The interactive test above draws from this bank in random order. Every question also has its own page with the full explanation.
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What is the difference between 'co-insurance' and a 'co-payment'?
- Co-insurance is a percentage of the cost the insured pays after deductible (e.g., 20%); a co-payment is a fixed dollar amount per service (e.g., $30 per office visit) ✓
- Co-payments are paid annually
- There is no difference
- Both are the same as deductibles
Cost-sharing in health insurance has three main components, often confused. Deductible: the amount the insured pays out of pocket before the plan begins to share costs (e.g., $1,500). Co-payment (copay): a fixed dollar amount paid per service (e.g., $30 for an office visit, $150 for an emergency roo… Full explanation →
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What is a 'pre-existing condition'?
- A new condition during the policy year
- A medical condition that existed before the policy's effective date — under the ACA, individual and small group policies cannot exclude or charge more for pre-existing conditions ✓
- A condition not yet diagnosed
- A condition that requires no treatment
A pre-existing condition is a medical condition (diagnosed or known) that existed before health coverage took effect. Historically, individual health policies excluded pre-existing conditions from coverage, charged higher premiums for them, or denied coverage entirely. The Affordable Care Act (ACA) … Full explanation →
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What is the main difference between individual and group health insurance underwriting?
- Group is always more expensive
- Group has worse coverage
- Group plans pool risk across all members of the group (often with limited or no individual medical underwriting); individual plans assess each applicant individually under modern ACA rules, though pre-existing conditions cannot be a basis for exclusion ✓
- Individual plans are illegal
Group health insurance pools risk across all members of a group (typically employees of a company) and historically has used minimal individual medical underwriting — anyone in the group qualifies based on employment. Premiums are based on the group's overall demographics and claims experience. Indi… Full explanation →
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What is an HMO (Health Maintenance Organization)?
- A managed care plan with a network of providers; members typically must use in-network providers (except emergencies) and need a primary care physician referral for specialists ✓
- A type of dental plan
- A government health program
- An indemnity plan
An HMO (Health Maintenance Organization) is a managed care health plan structured around a network of contracted providers. Characteristics: members must select a primary care physician (PCP) who coordinates their care; specialist visits require a PCP referral; care outside the network is generally … Full explanation →
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What is a PPO (Preferred Provider Organization)?
- An exclusive in-network only plan
- Same as an HMO
- A government program
- A managed care plan with a network of preferred providers; members can use out-of-network providers at higher cost, and do not need a primary care referral for specialists ✓
A PPO (Preferred Provider Organization) is a managed care plan with more flexibility than an HMO. Characteristics: a network of 'preferred' providers who have agreed to discounted rates with the insurer; members get lower cost-sharing when using in-network providers; out-of-network providers can be … Full explanation →
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What is an EPO (Exclusive Provider Organization)?
- Same as a PPO
- A managed care plan like a PPO but with no out-of-network coverage (except emergencies); usually no PCP referral required for specialists ✓
- A government program
- An indemnity plan
An EPO (Exclusive Provider Organization) is a hybrid between HMO and PPO. Like an HMO, it requires using in-network providers and does not cover out-of-network care (except emergencies). Like a PPO, it typically does not require a primary care physician or referrals for specialists. EPOs tend to hav… Full explanation →
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Who is eligible for Medicare?
- Anyone over 18
- Only people with low income
- Only veterans
- Generally Americans age 65+ who have paid Medicare taxes for the required period, plus younger people with certain disabilities, ESRD, or ALS ✓
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… Full explanation →
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What does Medicare Part A cover?
- Inpatient hospital stays, skilled nursing facility care, hospice, and some home health services ✓
- Eye care and dental
- Doctor visits and outpatient care
- Prescription drugs
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 ser… Full explanation →
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What is the Affordable Care Act (ACA) and what does it require?
- It is a state program
- 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 ✓
- It only affects Medicare
- It is voluntary for insurers
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; (… Full explanation →
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What are 'metal tiers' in ACA marketplace plans?
