West Virginia Life & Health Insurance Exam — All Questions

Which statement correctly distinguishes Medicare from Medicaid?

• a.Medicare is a needs-based program for low-income individuals, while Medicaid is based on age
• b.Both are strictly age-based programs with no income requirement
• c.Medicare is a federal health program primarily for people age 65 and older, while Medicaid is a needs-based program for low-income individuals funded jointly by federal and state governments✓
• d.Medicare covers only prescription drugs, while Medicaid covers only hospital stays

Medicare is a federal program that primarily covers people age 65 and older (and certain younger people with disabilities or end-stage renal disease), regardless of income. Medicaid is a joint federal-state program that provides coverage based on financial need (low income and limited assets). The first option reverses the two programs. Neither is purely age-based without regard to income (Medicaid is means-tested), and the descriptions of drug-only or hospital-only coverage misstate both programs; Medicare has multiple parts (A, B, C, D) covering hospital, medical, and drug benefits.

In group insurance, the individual members of the group receive:

• a.Their own master contracts to keep
• b.Certificates of coverage, while a single master policy is issued to the sponsor✓
• c.Separately underwritten individual policies issued individually to each member of the group
• d.No documentation of their coverage

In group insurance, the insurer issues one master policy to the sponsor (such as an employer or association), and each covered member receives a certificate of coverage that summarizes their benefits and rights. Members do not get individually underwritten policies, are not left without documentation, and do not each hold a master contract. The master-policy-and-certificate structure is a defining feature of group insurance and is why group underwriting looks at the group rather than each person.

In a noncontributory group insurance plan, the employer pays the entire premium, and as a result insurers generally require that:

• a.Only employees who volunteer are covered
• b.Coverage remain entirely optional for each worker
• c.100 percent of eligible employees be covered✓
• d.No employees be covered until they contribute

In a noncontributory plan the employer pays the full premium, so insurers typically require that 100 percent of eligible employees participate; universal participation eliminates adverse selection because no one can opt out and leave only higher-risk workers in the plan. It is not limited to volunteers, does not exclude everyone, and is not optional. The 100 percent rule for noncontributory plans contrasts with the lower participation percentages allowed when employees share the cost.

In a contributory group plan, in which employees share in the premium cost, insurers usually require that:

• a.A high percentage, such as 75 percent, of eligible employees enroll to limit adverse selection✓
• b.Only the employer be covered under the plan
• c.No employees be allowed to enroll
• d.Exactly 100 percent of employees enroll every year, a level generally required only for noncontributory plans

When employees pay part of the premium (a contributory plan), insurers require that a substantial share of those eligible, often around 75 percent, actually enroll, so the group does not fill up mainly with people who expect to have claims. Requiring no enrollment or only the employer makes no sense, and 100 percent participation is generally required only for noncontributory plans, where the employer pays everything. The participation threshold guards the group against adverse selection.

When an employee leaves a group life insurance plan, the conversion privilege generally allows them to:

• a.Keep the group premium rate for life
• b.Convert to an individual permanent policy without evidence of insurability, usually within 31 days✓
• c.Continue under the master policy indefinitely even after leaving the employer, which the group contract does not allow
• d.Receive a cash refund of prior premiums

The conversion privilege lets a departing employee convert their group life coverage to an individual permanent policy without proving insurability, typically within 31 days of leaving, though the individual premium is based on the person's attained age. It does not preserve the group rate, refund premiums, or keep the person under the master policy. Conversion protects coverage for someone who might otherwise be uninsurable, which is especially valuable if their health has declined.

Federal COBRA continuation generally allows an eligible employee who loses group health coverage to:

• a.Enroll in Medicare years before age 65 as a substitute for the lost employer coverage
• b.Keep the group coverage permanently
• c.Receive continued coverage at no cost
• d.Continue the group health coverage for a limited time by paying the premium themselves✓

COBRA lets qualified individuals who experience a qualifying event (such as job loss or reduced hours) continue their group health coverage for a limited period by paying the premium themselves, generally the full cost plus a small administrative charge. It is not free, not permanent, and not a path to early Medicare. COBRA bridges a coverage gap so a person does not go uninsured while between jobs or plans, though the enrollee bears the cost the employer once shared.

