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Medical Expense and Continuation

Deductibles and coinsurance math, stop-loss, coordination of benefits, COBRA, and ACA dependent rules.

Study questions and answers

Try each question first, then tap to check your answer.

1. An insured has a $1,000 deductible (not yet met) and 80/20 coinsurance. They incur $6,000 in covered expenses. How much does the insurer pay?

  1. $4,000
  2. $4,800
  3. $5,000
  4. $4,200
Show answer
A. $4,000
$6,000 minus the $1,000 deductible leaves $5,000. The insurer pays 80% of that, or $4,000. The insured pays $2,000 in total.

2. A stop-loss (out-of-pocket maximum) provision means that:

  1. The insured pays all costs above a set amount
  2. Once the insured pays a set amount in a year, the insurer pays 100% of covered expenses for the rest of that year
  3. It is the policy's lifetime limit
  4. It is the copay for office visits
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B. Once the insured pays a set amount in a year, the insurer pays 100% of covered expenses for the rest of that year
Stop-loss limits the insured's total cost sharing in a plan year.

3. An employee is covered by their own employer's plan and as a dependent on their spouse's plan. For the employee's own claims, which plan is primary?

  1. The spouse's plan
  2. Each plan pays half
  3. The plan with the lower deductible
  4. The employee's own employer plan
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D. The employee's own employer plan
Under coordination of benefits, the plan that covers the person as an employee is primary over the plan that covers them as a dependent.

4. Under the birthday rule, which parent's plan is primary for a dependent child?

  1. The older parent's plan
  2. The father's plan
  3. The plan of the parent whose birthday falls earlier in the calendar year
  4. The plan with the larger benefits
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C. The plan of the parent whose birthday falls earlier in the calendar year
Only the month and day count, not the year of birth.

5. COBRA continuation requirements apply to employers with how many employees?

  1. 2 or more
  2. 20 or more
  3. 50 or more
  4. 100 or more
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B. 20 or more
COBRA applies to group health plans of employers with 20 or more employees.

6. How long can an employee continue coverage under COBRA after terminating employment?

  1. 18 months
  2. 29 months
  3. 36 months
  4. 12 months
Show answer
A. 18 months
Termination or a reduction in hours allows 18 months. This can extend to 29 months if the person is disabled.

7. How long can dependents continue COBRA coverage after the covered employee's death or a divorce?

  1. 18 months
  2. 24 months
  3. 29 months
  4. 36 months
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D. 36 months
Qualifying events for dependents, such as death, divorce, or the employee becoming entitled to Medicare, allow up to 36 months.

8. Under COBRA, the former employee can be charged up to what percentage of the full plan cost?

  1. 0%, because the employer pays
  2. 100%
  3. 102%
  4. 150%
Show answer
C. 102%
The extra 2% covers administrative costs.

9. Under the Affordable Care Act, until what age can a dependent child stay on a parent's health plan?

  1. 21
  2. 23
  3. 25
  4. 26
Show answer
D. 26
Plans that offer dependent coverage must make it available until age 26.
Next topic: Group Insurance and AD&D Full health practice test