- Brand names
- Annual fees
- 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 ✓
- Required precious metal investments
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… Full explanation →
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What is the difference between short-term and long-term disability insurance?
- Short-term disability typically pays for 3-12 months after a brief elimination period (1-14 days); long-term disability pays after a longer elimination period (30-180 days) and can continue for years or until retirement age ✓
- Long-term pays a lump sum
- There is no difference
- Only the price differs
Disability income insurance replaces a portion of the insured's income when they cannot work due to illness or injury. Short-term disability (STD) covers shorter periods: elimination period of 1-14 days (waiting period before benefits start), benefit period of 3-12 months. Long-term disability (LTD)… Full explanation →
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What is long-term care (LTC) insurance designed to cover?
- Custodial care for activities of daily living (bathing, dressing, eating, toileting, transferring, continence) — typically in nursing homes, assisted living, adult day care, or at home — for those who cannot care for themselves ✓
- Hospital stays
- Prescription drugs
- Doctor visits
Long-term care insurance covers custodial care — help with activities of daily living (ADLs) — that health insurance and Medicare do not. The six standard ADLs are bathing, dressing, eating, toileting, transferring (moving from bed to chair), and continence. Benefits typically trigger when the insur… Full explanation →
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What is COBRA and what coverage does it provide?
- A pension benefit
- Federal law that allows employees losing group health coverage (due to job loss, reduction in hours, etc.) to continue the same coverage for a limited time (typically 18-36 months) by paying the full premium plus a 2% admin fee ✓
- Medicare for federal employees
- A type of HMO
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) is a federal law allowing employees who lose group health coverage from an employer with 20+ employees to continue the same coverage temporarily by paying the full premium (employee + employer share) plus up to a 2% administrative fee. C… Full explanation →
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What is a 'waiting period' in health insurance?
- Time to find a doctor
- A period before benefits begin after enrolling — limited to 90 days for new employees under ACA rules ✓
- The time between doctor visits
- The annual renewal period
A waiting period in group health insurance is the time between starting employment (or other eligibility) and when health benefits begin. Under ACA rules, employer-sponsored health plans cannot have waiting periods longer than 90 days for eligible employees. Some employers offer immediate coverage; … Full explanation →
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What is an 'out-of-pocket maximum'?
- The maximum amount the insured will pay for covered services in a plan year (including deductibles, copays, co-insurance); after reaching it, the plan pays 100% of covered services for the rest of the year ✓
- The premium amount
- The minimum the insurer pays
- An optional payment
The out-of-pocket maximum (OOP max) is the total amount the insured can pay for covered services in a plan year. Once the insured reaches this limit (through deductibles, copays, and co-insurance combined), the plan pays 100% of covered services for the rest of the year. Premiums do not count toward… Full explanation →
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What is 'coordination of benefits' (COB)?
- Choosing the best plan
- Choosing a beneficiary
- Rules for determining which insurer pays first (primary) and which pays second (secondary) when an insured has coverage under multiple plans ✓
- Adding extra benefits
Coordination of benefits (COB) rules determine the order of payment when a person is covered under more than one health plan (e.g., spouse's plan plus their own). Standard rules: (1) Employee's own plan is primary for the employee; (2) For dependent children, the 'birthday rule' applies — the parent… Full explanation →
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What is a Health Savings Account (HSA) and what plan must accompany it?
- Any savings account
- A tax-advantaged savings account paired with a High Deductible Health Plan (HDHP); contributions are tax-deductible, growth is tax-free, withdrawals for qualified medical expenses are tax-free ✓
- An HMO requirement
- A government benefit
A Health Savings Account (HSA) is a tax-advantaged savings account available only to people enrolled in a High Deductible Health Plan (HDHP). Triple tax advantages: (1) Contributions are tax-deductible (or pre-tax through payroll); (2) Growth is tax-free; (3) Withdrawals for qualified medical expens… Full explanation →
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Under HIPAA, what is the primary protection for individuals changing jobs?
