Free Pennsylvania Accident & Health insurance exam practice test

Correct answer: A. Follow reasonable procedures to make the report as accurate as possible

• A. Correct. Under 1681e(b), Accuracy of report, the agency must follow reasonable procedures to assure maximum possible accuracy of the information about the individual.
• B. Incorrect. 1681e(b) requires reasonable procedures for accuracy, not a phone confirmation of every item.
• C. Incorrect. 1681e(b) is about accuracy procedures, not sending the applicant a copy.
• D. Incorrect. 1681e(b) does not require the applicant's advance approval of each item.

Accuracy of report [...] Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

Correct answer: B. It becomes a final order a court can enforce

• A. Incorrect. Section 310.13 provides no stay for a late appeal.
• B. Correct. A Department decision from which no timely appeal is taken to the administrative hearings office is a final order, enforceable by a court of competent jurisdiction.
• C. Incorrect. Section 310.13 sets no expiration period for the decision.
• D. Incorrect. The decision becomes final by operation of section 310.13 without reissuance.

A decision of the department from which no timely appeal is taken to the administrative hearings office or an order of the commissioner from which no timely appeal is taken to a court of competent jurisdiction shall be a final order and shall be enforceable by a court of competent jurisdiction.

Correct answer: A. A person of average education in the ad's target audience

• A. Correct. § 51.21(a) uses the overall impression the ad may be expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.
• B. Incorrect. The test uses an average member of the target public, not an expert.
• C. Incorrect. The test uses a person of average education or intelligence.
• D. Incorrect. The Commissioner judges the ad by its effect on an average person in the target segment.

(a) The format and content of an advertisement of an insurance contract shall be sufficiently complete and clear to avoid deception or the capacity or tendency to mislead or deceive. Whether an advertisement has a capacity or tendency to mislead or deceive shall be determined by the Commissioner of Insurance from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence, within the segment of the public to which it is directed.

Correct answer: D. When the insurer agrees to the application and issues a policy

• A. Incorrect. Signing the application is the applicant's step; acceptance is the insurer's agreement to it.
• B. Incorrect. Wex ties acceptance to the insurer agreeing to the application and issuing a policy.
• C. Incorrect. A claim comes after the contract is formed; it is not acceptance.
• D. Correct. Wex says that in insurance law, acceptance takes place when an insurer agrees to the person's application and issues a policy covering certain risks or perils.

In the context of insurance law, acceptance takes place when an insurer agrees to the person's application for insurance and in turn issues them a policy to cover certain risks or perils.

Correct answer: D. Adverse selection

• A. Incorrect. Self-insurance is a firm keeping its own risk, not a buying pattern among applicants.
• B. Incorrect. Retention is internal fund allocation for loss exposure, not who seeks coverage.
• C. Incorrect. Indemnity is about restoring an insured after a loss, not who buys coverage.
• D. Correct. The NAIC defines adverse selection as persons with a higher than average probability of loss seeking greater insurance coverage than those with less risk.

Adverse Selection - the social phenomenon whereby persons with a higher than average probability of loss seek greater insurance coverage than those with less risk.

Correct answer: C. As money, or by repairing or replacing the item

• A. Incorrect. Wex does not set original purchase price as the measure.
• B. Incorrect. Wex lists cash as one of the forms.
• C. Correct. Wex says that, depending on the clause, indemnity may be paid in cash or in the form of repairs or replacement.
• D. Incorrect. Wex lists repairs as one of the forms.

Indemnity is a type of insurance that covers a wide range of damages and losses. In the indemnity clause, one party commits to compensate another party for any prospective loss or damage. More common is in insurance contracts, in exchange for premiums paid by the insured to the insurer, the insurer offers to compensate the insured for any potential damages or losses. Depending on the clause of the indemnity agreement, indemnity may be paid in cash or in the form of repairs or replacement.

Correct answer: D. Only if it also asks for the reasons behind any such prior decision

• A. Incorrect. Section 11 has no time limit; it requires that the inquiry also ask for the reasons.
• B. Incorrect. Section 11's condition is that the inquiry also request the reasons, not a separate authorization.
• C. Incorrect. Section 11's condition is that the inquiry also request the reasons for the prior decision.
• D. Correct. Section 11 bars seeking information about a previous adverse underwriting decision unless the inquiry also requests the reasons for it.

