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Health Insurance Practice Exam- North
Carolina/latest update 2025 with questions and
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All of the following are true regarding Key Employee Disability Income insurance EXCEPT Premiums are not tax deductible for the employer. Benefits are taxable to the employer. The employer owns the policy. Benefits are paid to the employer to retrain a new person. - ✔✔B) Benefits are taxable to the employer. Key person disability income premiums are not deductible to the business, but the benefits are received income tax free by the business. How is emergency care covered for a member of an HMO? A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area. A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area. HMOs have salaried member physicians, but they do not cover emergency care. An HMO emergency specialist will cover the patient. - ✔✔A. A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area.
Emergency care must be provided for the member in or out of the HMO's service area. If emergency care is being provided for a member outside the service area, the HMO will be eager to get the member back into the service area so that care can be provided by salaried member physicians. After appointing an agent, how long does an insurer have to file with the Commissioner the form detailing the agent's name, address, and other needed information? 15 days 30 days 45 days 60 days - ✔✔B) 30 days Insurers have 30 days to file, in a form prescribed by the Commissioner, the names, addresses, and other information required by the Commissioner for its newly appointed agents. Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives? - ✔✔None Which of the following are the main factors taken into account when calculating residual disability benefits? a) Present earnings and earnings prior to disability b) Earnings prior to disability and the length of disability c)Employee's full-time status and length of disability
Under the Uniform Required Provisions, proof of loss under a health insurance policy normally should be filed within 90 days of a loss. Which of the following must an insurer obtain in order to transact insurance within a given state? a) Business entity license b)Insurer's license c)Certificate of authority d)Producer's certificate - ✔✔c)Certificate of authority All insurers (domestic, foreign, or alien) must obtain a certificate of authority before transacting insurance within a given state. According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level? a) Death of a spouse b) Age 40 c)Marriage d)Birth of a child - ✔✔a)Death of a spouse
The FIO rider allows insureds to increase their benefit levels to certain amounts at specific times without proof of insurability. The following are the typical occasions when an insurer allows for a benefit increase: ages 25, 28, 31, 34, 37 and 40; marriage; and the birth of a child. If an insurer accepts premium payments by credit card, who is responsible for paying the fees charged by a credit card company? a) Policyowners, as part of their premium b) Insured making payment c) Credit card company d) Insurer accepting payment - ✔✔d)Insurer accepting payment Credit card payment fees are the responsibility of the insurer. In fact, it is one of the conditions for permitting the insurer to accept payments by credit card. Which of the following is NOT true of a major-medical health insurance policy? a) It is designed to pay on a first dollar of expense basis. b) It usually has a maximum benefit amount. c) The benefits are subject to deductibles. d) It is designed to cover hospital and medical expenses of a catastrophic nature. - ✔✔a)It is designed to pay on a first dollar of expense basis. A major medical policy usually has deductibles and a copayment requirement. Basic medical, but not major medical, expense policies pay on a first dollar basis.
point represents $10, which means that $2000 of his surgery will be covered by his insurance plan. What system is Todd's insurance company using? a) Basic Surgical b)Point-based medical c)Conversion factor d)Relative value - ✔✔d)Relative value In a relative-value approach, a surgical procedure is assigned an amount of points relative to the maximum coverage allowed for a given surgery. A client has a new individual disability income policy with a 20-day probationary period and a 30 - day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay? a) 10 days b) 15 days c) 25 days d) 45 days - ✔✔b)15 days A probationary period refers to the amount of time that coverage is not available for illness- related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days.
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued? a) Adjust the claim benefit to reflect the insured's true age b) Deny any claims and cancel the policy c) Deny paying a claim based on misrepresentation d) Pay the full amount of a claim because the contestable period has ended - ✔✔a)Adjust the claim benefit to reflect the insured's true age The Misstatement of Age provision says that if a client has misstated her age, whether intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the mistake was found. When an individual is covered under two health insurance policies that have duplicate benefits which could make a claim for benefits because of an injury or illness profitable, it is called a) Pro-rata coverage. b)Overinsurance c) Double indemnity coverage. d) Fraternal coverage. - ✔✔b)Overinsurance Overinsurance is a term used to describe the situation that is created when an individual purchases duplicating coverage with the intent to collect from each policy for a single loss.
a) The insured has a unilateral right to renew the policy for the life of the contract. b) Coverage is not renewable beyond the insured's age 65. c) The insured's benefits cannot be reduced. d) The insurer can increase the policy premium on an individual basis. - ✔✔d)The insurer can increase the policy premium on an individual basis. Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy. Which of the following is NOT a feature of a noncancellable policy? a) The insured has the right to renew the policy for the life of the contract. b) The insurer may terminate the contract only at renewal for certain conditions. c) The premiums cannot be increased beyond the amount stated in the policy. d) The guarantee to renew coverage usually applies until the insured reaches certain age. - ✔✔b)The insurer may terminate the contract only at renewal for certain conditions. The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65. In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?