- Guaranteed promotions
- Wage protections
- Portability rules limiting pre-existing condition exclusions and ensuring access to coverage; HIPAA also established privacy and security rules for health information ✓
- Vacation guarantees
HIPAA (Health Insurance Portability and Accountability Act of 1996) has two main pillars: (1) Portability — limited pre-existing condition exclusions, prohibited discrimination based on health factors in group coverage, and certificates of creditable coverage to reduce pre-ex exclusions when changin… Full explanation →
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What is Medicaid and how does it differ from Medicare?
- They are the same program
- 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 ✓
- Medicaid is only for veterans
- Medicaid covers only children
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 … Full explanation →
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When are disability insurance benefits typically taxable as income?
- Always taxable
- Only if income exceeds a threshold
- If the policy was paid for with pre-tax dollars (employer-paid premium), benefits are taxable; if paid with after-tax dollars (employee-paid premium), benefits are generally tax-free ✓
- Never taxable
Disability income benefit taxation depends on who paid the premium and with what dollars. If the employer paid the premium (or the employee paid with pre-tax payroll deductions): benefits are taxable as ordinary income. If the employee paid the premium with after-tax dollars: benefits are received t… Full explanation →
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What is a 'rider' on a health insurance policy?
- A driver of the policy
- An optional addition (with extra premium) that modifies coverage — examples include accident-only coverage, hospital indemnity, prescription drug coverage, or specific-disease (cancer) riders ✓
- A required attachment
- A type of beneficiary
A rider in health insurance is an optional add-on that modifies or supplements the base policy, typically for additional premium. Common health insurance riders: hospital indemnity (pays a flat daily amount during hospital stays); accident-only (pays for accident-related medical expenses); critical … Full explanation →
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What is 'utilization review' in managed care?
- A type of audit
- A type of accounting
- Annual policy renewal
- The process by which insurers evaluate the medical necessity and appropriateness of services — prospective (prior authorization), concurrent (during treatment), or retrospective (after treatment) ✓
Utilization review is the process insurers use to evaluate whether requested or provided medical services are medically necessary, appropriate, and consistent with care guidelines. Three types: (1) Prospective (prior authorization) — review before services are provided, with the provider seeking app… Full explanation →
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Under the ACA, what is the 'open enrollment period' for marketplace coverage?
- Lifetime enrollment
- Year-round
- Only during summer
- An annual period (typically November 1 through January 15 federally, varying by state) when individuals can enroll in or change marketplace plans without a qualifying life event ✓
ACA marketplace plans have an annual open enrollment period, typically November 1 through January 15 in states using the federal exchange (HealthCare.gov). State-based exchanges may set different periods. During open enrollment, anyone can enroll in or change plans without restriction. Outside open … Full explanation →
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Under ACA, employers with how many full-time employees are required to offer affordable health coverage or face a penalty?
- 500+ employees
- 50+ full-time equivalent (FTE) employees — the 'Applicable Large Employer' threshold for the employer mandate ✓
- 100+ employees
- 1+ employees
The ACA's employer mandate (also called 'pay or play') applies to Applicable Large Employers (ALEs) — those with 50 or more full-time equivalent employees in the prior year. ALEs must offer affordable health coverage that meets minimum value standards to full-time employees (30+ hours per week) or p… Full explanation →
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What is 'guaranteed renewable' in a health insurance policy?
- A provision that the insurer must renew the policy each year as long as premiums are paid, though rates can change for the entire class — common in individual disability and long-term care policies ✓
- A guarantee the policy will never change
- Free coverage forever
- Discounted renewal
Guaranteed renewable is a policy provision that obligates the insurer to renew the policy each year if the insured pays the premium, regardless of changes in the insured's health or claims experience. However, the insurer can raise premiums for the entire class of policyholders (not for individuals)… Full explanation →
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What is the ACA 'open enrollment period'?
- The period for renewing commercial health plans
- The specific annual window during which individuals can enrol in or change health insurance plans through the ACA marketplace without a qualifying life event ✓
- A time when deductibles reset
- A period when anyone can get a job in insurance
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 … Full explanation →
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What is the difference between an HMO and a PPO?