No insurance institution, agent or insurance support organization may seek information in connection with an insurance transaction concerning: A. Any previous adverse underwriting decision experienced by an individual; or B. Any previous insurance coverage obtained by an individual through a residual market mechanism, unless such inquiry also requests the reasons for any previous adverse underwriting decision or the reasons why insurance coverage was previously obtained through a residual market mechanism.

Correct answer: B. Give him written notice at least 30 days in advance

• A. Incorrect. The rule requires written notice of at least 30 days, not oral notice of 10 days.
• B. Correct. The rule allows rescission for an intentional misrepresentation of material fact but requires at least 30 days advance written notice to the primary subscriber in the individual market.
• C. Incorrect. The rule's requirement before rescinding is 30 days advance written notice.
• D. Incorrect. The rule requires advance written notice to the affected person, not regulator approval.

A group health plan, or a health insurance issuer offering group or individual health insurance coverage, must not rescind coverage under the plan, or under the policy, certificate, or contract of insurance, with respect to an individual (including a group to which the individual belongs or family coverage in which the individual is included) once the individual is covered under the plan or coverage, unless the individual (or a person seeking coverage on behalf of the individual) performs an act, practice, or omission that constitutes fraud, or makes an intentional misrepresentation of material fact, as prohibited by the terms of the plan or coverage. A group health plan, or a health insurance issuer offering group or individual health insurance coverage, must provide at least 30 days advance written notice to each participant (in the individual market, primary subscriber) who would be affected before coverage may be rescinded under this paragraph (a)(1), regardless of, in the case of group coverage, whether the coverage is insured or self-insured, or whether the rescission applies to an entire group or only to an individual within the group.

Correct answer: B. Whether the insurer intends its coverage to apply to them

• A. Incorrect. § 88.51 requires disclosure of the insurer's intent on applicability, not a list of the applicant's conditions.
• B. Correct. The policy must clearly disclose the insurer's intent as to whether coverage applies to preexisting conditions.
• C. Incorrect. § 88.51 addresses the policy's disclosure of intent, not an agent's sales practice.
• D. Incorrect. § 88.51 does not require a premium disclosure; it requires disclosure of whether coverage applies.

The policy must clearly disclose the intent of the insurer as to the applicability or nonapplicability of coverage relating to preexisting conditions.

Correct answer: A. 45 days after the plan receives the claim

• A. Correct. Paragraph (f)(3) requires notice within a reasonable period of time, but not later than 45 days after the plan receives a disability claim.
• B. Incorrect. Thirty days is the length of an extension under (f)(3); the initial limit for disability claims is 45 days.
• C. Incorrect. The initial limit for disability claims under (f)(3) is 45 days.
• D. Incorrect. The regulation sets 45 days for the initial decision on a disability claim.

In the case of a claim for disability benefits, the plan administrator shall notify the claimant, in accordance with paragraph (g) of this section, of the plan's adverse benefit determination within a reasonable period of time, but not later than 45 days after receipt of the claim by the plan.

Correct answer: B. Three years

• A. Incorrect. The model provision uses three years, not one year.
• B. Correct. The provision applies after three years from the date of issue; after that, no misstatements except fraudulent misstatements may be used.
• C. Incorrect. The model provision uses three years, not two years.
• D. Incorrect. The model provision uses three years, not five years.

After three (3) years from the date of issue of this policy no misstatements, except fraudulent misstatements [...] No claim for loss incurred or disability (as defined in the policy) commencing after three (3) years from the date of issue of this policy shall be reduced

Correct answer: D. 3 months

• A. Incorrect. HealthCare.gov states the grace period is usually 3 months in this situation.
• B. Incorrect. HealthCare.gov states the grace period is usually 3 months in this situation.
• C. Incorrect. HealthCare.gov states the grace period is usually 3 months in this situation.
• D. Correct. HealthCare.gov says the grace period is usually 3 months when the person has a Marketplace plan with the premium tax credit and has paid at least one full month's premium during the benefit year.

The grace period for health insurance premium payments is usually 3 months if both of the following are true: [...] You have a Marketplace plan and use the premium tax credit [...] You paid at least one full month's premium during the benefit year.

