Nc Health Insurance Practice Exam
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All of the following services are generally covered under MedicaidEXCEPT:
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Cosmetic surgery
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Mental health services
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Rural health clinic services
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Prescription drug services
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Elevate your understanding of North Carolina health insurance through our comprehensive practice exam quiz. Navigate the intricacies of policies, coverage, and regulations in the state. Test your grasp of premium calculations, benefit structures, and key terminologies. Whether you're aiming for licensure or aiming to understand your coverage better, this quiz offers a diverse range of questions that mirror real-world scenarios. See moreChallenge yourself by tackling questions on deductibles, copayments, and provider networks. Prepare to excel with this interactive tool that sharpens your knowledge and boosts your confidence in navigating the complex landscape of health insurance in North Carolina.
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- 2.
Under the Patient Protection and Affordable Care Act, until when aredependent children eligible to be covered under their parent’s groupmedical insurance policy?
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age 19
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Age 22
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age 26
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They become married.
Correct Answer
A. age 26Explanation
A group health plan that offers dependent coverage must continue such coverage for an employee's adult child until
the child turns 26 years old, whether or not the child is married. Plans are not required to cover the spouse or child of
eligible children.Rate this question:
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- 3.
How is a person who is covered by a medical expense insurance plancommonly referred to?
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insured or subscriber
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patient
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customer or client
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risk
Correct Answer
A. insured or subscriberExplanation
Generally, the person who is covered by a medical expense insurance plan is called an insured or a subscriber.Rate this question:
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- 4.
To qualify for an insurance agent's license, a person must have all of thefollowing EXCEPT:
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college degree
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good reputation and character
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licensing fee
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18 years of age
Correct Answer
A. college degreeExplanation
To qualify for a license, an applicant must be at least 18 years old, complete a prelicensing education program, pay
the licensing fees, and pass the required state examination. An applicant also must not have been convicted of a
felony or crime involving dishonesty or fraud.Rate this question:
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- 5.
What is the term for deliberately withholding material facts when applying for insurance?
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concealment
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collusion
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twisting
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waiver
Correct Answer
A. concealmentExplanation
Concealment is deliberately withholding material facts when applying for insurance. If the concealed facts would have
changed the insurer's decision to offer the insurance policy, then the insurer can void the insurance contract.Rate this question:
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- 6.
Joshua's major medical policy requires him to pay $15 every time hegoes to see his doctor. What is this payment called?
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the deductible
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the policy's out-of-pocket maximum
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the doctor visit limit
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the co-payment
Correct Answer
A. the co-paymentExplanation
A co-payment is a fixed fee that insureds pay for their use of specific medical services covered by the plan.Rate this question:
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- 7.
Steven is filling out an application for life insurance. The applicationasked whether he had ever had heart problems. Steven intentionallyskips this question even though he had heart surgery three years agobecause he is afraid his application will be denied. What is the term forSteven's failure to give his entire medical history?
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estoppel
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Concealment
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waiver
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breach of contract
Correct Answer
A. ConcealmentExplanation
Concealment is deliberately withholding material facts when applying for insurance. If the concealed facts would have
changed the insurer's decision to offer the insurance policy, then the insurer can void the insurance contract.
ContributionsRate this question:
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- 8.
Comprehensive major medical plans provide a broad range of coverage.They most likely cover all of the following, EXCEPT:
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Hospital expenses, surgeons' and doctors' fees, and nursing care
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Physical and occupational therapy, diagnostic tests, and lab fees
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Cosmetic surgery, experimental procedures or treatment, and alcohol and drug abuse treatment
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Medical supplies and equipment and ambulatory costs
Correct Answer
A. Cosmetic surgery, experimental procedures or treatment, and alcohol and drug abuse treatmentExplanation
Comprehensive major medical plans do not cover cosmetic surgery, experimental procedures or treatment, or alcohol
and drug abuse treatment.Rate this question:
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- 9.
Dave owns a small business. He wants disability coverage that wouldpay routine business expenses if a disability should cause him to beunable to work for a while. What kind of insurance does Dave probablywant?
