The group that pays the largest share of health care costs in the United States is

  • private insurance companies.
  • private employers.


In attempting to deal with the problem of over-insurance, companies writing disability income insurance

  • may charge documentation higher fees than other providers in the area.
  • may include a non-cancellation provision.
  • may include a facility of payment clause.
  • may restrict the amount of coverage offered to individuals


Which of the following is a characteristic of Medicare Supplement policies?

  • Coverage for Medicare cost-sharing features will not automatically change with Medicare deductibles and coinsurance.
  • Policies cannot be guaranteed a renewal.
  • Policies may not impose a waiting period on preexisting conditions.
  • Policies cannot exclude preexisting conditions.


Although Social Security provides benefits in the event of a worker’s disability

  • coverage qualification requirements are demanding.
  • coverage is provided for disabilities that are short-term only.
  • coverage is subject to a one-week waiting period.
  • coverage decreases based on the number of work-related claims.


Which of the following types of pension plans are employers required to insure with the Pension Benefit Guarantee Corporation?

  • Defined benefit plans
  • Defined benefit and defined contribution plans
  • Single employer plans
  • Defined contribution plans

A business valued at $600,000 has four partners. If each partner buys $50,000 of life insurance on each of the other partners, this arrangement is known as

  • a shared interest plan.
  • an insurable interest plan.
  • an entity plan.
  • a cross-purchase plan.


The beneficiary under key person life insurance normally is the

  • the employer.
  • estate of the insured.
  • key person.
  • key person’s spouse.


The change of occupation provision used in individual health insurance contracts

  • is one of the mandatory uniform provisions.
  • forbids the changing of occupations.
  • provides for a return of premium if a new occupation is less hazardous and an adjustment of benefits if it is more hazardous.
  • forbids the changing of occupations.


When a deposit administration plan is used to fund a qualified retirement plan

  • a single premium annuity is purchased for each worker at retirement.
  • the insurer guarantees the adequacy of funds to meet accrued liabilities.
  • the insurer guarantees the benefits to retired workers for whom annuities have been purchased.
  • contributions are not allocated to specific workers until they retire.


Medicare Advantage

  • is intended to increase Medicare costs and coverage.
  • is an attempt reduce Medicaid market competition.
  • brought uniformity to Medicare prescription drug coverage plans and coverage.
  • has been referred to as the “privatization of Medicare”.


A preferred provider organization

  • is a group of health care providers designated by an employer or insurer.
  • usually charges higher fees than other providers in the area.
  • is a health insurer selected by a group of physicians.
  • is an insurer approved by the state commissioner of insurance.


Fee-for-service health insurance coverage

  • is not subject to regulation.
  • is of increasing in importance.
  • is being replaced by managed care plans.
  • has been in beneficial outcomes such as the overutilization of health care.


From the perspective of the subscriber, a major disadvantage of health maintenance organizations is

  • the absence of a gatekeeper.
  • the inability to use providers outside the system except in emergencies.
  • the absence of coverage for outpatient services.
  • are not subject to regulation.


As a result of the U.S. Supreme Court decision in John Hancock Mutual Life Insurance Company v. Harris Trust & Savings Bank (Harris Trust)

  • the court ruled all funds held by Hancock in connection with the general account group policy issued to Harris Trust should be treated as assets for ERISA purposes.
  • insurer pension funding products were not redesigned.
  • insurer pension funding arrangements are all exempt from ERISA fiduciary requirements.
  • general account assets of insurers can sometimes be treated as pension assets.


Consumer-driven health care

  • encourages preventive care.
  • limits out-of-pocket costs to relatively low levels.
  • is evident in the design of high deductible health plans and health savings accounts.
  • relies on insurers to control utilization and costs.

The beneficiary under a split-dollar life insurance policy normally is the

  • the estate of the insured.
  • the key employee’s spouse.
  • the employer.
  • the key employee’s beneficiary and the employer to the extent of their interests.


The elimination period in disability income contracts performs the same function as

  • a facility of payment clause.
  • a waiver of premium clause.
  • an incontestable clause.
  • a deductible.


An approach an employer could use to de-risk its pension plan includes

  • continuing to offering traditional pension plans to employees.
  • an increase in exposure to risky equities in pension portfolios.
  • a refusal to consider pension buy-out offers.
  • a longevity swap.


The group that pays the largest share of health care costs in the United States is

  • private employers.
  • private insurance companies.


Disability income insurance

  • is sold only on a group basis.
  • should be purchased with as short a waiting period as possible.
  • is less important than life insurance because the probability of death at most ages is greater.
  • is often overlooked in income protection planning.


The major difference between noncancelable health insurance contracts and guaranteed renewable contracts is that

  • noncancelable policies cannot be cancelled in mid-term.
  • noncancelable policies are not guaranteed renewable.
  • total disability benefits are more liberal.
  • the premium for noncancelable policies cannot be changed.


