Final Examination

Instructions: Select the best answer for each question. Click Submit Answers when finished. A score of at least 70% (35 of 50 correct) is required to pass. Do not press the Enter key while taking this exam.

Which of the following is NOT one of the six Activities of Daily Living (ADLs) recognized in a tax-qualified LTC plan?

Bathing Taking medication Transferring Continence

An insured who needs help with bathing and dressing, as well as light housework, but does not need around-the-clock attention is most likely receiving:

Skilled nursing care Custodial care Acute care Rehabilitative care

The primary purpose of a long-term care partnership program is to:

Replace Medicare for long-term care expenses Encourage purchase of private LTCI by offering Medicaid asset protection Provide unlimited benefits to nursing home residents Subsidize LTCI premiums for low-income individuals

Under a dollar-for-dollar partnership program, if an insured receives $200,000 in LTCI benefits, the amount of assets she may protect from Medicaid spend-down is:

$100,000 $50,000 $200,000 The value of her primary residence only

To implement a state long-term care partnership plan, a state must:

Repeal all existing Medicaid laws Amend Medicaid eligibility rules to exclude assets equal in value to LTCI benefits paid Require all residents to purchase LTCI Create a state-run insurance fund

Which federal law lifted the restrictions that had halted new state LTC partnership plans and permitted their nationwide expansion?

OBRA COBRA HIPAA DRA

Which federal law clarified the tax status of private long-term care insurance policies?

DRA OBRA HIPAA ERISA

Under HIPAA, to be certified as a "chronically ill individual," a person must be expected to be unable to perform at least two ADLs for a period of at least:

30 days 60 days 90 days 180 days

Benefits paid by a tax-qualified LTCI reimbursement policy are generally:

Fully taxable as ordinary income Taxable only to the extent they exceed $430 per day Excluded from federal income tax Subject to the alternative minimum tax

Which federal law effectively halted the expansion of LTC partnership plans by imposing estate recovery requirements on new state programs?

HIPAA COBRA OBRA ERISA

Of the choices made by the applicant, which has the greatest impact on the LTCI premium?

Elimination period Daily benefit amount Survivor benefit rider Return of premium feature

When a state imposes requirements on partnership-qualified (PQ) policies beyond those required by the DRA, those requirements must also be imposed on:

Medicare supplement policies Non-partnership LTCI policies Life insurance policies only Group health plans

For an LTCI policy to qualify for a state partnership program under the DRA, the policy must first be:

Approved directly by CMS Federally tax-qualified Issued before the partnership program went into effect Issued only to residents over age 50

Under the DRA, an individual who is age 60 or younger when purchasing a partnership-qualified policy must have:

5% simple rate inflation protection Annual compound inflation protection A guaranteed purchase option only Any inflation feature she chooses

Under the DRA, for an individual age 76 or older at the time of purchasing a partnership-qualified policy, inflation protection:

Must be annual compound at 5% Must be some form of inflation protection Must be offered but is not required to be purchased Is not required to be offered

Medicare covers nursing facility care primarily when the patient:

Needs only custodial or personal care Requires skilled nursing or rehabilitation after a qualifying hospital stay Has been in the facility for at least 30 days Has a Medigap policy that covers the copayment

To qualify for Medicaid nursing home coverage, an individual's countable assets must generally be reduced to approximately:

$10,000 $5,000 $2,000 $25,000

The elimination period in an LTCI policy most closely resembles:

A grace period for premium payments A deductible expressed in time rather than dollars A guaranteed renewability provision A nonforfeiture benefit

Under a reimbursement LTCI policy, the insurer pays:

The full daily benefit amount regardless of actual expenses The lesser of the daily benefit amount or the actual expenses incurred A fixed monthly cash payment A percentage of the Medicare-allowable amount

How does compound inflation protection differ from simple inflation protection?

Simple applies only while the insured is receiving benefits; compound applies before benefits begin Simple calculates each year's increase on the original benefit; compound calculates it on the prior year's already-increased amount Compound is limited to a maximum of 10 years of increases Simple requires an annual medical exam to qualify; compound does not

The guaranteed purchase option (GPO) for inflation protection allows the insured to:

Automatically receive compound benefit increases each year Purchase additional coverage periodically without evidence of insurability Convert a reimbursement policy to a disability policy at any time Lock in a fixed premium for life

A nonforfeiture benefit in an LTCI policy is designed to ensure that:

Premiums will never increase The insured retains some benefit even if she stops paying premiums The policy cannot be cancelled due to a claim The insured may transfer the policy to a family member

A contingent nonforfeiture benefit differs from a standard nonforfeiture option in that it:

Requires payment of an additional premium Is triggered only when the premium is raised significantly Provides unlimited lifetime benefits Applies only if the insured is hospitalized first

The Medicaid look-back period for asset transfers made on or after February 8, 2006 is:

24 months 36 months 48 months 60 months

The waiver of premium provision in most LTCI policies provides that premiums are waived:

For the first 30 days of any claim While the insured is receiving nursing home benefits Permanently once any claim has been paid When the insured reaches age 65

Under the DRA, an insured who exchanges a non-PQ policy for a PQ policy may count toward Medicaid asset protection only:

Benefits received under both the old and new policy combined Benefits received under the new PQ policy Benefits received under the old policy before the exchange The full lifetime maximum of the new policy

Reciprocity between state partnership programs means that an insured who moves to another state:

Receives a premium refund from the original state Can still receive Medicaid asset protection in the new state if it has reciprocity Automatically receives Medicaid in the new state Receives identical Medicaid benefits in the new state

An insured who applies for Medicaid before exhausting her LTCI benefits will receive Medicaid asset protection based on:

The full lifetime maximum of the policy Only the benefits received as of the date of the Medicaid application 50% of the policy's lifetime maximum A fixed amount set by the state Medicaid agency

Under the NAIC Model Bulletin, agents who sell partnership LTCI must complete ongoing CE of at least:

2 hours every 12 months 4 hours every 24 months 8 hours every 24 months 6 hours every 12 months

Long-term care partnership programs protect assets equal to LTCI benefits received, but they do NOT protect the insured's:

Retirement accounts Income Investment accounts Savings accounts

A preexisting condition exclusion in an LTCI policy may cover only conditions that existed within how many months before the policy's effective date?

3 months 6 months 12 months 24 months

As part of ethical disclosure obligations, an LTCI agent must tell clients:

Only the advantages of the recommended policy Both the advantages and disadvantages, all costs, and the agent's own financial interest in the transaction Only information specifically required by state law The names of other clients who purchased the same policy

Churning and twisting refer to the practice of:

Providing false information in an insurance application Selling a new policy to a client who already has suitable coverage simply to earn a commission Using high-pressure tactics during a sales presentation Marketing insurance without disclosing that it is insurance

As a general suitability guideline, a person may not be able to afford LTCI if the annual premium would exceed approximately what percentage of annual income?

3% 5% 7% 10%

Before replacing an existing LTCI policy, a consumer and agent should consider:

Whether the new insurer has more name recognition Whether the insured is still insurable, how much older she is, and whether existing coverage is reasonable Whether the new agent will provide more responsive service Whether the new policy was reviewed by a consumer magazine

When replacing an LTCI policy, the insured should NEVER drop the existing policy until:

The new premium has been confirmed to be lower The replacement policy application has been approved The agent has submitted the state-required replacement form The state insurance department has been notified of the replacement

A partnership-qualified LTCI policy is generally NOT suitable for an individual who:

Has significant assets she wishes to preserve Is currently eligible for Medicaid Wants to reduce the risk of depleting retirement assets Plans to remain in a state that has a partnership program

The 30-day free-look provision required in LTCI policies gives the policyholder the right to:

Change benefit amounts during the first 30 days without underwriting Return the policy for a full premium refund within 30 days of delivery File a claim within 30 days without satisfying the elimination period Lock in the quoted premium for 30 days after submitting the application

Post-claims underwriting — which is prohibited in PQ policies — refers to the practice of:

Increasing premiums after a claim is filed Accepting an applicant without adequate health information, then rescinding coverage when a claim is filed Requiring a new medical exam before paying a claim Denying claims for conditions diagnosed after the effective date

The incontestability clause required in PQ policies protects the insured by:

Guaranteeing that premiums will never be increased Placing increasingly strict limits on the insurer's right to contest the policy based on application misrepresentations Waiving all exclusions after the first year of coverage Requiring the insurer to pay all claims within 30 days

A "pool of money" benefit structure in an LTCI policy means that benefits continue until:

A fixed number of years has elapsed The total benefits received equal the lifetime maximum dollar amount The insured no longer qualifies for Medicaid The insured reaches age 90

Errors and omissions (E&O) coverage is important for insurance agents primarily because it protects them against:

Insurer insolvency Claims of negligence or improper conduct in their professional capacity Loss of license for continuing education violations Premium increases by the insurers they represent

Total asset protection under an LTC partnership program is available in:

All states that have enacted DRA partnership legislation Only Indiana and New York, as exceptions — the DRA does not allow it for new programs All states that have adopted the NAIC Model Regulation Florida, because state law requires it for all PQ policies

The NAIC Shopper's Guide to Long-Term Care Insurance must be given to a prospective buyer:

Only when the agent recommends replacing existing coverage At the time of application Only after the policy has been approved by the insurer Only when the applicant is over age 65

Under a guaranteed renewable LTCI policy, the insurer may:

Cancel the policy at any time with 60 days' notice Increase premiums for a class of policyholders with state regulatory approval Reduce benefits if the insured files too many claims Require the insured to submit to a medical exam each year

Florida law limits the maximum LTCI elimination period to:

90 days 120 days 180 days 365 days

The Minimum Monthly Maintenance Needs Allowance (MMMNA) is intended to protect the monthly income of:

The nursing home resident on Medicaid The community spouse remaining at home The state Medicaid program Adult children who contribute to care costs

The LTCI personal worksheet used in the sales process is designed primarily to:

Calculate the exact premium for the recommended policy Help the agent and applicant document suitability considerations such as income, assets, and premium affordability Replace the outline of coverage required by state law Establish the insured's health history for underwriting purposes

Even a wealthy individual may benefit from purchasing LTCI because it:

Qualifies them automatically for Medicaid Converts an unpredictable long-term care liability into a regular, budgetable premium payment Eliminates all nursing home expenses Guarantees a fixed rate of return on premiums paid

The primary advantage of a long-term care partnership policy over a standard LTCI policy is that it:

Offers lower premiums than comparable non-partnership policies Provides Medicaid asset protection equal to LTCI benefits received if the insured eventually applies for Medicaid Guarantees the insured will qualify for Medicaid when benefits are exhausted Covers a broader range of services than non-partnership policies

Student Information