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Business overhead expense insurance
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Small business insurance
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Entity buy-sell insurance
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Workers' compensation
Correct Answer
A. Business overhead expense insuranceExplanation
Business overhead expense insurance reimburses the company for certain business expenses if the business owner
is disabled. Covered expenses may include utilities, leased equipment, office supplies, nonowner salaries, and rent.Rate this question:
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- 10.
Delta Vacation Cruises wants to purchase group health coverage for itspassengers. Which type of insurance should Delta purchase?
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Blanket policy
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Credit disability
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Illness only
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Accident and illness indemnity
Correct Answer
A. Blanket policyExplanation
Blanket insurance provides health insurance benefits to a changing group of people who are exposed to the same
risks, such as passengers on a cruise ship.Rate this question:
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- 11.
Which of the following groups would typically NOT be eligible for groupaccident and health insurance?
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association group
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neighborhood group
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labor union
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employer group
Correct Answer
A. neighborhood groupExplanation
Employer groups, association groups, and labor unions are eligible for group accident and health insurance.
Neighborhood groups are not an approved group.Rate this question:
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- 12.
Robin breaks a leg while snow skiing. Considering herself lucky it wasonly a leg, she decides she will never again attempt snow skiing. Whichof the following is Robin using as a means of risk management?
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Risk retention
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Risk avoidance
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Risk reduction
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Risk transfer
Correct Answer
A. Risk avoidanceExplanation
Risk management by avoidance means avoiding situations that could result in loss.Rate this question:
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- 13.
Greg's basic hospital plan provides for hospital room and board for amaximum of 30 days with a maximum benefit of $3,000. If Greg also hada supplementary major medical policy, what would that supplementaryplan cover?
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hospital room and board beginning on the 31st day and costs above $3,000
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hospital room and board and costs less than $3,000
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hospital room and board beginning on the 30th day
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hospital room and board beginning on the 15th day and costs above $6,000
Correct Answer
A. hospital room and board beginning on the 31st day and costs above $3,000Explanation
If Greg supplements his basic hospital plan with a supplementary major medical policy, the supplementary plan would
cover hospital room and board beginning on the 31st day and costs above $3,000.Rate this question:
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- 14.
Eric fails to pay the annual premium on his major medical insurancepolicy. The grace period provision allows him to pay the premium withinhow many days after the due date?
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7
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14
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21
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31
Correct Answer
A. 31Explanation
A policyholder is entitled to a 31-day grace period in which to pay the premium due on an annually renewable health
insurance policy.Rate this question:
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- 15.
Dr. Sanjay has agreed to become part of the Alliance PPO. When PPOenrollees come to his office for care, Dr. Sanjay must then
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bill the patients directly for the care.
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accept the PPO's negotiated fee as full payment for services.
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negotiate with the PPO regarding the amount that it will pay.
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require patients to immediately pay the entire bill and to seek reimbursement from the PPO.
Correct Answer
A. accept the PPO's negotiated fee as full payment for services.Explanation
Providers who become part of a PPO are required to accept the PPO's previously negotiated fee as full payment for
services.Rate this question:
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- 16.
Roy has an insurance policy that pays a fixed sum directly to him foreach day he spends in a hospital. What type of insurance policy doesRoy have?
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a basic medical expense policy
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a major medical policy
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a comprehensive policy
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a hospital indemnity policy
Correct Answer
A. a hospital indemnity policyExplanation
A hospital indemnity policy provides cash benefits that the insured may use as he or she sees fit. The benefit amount
per day is predetermined and paid regardless of any other coverage the insured may have.Rate this question:
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- 17.
All of the following are examples of hazards EXCEPT:
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Ron tends to forget to wear his seat belt when he drives.
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Sue is a heavy cigarette smoker.
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John is taking medications to control his high blood pressure.
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Jane, a business owner, refuses to fix a broken sidewalk in front of her shop because she and the town cannot agree on who must repair it.
Correct Answer
A. John is taking medications to control his high blood pressure.Explanation
A hazard is a condition that increases the number of losses or the severity of losses. Taking medications to control a
life-threatening disease is a hazard-reduction technique.Rate this question:
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- 18.