Correct answer: C. Four programs, for work-related injury or occupational disease

• A. Incorrect. OWCP says it administers four major programs, covering work-related injury or occupational disease.
• B. Incorrect. OWCP administers four major programs, and they address work-related injury or occupational disease.
• C. Correct. OWCP says it administers four major disability compensation programs for certain workers or their dependents who experience work-related injury or occupational disease.
• D. Incorrect. The OWCP programs address work-related injury or occupational disease, not non-occupational conditions.

The OWCP administers four major disability compensation programs that provide wage replacement benefits, medical treatment, vocational rehabilitation and other benefits to certain workers or their dependents who experience work-related injury or occupational disease.

Correct answer: A. 6 months

• A. Correct. Section 7G(3) requires a maximum period of time payable during disability of at least six (6) months.
• B. Incorrect. Model 171 Section 7G(3) requires at least six months.
• C. Incorrect. Model 171 Section 7G(3) requires at least six months.
• D. Incorrect. Model 171 Section 7G(3) requires at least six months.

Has a maximum period of time for which it is payable during disability of at least six (6) months

Correct answer: C. Her father's plan, as the parent ordered to cover her

• A. Incorrect. The custodial parent rule applies when there is no court decree; here the decree makes the father's plan primary.
• B. Incorrect. The birthday rule does not control when a court decree assigns responsibility and the plan knows of it.
• C. Correct. Section 6D(2)(b)(i) says that if a court decree makes one parent responsible for the child's health care coverage and that parent's plan has actual knowledge of those terms, that plan is primary.
• D. Incorrect. Length of coverage is not the test; the court decree makes the father's plan primary.

For a dependent child whose parents are divorced or separated or are not living together, whether or not they have ever been married: [...] If a court decree states that one of the parents is responsible for the dependent child's health care expenses or health care coverage and the plan of that parent has actual knowledge of those terms, that plan is primary.

Correct answer: A. Network care costs less, and seeing a specialist needs a referral

• A. Correct. HealthCare.gov says you pay less in a POS plan if you use providers that belong to the plan's network, and POS plans require a referral from your primary care doctor to see a specialist.
• B. Incorrect. HealthCare.gov describes a plan network with lower costs, not only doctors employed by the plan.
• C. Incorrect. HealthCare.gov says you pay less for network providers.
• D. Incorrect. A POS plan is a type of health plan, not a tax-free account.

A type of plan in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. POS plans also require you to get a referral from your primary care doctor in order to see a specialist.

Correct answer: C. As an expense-type form that must cover newborns

• A. Incorrect. Mixed forms are treated as expense incurred or service forms, not indemnity forms.
• B. Incorrect. The form is treated as an expense incurred or service form, with benefits extended to newborns.
• C. Correct. A form with both kinds of benefits is considered an expense incurred or service benefit policy, and its benefits must be extended to newborn children.
• D. Incorrect. § 89.203(b) states the treatment directly; no special approval is involved.

(b) Where a form provides both expense incurred or service benefits and indemnity benefits, for the purposes of implementation of Act 81 and this subchapter, the policy shall be considered an expense incurred or service benefit policy, and benefits thereunder shall be extended to newborn children.

Correct answer: A. 31 days after the birth

• A. Correct. The policy may require notification of birth and payment of the required premium within 31 days after the date of birth for coverage to continue beyond that period.
• B. Incorrect. The statute allows a 31-day requirement, not 10 days.
• C. Incorrect. The statute states 31 days, not 60.
• D. Incorrect. The statute states 31 days, not 90.

If payment of a specific premium or subscription fee is required to provide coverage for a child, the policy or contract may require that notification of birth of a newborn child and payment of the required premium or fees must be furnished to the insurer or nonprofit service or indemnity corporation within 31 days after the date of birth in order to have the coverage continue beyond such 31-day period.

Correct answer: C. Within 90 days after she becomes a participant

• A. Incorrect. The regulation allows 90 days after the employee becomes a participant, not 30.
• B. Incorrect. The deadline runs from when she becomes a participant, not from her first claim, and it is 90 days.
• C. Correct. The plan administrator must furnish the summary plan description by the later of 90 days after the employee becomes a participant or 120 days after the plan becomes subject to part 1 of title I; since the plan has been subject for years, the 90-day date applies.
• D. Incorrect. One year is too long; the regulation sets 90 days after she becomes a participant.

the plan administrator of an employee benefit plan subject to the provisions of part 1 of title I shall furnish a copy of the summary plan description and a statement of ERISA rights as provided in § 2520.102-3(t), to each participant covered under the plan (as defined in § 2510.3-3(d)), and each beneficiary receiving benefits under a pension plan on or before the later of: (1) The date which is 90 days after the employee becomes a participant, or (in the case of a beneficiary receiving benefits under a pension plan) within 90 days after he or she first receives benefits, except as provided in § 2520.104b-4(a), or, (2) Within 120 days after the plan becomes subject to part 1 of title I.