- HMO is for individuals only; PPO is for groups
- HMOs are government plans; PPOs are private
- HMOs cover prescriptions; PPOs do not
- HMO requires a primary care physician (PCP) and referrals to see specialists within a network; PPO allows direct access to any provider (in or out of network) at different cost levels ✓
HMO (Health Maintenance Organization): requires insured to choose a PCP; must get referrals from PCP to see specialists; only in-network providers covered except emergencies; lower premiums; less flexibility. PPO (Preferred Provider Organization): no PCP requirement; no referrals needed; can see any… Full explanation →
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An insured has a $2,000 deductible, a 20% coinsurance rate, and an $8,000 out-of-pocket maximum. They incur $15,000 in covered medical bills. How much does the insured pay?
- $5,000
- $8,000 ✓
- $15,000
- $3,000
Step 1: Insured pays first $2,000 (deductible). Remaining: $13,000. Step 2: Insured pays 20% coinsurance on next $30,000 — but the out-of-pocket maximum caps total. After $2,000 deductible, insured pays 20% × $13,000 = $2,600 in coinsurance. Total so far: $2,000 + $2,600 = $4,600. This is under the … Full explanation →
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How long can a former employee continue COBRA coverage after leaving their job voluntarily?
- 18 months ✓
- 36 months
- 90 days
- 30 days
Under COBRA (Consolidated Omnibus Budget Reconciliation Act), employees who voluntarily leave their job, are laid off (except for gross misconduct), or have their hours reduced can continue group health coverage for up to 18 months. Qualifying events for 36-month continuation: death of the covered e… Full explanation →
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Medicare Part B covers which type of healthcare?
- Long-term nursing home care
- Prescription drugs
- Outpatient medical services — physician visits, preventive services, durable medical equipment, outpatient surgery, lab tests ✓
- Hospital stays
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… Full explanation →
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What is the 'elimination period' in a disability income policy?
- A period when disability coverage is terminated
- The waiting period between onset of disability and when benefits begin paying — similar to a time-based deductible ✓
- A pre-existing condition exclusion period
- The period after which claims are no longer accepted
The elimination period (EP) is the 'deductible' measured in time rather than money. If your EP is 90 days, you must be continuously disabled for 90 days before receiving your first benefit check. Common elimination periods: 30, 60, 90, 180, 365 days. Longer EP = lower premium. Most individual disabi… Full explanation →
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What are 'ADLs' in long-term care insurance?
- Advanced Diagnosis Letters
- Activities of Daily Living — the functional tasks (bathing, dressing, eating, transferring, continence, toileting) that LTC policies use to determine benefit eligibility ✓
- Actual Dollar Losses from disability
- Annual Dollar Limits on benefits
Activities of Daily Living (ADLs) are the fundamental self-care tasks adults perform daily. Long-term care insurance policies typically trigger benefits when the insured cannot perform a specified number of ADLs independently (usually 2 of 6). The six standard ADLs: BATHING (washing body); DRESSING … Full explanation →
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What is 'experience rating' for group health insurance?
- A discount for healthy employees
- Rating based on years of experience in the industry
- A rating for the insurance agent's performance
- Setting the group's premium rate based on the group's own claims history rather than community-wide data — groups with better claims experience pay less ✓
Experience rating sets group premiums based on the group's own historical claims data. Large groups (100+ employees) are typically experience-rated — their premium directly reflects their own utilization. Small groups (under 50-100 employees) are typically community-rated — their premium reflects th… Full explanation →
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What are the four ACA 'metal tiers' and what do they represent?
- 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 ✓
- Gold, Silver, Bronze, Platinum — marketing names only
- They represent the level of network access
- They determine eligibility for subsidies
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 cred… Full explanation →
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What is the difference between 'own-occupation' and 'any-occupation' disability definitions?
