Chapter 7: Health Insurance Underwriting Quiz

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Chapter 7: Health Insurance Underwriting Quiz - Quiz

Dive into the world of Health Insurance Underwriting with our quiz! Test your savvy in assessing risks, understanding policies, and the nitty-gritty of underwriting. This quiz enhances your understanding of health insurance underwriting, a vital process in determining policy eligibility and pricing.

Explore questions covering risk evaluation, policy intricacies, and the fundamental principles governing underwriting decisions. You will gain insights into the factors influencing premium rates, the role of medical history in underwriting, and the significance of risk pools.

Whether you're a seasoned insurance professional or a curious learner, this quiz offers an opportunity to deepen your knowledge of health Read moreinsurance underwriting. So, grab this opportunity, broaden your expertise, and navigate the complex landscape of health insurance assessments with the Health Insurance Underwriting Quiz.


Chapter 7: Health Insurance Underwriting Questions and Answers

  • 1. 

    The difference between pre-certification and concurrent review is that pre-certification _________________________

    • A.

      Costs more to the patient

    • B.

      Costs less to the patient

    • C.

      Is considered to a cost containment measure

    • D.

      Occurs before the treatment is provided

    Correct Answer
    D. Occurs before the treatment is provided
    Explanation
    Pre-certification refers to the process of obtaining approval from an insurance company before receiving medical treatment. It is done to ensure that the treatment is necessary and covered by the insurance plan. Concurrent review, on the other hand, occurs during the course of treatment to assess its ongoing necessity and appropriateness. Therefore, the correct answer is that pre-certification occurs before the treatment is provided.

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  • 2. 

    The gatekeeper's role when used by an HMO is

    • A.

      Establishing out-of-network providers

    • B.

      Obtaining referrals to specialists from primary care physicians

    • C.

      Taking applications for enrollment into an HMO

    • D.

      Processing the subscriber'spayments

    Correct Answer
    B. Obtaining referrals to specialists from primary care physicians
    Explanation
    The gatekeeper's role when used by an HMO is obtaining referrals to specialists from primary care physicians. This means that the gatekeeper acts as a mediator between the patient and the specialist, ensuring that the patient receives appropriate and necessary care. The gatekeeper reviews the patient's medical history and determines if a referral to a specialist is required. This helps in managing healthcare costs and ensuring that the patient receives the right level of care.

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  • 3. 

    XYZ Corp pays the tax deductible insurance premiums for a key employee disability policy. Which of the following would be the appropriate tax consequence?

    • A.

      Premiums are paid with tax credits

    • B.

      Benefits are partially taxable

    • C.

      Benefits are fully taxable

    • D.

      Premiums are paid with after-tax dollars

    Correct Answer
    C. Benefits are fully taxable
    Explanation
    The appropriate tax consequence in this scenario is that the benefits from the key employee disability policy are fully taxable. This means that when the employee receives the benefits, they will be subject to income tax. The fact that the premiums are paid by the company with tax deductible dollars does not affect the taxability of the benefits.

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  • 4. 

    In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned?

    • A.

      Pre-certification

    • B.

      Pretense review

    • C.

      Congruent review

    • D.

      Concurrent review

    Correct Answer
    D. Concurrent review
    Explanation
    Concurrent review is the process in which the insurer oversees the insured's hospital stay to ensure that everything is going according to schedule and that the insured will be released as planned. This involves monitoring the progress of the insured's treatment, reviewing medical records, and coordinating with healthcare providers to ensure appropriate and timely care.

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  • 5. 

    Premium mode is a term used to describe the _________________________

    • A.

      Premium past due

    • B.

      Method of payment

    • C.

      Frequency of the premium payment

    • D.

      Premium paid

    Correct Answer
    C. Frequency of the premium payment
    Explanation
    The term "premium mode" refers to the frequency at which the premium payment is made. It determines how often the policyholder needs to make payments towards their insurance premium. Different premium modes can include monthly, quarterly, semi-annually, or annually. The premium mode chosen by the policyholder depends on their financial situation and preferences.

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  • 6. 

    Which of the following is  requirement for ANY change in an insurance application?

    • A.

      Change must be initialed by the agent.

    • B.

      Change must be initiated by the applicant.

    • C.

      Change must be approved by the insurer.

    • D.

      Change must be notarized.

    Correct Answer
    B. Change must be initiated by the applicant.
    Explanation
    The requirement for any change in an insurance application is that it must be initiated by the applicant. This means that the applicant is responsible for requesting and making any changes to the application. The applicant must take the initiative to communicate their desired changes to the insurer, whether it is updating personal information, adjusting coverage, or making any other modifications to the application.

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  • 7. 

    The IRS allows a taxpayer to deduct medical expenses that exceed 7.5% of their adjusted gross income. Which of the following is considered a tax deductible medical expense under this rule?

    • A.

      Long Term Care insurance premiums

    • B.

      Dread Disease insurance premiums

    • C.

      Travel accidental insurance premiums

    • D.

