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Medicare, Medicaid, and ACA: Practice Questions & Explanations

12 Health Insurance questions on medicare, medicaid, and aca, each with a worked explanation citing the source handbook.

Source: NAIC Health Insurance Producer model content outline and state insurance department study materials.

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Why this topic matters

Medicare, Medicaid and the Affordable Care Act questions cover Medicare Parts A to D and Medigap, Medicaid eligibility, and the ACA's marketplace, essential health benefits and guaranteed-issue rules.

Below are every medicare, medicaid, and aca question in our Health bank. Read each question, try to answer before reading the explanation, and use the source citations to look up anything you want to verify.

1. Who is eligible for Medicare?
  1. A Anyone over 18
  2. B Only people with low income
  3. C Only veterans
  4. D Generally Americans age 65+ who have paid Medicare taxes for the required period, plus younger people with certain disabilities, ESRD, or ALS

Explanation

Medicare is the federal health insurance program for Americans aged 65 and older who have paid Medicare taxes (or whose spouse has paid Medicare taxes) for at least 10 years (40 quarters). People under 65 may also qualify if they have received Social Security Disability Insurance (SSDI) benefits for 24 months, have End-Stage Renal Disease (ESRD), or have Amyotrophic Lateral Sclerosis (ALS). Medicare is distinct from Medicaid (which is income-based and jointly state-federal). Medicare has four parts: Part A (hospital insurance, usually premium-free for those who paid in), Part B (medical insurance, monthly premium), Part C (Medicare Advantage, private plans replacing A and B), Part D (prescription drug coverage). Most beneficiaries also use Medigap supplemental policies to cover gaps in original Medicare.
Source: NAIC Model Outline, Medicare Eligibility

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2. What does Medicare Part A cover?
  1. A Inpatient hospital stays, skilled nursing facility care, hospice, and some home health services
  2. B Eye care and dental
  3. C Doctor visits and outpatient care
  4. D Prescription drugs

Explanation

Medicare Part A is hospital insurance, covering: (1) Inpatient hospital stays — semi-private room, meals, general nursing, drugs received in hospital; (2) Skilled nursing facility care (limited, after a qualifying hospital stay); (3) Hospice care for terminally ill patients; (4) Some home health services (intermittent skilled care, not custodial). Part A is usually premium-free for beneficiaries (or their spouse) who paid into Medicare for 40+ quarters during their working years. It has a deductible per benefit period and co-insurance for longer stays. Part B covers outpatient care, doctor visits, preventive services, durable medical equipment, and other medically necessary services that are not hospital stays. Part D covers prescription drugs.
Source: NAIC Model Outline, Medicare Part A

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3. What is the Affordable Care Act (ACA) and what does it require?
  1. A It is a state program
  2. B Federal law (2010) that established health insurance marketplaces, required most Americans to have qualifying coverage (individual mandate now $0 federal penalty), prohibits denying coverage for pre-existing conditions, requires coverage of essential health benefits, and provides premium subsidies to qualifying individuals
  3. C It only affects Medicare
  4. D It is voluntary for insurers

Explanation

The Affordable Care Act (ACA, also called Obamacare) is a federal law passed in 2010 that significantly reformed US health insurance. Key provisions: (1) Pre-existing condition protections — insurers in individual and small group markets cannot deny coverage or charge more based on health history; (2) Essential Health Benefits — ACA-compliant plans must cover 10 categories of essential benefits (ambulatory care, emergency services, hospitalization, maternity, mental health, prescription drugs, rehab, lab, preventive, pediatric); (3) Health Insurance Marketplaces (Exchanges) — state and federal websites where individuals can compare and buy plans; (4) Premium Tax Credits — subsidies for households earning 100-400%+ of federal poverty level; (5) Medicaid expansion (state-optional); (6) Individual mandate (federal penalty reduced to $0 in 2019 but still applies in some states); (7) Employer mandate for large employers.
Source: NAIC Model Outline, ACA

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4. What are 'metal tiers' in ACA marketplace plans?
  1. A Brand names
  2. B Annual fees
  3. C Bronze, Silver, Gold, and Platinum tiers indicating the plan's actuarial value (the percentage of healthcare costs the plan covers on average) — 60%, 70%, 80%, 90% respectively
  4. D Required precious metal investments