- Own-occ is only for doctors and lawyers
- Own-occ: disabled if unable to perform the duties of YOUR specific occupation. Any-occ: disabled only if unable to perform ANY occupation for which you're qualified by education and experience — a much stricter standard ✓
- They are the same standard with different names
- Own-occ pays more; any-occ pays less
The disability definition is the most important policy provision in a disability income contract. OWN-OCCUPATION ('own occ'): if a surgeon loses fine motor control and cannot perform surgery, they are 'totally disabled' under own-occ even if they could work as a teacher — their specific occupation i… Full explanation →
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What is the main feature of a Health Maintenance Organization (HMO) plan?
- You can see any provider with no referrals
- No premiums are required
- It only covers dental care
- Care is coordinated through a primary care physician (PCP) who provides referrals to specialists; coverage is generally limited to in-network providers (except emergencies) ✓
HMO (Health Maintenance Organization): A managed care plan emphasizing coordinated care and cost control. KEY FEATURES: Requires choosing a PRIMARY CARE PHYSICIAN (PCP) who coordinates care; REFERRALS from the PCP usually required to see specialists; coverage generally LIMITED TO IN-NETWORK provider… Full explanation →
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In health insurance, what is the difference between a copayment, coinsurance, and a deductible?
- Copay is a percentage; coinsurance is fixed
- Deductible is the monthly premium
- Deductible = amount you pay before insurance starts paying; copayment = a fixed dollar amount per service; coinsurance = a percentage of the cost you pay after the deductible ✓
- They are all the same
HEALTH INSURANCE COST-SHARING TERMS: DEDUCTIBLE: The amount you pay OUT OF POCKET before insurance begins to pay (e.g., $2,000 deductible — you pay the first $2,000 of covered care); COPAYMENT (copay): A FIXED DOLLAR amount you pay for a specific service (e.g., $25 per doctor visit, $15 per prescrip… Full explanation →
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What is a High Deductible Health Plan (HDHP) paired with a Health Savings Account (HSA)?
- A plan with no deductible
- An HDHP has a higher deductible and lower premium; it can be paired with an HSA — a tax-advantaged account for paying qualified medical expenses with pre-tax dollars ✓
- A dental-only plan
- A plan that only covers emergencies
HDHP + HSA: HIGH DEDUCTIBLE HEALTH PLAN (HDHP): Has a HIGHER deductible and LOWER premium than traditional plans; the insured pays more out of pocket before coverage kicks in, in exchange for lower monthly premiums; must meet IRS minimum deductible thresholds to qualify; HEALTH SAVINGS ACCOUNT (HSA)… Full explanation →
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In a PPO (Preferred Provider Organization) plan, what happens if the insured uses an out-of-network provider?
- No coverage at all
- Coverage is still provided but typically at a HIGHER out-of-pocket cost (lower reimbursement, higher coinsurance/deductible) than for in-network providers — PPOs allow out-of-network use at a higher cost ✓
- Coverage is exactly the same
- The provider must be the PCP
PPO (Preferred Provider Organization) OUT-OF-NETWORK: PPOs offer FLEXIBILITY — the insured CAN use out-of-network providers, but at a HIGHER out-of-pocket cost. IN-NETWORK: Lower cost (negotiated rates, lower coinsurance/deductible); OUT-OF-NETWORK: Still covered, but the insured pays more (higher c… Full explanation →
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What is the difference between Medicare and Medicaid?
- Medicaid is only for seniors
- They are the same program
- 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 ✓
- Medicare is for low-income only
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 drug… Full explanation →
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What is a 'pre-existing condition' and how does the ACA address it?
- A health condition that existed before the coverage began; under the ACA, health insurers generally cannot deny coverage or charge more based on pre-existing conditions ✓
- A condition only for seniors
- A condition that develops after coverage starts
- A condition that is never covered
PRE-EXISTING CONDITION: A health condition (illness, injury) that EXISTED BEFORE the new health coverage began (e.g., diabetes, asthma, prior cancer). HISTORICAL PROBLEM: Before the ACA, insurers could DENY coverage, EXCLUDE the condition, or CHARGE MORE based on pre-existing conditions; ACA PROTECT… Full explanation →
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What is the 'elimination period' (waiting period) in a disability income insurance policy?