      Individual disability income Insurance premiums

    Correct Answer
    A. Long Term Care insurance premiums
    Explanation
    Long Term Care insurance premiums are considered a tax deductible medical expense under the given rule because they cover the cost of necessary medical services, including nursing home care, home health care, and assisted living services. These premiums can be deducted if they exceed 7.5% of the taxpayer's adjusted gross income, providing a tax benefit for individuals who require long-term care.

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  • 8. 

    XYZ Company has applied for group health insurance for its employees. What information would the insurer's underwriters likely use to determine the appropriate coverage and final premium rate given to the group?

    • A.

      Experience rating

    • B.

      Credit reports

    • C.

      Arrest reports

    • D.

      AM Best rating

    Correct Answer
    A. Experience rating
    Explanation
    The insurer's underwriters would likely use experience rating to determine the appropriate coverage and final premium rate for XYZ Company's group health insurance. Experience rating involves analyzing the claims history and health risks of the group's employees. This information helps the underwriters assess the likelihood of future claims and calculate a premium rate that reflects the group's risk profile. Credit reports and arrest reports are unlikely to be relevant in this context, while the AM Best rating pertains to the financial stability of the insurer itself and may not directly impact the determination of coverage and premium rate for the group.

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  • 9. 

    An insured was injured as an innocent bystander when someone committed a felony. The insurer is ________

    • A.

      Likely to void the policy

    • B.

      Partially liable for the loss

    • C.

      Not liable for the loss

    • D.

      Liable for the loss

    Correct Answer
    D. Liable for the loss
    Explanation
    The insurer is liable for the loss because the insured was injured as an innocent bystander during the commission of a felony. The insurer has a responsibility to cover the insured's losses and provide compensation for the injuries sustained.

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  • 10. 

    Which of the following typically does NOT provide a form of managed care?

    • A.

      Preferred Provider Organization (PPO)

    • B.

      Pont-of-Service (POS) plan

    • C.

      Major medical indemnity plan

    • D.

      Health Maintenance Organization (HMO)

    Correct Answer
    C. Major medical indemnity plan
    Explanation
    A major medical indemnity plan typically does not provide a form of managed care. Managed care refers to a healthcare system that aims to control healthcare costs and improve quality by coordinating and managing healthcare services. In contrast, a major medical indemnity plan is a type of insurance plan that provides coverage for major medical expenses, such as hospital stays or surgeries, but does not typically involve managed care features like network providers or pre-authorization requirements. Instead, it allows the insured to choose their healthcare providers and does not require referrals or coordination of care.

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  • 11. 

    Which of these characteristics of a applicant is NOT taken into consideration when assessing risk for Disability coverage?

    • A.

      Health of applicant

    • B.

      Gender of applicant

    • C.

      Number of children

    • D.

      Occupation of applicant

    Correct Answer
    C. Number of children
    Explanation
    When assessing risk for Disability coverage, the number of children is not taken into consideration. The other characteristics listed, such as the health, gender, and occupation of the applicant, are factors that are typically considered when determining the level of risk for disability coverage. The number of children does not directly impact the likelihood of a disability occurring, and therefore is not relevant in assessing risk for this type of coverage.

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  • 12. 

    Tara the producer is delivering a specified disease insurance policy to a new policyowner. Upon delivery, she may be expected to collect all of the following EXCEPT a(n)

    • A.

      Initial premium

    • B.

      Signed impairment rider acknowledgment

    • C.

      Modified application with a new signature

    • D.

      Good health statement

    Correct Answer
    C. Modified application with a new signature
    Explanation
    Upon delivering a specified disease insurance policy to a new policyowner, Tara the producer is expected to collect the initial premium, signed impairment rider acknowledgment, and a good health statement. However, she is not expected to collect a modified application with a new signature. This suggests that the policyowner does not need to modify their application or provide a new signature at the time of delivery.

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  • 13. 

    A 10% excise tax is normally applied to an early withdrawal from an IRA. According to HIPAA, this tax will not be applied if the withdrawal is used for medical expenses that exceed (blank) of the individual's adjusted gross income.

    • A.

      5%

    • B.

      6.5%

    • C.

      7.5%

    • D.

      8%

    Correct Answer
    C. 7.5%
    Explanation
    According to HIPAA, a 10% excise tax on an early withdrawal from an IRA can be waived if the withdrawal is used for medical expenses that exceed 7.5% of the individual's adjusted gross income. This means that if the individual's medical expenses are equal to or greater than 7.5% of their adjusted gross income, they will not have to pay the 10% excise tax on the withdrawal.

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  • 14. 

    Which of the following is NOT an example of utilization review?

    • A.

      Monitoring length of hospital stay

    • B.

      Ongoing inspection of accident prone individuals

    • C.

      Monitoring the appropriateness of care

    • D.

      Setting a hospital release date for a patient

    Correct Answer
    B. Ongoing inspection of accident prone individuals
    Explanation
    Utilization review involves assessing the appropriateness and efficiency of healthcare services. Monitoring the length of hospital stay, monitoring the appropriateness of care, and setting a hospital release date for a patient are all examples of utilization review as they involve evaluating and managing healthcare resources. However, ongoing inspection of accident-prone individuals is not directly related to the utilization of healthcare services and therefore does not fall under the category of utilization review.

