Chapter 4 Review Questions
NOTE to Department of Financial Services. The following questions represent a bank of questions that we will use to compile this chapter's review questions. We use a software package that creates a unique review for each student, scrambles choices and question order. This bank is presented in its current format to allow the Department to see the text references for these questions. Simply click on the question link to see the text reference. The software package provides feedback to the student -- the correct answer and the rationale.
a. federally tax qualified
b. non-tax qualified
c. tax-qualified at the option of the state
d. tax-qualified at the option fo the insured
All partnership LTC policies must meet HIPAA's qualifications -- i.e., they must be tax qualified.
a. 8 hours of initial LTC training and 8 hours of continuing LTC Partnership training every compliance period
b. 4 hours of initial LTC training and 4 hours of continuing LTC Partnership training every compliance period
c. 8 hours of initial LTC training, including LTC Partnership training, and 4 hours of continuing LTC training every compliance period thereafter
d. 8 hours of LTC training, including LTC Partnership training, every compliance period
The NAIC model's training requirement is for an initial 8 hours of training, and 4 hours of continuing education in each subsequent continuing education compliance period.
a. amendment of state insurance laws to exempt certain assets equal to LTC benefits from Medicaid eligibility requirements
b. amendment of Medicaid laws to exempt certain assets equal to LTC benefits from Medicaid eligibility requirements
c. amend state laws to permit the sale of tax qualified LTC policies within that state
d. all of the above
To implement a state partnership plan, the state must change its Medicaid eligibility rules to exclude assets equal in value to benefits paid by private insurance policies for LTC costs. All states permit the sale of tax-qualified LTC plans (in fact most LTC policies sold today are tax-qualified).
a. educating consumers about the need, risk and cost of LTC
b. curb insurance spending by Medicaid on LTC expense
c. provide tax deductions for purchasers of qualified LTC policies
d. encourage the private LTC insurance industry
The state partnership plans do not offer any special tax deductions. They encourage consumers to buy private LTC as a way to cover the initial costs of nursing home care and reduce state expenditures through Medicaid.
a. nationwide reciprocity is a goal, but is not currently available
b. the four original states currently enjoy reciprocity, but not with other states
c. only those states that have implemented partnership plans enjoy reciprocity
d. none of the states currently has any reciprocal benefits
Nationwide reciprocity is a goal, but is not currently available in most states. Only Indiana and Connecticut currently have a reciprocal arrangement.
a. Medicaid's asset requirements
b. Medicaid's income requirement
c. Medicaid's estate recovery rules
d. a and c
LTC partnership policies are designed to protect the insured's assets -- during the insured's lifetime (protection from asset requirements) and after his or her death (estate recovery). Prior to the passage of the DRA in 2005, Medicaid could impose estate recovery on partnership policies, but that is no longer the case. The insured must still comply with Medicaid's income requirements.
a. Chris, age 56
b. Pat, age 67
c. Lou, age 74
d. all partnership LTC plans must include automatic inflation protection
All partnership policies must offer the applicant some form of inflation protection. The Deficit Reduction Act requires automatic inflation protection for applicants age 60 or younger. Those between ages 60 and 76 must include some form of inflation of protection -- but it need not be "automatic". For applicants age 76 or older, the offer must be made, but inflation protection is not a requirement.
a. inflation protection
b. guaranteed renewability
c. free look provision
d. tax free benefit payments
Most LTC policies issued today comply with HIPAA's requirements -- and therefore are tax-qualified (benefits are paid tax free), guaranteed renewable and have a 30-day free look provision. In addition, PQ (partnership qualified) policies must have some form of inflation protection. This is not required under HIPAA.
a. surrender the old policy for a new PQ policy
b. request an endorsement on the old policy for inflation protection and new issue date
c. continue to hold the old policy -- and as long as it has inflation protection, it is automatically partnership qualified
d. either a or b
Older policies are not automatically afforded with PQ status -- even if they meet all the criteria. The older policy must be lapsed and reissued, or an endorsement make to include the PQ criteria. Only claims paid on a policy issued after the state enacted the partnership plan will qualify for the asset protection.
a. the policy must be tax-qualified under HIPAA
b. the policy must contain consumer protections based on the NAIC Model LTC Policy
c. the insured must be a resident of the state when he or she collects policy benefits
d. the policy must be issued after the date the state partnership plan becomes effective in the insured's state of residence
Partnership qualified plans must be tax-qualified (that is, comply with HIPAA's criteria), contain the consumer protections provided in the NAIC Model Policy (also a HIPAA requirement), and be issued after the plan becomes effective in the state. The insured must be a resident of the state when the policy is first issued, but the insured could move and receive benefits under a reciprocity agreement if LTC services are provided out-of-state.
a. compound inflation protection
b. some level of inflation protection
c. simple inflation protection
d. no inflation protection is required, but the policy can be sold
Applicants between age 60 and 76 must select some form of inflation protection (automatic, guaranteed purchase option, or other). Policies sold to those age 60 or younger must have annual compound inflation protection.
a. required under NAIC Model legislation
b. a method to deny payment of claims
c. only used when issuing group policies
d. none of the above
Post-claims underwriting is the practice of accepting applications without adequate information about health history with the intent to use "mistakes" on the application as a way to deny claims. It is prohibited by NAIC Model legislation.
c. depends on when Medicaid processes his application
d. Jake cannot apply for Medicaid benefits before his policy is exhausted
Jake can apply for Medicaid benefits at any time -- but the level of asset protection is based on the benefits actually paid by the partnership policy at the time the application is made.
a. is permitted, by the policy loses is partnership status
b. is permitted, provided inflation protection is retained
c. is not permitted, although a change from facilities-only to comprehensive plan would be
d. is not permitted
Under federal law, such changes in plans are permitted and will retain partnership status as long as the new plan includes partnership requirements such as inflation protection. States may impose their own requirements on any plan changes
a. either dollar-for-dollar or total asset protection
b. total asset protection only
c. dollar-for-dollar only
d. reimbursement plans only
New state plans may allow for benefit payments on a reimbursement, disability or indemnity basis -- but new states may only use the dollar-for-dollar asset protection model.