HSCO 508 EXAM PREPARATION TEST
BANK WITH CORRECT ANSWERS
●● Four principles of insurance
Answer: 1) Risk is unpredictable
2) Risk can be predicted with some accuracy in a large group
3) Insurance can transfer risk from the individual to group through
pooling of resources
4) Losses are shared by all members
●● beneficiary
Answer: the insured
●● premium
Answer: amount charged to insurer to insure against risk
employer-employee cost sharing
●● risk rating
Answer: Experience rating - premiums can be unaffordable for high-risk
groups
Community rating - good risks subsidize poor risks
,Adjusted community rating - overcomes some of the above drawbacks
(*required by the ACA*)
●● cost sharing
Answer: types:
deductible
copayment
coinsurance
why? reduces moral hazard. impacts lowering utilization without
significant health consequences
●● deductible
Answer: Amount the insured pays first before benefits are paid by the
plan
Applied annually
●● copayment
Answer: flat amount paid per service
●● coinsurance
Answer: set proportion of medical costs
,●● vision and dental
Answer: coverage for these are generally not included in health
insurance
●● Group insurance
Answer: type of private insurance
anticipates that a substantial number of people in the group will purchase
insurance through its sponsor.
because risk is spread out among the many insured, group insurance
provides the advantage of *lower costs* than if the same type of
coverage was purchased in the individual insurance market
Tax advantages when it is obtained through the employer
Comprehensive coverage is an anomaly to the fundamental concepts of
insurance
●● self insurance
Answer: type of private insurance
, Spurred by public policy
No premium tax on employers
ERISA 1974
Exempt from some of the ACA requirements
the employer acts as its own insurere instead of obtaining insurance
through an insurance company. can protect themselves from risk of high
losses by purchasing reinsurance
●● individual private health insurance
Answer: Nongroup plans
Premiums based on individual's health and demographics
Many lost coverage under the ACA
small but important source of coverage. farmer, early retiree, self
employed, and employee of business that doesnt offer health insurance
●● managed care plans
Answer: Initially, these plans were different from commercial health
insurance
BANK WITH CORRECT ANSWERS
●● Four principles of insurance
Answer: 1) Risk is unpredictable
2) Risk can be predicted with some accuracy in a large group
3) Insurance can transfer risk from the individual to group through
pooling of resources
4) Losses are shared by all members
●● beneficiary
Answer: the insured
●● premium
Answer: amount charged to insurer to insure against risk
employer-employee cost sharing
●● risk rating
Answer: Experience rating - premiums can be unaffordable for high-risk
groups
Community rating - good risks subsidize poor risks
,Adjusted community rating - overcomes some of the above drawbacks
(*required by the ACA*)
●● cost sharing
Answer: types:
deductible
copayment
coinsurance
why? reduces moral hazard. impacts lowering utilization without
significant health consequences
●● deductible
Answer: Amount the insured pays first before benefits are paid by the
plan
Applied annually
●● copayment
Answer: flat amount paid per service
●● coinsurance
Answer: set proportion of medical costs
,●● vision and dental
Answer: coverage for these are generally not included in health
insurance
●● Group insurance
Answer: type of private insurance
anticipates that a substantial number of people in the group will purchase
insurance through its sponsor.
because risk is spread out among the many insured, group insurance
provides the advantage of *lower costs* than if the same type of
coverage was purchased in the individual insurance market
Tax advantages when it is obtained through the employer
Comprehensive coverage is an anomaly to the fundamental concepts of
insurance
●● self insurance
Answer: type of private insurance
, Spurred by public policy
No premium tax on employers
ERISA 1974
Exempt from some of the ACA requirements
the employer acts as its own insurere instead of obtaining insurance
through an insurance company. can protect themselves from risk of high
losses by purchasing reinsurance
●● individual private health insurance
Answer: Nongroup plans
Premiums based on individual's health and demographics
Many lost coverage under the ACA
small but important source of coverage. farmer, early retiree, self
employed, and employee of business that doesnt offer health insurance
●● managed care plans
Answer: Initially, these plans were different from commercial health
insurance
