Principles of Health Insurance Exam
2026 Questions and Answers
Also known as a Section 125 plan, which health insurance plan allows an
employee to pick and choose benefits that best fit their needs from a selection
available by the insurer? - Correct answer-Cafeteria plan
When a business chooses to self-insure, its insurance paperwork and claims are
often administered and processed by which type of outside organization(s)? -
Correct answer-Administrative Services Only (ASO)
Although claims are funded by the employer, the employer may still use an
insurance company for administrative purposes and claims processing, known as
Administrative Services Only (ASO) or Third Party Administrator (TPA).
All of the following are categories of basic health insurance EXCEPT: - Correct
answer-Universal health insurance
Disability income insurance
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Medical expense insurance
Accidental and dismemberment insurance
Which type of HMO model exclusively employees physicians and specialists on a
salaried basis? - Correct answer-Staff Model
Also known as a Flexible Benefits Plan, what benefit program offers employees a
choice between permissible taxable benefits, including: cash, and nontaxable
benefits such as life and health insurance, vacations, retirement plans and child
care? - Correct answer-Cafeteria Plan
Emily is covered under a major medical health insurance policy that includes a
$1,000 deductible and 80/20 coinsurance of the next $10,000 in medical expenses.
What is Emily's annual stop-loss? - Correct answer-$3,000
All of the following are types of deductibles associated with major medical
expense plans EXCEPT: - Correct answer-Participatory Deductible
Corridor Deductible
Flat Deductible
Integrated Deductible
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,Jennifer's comprehensive major medical policy has a $1,500 deductible and 60/40
coinsurance of the next $5,000, then 100% thereafter. What is Jennifer's stop-loss?
- Correct answer-$3,500
Deductible + Coinsurance dollar amount = Out-of-Pocket Maximum
Step 1:
Determine the deductible amount : $1,500
Step 2:
Determine the coinsurance dollar amount : 40% of the next $5,000 = $2,000
Step 3:
Add the deductible amount of $1,500 to the coinsurance dollar amount of $2,000 to
calculate the maximum out-of-pocket limit of $3,500 for the calendar year.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, All of the following statements correctly describe a deductible EXCEPT - Correct
answer-Deductibles are associated with basic medical insurance, major medical
insurance and dental insurance.
Most deductibles are considered to be 'all-cause;' however, a deductible can also be
considered 'per-cause' depending on the insurer and plan chosen.
Three general types of deductibles exist in major medical insurance including
'corridor,' 'integrated' and 'flat' deductibles.
A deductible is the amount of medical expense that the policyholder must 'absorb,'
or pay before benefits are covered by the insurance company.
Unlike major medical and dental insurance, basic medical insurance is referred to
as 'first-dollar' coverage because it provides benefits up front to an insured
individual without having to satisfy any plan deductible.
Tim was recently hospitalized and underwent an unplanned surgery. As a result, he
incurred a total of $7,500 in medical expenses. Tim's major medical health
insurance policy has a $3,500 deductible and 80/20 coinsurance with a stop-loss
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
2026 Questions and Answers
Also known as a Section 125 plan, which health insurance plan allows an
employee to pick and choose benefits that best fit their needs from a selection
available by the insurer? - Correct answer-Cafeteria plan
When a business chooses to self-insure, its insurance paperwork and claims are
often administered and processed by which type of outside organization(s)? -
Correct answer-Administrative Services Only (ASO)
Although claims are funded by the employer, the employer may still use an
insurance company for administrative purposes and claims processing, known as
Administrative Services Only (ASO) or Third Party Administrator (TPA).
All of the following are categories of basic health insurance EXCEPT: - Correct
answer-Universal health insurance
Disability income insurance
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Medical expense insurance
Accidental and dismemberment insurance
Which type of HMO model exclusively employees physicians and specialists on a
salaried basis? - Correct answer-Staff Model
Also known as a Flexible Benefits Plan, what benefit program offers employees a
choice between permissible taxable benefits, including: cash, and nontaxable
benefits such as life and health insurance, vacations, retirement plans and child
care? - Correct answer-Cafeteria Plan
Emily is covered under a major medical health insurance policy that includes a
$1,000 deductible and 80/20 coinsurance of the next $10,000 in medical expenses.
What is Emily's annual stop-loss? - Correct answer-$3,000
All of the following are types of deductibles associated with major medical
expense plans EXCEPT: - Correct answer-Participatory Deductible
Corridor Deductible
Flat Deductible
Integrated Deductible
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,Jennifer's comprehensive major medical policy has a $1,500 deductible and 60/40
coinsurance of the next $5,000, then 100% thereafter. What is Jennifer's stop-loss?
- Correct answer-$3,500
Deductible + Coinsurance dollar amount = Out-of-Pocket Maximum
Step 1:
Determine the deductible amount : $1,500
Step 2:
Determine the coinsurance dollar amount : 40% of the next $5,000 = $2,000
Step 3:
Add the deductible amount of $1,500 to the coinsurance dollar amount of $2,000 to
calculate the maximum out-of-pocket limit of $3,500 for the calendar year.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, All of the following statements correctly describe a deductible EXCEPT - Correct
answer-Deductibles are associated with basic medical insurance, major medical
insurance and dental insurance.
Most deductibles are considered to be 'all-cause;' however, a deductible can also be
considered 'per-cause' depending on the insurer and plan chosen.
Three general types of deductibles exist in major medical insurance including
'corridor,' 'integrated' and 'flat' deductibles.
A deductible is the amount of medical expense that the policyholder must 'absorb,'
or pay before benefits are covered by the insurance company.
Unlike major medical and dental insurance, basic medical insurance is referred to
as 'first-dollar' coverage because it provides benefits up front to an insured
individual without having to satisfy any plan deductible.
Tim was recently hospitalized and underwent an unplanned surgery. As a result, he
incurred a total of $7,500 in medical expenses. Tim's major medical health
insurance policy has a $3,500 deductible and 80/20 coinsurance with a stop-loss
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