Acme Insurance and Apogee Insurance agree to offer different premiumrates for persons of equal risk within a particular class. They also agreeto limit benefits paid to insureds within this class if the insureds live incertain counties of North Carolina. What are Acme and Apogee engagingin?
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acceptable marketing and underwriting practices
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unfair and prohibited business practices
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insurance fraud
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false advertising
Correct Answer
A. unfair and prohibited business practicesExplanation
Acme and Apogee are agreeing to an unreasonable restraint of trade in the insurance business of North Carolina.
Furthermore, they are engaging in unfair discrimination by charging persons of the same class and substantially
equal risk different premium rates and by paying different benefits to persons in this class.Rate this question:
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- 19.
Mark works at XYZ Industries and is covered by its group HMO plan. Heis also covered by his wife's group PPO plan. How will benefits be paid ifhe incurs $300 in medical expenses?
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His employer's plan will pay benefits first.
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Both plans must pay an equal share of the expenses.
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His wife's plan will pay benefits first.
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Neither plan is required to pay any of the expenses because he has duplicative coverage.
Correct Answer
A. His employer's plan will pay benefits first.Explanation
The plan in which a person directly participates because he or she is employed by or associated with the plan
sponsor is the primary plan. This plan pays the benefits for that person. Coverage provided by any other plan or
insurer is secondary. It pays benefits only to the extent the primary plan did not cover the loss.Rate this question:
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- 20.
Denny is covered by a PPO. What is the result if he receives non-emergency medical treatment from an out-of-network physician?
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The claim will be denied.
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He will pay a higher amount for the medical care.
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His cost for the medical care will not be affected.
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He will pay a lower amount for the medical care
Correct Answer
A. He will pay a higher amount for the medical care.Explanation
A PPO subscriber is free to select, from an extensive list of providers, the physician he or she prefers to see. A
person can also choose a non-PPO provider but must pay more if he or she obtains nonemergency treatment from
outside the network of PPO providers.Rate this question:
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- 21.
Alicia wants to buy a disability income policy that will provide her with a$1,000 monthly benefit. If she chooses a 30-day elimination periodinstead of a 90-day elimination period, what impact will this have on thepremium?
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Her annual premium will be lower.
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Her annual premium will be higher.
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Her annual premium will be the same for both policies.
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Her annual premium will decrease if she does not have any claims during the first policy year.
Correct Answer
A. Her annual premium will be higher.Explanation
The shorter the policy's elimination period, the higher the premium. Therefore, if Alicia chooses a 30-day elimination
period instead of a 90-day period, her annual premium will be higher.Rate this question:
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- 22.
Jim applied for a health insurance policy. The insurer attached a waiverto the policy that excludes any loss associated with cardiac illness. Howhas Jim's application been classified?
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Preferred
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Substandard
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Standard
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Declined
Correct Answer
A. SubstandardExplanation
Jim's application has been classified as substandard, which means that he falls below the insurer's standard
guidelines. The insurer may attach a waiver to the policy that excludes from coverage any loss associated with a
specified condition, or the insurer may charge an added premium.Rate this question:
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- 23.
Which of the following statements is not true about group insurance?
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A master contract is issued.
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Underwriting is on a group, not an individual, basis.
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Exclusions and riders are written for the most at-risk members.
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The cost is lower than it is for individual policies.
Correct Answer
A. Exclusions and riders are written for the most at-risk members.Explanation
A key provision of group insurance is that it does not discriminate on the basis of an individual's health history.Rate this question:
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- 24.
Best Insurance Company is incorporated in Canada and just applied fora license to transact insurance in North Carolina. Which type of insureris Best Insurance Company considered in North Carolina?
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domestic
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foreign
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alien
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limited
Correct Answer
A. alienExplanation
North Carolina classifies insurance companies according to where they were incorporated. An alien company is one
that has been incorporated or organized under the laws of any jurisdiction outside the United States.Rate this question:
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- 25.
In the case of an insurer that employs agents in the field, which of thefollowing has primary responsibility for delivering a new policy to thepolicyholder?
