Health Insurance License Exam Flashcards
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What is the difference between an HSA and an FSA?
An HSA is a portable, individually owned savings account paired with a high-deductible health plan (HDHP) and funds roll over; an FSA is employer-owned and is generally 'use-it-or-lose-it.'
What is the 'own occupation' vs. 'any occupation' definition of total disability?
'Own occupation' pays if you can't perform your specific job; 'any occupation' pays only if you can't perform any job you're reasonably suited for — a stricter standard.
What is the taxation of individually paid disability income benefits?
When premiums are paid with after-tax dollars by the individual, the disability benefits received are generally income tax-free.
What is the Grace Period provision?
A set number of days after a premium due date during which the policy stays in force and the overdue premium can still be paid without lapse.
What is a Preexisting Condition under a health policy?
A condition for which the insured received medical advice or treatment before the policy's effective date; coverage for it may be limited or excluded for a stated period.
What is the elimination period in a disability income policy?
A waiting period after a disability begins during which no benefits are paid; it acts as a time deductible (common: 30, 60, or 90 days).
Define 'guaranteed renewable' health insurance.
The insurer must renew the policy (cannot cancel) as long as premiums are paid, but may raise premiums by class — never for an individual insured alone.
What is coinsurance in a major medical plan?
The percentage split of covered costs between insurer and insured after the deductible (e.g., 80/20 means the insurer pays 80%, the insured 20%).
What is the purpose of a stop-loss (out-of-pocket maximum) provision?
It caps the insured's total out-of-pocket coinsurance/deductible costs for the year; the insurer then pays 100% of covered expenses.
What is the Probationary Period in a health policy?
A period after the policy's effective date during which sickness-related claims (often for specified conditions) are not covered.
HMO vs. PPO: key structural difference?
An HMO requires using in-network providers and a primary care physician (PCP) for referrals; a PPO allows out-of-network care at higher cost and needs no referrals.
What does the Time Limit on Certain Defenses (incontestability) provision do?
After the policy has been in force for a set period (commonly 2–3 years), the insurer cannot contest claims or void the policy for misstatements (except fraud, if allowed).
What is the Free-Look period in a health insurance policy?
A window after delivery (commonly 10 days) during which the policyowner may return the policy for a full premium refund.
What does 'indemnity' mean in a medical expense plan?
Benefits are paid based on actual covered expenses incurred (reimbursement), rather than a fixed flat amount regardless of cost.