Explanation

ACA marketplace plans are organized into four metal tiers based on actuarial value (AV) — the percentage of total healthcare costs the plan covers on average for a typical population. Bronze: ~60% AV (insurer pays 60%, members pay 40% through deductibles, copays, co-insurance); Silver: ~70% AV; Gold: ~80% AV; Platinum: ~90% AV. Higher metal tiers have higher premiums but lower cost-sharing. Catastrophic plans exist for those under 30 or with hardship exemptions, with very high deductibles. Silver plans qualify for cost-sharing reductions for households earning 100-250% of federal poverty level, which can effectively boost Silver to Gold or Platinum levels of coverage at Silver premium prices. The tier system helps consumers compare plans without needing actuarial expertise.
Source: NAIC Model Outline, Metal Tiers

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5. What is Medicaid and how does it differ from Medicare?
  1. A They are the same program
  2. B Medicaid is a joint federal-state program providing coverage to low-income individuals and families based on financial need; Medicare is federal coverage based on age (65+) or disability, regardless of income
  3. C Medicaid is only for veterans
  4. D Medicaid covers only children

Explanation

Medicaid and Medicare are easily confused but serve different populations. Medicaid is a joint federal-state program (states administer with federal matching funds) providing health coverage to low-income individuals and families, based on income and family size. Eligibility rules and benefits vary by state, especially after the ACA gave states the option to expand Medicaid to all adults under 138% of federal poverty level. Medicare is a federal program for Americans 65+, certain disabled persons, ESRD patients, and ALS patients, based on age or disability rather than income. Some people qualify for both (dual-eligibles); Medicare is primary in that case. Medicaid covers nursing home care (after asset spend-down); Medicare provides only limited skilled nursing facility coverage.
Source: NAIC Model Outline, Medicaid

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6. What is the ACA 'open enrollment period'?
  1. A The period for renewing commercial health plans
  2. B The specific annual window during which individuals can enrol in or change health insurance plans through the ACA marketplace without a qualifying life event
  3. C A time when deductibles reset
  4. D A period when anyone can get a job in insurance

Explanation

Open Enrollment Period (OEP) for ACA marketplace plans runs November 1 through January 15 in most states (some state-based marketplaces have slightly different dates). Outside of OEP, individuals can only enrol or make changes if they have a Special Enrollment Period (SEP) triggered by a qualifying life event: losing job-based coverage; marriage or divorce; birth or adoption of a child; moving to a new state; gaining citizenship. Without an SEP, applicants must wait for the next OEP.
Source: Health Insurance Exam, ACA Open Enrollment

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7. Medicare Part B covers which type of healthcare?
  1. A Long-term nursing home care
  2. B Prescription drugs
  3. C Outpatient medical services — physician visits, preventive services, durable medical equipment, outpatient surgery, lab tests
  4. D Hospital stays

Explanation

Medicare Part A: hospital insurance — inpatient hospital care, skilled nursing facility care (post-hospital), hospice, some home health. Medicare Part B: medical insurance — physician services, outpatient hospital services, preventive screenings, durable medical equipment (wheelchairs, walkers), lab tests, outpatient surgery. Medicare Part C: Medicare Advantage (private plan combining A+B). Medicare Part D: prescription drug coverage. Medicare does NOT cover long-term custodial nursing home care — that is covered by Medicaid (means-tested) or long-term care insurance.
Source: Health Insurance Exam, Medicare Part B

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8. What are the four ACA 'metal tiers' and what do they represent?
  1. A Bronze (60/40), Silver (70/30), Gold (80/20), Platinum (90/10) — the percentage split between insurer and insured for covered costs after the deductible
  2. B Gold, Silver, Bronze, Platinum — marketing names only
  3. C They represent the level of network access
  4. D They determine eligibility for subsidies

Explanation

ACA metal tiers define actuarial value — the expected percentage of costs the plan pays for an average enrollee. BRONZE (60/40): insurer pays 60%, insured pays 40%; lowest premium, highest out-of-pocket. SILVER (70/30): 70/30 split; medium premium; Silver plans are the benchmark for premium tax credits; cost-sharing reductions (CSRs) available for lower-income enrollees. GOLD (80/20): 80/20 split; higher premium, lower out-of-pocket. PLATINUM (90/10): insurer pays 90%; highest premium, lowest out-of-pocket; worth it for people with frequent medical needs. These are averages — individual plan design varies within each tier.
Source: Health Insurance Exam, ACA Metal Tiers

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9. What is the difference between Medicare and Medicaid?
  1. A Medicaid is only for seniors
  2. B They are the same program
  3. C Medicare is a FEDERAL program primarily for people 65+ (and certain younger people with disabilities); Medicaid is a JOINT federal-state program providing coverage for low-income individuals and families based on need
  4. D Medicare is for low-income only

Explanation

MEDICARE vs MEDICAID:

Medicare: FEDERAL health insurance program primarily for: people 65 and OLDER; certain younger people with DISABILITIES; people with End-Stage Renal Disease/ALS; based on AGE/disability (not income).