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insurance company
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agency for which the agent works
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agent
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Department of Insurance
Correct Answer
A. agentExplanation
At the end of the underwriting process, the insurer sends the issued policy to the agent, who then delivers the policy
to the client.Rate this question:
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- 26.
Which of the following statements is not true about group insurance?
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A master contract is issued.
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Underwriting is on a group, not an individual, basis.
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Exclusions and riders are written for the most at-risk members.
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The cost is lower than it is for individual policies.
Correct Answer
A. Exclusions and riders are written for the most at-risk members.Explanation
A key provision of group insurance is that it does not discriminate on the basis of an individual's health history.Rate this question:
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- 27.
An employee who suffers a short-term job-related injury may look to hisor her employer to do which of the following?
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Provide coverage under its group short-term disability income policy
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provide coverage through its group medical plan for the lost income
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provide coverage through workers' compensation insurance
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provide coverage through its long-term group disability plan
Correct Answer
A. provide coverage through workers' compensation insuranceExplanation
For short-term job-related injuries, an employer must provide workers' compensation insurance. Most short-term group disability plans do not provide coverage for on-the-job injuries.Rate this question:
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- 28.
Debbie, Lisa, Greta, and Jessica apply for individual health insurancepolicies. At the end of the underwriting process, the insurer classifiedthem as follows: Debbie as substandard, Lisa as standard, and Jessicaas preferred. Greta's application was declined. Which of the followingstatements is correct?
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Debbie's policy will be issued at standard premium rates.
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Lisa's policy may be charged an additional premium.
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Jessica's policy will be issued with the lowest premium rate.
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Greta can submit to another medical exam in order to qualify for a policy with the insurer.
Correct Answer
A. Jessica's policy will be issued with the lowest premium rate.Explanation
Preferred risk applicants are issued policies with lower premium rates than standards risks or substandard risks.
Jessica will therefore receive the lowest premium rate of all the applicants.Rate this question:
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- 29.
Workers' compensation plans offer all of the following benefits tocovered workers EXCEPT
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wage replacement benefits for disability
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medical treatment
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vocational rehabilitation
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expenses of running a business until a disabled worker can return to work
Correct Answer
A. expenses of running a business until a disabled worker can return to workExplanation
A business overhead expense policy covers certain overhead costs of a small business owner upon his or her
disability. Workers' compensation does not cover these costs.Rate this question:
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- 30.
What is the term for voluntarily giving up a known right?
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Estoppel
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Waiver
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Voidable
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Conditional
Correct Answer
A. WaiverExplanation
Waiver is voluntarily giving up a known right. If an insurer voluntarily gives up a legal right that it has under an
insurance contract, it cannot deny a claim based on a violation of that right. Estoppel is similar to the idea of waiver
but involves giving up a right without intending to do so. The difference is the lack of intent to give up the right.Rate this question:
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- 31.
If an insurer issues a disability income policy that pays a set monthlybenefit of $500, which approach is the insurer using?
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Percentage limitation approach
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incomeformula approach
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flat-rate approach
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specified benefit approach
Correct Answer
A. flat-rate approachExplanation
An individual disability income policy that is issued with a benefit that is a stated amount uses a flatrate
approach.Rate this question:
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- 32.
Medical expense policies cover a wide range of services and care. Theway in which they cover the cost of these services and the way in whichcovered care services are delivered depends on which of the following?
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state insurance law
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the plan or policy
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the insured's age and health
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the insurer's marketing of these services
Correct Answer
A. the plan or policyExplanation
The way in which covered care services are delivered depends on the plan or policy.Rate this question:
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- 33.
Which of the following best illustrates risk transfer?
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Anita purchases health insurance to protect herself in the event of a serious illness.
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Abigail refuses to buy a home and continues to rent because she thinks homeowners insurance is too expensive.
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Anne refuses to venture out after dark, citing the fear of being assaulted.
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Arlene decides not to purchase life insurance because she has no dependents and plenty of cash in her savings accounts to cover any final expenses.
Correct Answer
A. Anita purchases health insurance to protect herself in the event of a serious illness.Explanation
In risk transfer, an individual or business transfers the risk of loss to an insurance company in return for the payment
of a premium.Rate this question:
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- 34.
