©BRIGHTSTARS EXAM SOLUTIONS
11/16/2024 10:16 AM
MHR 416 CH 10 Exam Questions With
Correct Answers
Two Types of Fee-For-Service Plans - answer✔Indemnity Plan and Self funded plan
Indemnity plan - answer✔Based on contract between employers and insurance companies
Insurance benefits paid from insurance company's financial reserves from premiums
Self-Funded Plan - answer✔Company pays benefits from own assets Generally used when
company's financial burden is less than the cost to subscribe to an insurance company coverage
Fee-For-Services Plans Cost-Control Stipulations - answer✔Deductible Coinsurance Out-of-
pocket maximum Preexisting condition clauses Preadmission certification of medical necessity
Second surgical options Maximum benefit limits
Supplemental Plans - answer✔Used as a supplement to hospitalization, surgical, and physician
expenses Acts as a backup to basic insurance covering expenses that exceed maximum benefit
limits Extends coverage to services excluded from the regular plan
Comprehensive - answer✔Replace traditional fee-for service plans by extending coverage to a
broader array of services Applies a single deductible for all services
Managed Care Plans - answer✔emphasize cost control by limiting employees choice of doctors
and hospitals Health Maintenance Organizations (HMOs) Preferred Provider Organizations
(PPOs) Point-of-Service Plans (POSs)
Savings Accounts - answer✔FSA, HRA, HSA
Flexible spending accounts (FSAs) - answer✔Employee contributes pre-tax
Health reimbursement accounts (HRAs) - answer✔Employer contributes Can be carried over
Health saving accounts (HSAs) - answer✔Both employee and employer contribute
Specialized Insurance Benefits - answer✔Also called carve-out plans because they are separate
insurance from medical benefit plans
1|Page
, ©BRIGHTSTARS EXAM SOLUTIONS
11/16/2024 10:16 AM
Specialized insurance benefits Includes: - answer✔Dental coverage (Exhibit 5.9) Vision coverage
Prescription drug coverage Mental health and substance abuse Maternity care
Types of Disability Insurance - answer✔short or long term
Short-Term - answer✔Less than 6 months Inability to perform any of occupation's duties
Long-Term - answer✔6 months to life Inability to perform work qualified for (training,
education, experience)
Paid Time-Off Practices - answer✔Holidays Vacation Sick leave Personal days Integrated paid
time-off policies Bereavement or funeral leave Sabbatical leave Volunteerism Jury duty and
witness duty leaves Military leave Nonproduction time On-call time
Traditional and Flexible Benefits Plans - answer✔contain the same set of benefits for each
employee Creates administrative ease and represents a one-size-fits-all approach Increasingly,
companies are replacing fixed benefits plans with cafeteria benefits plans, which give
employees a choice of benefits
One-Size-Fits-All Approach - answer✔Predetermined set and level of benefits Based largely on
cost considerations. Differences in employee needs and preferences strongly influence the
adequacy of benefits plan Increasingly, more employers use cafeteria plan designs to help
insure that employees' needs and preferences are being met Employer is likely to maximize the
value of its benefits expenditures by not spending money on unwanted benefits
Cafeteria Plans - answer✔enable employees in a company to choose from among a set of
benefits and different levels of these benefits Under the plan, employees can accept or reject
benefits Increased diversity of the workforce Demographic diversity Both associated with
greater differences in needs and preferences
Internal Revenue Code (IRC) Section 125 - answer✔offers tax benefits to companies that permit
employee choice.
