Question 1

You must have Parts A and B of Medicare in order to qualify for Part D.

Accepted Answer

Part D is a prescription drug plan that is available to people who have both Part A and Part B of Medicare.

Question 2

Part D of Medicare represents a combination of Part A and Part B provided through private insurance companies.

Accepted Answer

Part D of Medicare is specifically designed to cover prescription drugs and is separate from Part A (hospital insurance) and Part B (medical insurance), which are not combined under Part D.

Question 3

Medicare is a government health insurance program for those over 65 years of age who can show need for financial assistance.

Accepted Answer

Medicare is a federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant), regardless of income or financial need.

Question 4

What would be the out-of-pocket cost to an individual whose health care policy includes a 20% co-pay for all long-term illnesses? The policy has a stop-loss provision of $40,000. A current long-term illness has resulted in total expenses of $250,000.

Accepted Answer

The stop-loss provision limits the out-of-pocket expenses to $40,000, regardless of the 20% co-pay on the total expenses.

Question 5

Medicare basic coverage (Part A) covers

Accepted Answer

The answer of Medicare basic coverage (Part A) covers
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Question 6

Which of the following is not a disadvantage of an HMO plan versus a PPO plan?

Accepted Answer

The HMO plan being less expensive is not a disadvantage compared to a PPO plan; it is often considered an advantage due to lower premiums and out-of-pocket costs.

Question 7

Assuming you were in the 24% federal and 5% state income tax brackets last year, and you allocated $200 per month to your flexible spending account, how much did you save if there was $1,000 remaining in the account at the end of the year?

Accepted Answer

The flexible spending account contributions are made with pre-tax dollars. Assuming a 24% federal and 5% state tax rate, you save 29% (24% + 5%) of the $2,400 ($200 x 12 months) contributed, which equals $696. If there was $1,000 remaining in the account at the end of the year that was forfeited (assuming it does not roll over), you effectively lost $1,000 of your pre-tax contributions. However, because you saved $696 in taxes by contributing to the account, the net loss is $1,000 - $696 = $304. Since the question asks how much you saved, not the net effect including the loss, the correct interpretation is the tax savings of $696, but none of the options accurately reflects this calculation. The closest answer based on the options provided and likely intended interpretation is that you saved $196, which seems to be a misunderstanding of the calculation. The correct calculation was not directly provided in the options, indicating a potential error in the question or answer choices.

Question 8

Having money deducted from your paycheck and put in a flexible spending account is one of the ways you can avoid paying taxes on the amount you spend for health care expenses.

Accepted Answer

Money contributed to a Flexible Spending Account (FSA) is deducted from your paycheck before taxes, reducing your taxable income and therefore the amount of taxes you pay, while allowing you to use the pre-tax dollars for eligible healthcare expenses.

Question 9

If you are in the 22% federal and 5% state income tax brackets, how much do you save each year by allocating $200 per month to your flexible spending account assuming you have zero funds left over at the end of the year?

Accepted Answer

By allocating $200 per month to a flexible spending account, you save on both federal and state taxes for that amount. Annually, this is $200 * 12 = $2,400. The total tax rate is 22% + 5% = 27%. Savings are $2,400 * 27% = $648 annually.

Question 10

Additional types of insurance commonly offered through employers include

Accepted Answer

Dental and vision insurance are common types of insurance offered through employers, providing coverage for dental care and eye care, respectively. Fitness insurance is not a commonly offered employer benefit.

Question 11

________ is the government program that provides health insurance to individuals who are 65 years of age or older.

Accepted Answer

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease.

Question 12

Unfortunately, you have had several medical procedures in the current year with the following bills, $2,000, $9,200, $18,000, $5,000, and $3,500. Your deductible is $2,400, after which your co-pay is 10%. Your policy also includes a $6,000 out-of-pocket maximum clause. How much of the total bills are you responsible to pay?

Accepted Answer

The correct answer is D. The total bills are $2,000 + $9,200 + $18,000 + $5,000 + $3,500 = $37,700. The deductible is $2,400, so the amount subject to the co-pay is $37,700 - $2,400 = $35,300. The co-pay is 10%, so the amount you are responsible to pay is $35,300 x 10% = $3,530. However, the policy also includes a $6,000 out-of-pocket maximum clause, so the maximum amount you are responsible to pay is $6,000.

Question 13

Regarding a flexible spending account, which of the following is not true?

Accepted Answer

Employers typically do not match contributions to flexible spending accounts (FSAs). FSAs are funded by the employee through salary deferral, and while employers may contribute, matching funds dollar-for-dollar is not a standard practice.

Question 14

You are trying to help your aunt figure out how much she owes on a recent flurry of medical bills that resulted from her recent bypass surgery. Her company provided PPO plan includes the following provisions, $2,400 deductible, 10% co-pay and a $6,000 maximum out-of-pocket limit. You have summarized her bills as follow: doctor visits $1,500, surgeon and other docs $16,000, operating room $15,000, hospital stay $21,000, rehabilitative service $10,000. How much does she owe in total on these enormous bills?

Accepted Answer

First, add all the medical bills: $1,500 (doctor visits) + $16,000 (surgeon and other docs) + $15,000 (operating room) + $21,000 (hospital stay) + $10,000 (rehabilitative service) = $63,500. The plan includes a $2,400 deductible, which must be paid first. After the deductible, the co-pay is 10% of the remaining costs. However, there's a $6,000 out-of-pocket maximum, which includes the deductible. Given the total costs far exceed this limit, the maximum amount she would owe is $6,000, regardless of the total bill amounts.

Question 15

Health insurance policies may provide coverage for all of the following, except

Accepted Answer

Cosmetic surgery is generally not covered by health insurance policies unless it is deemed medically necessary, such as reconstructive surgery after an accident. Rehabilitation, mental health services, and pregnancy-related care are typically covered to various extents depending on the policy.

Question 16

An account that allows employees to use pre-tax income to pay for medical expenses is a

Accepted Answer

A flexible spending account (FSA) allows employees to use pre-tax income to pay for eligible medical expenses, reducing their taxable income.

Question 17

One disadvantage of a flexible spending account is that

Accepted Answer

Flexible Spending Accounts (FSAs) typically have a "use it or lose it" policy, meaning that if you don't use the funds by the end of the plan year (with some exceptions allowing for a small rollover amount or grace period), you lose the unused funds. This is a significant disadvantage as it can lead to wasteful spending or loss of money.

Question 18

Medigap insurance, intended to supplement Medicare, is sold and serviced by the federal government.

Accepted Answer

Medigap insurance is sold by private insurance companies, not the federal government. However, it is regulated by the government to ensure certain standards and protections for consumers.

Question 19

Usually plans such as dental insurance and vision insurance are good deals if they are offered through employers.

Accepted Answer

Employer-sponsored dental and vision insurance plans often come with lower premiums due to group rates and sometimes employers may also contribute to the cost, making them more cost-effective for employees.

Question 20

Medicaid is health insurance for people with low income and is administered by each state within certain broad federal requirements and guidelines.

Accepted Answer

Medicaid is a joint federal and state program that helps with medical costs for some people with limited income and resources. Each state administers its own Medicaid program within federal guidelines, allowing for some variation in coverage and eligibility criteria across states.

Quiz 12: Health and Disability Insurance