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CEBS GBA 2 Questions and Answers (100%
Correct Answers) Already Graded A+
Benefits of STD group policies [ ANS: ] 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: [ ANS: ] As the size of the
same increases, the sample mean gets closer to the population
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mean.
Indemnification [ ANS: ] Indemnification of losses means
reimbursement to the insured if a loss occurs. In theory,
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indemnification restores the individual to their preexisting state
had the loss not occurred.
Adverse Selection [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] Generic term for any outside party,
insurance company or a government program, which pays for
, 2
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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 [ ANS: ] 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 [ ANS: ] Began in 1966. A federal and state assistance
program that pays for health care services for people who cannot
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afford them. Mandatory nursing home benefit added in 1972.
Four Characteristics of Insurance [ ANS: ] 1. Pooling of losses.
2. Payment only for random losses.
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3. Risk transfer.
4. Indemnification
Pooling of losses [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] Blue Cross/Blue Shield, Commercial Insurers,
and Self-insurers.
, 3
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Blue Cross Blue Shield [ ANS: ] 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 [ ANS: ] 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.
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Blue Shield [ ANS: ] 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
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health care coverage for 106 million individuals.
Commercial Insurers [ ANS: ] Private, non-government insurers who
are often the insurance options available through employers. All
commercial insurance companies are taxable (for-profit) entities.
Self-Insurers [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] Hospital and some skilled nursing facility
coverage. Part C: Managed care coverages offered by private
, 4
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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 [ ANS: ] Physician services, ambulatory surgical
services, outpatient services, and other miscellaneous services.
Medicare Part C [ ANS: ] 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 [ ANS: ] Prescription Drug coverage.
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Managed Care Plan [ ANS: ] 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
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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) [ ANS: ] 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) [ ANS: ] One type of
managed care plan. Based on the premise that the traditional
insurer-provider relationship creates incentives that reward
providers for treating patients' illnesses while offering little incentive
for providing prevention and rehabilitation services.
Provider Panel [ ANS: ] 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.
For Expert help and assignment solutions, +254707240657
CEBS GBA 2 Questions and Answers (100%
Correct Answers) Already Graded A+
Benefits of STD group policies [ ANS: ] 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: [ ANS: ] As the size of the
same increases, the sample mean gets closer to the population
© 2025 Assignment Expert
mean.
Indemnification [ ANS: ] Indemnification of losses means
reimbursement to the insured if a loss occurs. In theory,
Guru01 - Stuvia
indemnification restores the individual to their preexisting state
had the loss not occurred.
Adverse Selection [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] Generic term for any outside party,
insurance company or a government program, which pays for
, 2
For Expert help and assignment solutions, +254707240657
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 [ ANS: ] 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 [ ANS: ] Began in 1966. A federal and state assistance
program that pays for health care services for people who cannot
© 2025 Assignment Expert
afford them. Mandatory nursing home benefit added in 1972.
Four Characteristics of Insurance [ ANS: ] 1. Pooling of losses.
2. Payment only for random losses.
Guru01 - Stuvia
3. Risk transfer.
4. Indemnification
Pooling of losses [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] Blue Cross/Blue Shield, Commercial Insurers,
and Self-insurers.
, 3
For Expert help and assignment solutions, +254707240657
Blue Cross Blue Shield [ ANS: ] 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 [ ANS: ] 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.
© 2025 Assignment Expert
Blue Shield [ ANS: ] 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
Guru01 - Stuvia
health care coverage for 106 million individuals.
Commercial Insurers [ ANS: ] Private, non-government insurers who
are often the insurance options available through employers. All
commercial insurance companies are taxable (for-profit) entities.
Self-Insurers [ ANS: ] 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 [ ANS: ] 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 [ ANS: ] Hospital and some skilled nursing facility
coverage. Part C: Managed care coverages offered by private
, 4
For Expert help and assignment solutions, +254707240657
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 [ ANS: ] Physician services, ambulatory surgical
services, outpatient services, and other miscellaneous services.
Medicare Part C [ ANS: ] 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 [ ANS: ] Prescription Drug coverage.
© 2025 Assignment Expert
Managed Care Plan [ ANS: ] 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
Guru01 - Stuvia
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) [ ANS: ] 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) [ ANS: ] One type of
managed care plan. Based on the premise that the traditional
insurer-provider relationship creates incentives that reward
providers for treating patients' illnesses while offering little incentive
for providing prevention and rehabilitation services.
Provider Panel [ ANS: ] 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.