What do the provisions "other insurance with this insurer" and "other insurance with other insurer(s)" exemplify in insurance policies?
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The relation-of-earnings to insurance provision
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The change of occupation provision
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The misstatement of age provision
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Coordination of benefits
Correct Answer
A. Coordination of benefitsExplanation
These provisions ensure that the insured does not profit from any one policy. Health insurance policies are designed to return the insured to the position he or she was in before a covered loss. They are not intended to provide benefits that exceed the insured's loss.Rate this question:
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- 35.
An insurer must notify its current customers of its privacy policies orpractices at least once every how often?
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6 months
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12 months
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18 months
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24 months
Correct Answer
A. 12 monthsExplanation
An insurer or agent must notify its current customers of its privacy policies or practices at least once every year.Rate this question:
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- 36.
How long from contract signing and issue does an insurance companyhave to discover and void an insurance policy due to fraud?
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6 months
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12 months
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18 months
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24 months
Correct Answer
A. 24 monthsExplanation
The time during which an insurer can void an insurance company on the basis of fraud is typically limited to two years
from the date the contract was signed and issued.Rate this question:
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- 37.
Susanna has been diagnosed with cancer. She has health insurance butwonders how much she will have to pay for her care and treatments.What is the maximum amount she would have to pay under the terms ofher policy?
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the deductible
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the medical condition allocation
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the out-of-pocket maximum
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the policy limit
Correct Answer
A. the out-of-pocket maximumExplanation
The out-of-pocket maximum represents the amount the insured must pay before the insurer pays 100 percent of the
policy's benefits. Co-pays do not apply to the out-of-pocket maximum.Rate this question:
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- 38.
Before delivering a health insurance policy to a client, the agent altersthe insuring clause in a way that he believes will benefit the insurancecompany. Which of the following statements is correct regarding thisalteration?
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It is required of a diligent agent.
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It is prohibited by the entire contract provision.
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It is permitted only when it is in the insurer’s best interests.
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It is prohibited unless the insured agrees to it in writing.
Correct Answer
A. It is prohibited by the entire contract provision.Explanation
Under the entire contract provision, changes to an insurance policy are invalid unless they are approved and
endorsed by an officer of the insurance company. An agent cannot unilaterally change the terms of the policy.Rate this question:
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- 39.
Selene just turned 65 and is overwhelmed by the Medicare program. Sheknows that part of her coverage is provided at no charge and that shewill pay for other parts. Which of the following coverages will she haveto buy through a private insurer?
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Medicare Part A
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Medicare Part B
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Medicare Advantage
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Medicaid
Correct Answer
A. Medicare AdvantageExplanation
Medicare Advantage plans are obtained through private health insurance companies and offer expanded benefits.
They provide all of the Part A Hospital Insurance and Part B Medical Expense coverage. Some may also provide the
Part D Prescription Drug coverage.Rate this question:
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- 40.
Emily solicits policies and accepts premiums from the public but is notlicensed as an agent. She then turns over the applications andpremiums to her husband, who is licensed. Which statement is correct?
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Emily has committed a felony.
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Emily is not required to be licensed to solicit policies and accept premiums.
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Emily has not committed any type of unlawful act.
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Emily has committed a Class 1 misdemeanor.
Correct Answer
A. Emily has committed a Class 1 misdemeanor.Explanation
It is unlawful for a person to solicit insurance, accept premiums, or otherwise act as an agent, broker, limited
representative, adjuster, or appraiser without a license. A violation of this requirement is considered a Class 1
misdemeanor.Rate this question:
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- 41.
Bill believes he has a cause of action against his health insurer for itsrefusal to pay benefits on a claim. He filed written proof of loss on April1. Not having received a response by May 1, he decides to take legalaction. What will his attorney probably do?
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advise him to file suit
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advise him to wait
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advise him to file proof of loss again
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advise him to cancel the policy
Correct Answer
A. advise him to waitExplanation
The legal actions provision of a health insurance policy prohibits the insured from suing the insurer on a claim before
60 days have passed since filing written proof of loss. However, an insured cannot bring suit after six years have
passed since filing proof of loss.Rate this question:
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- 42.