Long-term care partnership programs

  • allow individuals to protect some of their assets from Medicaid spend-down requirements.
  • must provide more generous benefits than TQ-LTCI.
  • have demonstrated an ability to reduce Medicaid costs over the long-term.
  • must include inflation protection in all policies.


Under a basic split‑dollar insurance plan the employer pays:

  • the part of the premium equal to the increase in cash value during the policy year.
  • one‑half of all premiums due.
  • the portion of the premium equal to the cost of the decreasing term insurance for the policy year.


The capitation approach to charging for health care benefits is characteristic of

  • preferred provider organizations.
  • Blue Cross and Blue Shield organizations.
  • point of service plans.
  • health maintenance organization.


Which of the following is true with respect to State Children’s Health Insurance Programs?

  • States receive federal funding to support the programs.
  • They were created to insure children that qualify for Medicaid.
  • Coverage also extends to the guardians of the insured child.
  • Eligibility requirements vary by state.


The Medicaid program

  • has uniform national eligibility requirements established by the federal government.
  • is completely funded by the federal government.
  • is completely funded by the state government.
  • is a federal-state program that provides medical assistance to low-income individuals.


The Social Insurance Supplement Benefit

  • permits one to coordinate disability insurance with social security benefits.
  • is a mandatory provision under most state laws.
  • is designed for those occupations not covered by OASDI.
  • is designed to cover the five-month waiting period under Social Security.


When a physician refuses to accept assignment under Medicare

  • the beneficiary may have additional out-of-pocket expenses.
  • he or she is barred from participating in Medicare for two years.
  • neither the physician nor the beneficiary can collect from Medicare.
  • there is no limit on the amount the physician may charge a Medicare beneficiary.


Which of the following is true with respect to Medicare Prescription Drug Coverage?

  • It brought uniformity to Medicare prescription drug coverage plans and coverage.
  • It offered only as a stand-alone Prescription Drug Plan.
  • It is offered as part of a Medicare Advantage Plan only.
  • It may be offered as part of a Medicare Advantage Plan or through a stand-alone Prescription Drug Plan.


The part of Medicare that is designed to pay for hospital expenses, but excludes physician’s charges is

  • Medicare Part B.
  • Medicare Part A.
  • Medicare Part D.
  • Medicare Part C.


Under a health savings account

  • contributions by individuals are tax deductible up to a limit.
  • distributions for medical expenses are nontaxable to the extent they exceed contributions.
  • investment income is taxable on an annual basis.
  • distributions to pay qualified medical expenses are taxable as income, but deductible as medical expenses to the extent that they exceed 7.5% of adjusted gross income.


The Pension Protection Act of 2006

  • was enacted in response to concerns about the funding status of defined benefit pension plans and PBGC losses.
  • decreased PBGC premiums.
  • requires employers to amortize their unfunded liabilities over a longer period than before.
  • disallows direct deposit of income tax refunds from the IRS into an IRA.


A disability income insurance policy on which premiums are paid weekly must have a grace period of at least

  • ten days.
  • thirty-one days.
  • there is no grace period on weekly premium policies.
  • seven days.


Health Maintenance Organizations differ from commercial insurers in that they

  • also provide health care.
  • operate in the same manner as Blue Cross Organizations.
  • are not subject to regulation.
  • are owned by the participating subscribers.


Benefits paid under tax-qualified long-term care insurance

  • are taxable as income unless paid by as part of an employee benefit plan.
  • are exempt from federal income tax.
  • are taxable as income, but deductible as medical expenses.
  • are excludable from taxable income up to a specified daily limit or up to the costs actually incurred for long-term care.


The chance of being disabled is

  • less than the chance of death at any age.
  • less than the chance of death during middle ages.
  • greater than the chance of death during working years.
  • about the same as the chance of death.


Which of the following is an option under Medicare Advantage?

  • Long-term care coverage
  • Private free-for-service plans
  • Short-term care coverage
  • Nonpreferred provider organizations


An arrangement under which an employee and employer share the premium cost of an insurance policy on the life of the employee is called a

  • deferred compensation plan.
  • split-dollar plan.
  • shared interest agreement.
  • cross-purchase agreement.


When home care benefits are included in a long-term care insurance policy

  • home care benefits are usually subject to a requirement that the insured was previously confined in a skilled nursing facility.
  • coverage may also include personal care services like bathing, dressing, and grooming.
  • coverage applies only to home care workers certified by Medicare.
  • home care benefits are provided only if the insured has been hospitalized.


The Residual Disability Benefit used in some disability income contracts

  • typically pays benefits for a six-month period.
  • provides a monthly indemnity equal to one-half the total disability benefit.
  • determines indemnity based on the percentage of income lost.
  • typically pays benefits for a six-month period.

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