- The period after which the policy expires
- The period to pay premiums
- The time between the onset of a disability and when benefit payments begin — the insured must be disabled for this period before benefits start, functioning like a time-based deductible ✓
- The maximum benefit period
ELIMINATION PERIOD (waiting period) in DISABILITY INCOME insurance: The time between when a disability begins and when BENEFIT PAYMENTS START. The insured must remain disabled throughout this period before benefits begin — it functions like a TIME-BASED DEDUCTIBLE; COMMON LENGTHS: 30, 60, 90, 180 da… Full explanation →
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What does 'COBRA' allow?
- A new type of HMO
- Coverage only for retirees
- Eligible employees (and dependents) to CONTINUE their group health coverage for a limited time after losing it due to certain qualifying events (like job loss), usually by paying the full premium themselves ✓
- Free lifetime health coverage
COBRA (Consolidated Omnibus Budget Reconciliation Act): Allows eligible employees and their dependents to CONTINUE their employer-sponsored GROUP HEALTH COVERAGE for a LIMITED TIME after they would otherwise lose it due to a QUALIFYING EVENT. QUALIFYING EVENTS: Job loss (voluntary or involuntary, ex… Full explanation →
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In health insurance, what is 'coordination of benefits' (COB)?
- A government subsidy
- Choosing a doctor
- A type of deductible
- A provision used when a person is covered by more than one health plan, determining which plan pays first (primary) and which pays second (secondary), to prevent duplicate payment exceeding the actual cost ✓
COORDINATION OF BENEFITS (COB): A provision/process used when a person is covered by MORE THAN ONE health plan (e.g., their own employer plan and a spouse's plan). PURPOSE: Determines the ORDER of payment — which plan is PRIMARY (pays first) and which is SECONDARY (pays second) — and prevents the to… Full explanation →
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What are the basic parts of Medicare?
- 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) ✓
- Parts A and B only, with no drug coverage available
- Parts that only cover dental
- Just one single plan
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… Full explanation →
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What is the purpose of a 'probationary period' or 'waiting period' for certain conditions in some health policies?
- To provide free coverage
- A specified period after the policy begins during which certain conditions or services are not covered — used by insurers to manage risk; note ACA-compliant major medical plans generally cannot impose pre-existing condition waiting periods ✓
- To increase premiums forever
- To deny all claims
PROBATIONARY/WAITING PERIOD for conditions: A specified period at the START of a policy during which certain conditions or services are NOT covered. HISTORICAL/CERTAIN POLICIES: Used by insurers to manage adverse selection and risk (e.g., a waiting period before maternity or certain conditions are c… Full explanation →
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What is an 'out-of-pocket maximum' in a health insurance plan?
- The premium amount
- The insurer's maximum payment
- The most an insured will have to pay for covered services in a plan year (including deductible, copays, and coinsurance); after reaching it, the plan pays 100% of covered services for the rest of the year ✓
- The deductible only
OUT-OF-POCKET MAXIMUM (OOP max): The MOST an insured will have to pay for COVERED services in a plan year. INCLUDES: deductible + copayments + coinsurance for covered, in-network services; DOES NOT include: premiums, out-of-network charges (in many plans), balance billing, or non-covered services; O… Full explanation →
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What is the main purpose of long-term care (LTC) insurance?
- To cover hospital surgery costs
- To cover the costs of long-term care services — such as nursing home care, assisted living, or in-home care — needed when a person cannot perform activities of daily living, which standard health insurance and Medicare largely do not cover ✓
- To cover dental work
- To replace lost income
LONG-TERM CARE (LTC) INSURANCE: Covers the costs of LONG-TERM CARE SERVICES that standard health insurance and Medicare largely DON'T cover. COVERS: Nursing home care; assisted living facilities; in-home care (home health aides); adult day care; care needed when a person cannot perform ACTIVITIES OF… Full explanation →
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What is a key difference between group health insurance and individual health insurance?