Medicare Part A primarily covers:

• a.Outpatient prescription drugs
• b.Inpatient hospital care, skilled nursing facility care, hospice, and some home health care✓
• c.Routine vision and dental care
• d.Routine physician office visits and outpatient services, which are actually covered under Part B

Medicare Part A is hospital insurance, covering inpatient hospital stays, skilled nursing facility care following a hospitalization, hospice care, and certain home health services. Physician office visits and outpatient care fall under Part B, prescription drugs under Part D, and routine vision and dental are generally not covered by Original Medicare. Part A is usually premium-free for those who paid Medicare taxes long enough, and remembering that Part A equals hospital coverage is a core exam fact.

Medicare Part B primarily covers:

• a.Long-term custodial nursing home care, which Medicare largely excludes from coverage
• b.Inpatient hospital confinement
• c.Physician services, outpatient care, and many preventive services✓
• d.Outpatient prescription drugs only

Medicare Part B is medical insurance, covering physician services, outpatient hospital care, durable medical equipment, and a range of preventive services; beneficiaries pay a monthly premium for it. Inpatient hospital care is Part A, prescription drugs are Part D, and long-term custodial care is largely not covered by Medicare at all. Knowing that Part B handles doctor and outpatient services, while Part A handles hospital stays, is essential for advising Medicare-eligible clients.

Medicare Part D provides:

• a.Hospice care benefits
• b.Custodial nursing home care
• c.Outpatient prescription drug coverage offered through private insurers✓
• d.Inpatient hospital coverage, which is the role of Part A instead

Medicare Part D is the prescription drug benefit, delivered through private insurers approved by Medicare, and it helps beneficiaries pay for outpatient medications. Inpatient hospital care is Part A, hospice is also under Part A, and custodial nursing home care is generally not a Medicare benefit. Part D was added to fill the prescription drug gap in Original Medicare, and beneficiaries choose a stand-alone drug plan or get drug coverage bundled into a Medicare Advantage plan.

Medicare Advantage (Part C) plans are best described as coverage that:

• a.Is administered directly by the federal government rather than through the private insurers that actually offer these plans
• b.Is identical to a Medicare Supplement policy
• c.Covers prescription drugs and nothing else
• d.Is offered by private insurers and bundles Part A and Part B benefits, often adding extra coverage✓

Medicare Advantage (Part C) plans are offered by private insurers approved by Medicare and provide Part A and Part B benefits together, frequently adding extras such as drug, dental, or vision coverage, often through an HMO or PPO network. They are not the same as Medigap (which supplements Original Medicare), are not run directly by the government, and cover far more than drugs alone. Part C is an alternative way to receive Medicare benefits through a private plan.

Medicare Supplement (Medigap) policies are designed to:

• a.Serve as a stand-alone prescription drug plan, which is the function of Part D rather than a Medicare Supplement policy
• b.Completely replace Medicare coverage
• c.Pay for long-term custodial care
• d.Help pay costs Medicare leaves to the beneficiary, such as deductibles and coinsurance, using standardized plans✓

Medigap policies supplement Original Medicare by paying some of the out-of-pocket costs Medicare does not, such as deductibles, coinsurance, and copayments, and they are sold as standardized plans so consumers can compare them easily. They do not replace Medicare, are not primarily drug plans, and do not cover long-term custodial care. Medigap works alongside Original Medicare, filling its gaps, and cannot be paired with a Medicare Advantage plan at the same time.

In addition to retirement income, the federal Social Security program also provides:

• a.Property damage coverage
• b.Long-term custodial care coverage for extended nursing home stays, which Social Security does not provide
• c.Survivor benefits to a worker's dependents and disability benefits to qualifying workers✓
• d.Routine dental benefits

Social Security is a social insurance program that pays retirement, survivor, and disability benefits: survivor benefits go to the dependents of a deceased worker, and disability benefits go to workers who become disabled and meet the earnings and work-history requirements. It does not provide property, dental, or long-term custodial care coverage. Because Social Security offers a base of survivor and disability protection, producers factor it in when calculating how much private coverage a client still needs.

Under the federal Affordable Care Act, adult children may generally remain covered on a parent's health plan until they reach age:

• a.18
• b.21
• c.30
• d.26✓

The Affordable Care Act allows young adults to stay on a parent's health plan until age 26, regardless of whether they are married, in school, or financially independent. Ages 18, 21, and 30 are not the federal threshold. This provision is one of the most widely used ACA reforms, helping young adults maintain continuous coverage during early career years, and it is a frequently tested federal figure on the licensing exam.