a) Full b)Half c)None d)Corridor - ✔✔d)Corridor The basic expense policy will provide coverage on a first-dollar basis (no deductible). After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits. The corridor deductible derives its name from the fact that it is applied between the basic coverage and the major medical coverage. Which characteristic does NOT describe managed care? a) Preventive care b) Unlimited access to providers c)High-quality care d)Shared risk - ✔✔b)Unlimited access to providers There are five distinguishing features of managed care: controlled access to providers, comprehensive case management, risk sharing, preventive care, and high-quality care. An employer responsible for paying part or all of the premium for a group life or group health plan cannot willfully fail to pay the premium without first giving the employees how many days' advance notice?
b) Misrepresentation. c)Concealment. d)Unfair claim practice. - ✔✔b)Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal. Which of the following is the term for the specific dollar amount that must be paid by an HMO member for a service? a) Premium b) Cost share c)Copayment d)Deductible - ✔✔c)Copayment A copayment is a specific dollar amount of the cost of care that must be paid by the member. For example, the member may be required to pay $5 or $10 for each office visit Which of the following is NOT a factor in determining qualifications for Social Security disability benefits? a) Worker's PIA b) Worker's age c) Number of work credits earned
d) Worker's occupation - ✔✔d)Worker's occupation A worker's specific occupation is not a factor in determining benefits, so long as the worker has earned the required amount of work credits. What is another name for social security benefits? a) Disability and long-term care insurance b) Survivor benefits c) Old Age, Survivors, and Disability Insurance d) Medicare benefits - ✔✔c)Old Age, Survivors, and Disability Insurance Social security benefits are also known as Old Age, Survivors, and Disability Insurance (OASDI). According to the PPACA rules, what percentage of health care costs will be covered under a bronze plan? a) 10% b)30% c)40% d)60% - ✔✔d)60% Under the bronze plan, the health plan is expected to cover 60% of the cost for an average population, and the participants would cover the remaining 40%
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? a) The group plan will pay depending on the employee's recovery. b) The group plan will not pay because the employee was injured at work. c) The group plan will pay. d) The group plan will pay a portion of the employee's expenses. - ✔✔b)The group plan will not pay because the employee was injured at work. Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage. An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? a) No coverage will apply, since disability income policies cover sickness only. b) Coverage will apply since the break was accidental. c) Coverage will apply, but will be reduced by 50%. d) No coverage will apply, since the injury could have been foreseen. - ✔✔d)No coverage will apply, since the injury could have been foreseen. An accidental means clause states that if the insured meant to do whatever caused their injury, no coverage applies since the resulting injury should have been foreseen.
All statements of the insured in any application for a policy of insurance are deemed a) Contractual considerations and must be unilaterally binding for the insured. b)Warranties. c) Representations. d) Either warranties or representations dependent upon the context in which they were written.
- ✔✔c)Representations. All statements or descriptions in any application for a policy of insurance, or in the policy itself, shall be deemed representations and not warranties. A representation, unless material or fraudulent, will NOT prevent a recovery on the policy. In which of the following situations would Social Security Disability benefits NOT cease? a) The individual has undergone therapy and is no longer disabled b) The individual's son gets a part-time job to help support the family c) The individual reaches age 65 d) The individual dies - ✔✔b)The individual's son gets a part-time job to help support the family Benefits cease when the individual reaches age 65, dies, or is no longer disabled. If a person has been receiving Social Security disability benefits at the time that he or she turns age 65, the disability benefits cease, and are replaced by Social Security retirement benefits. At death, family benefits will continue as survivor benefits. Benefits will continue for an adjustment period of three months if an individual no longer satisfies the definition of disability.
If a licensee fails to notify the Commissioner of insurer insolvency, if known or suspected, and to provide a statement of relevant facts, which of the following is TRUE? a) The person will be subject to a fine. b) There will be no repercussions for that; reporting of insurer insolvencies is voluntary. c) The Commissioner may suspend or revoke the person's license. d) The Commissioner will issue a cease and desist order. - ✔✔c)The Commissioner may suspend or revoke the person's license. It is the duty of any licensed person, or employee or representative of an insurance company to notify the Commissioner of any violations of the General Statutes of the Insurance Code, or insurer insolvency. The Commissioner may suspend, revoke, or refuse to renew the license of any licensee who willfully fails to comply with this section of the Insurance Code. Which statement accurately describes group disability income insurance? a) There are no participation requirements for employees. b)Short-term plans provide benefits for up to 1 year. c) The extent of benefits is determined by the insured's income. d) In long-term plans, monthly benefits are limited to 75% of the insured's income. - ✔✔c)The extent of benefits is determined by the insured's income. Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.
In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is a) More limited in general. b) More limited in duration. c) Broader in duration. d) Broader in general. - ✔✔d)Broader in general. A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses the accidental means definition. An insurance institution or agent that discloses information in violation of the information privacy and disclosure statutes of North Carolina will be liable for a) The legal costs incurred by the client. b) Only such damages as can be proven in a court of law. c) Damages sustained by the individual to whom the information relates. d) Any legal action brought by the client within 5 years. - ✔✔c)Damages sustained by the individual to whom the information relates An insurance institution, agent, or insurance-support organization that discloses information in violation shall be liable for damages sustained by the individual to whom the information relates. No individual, however, shall be entitled to a monetary award that exceeds the actual damages sustained by the individual as a result of a violation.
