

Many employers offer health insurance that starts immediately or soon after you begin a new job, and there are laws like COBRA in the United States that allow individuals to continue their previous employer's coverage for a limited time after leaving a job.

Question 4

Unfortunately,you have had several medical procedures in the current year with the following bills,$2,000,$9,200,$18,000,$5,000,and $3,500.Your deductible is $2,400,after which your co-pay is 10%.Your policy also includes a $6,000 out-of-pocket maximum clause.How much of the total bills are you responsible to pay?

Accepted Answer

First, we need to calculate the total bills which is $2,000 + $9,200 + $18,000 + $5,000 + $3,500 = $37,700.
Since the deductible is $2,400, we subtract it from the total bills: $37,700 - $2,400 = $35,300.
Next, we need to calculate 10% of the remaining bills: 10% x $35,300 = $3,530.
Since the out-of-pocket maximum clause is $6,000, we compare it to the sum of the deductible and the 10% co-pay: $2,400 + $3,530 = $5,930. 
Since $5,930 is less than $6,000, we know that the amount we are responsible to pay is $5,930. Therefore, the answer is D.

Question 5

If you are in the 20% federal and 5% state income tax brackets,how much do you save each year by allocating $200 per month to your flexible spending account assuming you have zero funds left over at the end of the year?

Accepted Answer

Allocating $200 per month to a flexible spending account saves you taxes on that amount. The annual contribution is $2,400 ($200 x 12 months). The tax savings is 25% (20% federal + 5% state) of $2,400, which equals $600.

Question 6

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

Accepted Answer

Employers are not required to match funds in a flexible spending account.

Question 7

What would be the out-of-pocket cost to an individual whose health care policy includes a 20% 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.

Accepted Answer

The stop-loss provision limits the out-of-pocket expenses to $40,000, regardless of the 20% co-pay on the total expenses.

Question 8

Medicaid is health insurance for people with low income and is administered by each state within certain broad federal requirements and guidelines.

Accepted Answer

Medicaid is indeed health insurance for people with low income and the states have the authority to administer it within the guidelines set by the federal government.

Question 9

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

Accepted Answer

Dental insurance and vision insurance plans often have lower costs when offered through employers, as the employer may negotiate better rates with insurance providers. Additionally, group plans offered through employers may have better coverage options compared to individual plans.

Question 10

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

Accepted Answer

When changing jobs, you are not allowed to stop and start health care plans whenever you need to and still be guaranteed insurance coverage by a new provider. Instead, you may only enroll in a new health care plan during open enrollment periods or special enrollment periods.

Question 11

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

Accepted Answer

Medicare is a federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant), regardless of income or financial need.

Question 12

One disadvantage of a flexible spending account is

Accepted Answer

One disadvantage of a flexible spending account is that any funds allocated to the account that are not used by the end of the plan year are forfeited and cannot be rolled over into the next year. This means that if you do not estimate your out-of-pocket healthcare expenses accurately, you could end up losing the money you put into the account.

Question 13

Health insurance policies may provide coverage for all of the following except

Accepted Answer

Health insurance policies generally do not cover cosmetic surgery as it is considered an elective procedure. However, policies may cover reconstructive surgery needed due to an injury or illness.

Question 14

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

Accepted Answer

Part D of Medicare is specifically designed to cover prescription drugs and is separate from Part A (hospital insurance) and Part B (medical insurance), which are not combined under Part D.

Question 15

Having money deducted from 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.

Accepted Answer

This is true. Money contributed to a flexible spending account is not subject to income tax, therefore reducing your taxable income and helping you save money on health care expenses.

Question 16

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

Accepted Answer

A flexible spending account (FSA) is an account that allows employees to use pre-tax income to pay for eligible medical expenses. It is important to note that the funds in an FSA typically must be used within the calendar year or they will be forfeited, so it is important to carefully plan and estimate the amount of expenses to be incurred. HMO and PPO are types of health insurance plans, while a medical savings account (MSA) is a type of tax-advantaged savings account that can be used to pay for medical expenses.

Question 17

Which of the following is not a disadvantage of an HMO plan versus a PPO plan?

Accepted Answer

The HMO plan being less expensive is not a disadvantage compared to a PPO plan; it is often considered an advantage due to lower premiums and out-of-pocket costs.

Question 18

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

Accepted Answer

This is true. In order to enroll in Medicare Part D, you must first have Medicare Part A (hospital insurance) and/or Part B (medical insurance).

Question 19

Additional types of insurance commonly offered through employers include

Accepted Answer

Dental and vision insurance are commonly offered as additional types of insurance through employers. Fitness insurance is not a common type of insurance offered through employers.

Question 20

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

Accepted Answer

Medigap insurance is sold by private insurance companies, not the federal government. However, it is regulated by the government to ensure that all Medigap plans offer the same standardized benefits.

Quiz 12: Health and Disability Insurance