Parts: A (hospital), B (medical), C (Medicare Advantage), D (prescription drugs).

Medicaid: JOINT FEDERAL-STATE program providing coverage for LOW-INCOME individuals and families; eligibility based on INCOME/NEED (and category — children, pregnant women, elderly, disabled); administered by states within federal guidelines (eligibility and benefits vary by state).

Memory aid: MedicARE for the AGED (65+); MedicAID for those who need AID (low income).

Dual eligible: Some people qualify for both; MEDICARE SUPPLEMENT (Medigap): Private insurance to cover Medicare's gaps (deductibles, coinsurance); understanding the distinction — Medicare (federal, age/disability-based) vs Medicaid (federal-state, income/need-based) — is fundamental health insurance exam content on government programs.

Source: Health Insurance — Government Programs, Medicare vs Medicaid

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10. What are the basic parts of Medicare?
  1. A Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage — private plans combining A/B and often D), and Part D (prescription drug coverage)
  2. B Parts A and B only, with no drug coverage available
  3. C Parts that only cover dental
  4. D Just one single plan

Explanation

The parts of medicare: PART A — HOSPITAL INSURANCE: Inpatient hospital stays, skilled nursing facility, hospice, some home health; most pay no premium (earned through work history); PART B — MEDICAL INSURANCE: Doctor visits, outpatient care, preventive services, medical equipment; requires a monthly premium; PART C — MEDICARE ADVANTAGE: PRIVATE plans (HMO/PPO) that combine Part A and B (and usually D) into one plan, often with extra benefits; an alternative to Original Medicare; PART D — PRESCRIPTION DRUG COVERAGE: Optional prescription drug plans (private); MEDIGAP (Medicare Supplement): Separate private insurance to cover Original Medicare's gaps (deductibles, coinsurance) — works with Original Medicare, not Medicare Advantage; ORIGINAL MEDICARE = Parts A + B (+ optional D and Medigap); MEDICARE ADVANTAGE = Part C (bundled alternative); understanding the four parts of Medicare (A-hospital, B-medical, C-Advantage, D-drugs) and how they fit together is important government-programs content on the health insurance exam.

Source: Health Insurance — Government Programs, Parts of Medicare

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11. What is Medicare, and who is it primarily designed to cover?
  1. A A program only for children
  2. B A private employer plan
  3. C A program only for low-income individuals
  4. D A federal health insurance program primarily for people age 65 and older, and for certain younger people with disabilities or end-stage renal disease

Explanation

Medicare is a federal health insurance program primarily for people age 65 and older, and also for certain younger individuals with qualifying disabilities or end-stage renal disease. It has parts: Part A (hospital insurance), Part B (medical insurance for physician and outpatient services), Part C (Medicare Advantage, private plans that bundle benefits), and Part D (prescription drug coverage). Medicare is distinct from Medicaid, which is a joint federal-state program for low-income individuals. Understanding what Medicare is, whom it covers, and its basic parts is standard government-programs content on the health insurance exam.
Source: NAIC Model Outline, Medicare

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12. How does Medicaid differ from Medicare?
  1. A Medicaid is private insurance
  2. B They are the same program
  3. C Medicaid is a joint federal-state program providing coverage primarily for low-income individuals and families, with eligibility based on income and other factors, whereas Medicare is age- or disability-based
  4. D Medicaid is only for those over 65

Explanation

Medicaid is a joint federal-state program that provides health coverage primarily to low-income individuals and families, with eligibility based on income and other factors (and rules that vary by state, since states administer their own programs within federal guidelines). Medicare, by contrast, is a federal program based mainly on age (65+) or disability, regardless of income. Some individuals qualify for both ('dual eligibles'). The key distinction is the basis of eligibility: Medicaid is needs-based (income), while Medicare is age/disability-based. Because state Medicaid rules differ, exam answers often note this variation. This Medicare-versus-Medicaid distinction is commonly tested.
Source: NAIC Model Outline, Medicaid

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