Qualified benefits - answer✔refer to any employer-sponsored benefits for which an employee
may exclude the cost from federal income tax calculation
Cafeteria Plans Under IRC 125 Allowable - answer✔Employer-provided accident or health plan
Group term life insurance Contributions to 401K Dependent care assistance Adoption
assistance
Cafeteria Plans Under IRC 125 Prohibited - answer✔Medical Savings Accounts Scholarships
Educational assistance programs Fringe benefits such as transportation support
2|Page
11/16/2024 10:16 AM
MHR 416 CH 10 Exam Questions With
Correct Answers
Two Types of Fee-For-Service Plans - answer✔Indemnity Plan and Self funded plan
Indemnity plan - answer✔Based on contract between employers and insurance companies
Insurance benefits paid from insurance company's financial reserves from premiums
Self-Funded Plan - answer✔Company pays benefits from own assets Generally used when
company's financial burden is less than the cost to subscribe to an insurance company coverage
Fee-For-Services Plans Cost-Control Stipulations - answer✔Deductible Coinsurance Out-of-
pocket maximum Preexisting condition clauses Preadmission certification of medical necessity
Second surgical options Maximum benefit limits
Supplemental Plans - answer✔Used as a supplement to hospitalization, surgical, and physician
expenses Acts as a backup to basic insurance covering expenses that exceed maximum benefit
limits Extends coverage to services excluded from the regular plan
Comprehensive - answer✔Replace traditional fee-for service plans by extending coverage to a
broader array of services Applies a single deductible for all services
Managed Care Plans - answer✔emphasize cost control by limiting employees choice of doctors
and hospitals Health Maintenance Organizations (HMOs) Preferred Provider Organizations
(PPOs) Point-of-Service Plans (POSs)
Savings Accounts - answer✔FSA, HRA, HSA
Flexible spending accounts (FSAs) - answer✔Employee contributes pre-tax
Health reimbursement accounts (HRAs) - answer✔Employer contributes Can be carried over
Health saving accounts (HSAs) - answer✔Both employee and employer contribute
Specialized Insurance Benefits - answer✔Also called carve-out plans because they are separate
insurance from medical benefit plans
1|Page
, ©BRIGHTSTARS EXAM SOLUTIONS
11/16/2024 10:16 AM
Specialized insurance benefits Includes: - answer✔Dental coverage (Exhibit 5.9) Vision coverage
Prescription drug coverage Mental health and substance abuse Maternity care
Types of Disability Insurance - answer✔short or long term
Short-Term - answer✔Less than 6 months Inability to perform any of occupation's duties
Long-Term - answer✔6 months to life Inability to perform work qualified for (training,
education, experience)
Paid Time-Off Practices - answer✔Holidays Vacation Sick leave Personal days Integrated paid
time-off policies Bereavement or funeral leave Sabbatical leave Volunteerism Jury duty and
witness duty leaves Military leave Nonproduction time On-call time
Traditional and Flexible Benefits Plans - answer✔contain the same set of benefits for each
employee Creates administrative ease and represents a one-size-fits-all approach Increasingly,
companies are replacing fixed benefits plans with cafeteria benefits plans, which give
employees a choice of benefits
One-Size-Fits-All Approach - answer✔Predetermined set and level of benefits Based largely on
cost considerations. Differences in employee needs and preferences strongly influence the
adequacy of benefits plan Increasingly, more employers use cafeteria plan designs to help
insure that employees' needs and preferences are being met Employer is likely to maximize the
value of its benefits expenditures by not spending money on unwanted benefits
Cafeteria Plans - answer✔enable employees in a company to choose from among a set of
benefits and different levels of these benefits Under the plan, employees can accept or reject
benefits Increased diversity of the workforce Demographic diversity Both associated with
greater differences in needs and preferences
Internal Revenue Code (IRC) Section 125 - answer✔offers tax benefits to companies that permit
employee choice.
Qualified benefits - answer✔refer to any employer-sponsored benefits for which an employee
may exclude the cost from federal income tax calculation
Cafeteria Plans Under IRC 125 Allowable - answer✔Employer-provided accident or health plan
Group term life insurance Contributions to 401K Dependent care assistance Adoption
assistance
Cafeteria Plans Under IRC 125 Prohibited - answer✔Medical Savings Accounts Scholarships
Educational assistance programs Fringe benefits such as transportation support
2|Page