A central federal Affordable Care Act reform to individual and small-group health coverage was to:

• a.Remove all preventive care from coverage
• b.Prohibit denying coverage or charging more due to pre-existing conditions and require coverage of essential health benefits✓
• c.Allow insurers to impose lifetime dollar limits on benefits, which is the opposite of what the law did, since it banned such lifetime limits
• d.Permit denial of coverage for people with prior illnesses

The ACA prohibits insurers in the individual and small-group markets from denying coverage or charging higher premiums because of pre-existing conditions, and it requires plans to cover a set of essential health benefits. It did the opposite of allowing lifetime limits (it banned them), did not permit denial for prior illness, and expanded rather than removed preventive care (which many plans must cover at no cost sharing). Guaranteed issue and essential health benefits are hallmark ACA consumer protections.

Medicaid is best described as a program that is:

• a.Purely federal and based only on the recipient's age, a description that actually fits Medicare rather than Medicaid
• b.Jointly funded by the federal and state governments and provides coverage based on financial need✓
• c.Available to everyone regardless of income or assets
• d.Funded entirely by the insured's own premiums

Medicaid is a joint federal-state program that provides health coverage to low-income individuals and families based on financial need (limited income and assets), with the federal government and states sharing the cost. It is not purely federal or age-based (that description fits Medicare), is not premium-funded by recipients, and is not open to everyone regardless of income, because it is means-tested. Medicaid is also the largest payer for long-term custodial care in the United States, a gap Medicare largely leaves uncovered.

Most people receive Medicare Part A without paying a monthly premium because:

• a.It is entirely optional coverage that any resident may simply decline without affecting their other benefits
• b.They or their spouse paid Medicare payroll taxes while working, typically for 40 quarters✓
• c.It is funded from Part B premiums
• d.It is means-tested for low income

Part A is premium-free for those with a sufficient work history of Medicare payroll taxes (about 40 quarters). It is not means-tested, optional, or funded by Part B.

Medicare Part B (medical insurance) helps cover:

• a.Only outpatient prescription drugs dispensed through various Medicare-approved retail pharmacies
• b.Long-term custodial nursing home care
• c.Physician services, outpatient care, lab tests, and durable medical equipment✓
• d.Inpatient hospital room and board

Part B covers physician and outpatient services, tests, and durable medical equipment. Inpatient hospital care is Part A, and drugs are Part D; Medicare does not cover long-term custodial care.

Medicare Part B is:

• a.Available only to disabled individuals
• b.Paid for entirely by employers on behalf of their retired former employees who have already turned 65
• c.Voluntary and financed partly by a monthly premium usually deducted from Social Security✓
• d.Provided free to everyone at 65

Part B is optional and requires a monthly premium, commonly withheld from the enrollee's Social Security check. It is not free, disability-only, or employer-funded.

Medicare Part C (Medicare Advantage) is:

• a.A supplement to the Medicaid program
• b.Coverage delivered through private insurers approved by Medicare, combining Part A and B benefits, often with extras✓
• c.Free, government-run hospital-only coverage that automatically replaces both Part A and Part B for every single enrollee nationwide
• d.A government-run prescription drug program

Part C lets beneficiaries receive their Medicare benefits through approved private plans that bundle Parts A and B, frequently adding extras like drug or dental coverage. It is not government drug coverage or a Medicaid supplement.

A significant gap in Medicare is that it generally does NOT cover:

• a.Diagnostic laboratory tests
• b.Inpatient hospital stays
• c.Long-term custodial (nursing home) care✓
• d.Physician office visits

Medicare pays for medically necessary care but not ongoing custodial long-term care, which is a major reason people buy LTC insurance. Hospital stays, doctor visits, and lab tests are covered.

Medicare Supplement (Medigap) policies are:

• a.Unregulated and vary randomly from insurer to insurer
• b.A form of stand-alone prescription drug plan that is sold to replace the need for enrolling in Medicare Part D at all
• c.Sold only by the federal government
• d.Standardized into lettered plans, so a given plan letter offers the same core benefits from any insurer✓

Medigap plans are federally standardized by letter, so the same plan letter provides identical core benefits regardless of insurer, making them easy to compare. They are sold by private insurers, not the government, and are not drug plans.

The Medigap open enrollment period is a ___-month period, beginning when the individual is 65 and enrolled in Part B, during which they can buy any Medigap policy without medical underwriting:

• a.24
• b.6✓
• c.3
• d.12

The Medigap open enrollment period lasts 6 months from when someone is 65 and enrolled in Part B, and during it insurers cannot use medical underwriting to deny or rate coverage.