- Individual insurance has no premiums
- They are identical
- Group insurance is always worse
- Group insurance covers members of a group (typically employees of an employer) under one master policy, often with lower per-person cost and simplified underwriting; individual insurance is purchased by a person directly and individually underwritten/rated ✓
GROUP vs INDIVIDUAL HEALTH INSURANCE: GROUP INSURANCE: Covers members of a GROUP (typically employees of an employer, or members of an association) under one MASTER POLICY held by the employer/group; ADVANTAGES: often LOWER per-person cost (risk spread over the group, employer often pays part of the… Full explanation →
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What does 'guaranteed renewable' mean in a health or disability insurance policy?
- The premium can never change
- The insurer must RENEW the policy (cannot cancel it) as long as the insured pays premiums, though the insurer CAN change premiums for an entire class of policyholders — providing renewal security to the insured ✓
- Coverage is free
- The policy expires each year
GUARANTEED RENEWABLE: A renewal provision where the insurer MUST RENEW the policy (cannot cancel or refuse to renew) as long as the insured pays the premiums — but the insurer CAN INCREASE PREMIUMS for an entire CLASS of policyholders (not single out an individual). KEY POINTS: The insured has the R… Full explanation →
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What is the purpose of a 'deductible' in a health insurance plan?
- The maximum the insurer will ever pay
- A monthly fee to keep the policy active
- A payment the insurer makes to the insured
- The amount the insured must pay out of pocket for covered services before the insurer begins to pay ✓
A deductible is the amount an insured must pay out of pocket for covered health services within a plan period before the insurer starts paying its share. For example, with a $1,000 deductible, the insured pays the first $1,000 of covered costs before coverage kicks in (some services may be covered b… Full explanation →
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What is the difference between a copayment and coinsurance?
- Coinsurance is always 100%
- A copayment is paid by the insurer
- A copayment is a fixed dollar amount the insured pays for a covered service, while coinsurance is a percentage of the cost the insured pays after the deductible ✓
- They are the same thing
A copayment (copay) is a fixed dollar amount the insured pays for a specific covered service — for example, $25 for a doctor visit. Coinsurance is a percentage of the cost of a covered service that the insured pays, usually after meeting the deductible — for example, the plan pays 80% and the insure… Full explanation →
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What is the defining feature of a Health Maintenance Organization (HMO)?
- It only covers out-of-network care
- It allows any provider with no referrals
- It typically requires members to use a network of providers and to select a primary care physician (PCP) who coordinates care and provides referrals to specialists ✓
- It has no network restrictions
An HMO is a managed-care plan that generally requires members to receive care from a defined network of providers (except in emergencies) and to choose a primary care physician (PCP) who coordinates their care and provides referrals to specialists. HMOs typically have lower premiums and out-of-pocke… Full explanation →
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How does a Preferred Provider Organization (PPO) differ from an HMO?
- A PPO requires a PCP and referrals like an HMO
- A PPO offers more flexibility — members can see providers in or out of network (paying more out of network) and generally do not need referrals to see specialists ✓
- A PPO has no network at all
- A PPO covers no out-of-network care
A PPO is a managed-care plan that contracts with a network of preferred providers but allows members to use out-of-network providers as well, at a higher cost-share. Unlike an HMO, a PPO generally does not require members to select a primary care physician or obtain referrals to see specialists, giv… Full explanation →
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What is Medicare, and who is it primarily designed to cover?
- A program only for children
- A private employer plan
- A program only for low-income individuals
- A federal health insurance program primarily for people age 65 and older, and for certain younger people with disabilities or end-stage renal disease ✓
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 … Full explanation →
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How does Medicaid differ from Medicare?
- Medicaid is private insurance
- They are the same program
- 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 ✓
- Medicaid is only for those over 65
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… Full explanation →
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What is the purpose of disability income insurance?