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  • 15. 

    Bill the producer is collecting the initial premium on a health policy. Which of the following statements is true?

    • A.

      The contract is not in force without the initial premium being paid.

    • B.

      A partial initial premium is acceptable.

    • C.

      The insured has no advantage to pay the initial premium at the time of application.

    • D.

      A claim must be honored by the insurer even if an initial premium is not paid.

    Correct Answer
    A. The contract is not in force without the initial premium being paid.
    Explanation
    The correct answer is that the contract is not in force without the initial premium being paid. This means that until the insured pays the initial premium, the health policy is not active and the insurer is not obligated to provide coverage or honor any claims. The initial premium is a necessary requirement to activate the contract and ensure that both parties are bound by the terms and conditions of the policy.

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  • 16. 

    The IRS allows a taxpayer to deduct medical expenses that exceed 7.5% of their adjusted gross income. Which of the following is considered a tax deductible medical expense under this rule?

    • A.

      Long Term Care insurance premiums

    • B.

      Dread Disease insurance premiums

    • C.

      Travel accidental insurance premiums

    • D.

      Individual disability income Insurance premiums

    Correct Answer
    A. Long Term Care insurance premiums
    Explanation
    Long Term Care insurance premiums are considered a tax deductible medical expense under the given rule because they are payments made for insurance coverage that provides for the cost of long-term care services, such as nursing home care, home health care, or assisted living facilities. These premiums can be deducted if they exceed 7.5% of the taxpayer's adjusted gross income, as allowed by the IRS.

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  • 17. 

    In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned?

    • A.

      Pre-certification review

    • B.

      Pretense review

    • C.

      Congruent review

    • D.

      Concurrent review

    Correct Answer
    D. Concurrent review
    Explanation
    Concurrent review is the process in which the insurer oversees the insured's hospital stay to ensure that everything is going according to schedule and that the insured will be released as planned. This involves monitoring the progress of the insured's treatment and evaluating the medical necessity of the services being provided. It helps to ensure that the insured receives appropriate and timely care while also managing costs for the insurer.

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  • 18. 

    An example of primary care physician would be a(n)

    • A.

      Internist

    • B.

      Psychologist

    • C.

      Endocrinologist

    • D.

      Chiropractor

    Correct Answer
    A. Internist
    Explanation
    An internist is an example of a primary care physician because they specialize in providing comprehensive medical care for adults. They are trained to diagnose and treat a wide range of illnesses and conditions, and they often serve as the first point of contact for patients seeking medical care. Internists focus on promoting overall health and wellness, managing chronic conditions, and coordinating care with other specialists when needed. They play a crucial role in preventive care, routine check-ups, and managing common health concerns, making them an essential part of primary care.

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  • 19. 

    How are premiums paid by the insured for personally owned disability income insurance treated for tax purposes?

    • A.

      Partially tax deductible

    • B.

      Not tax deductible

    • C.

      Fully tax deductible

    • D.

      Tax deferred

    Correct Answer
    B. Not tax deductible
    Explanation
    Premiums paid by the insured for personally owned disability income insurance are not tax deductible. This means that the insured cannot claim these premiums as a deduction on their tax return. Unlike certain other types of insurance, such as health insurance or certain business-related insurances, disability income insurance premiums are not considered a qualified expense for tax purposes. Therefore, the insured must pay the premiums with after-tax dollars and cannot receive any tax benefits for these payments.

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  • 20. 

    Premium mode is a term used to describe the _______________________

    • A.

      Premium past due

    • B.

      Method of payment

    • C.

      Frequency of the premium payment

    • D.

      Premium paid

    Correct Answer
    C. Frequency of the premium payment
    Explanation
    The term "premium mode" refers to the frequency at which the premium payment is made. It indicates how often the policyholder is required to make payments towards their insurance premium. This can vary depending on the insurance policy and the preferences of the policyholder. For example, premium mode options may include monthly, quarterly, semi-annual, or annual payments. The chosen premium mode can affect the total cost of the insurance policy, as well as the convenience and budgeting of the policyholder.

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  • 21. 

    What happens when an insurance policy is backdated?

    • A.

      The policy's elimination period is waved

    • B.

      The time frame for reinstating a lapsed polkicy is extended

    • C.

      The policy's probation period is earlier than the present

    • D.

      The policy's effective date is earlier than the present

    Correct Answer
    D. The policy's effective date is earlier than the present
    Explanation
    When an insurance policy is backdated, it means that the policy's effective date is set to a date earlier than the present. This can have several implications. It may allow the policyholder to have coverage for a specific incident or event that occurred before the policy was officially in effect. It can also affect the premium payments and the length of the policy term. Backdating a policy is typically done to provide coverage for a specific situation that occurred in the past, but it is important for insurance companies to carefully evaluate and approve such requests to prevent misuse or fraud.

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  • Current Version
  • Jan 31, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 03, 2020
    Quiz Created by
    Kernsshanice
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