CEBS - GBA EXAM 2 LATEST Exam 200+ QUESTIONS AND CORRECT ANSWERS|COMPLETE EXAM
Benefits of STD group policies - (answer) Ensures that experienced professionals are managing claims,
gives access to return-to-work support and fraud-prevention services, and locks in a fixed amount of
monthly financial obligation (premiums) regardless of the disability benefits being paid.
The law of large numbers states that: - (answer) As the size of the same increases, the sample mean
gets closer to the population mean.
Indemnification - (answer) Indemnification of losses means reimbursement to the insured if a loss
occurs. In theory, indemnification restores the individual to their preexisting state had the loss not
occurred.
Adverse Selection - (answer) Occurs because individuals and businesses that are more likely to have
claims are more inclined to purchase insurance than those that are less likely to have claims. This exists
because individuals know more about their health status than do insurers.
Moral Hazard - (answer) Premise that payments are made only for random losses which creates moral
hazard. Moral hazard is faced by insurers because individuals are more likely to use unneeded health
services when they are not paying the full cost of those services.
Coinsurance - (answer) A type of insurance in which the insured pays a share of the payment made
against a claim in excess of the deductible.
Third-Party Payers - (answer) Generic term for any outside party, insurance company or a government
program, which pays for part or all of a patient's health care services. Health insurers can be categorized
into two broad groupings: private insurers and public programs.
Medicare - (answer) A federal program of health insurance established by Congress in 1965 to provide
medical benefits to persons 65 years of age and older. Also covers health care costs associated with
selected disabilities and illnesses, regardless of age.
Medicaid - (answer) Began in 1966. A federal and state assistance program that pays for health care
services for people who cannot afford them. Mandatory nursing home benefit added in 1972.
Four Characteristics of Insurance - (answer) 1. Pooling of losses.
,CEBS - GBA EXAM 2 LATEST Exam 200+ QUESTIONS AND CORRECT ANSWERS|COMPLETE EXAM
2. Payment only for random losses.
3. Risk transfer.
4. Indemnification
Pooling of losses - (answer) Is the basis of insurance. Pooling = losses are spread over a large group of
individuals. Pooling involves the grouping of a large number of homogeneous exposure units. People or
things having the same risk characteristics. Law of large numbers applies.
Payment only for random losses - (answer) A random loss is one that is unforeseen and unexpected
and occurs as a result of chance. With insurance, payments are made only for random losses.
Risk transfer - (answer) The transfer of risk from an insured to an insurer. Insurance involves risk
transfer. The exception to risk transfer is self-insurance. The insurer is in a better financial position to
bear the risk than the insured because of the law of large numbers.
Private Insurers - (answer) Blue Cross/Blue Shield, Commercial Insurers, and Self-insurers.
Blue Cross Blue Shield - (answer) Blue Cross Blue Shield organizations trace their roots to the Great
Depression, when both hospitals and physicians were concerned about their patients' ability to pay
health care bills.
Blue Cross - (answer) Multiple insurance programs offered by hospitals. Hospitals provided services to
program members who made fixed payments to hospitals. Programs expanded from single-hospital
programs to multi-hospital plans called hospital service plans. The Blue Cross name was officially
adopted by most of these plans in 1939.
Blue Shield - (answer) Similar to Blue Cross plans. Providers were physicians not hospitals. 36 Blue
Cross Blue Shield organizations today. The Blues are independent corporations that belong to a single
national association with set standards. The Blues provide health care coverage for 106 million
individuals.
Commercial Insurers - (answer) Private, non-government insurers who are often the insurance options
available through employers. All commercial insurance companies are taxable (for-profit) entities.
,CEBS - GBA EXAM 2 LATEST Exam 200+ QUESTIONS AND CORRECT ANSWERS|COMPLETE EXAM
Self-Insurers - (answer) Establishes a self-funded plan to cover potential losses instead of transferring
the risk to an insurance company. Large groups, especially employers, are good candidates for self
insurance. Today, most large groups are self-insured.
Public Insurers - (answer) Government is a major insurer and direct provider of health care services.
Government provides health care services through the U.S. Department of Veterans Affairs, the U.S.
Department of Defense and TRICARE program. The government provides or mandates insurance
programs, such as workers' compensation, Medicare and Medicaid.
Medicare Part A - (answer) Hospital and some skilled nursing facility coverage. Part C: Managed care
coverages offered by private insurance companies and can be selected in lieu of Parts A and B. Also
called Medicare Advantage Plans. Part D: Prescription Drug coverage.
Medicare Part B - (answer) Physician services, ambulatory surgical services, outpatient services, and
other miscellaneous services.
Medicare Part C - (answer) Managed care coverages offered by private insurance companies and can
be selected in lieu of Parts A and B. Also called Medicare Advantage Plans.
Medicare Part D - (answer) Prescription Drug coverage.