A Medigap policy is designed to:

• a.Replace Medicare entirely and serve as the beneficiary's sole source of both hospital and physician coverage from that point forward
• b.Fully cover custodial long-term care
• c.Pay some of Medicare's cost-sharing, such as deductibles and coinsurance, without duplicating benefits Medicare already pays✓
• d.Provide drug coverage in place of Part D

Medigap fills gaps in Original Medicare, like deductibles and coinsurance, and by law cannot duplicate benefits Medicare pays. It does not replace Medicare, substitute for Part D, or cover long-term custodial care.

To be 'fully insured' for Social Security retirement benefits, a worker generally needs:

• a.100 quarters of coverage
• b.40 quarters (credits) of coverage✓
• c.10 quarters of coverage
• d.No work history at all

Fully insured status for retirement benefits generally requires 40 quarters (credits) of covered work, about 10 years. Fewer quarters may provide only limited or no benefits.

Social Security survivor benefits may be paid to:

• a.A surviving spouse and dependent children of a deceased insured worker✓
• b.Only the deceased worker themselves, paid out as a single lump sum into the worker's estate
• c.The deceased worker's employer
• d.Anyone who applies for them

Survivor benefits support the eligible family, typically a surviving spouse and dependent children, of an insured worker who dies. They are not paid to unrelated applicants or employers.

Social Security disability benefits use a strict definition: the worker must be unable to engage in ______ due to a medically determinable impairment expected to last at least 12 months or result in death:

• a.their own occupation
• b.any substantial gainful activity✓
• c.a preferred, higher-paying job
• d.part-time work only

Social Security disability requires inability to perform any substantial gainful activity, a very strict any-occupation-style standard, with a durational requirement of 12 months or death. It is not an own-occupation test.

The Social Security 'blackout period' is the span during which a surviving spouse receives no survivor income, generally:

• a.From when the youngest child turns 16 until the surviving spouse reaches age 60✓
• b.Immediately after the worker's death
• c.While the surviving spouse is disabled
• d.The years after the surviving spouse turns 65 and begins receiving their own Social Security retirement benefit

The blackout period runs from when the youngest child reaches 16 (ending the caregiver benefit) until the surviving spouse turns 60 and can claim widow(er)'s benefits. During it, no Social Security survivor income is paid to the spouse.

A worker's Social Security benefit amount is based on the Primary Insurance Amount (PIA), which is derived from the worker's:

• a.Number of dependents only
• b.Average indexed earnings over their working career✓
• c.Current savings balance
• d.The total size and annual payroll of the worker's single most recent employer

The PIA is computed from the worker's averaged, indexed lifetime earnings and determines the benefit at full retirement age. Savings, employer size, and dependent count do not set the PIA.

In group life insurance, the individual employee receives a ________ while the employer holds the ________:

• a.certificate of insurance; master contract✓
• b.rider; annuity
• c.prospectus; binder
• d.policy; certificate

Group insurance is written as one master contract issued to the employer, and each covered employee receives a certificate summarizing their coverage. The other pairings do not describe group life.

Group life underwriting typically:

• a.Is performed separately for each individual employee, who must submit their own detailed medical evidence of insurability
• b.Requires each member to pass an individual medical exam
• c.Declines every applicant with any health condition
• d.Evaluates the group as a whole, so individual evidence of insurability is often not required✓

Group underwriting looks at the characteristics of the whole group rather than each individual, so members usually need not prove insurability. This lowers cost and broadens access.

In a noncontributory group plan, the employer pays the entire premium, so insurers usually require:

• a.100% of eligible employees to be covered, to avoid adverse selection✓
• b.75% participation among eligible employees
• c.Individual underwriting of each employee
• d.No minimum participation

Because the employer pays it all in a noncontributory plan, insurers require 100% participation, which eliminates adverse selection. Contributory plans, where employees pay part, use a lower threshold like 75%.

In a contributory group plan, where employees pay part of the premium, insurers commonly require a minimum participation of about:

• a.75% of eligible employees✓
• b.10% of eligible employees
• c.100% of eligible employees
• d.0%, with no minimum

Contributory plans typically require around 75% participation to spread risk and limit adverse selection. Requiring 100% is the noncontributory rule, and very low thresholds would invite adverse selection.

When an employee leaves a job covered by group term life, the conversion privilege usually allows them to convert to:

• a.An individual permanent (whole life) policy without evidence of insurability, at their attained age✓
• b.No coverage whatsoever, because group term life simply cannot be continued in any form after employment ends
• c.A cheaper group plan automatically
• d.A new group term plan elsewhere

The conversion privilege lets a departing employee convert group term to an individual permanent policy without proving insurability, though at the attained-age premium. It does not provide new group coverage or a discount.