- To cover property damage
- To pay medical bills directly
- To replace a portion of the insured's income if they become unable to work due to a covered illness or injury ✓
- To pay a death benefit
Disability income insurance replaces a portion of an insured's earned income (commonly around 50–70%) if they become unable to work because of a covered illness or injury. Unlike health insurance, which pays for medical treatment, disability income insurance addresses the lost paycheck. Key features… Full explanation →
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What does long-term care (LTC) insurance cover?
- Services needed by people who cannot perform activities of daily living independently — such as nursing home, assisted living, or in-home custodial care — generally not covered by standard health insurance or Medicare long-term ✓
- Only prescription drugs
- Only hospital surgery
- Only emergency room visits
Long-term care insurance covers the cost of services for people who can no longer perform activities of daily living (such as bathing, dressing, eating, transferring) on their own, or who need supervision due to cognitive impairment. Covered settings can include nursing homes, assisted living facili… Full explanation →
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What is the purpose of a 'coordination of benefits' (COB) provision when a person is covered by more than one health plan?
- To pay double benefits
- To determine the order in which multiple plans pay so that total reimbursement does not exceed the actual expenses (preventing the insured from profiting) ✓
- To increase the premium
- To cancel one of the policies
A coordination of benefits (COB) provision applies when a person is covered under more than one health plan (for example, their own and a spouse's). COB rules establish which plan is 'primary' (pays first) and which is 'secondary' (pays remaining eligible costs), so that the combined payments do not… Full explanation →
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What does COBRA generally allow in the context of group health insurance?
- It cancels coverage at termination
- It applies only to individual policies
- It provides free lifetime coverage
- It generally allows eligible employees and dependents to continue group health coverage for a limited period after a qualifying event (such as job loss), usually by paying the full premium themselves ✓
COBRA (the federal Consolidated Omnibus Budget Reconciliation Act) generally allows eligible employees and their covered dependents to temporarily continue their group health coverage after a qualifying event — such as job loss, reduction in hours, or certain family changes — that would otherwise en… Full explanation →
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What is 'open enrollment' in health insurance?
- A period only for group plans
- A period when premiums are free
- A designated period during which individuals can enroll in, or make changes to, health insurance coverage, outside of which enrollment is generally limited to qualifying life events (special enrollment) ✓
- A time when claims are paid faster
Open enrollment is a designated period during which individuals can sign up for health insurance or make changes to their coverage (such as switching plans). Outside of open enrollment, a person generally can enroll or change coverage only if they experience a qualifying life event — such as marriag… Full explanation →
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What is the role of a 'formulary' in a health or prescription drug plan?
- A list of prescription drugs covered by the plan, often organized into tiers that determine the insured's cost-share for each drug ✓
- A claim form
- The plan's deductible amount
- A list of in-network doctors
A formulary is the list of prescription drugs that a health or drug plan covers. Formularies are commonly organized into tiers — for example, generic drugs in a low-cost tier and brand-name or specialty drugs in higher-cost tiers — which determine the copayment or coinsurance the insured pays for ea… Full explanation →
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What does 'guaranteed issue' mean in health insurance?
- It applies only to life insurance
- The insurer can decline anyone
- Coverage is guaranteed to be cheap
- A requirement that an insurer issue coverage to an applicant regardless of health status, without denying coverage based on pre-existing conditions ✓
Guaranteed issue means an insurer must offer coverage to an eligible applicant regardless of their health status or medical history, and cannot decline them or charge more based on pre-existing conditions. This consumer protection is a feature of various group plans and, under the Affordable Care Ac… Full explanation →
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What is the function of an 'out-of-pocket maximum' in a health plan?
- It is the most an insured will have to pay for covered services in a plan period; after reaching it, the plan generally pays 100% of further covered, in-network costs ✓
- It is the premium amount
- It is the maximum the insurer pays
- It is the deductible doubled
The out-of-pocket maximum is the most an insured will have to pay for covered, in-network services during a plan period through deductibles, copayments, and coinsurance combined. Once the insured's spending reaches this cap, the plan generally pays 100% of additional covered, in-network costs for th… Full explanation →