Managed Care Plan - (answer) Managed care plans combine the provision of health care services and
the insurance function into a single entity. The aim of this entity is to both increase the quality of care
and to decrease the cost of health care services. The common feature in managed care plans is that the
insurer has a mechanism by which it controls, or at least influences, patients' utilization of health care
services.
Preferred Provider Organization (PPO) - (answer) Evolved during the 1980s. A hybrid of HMOs and
traditional health insurance plans that use cost saving strategies of HMOs. Do not mandate that
beneficiaries use specific providers. Financial incentives to use providers that are part of the provider
panel. Do not require beneficiaries to use preselected gatekeeper physicians.
Health Maintenance Organization (HMO) - (answer) One type of managed care plan. Based on the
premise that the traditional insurer-provider relationship creates incentives that reward providers for
, CEBS - GBA EXAM 2 LATEST Exam 200+ QUESTIONS AND CORRECT ANSWERS|COMPLETE EXAM
treating patients' illnesses while offering little incentive for providing prevention and rehabilitation
services.
Provider Panel - (answer) The group of providers - say doctors and hospitals - designated as preferred
by a managed care plan. Services delivered by providers outside of the panel may be only partially
covered, or not covered at all, by the plan.
Primary drawback with HMO care delivery model - (answer) From a patient perspective, HMOs have
several drawbacks, including a limited network of providers and the assignment of a primary care
physician, often called a gatekeeper, who acts as the initial contact and authorizes all services received
from the HMO.
Managed Fee-for-Service Plans - (answer) Most insurance companies apply managed care strategies to
their more conventional plans. These plans use preadmission certification, utilization review and second
surgical opinions to control inappropriate utilization.
Traditional Plans - (answer) Traditional plans are created by insurers that either directly own a provider
network or create one through contractual arrangements with independent providers.
ACA Provision to Increase Insurance Access - (answer) Children and dependents covered until age 26.
Insurance companies prohibited from dropping policyholders that became sick and from denying
coverage due to preexisting conditions. Individuals given the right to appeal and request review denials
of payment.
Community rating - (answer) Insurers must charge the same premium rate to all applicants of the
same age and geographic location, regardless of preexisting conditions or sex.
Medical Loss Ratio (MLR) - (answer) Insurers must spend at least 80% (85% for large groups) of
premium dollars on health costs and claims instead of on administrative costs and profits.
Individual Mandate (ACA) - (answer) Foundational element of the ACA for broader insurance coverage.
Effective in January 2014. Required that all eligible individuals not covered by an employer-sponsored
health plan, Medicaid, or Medicare have a health insurance policy or face a tax penalty. Repealed in 2017
by passage of the Tax Cuts and Jobs Act effective January 1, 2019.
Benefits of STD group policies - (answer) Ensures that experienced professionals are managing claims,
gives access to return-to-work support and fraud-prevention services, and locks in a fixed amount of
monthly financial obligation (premiums) regardless of the disability benefits being paid.
The law of large numbers states that: - (answer) As the size of the same increases, the sample mean
gets closer to the population mean.
Indemnification - (answer) Indemnification of losses means reimbursement to the insured if a loss
occurs. In theory, indemnification restores the individual to their preexisting state had the loss not
occurred.
Adverse Selection - (answer) Occurs because individuals and businesses that are more likely to have
claims are more inclined to purchase insurance than those that are less likely to have claims. This exists
because individuals know more about their health status than do insurers.
Moral Hazard - (answer) Premise that payments are made only for random losses which creates moral
hazard. Moral hazard is faced by insurers because individuals are more likely to use unneeded health
services when they are not paying the full cost of those services.
Coinsurance - (answer) A type of insurance in which the insured pays a share of the payment made
against a claim in excess of the deductible.
Third-Party Payers - (answer) Generic term for any outside party, insurance company or a government
program, which pays for part or all of a patient's health care services. Health insurers can be categorized
into two broad groupings: private insurers and public programs.
Medicare - (answer) A federal program of health insurance established by Congress in 1965 to provide
medical benefits to persons 65 years of age and older. Also covers health care costs associated with
selected disabilities and illnesses, regardless of age.
Medicaid - (answer) Began in 1966. A federal and state assistance program that pays for health care
services for people who cannot afford them. Mandatory nursing home benefit added in 1972.
Four Characteristics of Insurance - (answer) 1. Pooling of losses.
,CEBS - GBA EXAM 2 LATEST Exam 200+ QUESTIONS AND CORRECT ANSWERS|COMPLETE EXAM
2. Payment only for random losses.
3. Risk transfer.
4. Indemnification
Pooling of losses - (answer) Is the basis of insurance. Pooling = losses are spread over a large group of
individuals. Pooling involves the grouping of a large number of homogeneous exposure units. People or
things having the same risk characteristics. Law of large numbers applies.
Payment only for random losses - (answer) A random loss is one that is unforeseen and unexpected
and occurs as a result of chance. With insurance, payments are made only for random losses.
Risk transfer - (answer) The transfer of risk from an insured to an insurer. Insurance involves risk
transfer. The exception to risk transfer is self-insurance. The insurer is in a better financial position to
bear the risk than the insured because of the law of large numbers.