A key advantage of the group life conversion privilege is that the departing employee:

• a.Keeps the employer's premium contribution
• b.Receives a lower premium than the group rate
• c.Converts the group coverage to an individual term policy at no cost to the employee for the first full year
• d.Does not have to prove insurability, which is valuable for someone in poor health✓

The conversion privilege's main value is guaranteed insurability, no medical exam, which matters most for someone whose health has declined. The individual premium is usually higher, and the employer no longer contributes.

Under federal tax rules, employer-paid group term life premiums are tax-free to the employee only up to ________ of coverage; the cost of coverage above that is taxable income to the employee:

• a.$10,000
• b.$100,000
• c.$250,000
• d.$50,000✓

The first $50,000 of employer-provided group term life is a tax-free benefit; the imputed cost of coverage above $50,000 is taxable income to the employee. The other amounts are incorrect thresholds.

Federal COBRA generally lets an eligible employee who loses group health coverage continue it for a limited time by:

• a.Enrolling immediately in Medicare
• b.Receiving free coverage for life
• c.Paying the full premium themselves (up to 102% of cost) for a stated period such as 18 months✓
• d.Paying nothing at all for the continued coverage, since the former employer must keep funding it in full

COBRA allows continuation of the group health plan if the former employee pays the full premium plus up to a 2% administrative charge, commonly for 18 months. It is not free or permanent, and it is separate from Medicare.

Which is a COBRA qualifying event that can extend continuation up to 36 months for dependents?

• a.A routine pay raise
• b.The employer moving to a new office
• c.Switching to a different doctor
• d.Divorce from, or the death of, the covered employee✓

Events like divorce or the covered employee's death can extend dependents' COBRA continuation to 36 months. A raise, a doctor change, or an office move are not qualifying events.

COBRA generally applies to employers with:

• a.Only government agencies
• b.Fewer than 5 employees
• c.Any number of employees
• d.20 or more employees✓

Federal COBRA applies to private employers (and state/local government) with 20 or more employees. Very small employers are exempt, though some states have mini-COBRA laws.

A Section 125 cafeteria plan allows employees to:

• a.Choose only cash compensation
• b.Choose among qualified benefits, paying for some of them with pre-tax dollars✓
• c.Avoid all taxes on their wages
• d.Purchase only employer-sponsored group life insurance, paying those premiums entirely with after-tax dollars

A Section 125 plan lets employees select from a menu of qualified benefits and fund chosen ones with pre-tax dollars, lowering taxable income. It is not cash-only, tax-free wages, or life-insurance-only.

A Flexible Spending Account (FSA) under a cafeteria plan traditionally follows a rule that:

• a.Unused funds may be forfeited at year-end (use-it-or-lose-it), subject to limited carryover or grace rules✓
• b.Unused account balances automatically roll over indefinitely from one plan year to the next with no limit whatsoever
• c.Funds are always refunded to the employee in cash
• d.There is no annual contribution limit

The classic FSA use-it-or-lose-it rule means unspent funds can be forfeited at year-end, though limited carryover or grace-period options may apply. Funds are not cash-refundable and contributions are capped.

The 'actively-at-work' provision in group insurance requires that, for coverage to take effect, the employee must:

• a.Be retired from the company
• b.Have reached age 65
• c.Be actively performing their job duties on the day coverage is to begin✓
• d.Pass an individual physical exam

The actively-at-work provision conditions the start of coverage on the employee being at work and able to perform their duties on the effective date. It is not tied to retirement, an exam, or a specific age.

For an employee age 65 or older who is still working at a large employer, the employer group health plan is generally the ______ payer and Medicare is ______:

• a.primary; secondary✓
• b.excluded; primary
• c.the only; unused
• d.secondary; primary

Under the Medicare Secondary Payer rules, a large employer's group plan pays first (primary) for an active employee 65+, and Medicare pays second. The group plan is not secondary or the only payer in this situation.

Group short-term disability (STD) differs from long-term disability (LTD) mainly in that STD:

• a.Pays benefits for many years, often continuing all the way until the insured reaches retirement age
• b.Never has any waiting period
• c.Covers only retired employees
• d.Has a shorter benefit period (weeks to months) and a shorter waiting period✓

STD pays for a shorter benefit period after a brief waiting period, bridging until LTD begins. LTD covers longer durations; STD is not for retirees and usually has a short elimination period.