Correct answer: D. 1 to 50 employees

• A. Incorrect. HealthCare.gov states 1 to 50 employees.
• B. Incorrect. HealthCare.gov states 1 to 50 employees; 20 is the COBRA threshold.
• C. Incorrect. HealthCare.gov states 1 to 50 employees.
• D. Correct. HealthCare.gov says a business or non-profit generally must have 1 to 50 employees to purchase SHOP insurance.

To purchase SHOP insurance, your business or non-profit organization generally must have 1 to 50 employees.

Correct answer: B. 30 days; she pays both premiums for the month she has both

• A. Incorrect. Medicare.gov describes a 30-day free look period, and she pays both premiums for the month she has both.
• B. Correct. Medicare.gov says she has 30 days to decide whether to keep the new policy (a 30-day free look period) and must pay both premiums for the month she has both.
• C. Incorrect. The free look period is 30 days, and she pays both premiums for the month she has both policies.
• D. Incorrect. Medicare.gov warns not to cancel the first policy until she decides to keep the second one.

When you get your new Medigap policy, you have 30 days to decide if you want to keep it (called a 30-day free look period). Don't cancel your first Medigap policy until you've decided to keep your second Medigap policy. You'll need to pay both premiums for the month that you have both.

Correct answer: B. Each spouse who wants Medigap must buy a separate policy

• A. Incorrect. A Medigap policy covers only one person, no matter when the spouses apply.
• B. Correct. A Medigap policy covers only one person, so each spouse who wants Medigap coverage has to buy his or her own policy.
• C. Incorrect. Age does not change the rule; a Medigap policy covers only one person.
• D. Incorrect. Each spouse may buy a Medigap policy; the point is that each needs a separate policy.

A Medigap policy only covers one person, so if you and your spouse both want Medigap coverage, you each have to buy your own policy.

Correct answer: B. Policies sold after 2005 have no drug coverage; she can add a Part D plan

• A. Incorrect. Medicare.gov says Medigap plans sold after 2005 don't include prescription drug coverage, regardless of plan letter.
• B. Correct. Medicare.gov says Medigap plans sold after 2005 don't include prescription drug coverage, and a person can enroll in a separate Medicare drug plan (Part D).
• C. Incorrect. Medigap plans sold after 2005 don't include prescription drug coverage.
• D. Incorrect. Medicare.gov points her to a separate Medicare drug plan (Part D) for drug coverage, not a Medigap rider.

Medigap plans sold after 2005 don't include prescription drug coverage. [...] You can enroll in a separate Medicare drug plan (Part D) if you want prescription drug coverage.

Correct answer: B. Page one of both the policy and the outline of coverage

• A. Incorrect. The notice belongs on the first page of the outline of coverage and policy.
• B. Correct. The notice must be displayed on the first page of the outline of coverage and policy.
• C. Incorrect. The notice goes on the first page, not the last.
• D. Incorrect. Billing notices are not where § 89a.120(a)(2) requires the notice.

(a) Every insurer, health care service plan or other entity marketing long-term care insurance coverage in this Commonwealth, directly or through its producers, shall: [...] (2) Display prominently by type, stamp or other appropriate means, on the first page of the outline of coverage and policy the following: ‘‘Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.’’

Correct answer: A. Within 60 days of receipt; one rollover per 1-year period

• A. Correct. Publication 969 says you must roll over the amount within 60 days after the date of receipt, and you can make only one rollover contribution to an HSA during a 1-year period.
• B. Incorrect. The rollover window is 60 days, and the limit is one rollover per 1-year period, not one per quarter.
• C. Incorrect. Publication 969 allows 60 days, not 90, and only one rollover during a 1-year period.
• D. Incorrect. The 60-day window is right, but Publication 969 limits HSA rollovers to one during a 1-year period.

You must roll over the amount within 60 days after the date of receipt. You can make only one rollover contribution to an HSA during a 1-year period.