Question 1

In evaluating the claims experience during a given rating period of the Lucky Company, the Calaway Health Plan determined that the claims incurred by Lucky were lower than Calaway anticipated when it established Lucky's premium rate for the rating period. Calaway, therefore, refunded a portion of Lucky's premium to reflect the better-than-anticipated claims experience. This rating method is known as:

Adurational rating

Bretrospective experience rating

Cblended rating

Dprospective experience rating

Answer : B

Question 2

The Norton Health Plan used blended rating to develop a premium rate for the Roswell Company, a large employer group. Norton assigned Roswell a credibility factor of 0.7 (or 70%). Norton calculated Roswell's manual rate to be $200 and its experience claims cost as $180. Norton's retention charge is $3. This information indicates that Roswell's blended rate is:

A$186

B$189

C$194

D$197

Answer : B

Question 3

The following statements are about the Health Insurance Portability and Accountability Act (HIPAA) as it relates to the small group market. Three of these statements are true and one statement is false. Select the answer choice containing the FALSE statement:

AA health plan that participates in the small group market is required to issue a contract to any employer that requests healthcare benefits, as long as the employer meets the statutory definition of a small group.

BA small group must consist of more than 10 employees in order to be underwritten on a group, rather than an individual, basis.

CA health plan is prohibited from canceling a small group's healthcare coverage because of poor claims experience.

DA health plan that participates in the small group market is limited in placing restrictions such as waiting periods and pre-existing conditions exclusions to individuals in high risk categories.

Answer : B

Question 4

In a comparison of small employer-employee groups to large employer-employee groups, it is correct to say that small employer-employee groups tend to:

AMore closely follow actuarial predictions with respect to morbidity rates

BGenerate more administrative expenses as a percentage of the total premium amount the group pays

CHave less frequent and smaller claims fluctuations

DExpose an health plan to a lower risk of anti selection

Answer : B

Question 5

One way that a health plan can protect itself against case stripping is by requiring:

AEmployees covered by a small group plan to contribute 100% of the cost of the healthcare coverage

BThe small group to have no more than 10 members

CA minimum level of participation in order for a small group to be eligible for healthcare coverage

DIts underwriters to consider the characteristics of the employer, but not of the group members, when underwriting the group

Answer : C

Free Practice Questions for AHIP AHM-520 Exam

Question 1

Question 2

Question 3

Question 4

Question 5