Dan, age 43, is applying for an individual health insurance policy. Theapplication asks about his current health and whether he has any knownmedical conditions. Dan discloses that he is partially blind, which wouldbe considered which of the following?
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a peril
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A moral hazard
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a morale hazard
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a physical hazard
Correct Answer
A. a physical hazardExplanation
A hazard is a characteristic that increases the chance of a peril occurring. A physical hazard is a physical
characteristic, such as blindness, that increases the chance of loss. A physical hazard exists due to a person's
physical condition as opposed to arising from his or her character.Rate this question:
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- 43.
Which statement about health insurance plans for business is NOTcorrect?
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Business health insurance plans provide a number of benefits for the employers who offer them.
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Business health insurance only benefits business owners.
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A benefit of business health insurance is the plan owner's ability to receive favorable tax treatment.
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The tax treatment of business health insurance contracts varies, based on the type of contract.
Correct Answer
A. Business health insurance only benefits business owners.Explanation
A benefit of business health insurance is the plan owner's ability to receive favorable tax treatment.Rate this question:
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- 44.
Which of the following is not required to be covered under a grouphealth insurance policy issued in North Carolina?
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mammograms every year beginning at age 30
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medicine and treatment for diabetes
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prostate cancer screening tests
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cervical cancer screening
Correct Answer
A. mammograms every year beginning at age 30Explanation
Health insurance policies must cover one baseline mammogram for women ages 35 through 39. Thereafter, insurers
must cover mammograms on a schedule that depends on a woman's age and breast cancer risk.Rate this question:
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- 45.
Coverage under an insurance policy typically takes effect when
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it is delivered.
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the insurance company sends it to the agent.
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the insured signs the application.
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the premium has been collected.
Correct Answer
A. the premium has been collected.Explanation
The effective coverage date depends on when the applicant pays the first premium.Rate this question:
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- 46.
All of the following entities mandate the size of a group health insuranceplan EXCEPT:
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the state's attorney general
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the IRS
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the group's home state
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the insurer underwriting the plan
Correct Answer
A. the state's attorney generalExplanation
The IRS, the state insurance office, and the insurer all have a say in the qualifying size of a group plan. The state's
attorney general is not involved.Rate this question:
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- 47.
As required by the Patient Protection and Affordable Care Act, essentialhealth benefits (EHBs) are best described as:
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Emergency health care services that are not subject to benefit limits
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Pediatric care services that are not subject to benefit limits
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Preventive and wellness medical care services that are not subject to benefit limits
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Various medical services that include pediatric, laboratory, preventive, rehabilitative, and emergency care services that are not subject to benefit limits
Correct Answer
A. Various medical services that include pediatric, laboratory, preventive, rehabilitative, and emergency care services that are not subject to benefit limitsExplanation
The list of EHBs includes about a dozen medical care services that range from pediatric and wellness programs to
lab and rehabilitative services, as well as emergency care services, that are not subject to annual or lifetime limits on
the dollar value of policy benefits.Rate this question:
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- 48.
Gracie owns a Medicare Advantage policy and requires emergency carewhile visiting her daughter, but there are no network providers nearby.What should Gracie do?
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travel home where she can see a network provider
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see a nonnetwork provider
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forego treatment
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get approval from Medicare before seeing a nonnetwork provider
Correct Answer
A. see a nonnetwork providerExplanation
A Medicare Advantage policy or certificate must provide payment for full coverage under the policy for covered
emergency services that are not available through network providers.Rate this question:
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- 49.
Bob had been working at Sunset Airlines for ten years when he was laidoff on June 1. How long can Bob continue his health insurance coverageunder Sunset's group plan?
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6 months
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9 months
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12 months
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18 months
Correct Answer
A. 18 monthsExplanation
A group sickness and accident insurance policy must provide that an employee who has been insured continuously
for at least three months and whose coverage is terminated for any reason other than nonpayment of the premium is
entitled to continue coverage under the group plan for up to 18 more months.Rate this question:
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Jun 27, 2024Quiz Edited by
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Aug 17, 2016Quiz Created by
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