Private Insurers - (answer) Blue Cross/Blue Shield, Commercial Insurers, and Self-insurers.
Blue Cross Blue Shield - (answer) Blue Cross Blue Shield organizations trace their roots to the Great
Depression, when both hospitals and physicians were concerned about their patients' ability to pay
health care bills.
Blue Cross - (answer) Multiple insurance programs offered by hospitals. Hospitals provided services to
program members who made fixed payments to hospitals. Programs expanded from single-hospital
programs to multi-hospital plans called hospital service plans. The Blue Cross name was officially
adopted by most of these plans in 1939.
Blue Shield - (answer) Similar to Blue Cross plans. Providers were physicians not hospitals. 36 Blue
Cross Blue Shield organizations today. The Blues are independent corporations that belong to a single
national association with set standards. The Blues provide health care coverage for 106 million
individuals.
Commercial Insurers - (answer) Private, non-government insurers who are often the insurance options
available through employers. All commercial insurance companies are taxable (for-profit) entities.
,CEBS - GBA EXAM 2 LATEST Exam 200+ QUESTIONS AND CORRECT ANSWERS|COMPLETE EXAM
Self-Insurers - (answer) Establishes a self-funded plan to cover potential losses instead of transferring
the risk to an insurance company. Large groups, especially employers, are good candidates for self
insurance. Today, most large groups are self-insured.
Public Insurers - (answer) Government is a major insurer and direct provider of health care services.
Government provides health care services through the U.S. Department of Veterans Affairs, the U.S.
Department of Defense and TRICARE program. The government provides or mandates insurance
programs, such as workers' compensation, Medicare and Medicaid.
Medicare Part A - (answer) Hospital and some skilled nursing facility coverage. Part C: Managed care
coverages offered by private insurance companies and can be selected in lieu of Parts A and B. Also
called Medicare Advantage Plans. Part D: Prescription Drug coverage.
Medicare Part B - (answer) Physician services, ambulatory surgical services, outpatient services, and
other miscellaneous services.
Medicare Part C - (answer) Managed care coverages offered by private insurance companies and can
be selected in lieu of Parts A and B. Also called Medicare Advantage Plans.
Medicare Part D - (answer) Prescription Drug coverage.
Managed Care Plan - (answer) Managed care plans combine the provision of health care services and
the insurance function into a single entity. The aim of this entity is to both increase the quality of care
and to decrease the cost of health care services. The common feature in managed care plans is that the
insurer has a mechanism by which it controls, or at least influences, patients' utilization of health care
services.
Preferred Provider Organization (PPO) - (answer) Evolved during the 1980s. A hybrid of HMOs and
traditional health insurance plans that use cost saving strategies of HMOs. Do not mandate that
beneficiaries use specific providers. Financial incentives to use providers that are part of the provider
panel. Do not require beneficiaries to use preselected gatekeeper physicians.
Health Maintenance Organization (HMO) - (answer) One type of managed care plan. Based on the
premise that the traditional insurer-provider relationship creates incentives that reward providers for
, CEBS - GBA EXAM 2 LATEST Exam 200+ QUESTIONS AND CORRECT ANSWERS|COMPLETE EXAM
treating patients' illnesses while offering little incentive for providing prevention and rehabilitation
services.
Provider Panel - (answer) The group of providers - say doctors and hospitals - designated as preferred
by a managed care plan. Services delivered by providers outside of the panel may be only partially
covered, or not covered at all, by the plan.
Primary drawback with HMO care delivery model - (answer) From a patient perspective, HMOs have
several drawbacks, including a limited network of providers and the assignment of a primary care
physician, often called a gatekeeper, who acts as the initial contact and authorizes all services received
from the HMO.
Managed Fee-for-Service Plans - (answer) Most insurance companies apply managed care strategies to
their more conventional plans. These plans use preadmission certification, utilization review and second
surgical opinions to control inappropriate utilization.
Traditional Plans - (answer) Traditional plans are created by insurers that either directly own a provider
network or create one through contractual arrangements with independent providers.
ACA Provision to Increase Insurance Access - (answer) Children and dependents covered until age 26.
Insurance companies prohibited from dropping policyholders that became sick and from denying
coverage due to preexisting conditions. Individuals given the right to appeal and request review denials
of payment.
Community rating - (answer) Insurers must charge the same premium rate to all applicants of the
same age and geographic location, regardless of preexisting conditions or sex.
Medical Loss Ratio (MLR) - (answer) Insurers must spend at least 80% (85% for large groups) of
premium dollars on health costs and claims instead of on administrative costs and profits.
Individual Mandate (ACA) - (answer) Foundational element of the ACA for broader insurance coverage.
Effective in January 2014. Required that all eligible individuals not covered by an employer-sponsored
health plan, Medicaid, or Medicare have a health insurance policy or face a tax penalty. Repealed in 2017
by passage of the Tax Cuts and Jobs Act effective January 1, 2019.
