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Free Accident and Health or Sickness Agent License Examination Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the Accident and Health or Sickness Agent License Examination practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1Which transaction falls within a California Accident and Health or Sickness agent's licensed authority?

    1. A. Selling homeowners insurance
    2. B. Selling coverage for sickness and bodily injury, including disability income
    3. C. Selling fixed annuities
    4. D. Selling commercial auto insurance

    Answer: B

    Explanation: Section 1626(a)(2) says this license may "transact insurance coverage for sickness, bodily injury, or accidental death" and may include disability-income benefits. The other choices require different authorities.

    Reference: California Code, INS 1626. — §1626(a)(2)

  2. 2A policy has a $600 annual deductible and no earlier covered claims this year. Assuming a covered service is subject to the deductible, how much must the insured pay toward it before the plan begins paying?

    1. A. The first $200 of covered charges
    2. B. The first $400 of covered charges
    3. C. The first $600 of covered charges
    4. D. The first $800 of covered charges

    Answer: C

    Explanation: "The amount you pay for covered health care services before your insurance plan starts to pay." The stated deductible is the insured-paid amount before the plan begins paying. The other dollar amounts confuse it with some different plan design.

    Reference: HealthCare.gov — HealthCare.gov glossary, Deductible

  3. 3What employer group size generally brings a California group policy within Cal-COBRA?

    1. A. 2–19 employees
    2. B. 20–49 employees
    3. C. 50–99 employees
    4. D. 100 or more employees

    Answer: A

    Explanation: Section 10128.50 states the California law's intended reach for employers "with 2 to 19 eligible employees" who lack federal COBRA continuation.

    Reference: California Code, INS 10128.50 — California Insurance Code §10128.50(b)

  4. 4A client asks whether one positive HIV result by itself permits immediate declination of California disability-income coverage. What should the producer explain?

    1. A. The result alone cannot support declination
    2. B. The result alone may support transfer to traditional medical underwriting
    3. C. A different rate may be based on sound actuarial principles and experience
    4. D. The statute applies when coverage is contingent on medical review for other conditions

    Answer: A

    Explanation: California section 799.02(a) says an insurer "shall not decline an application or an enrollment request" based solely on a positive HIV test. The distractors state real adjacent underwriting rules, but none permits immediate declination on that result alone.

    Reference: California Code, INS 799.02 — California Insurance Code §799.02(a)–(d)

  5. 5For a California license issued after January 1, 1992, how much LTC training is required in each of the first four 12-month periods?

    1. A. Four hours
    2. B. Eight hours
    3. C. Twelve hours
    4. D. Twenty-four hours

    Answer: B

    Explanation: Section 10234.93(a)(4)(A) requires "eight hours of training in each of the first four 12-month periods." Thus the annual amount is eight hours.

    Reference: California Code, INS 10234.93 — California Insurance Code §10234.93(a)(4)(A)

  6. 6A California Accident and Health or Sickness agent wants to transact life insurance solely under that license. What is correct?

    1. A. The license permits life insurance only for existing health clients
    2. B. The license permits term life but not permanent life
    3. C. The agent must obtain the appropriate life authority
    4. D. The agent may sell life insurance after insurer appointment

    Answer: C

    Explanation: California's objectives state that these agents "do not have authority to transact life, annuity, property, or casualty insurance." An appointment cannot enlarge the statutory license scope.

    Reference: 2025 Ahs License Exam Objectives — Introduction, item (4)

  7. 7An insured has met a $100 deductible and incurs a covered service with a $200 allowed cost and 20% coinsurance. Ignoring any out-of-pocket maximum, what is the insured's coinsurance?

    1. A. $20 of the allowed service cost
    2. B. $40 of the allowed service cost
    3. C. $160 of the allowed service cost
    4. D. $200 of the allowed service cost

    Answer: B

    Explanation: "The percentage of costs of a covered health care service you pay (20%, for example) after you've paid your deductible." The insured owes 20% of the $200 allowed cost, or $40. $20 mistakenly applies the rate to the $100 deductible, $160 is the complementary 80% share, and $200 ignores coinsurance.

    Reference: HealthCare.gov — HealthCare.gov glossary, Coinsurance

  8. 8When advising a small employer whether its insured plan falls under Cal-COBRA, what working-day threshold should a California producer recognize?

    1. A. 25 percent
    2. B. 50 percent
    3. C. 75 percent
    4. D. 90 percent

    Answer: B

    Explanation: Section 10128.51(e) uses "at least 50 percent of its working days" in the applicable measurement period. The producer identifies the coverage rule and should refer administration to the responsible plan parties.

    Reference: California Code, INS 10128.51 — California Insurance Code §10128.51(e)

  9. 9When may a California disability-income insurer refuse or limit coverage for an HIV-positive applicant?

    1. A. Whenever the producer prefers
    2. B. When based on sound actuarial principles and actual or reasonably anticipated experience
    3. C. Only because the HIV test was positive
    4. D. Only when no medical review applies to other conditions

    Answer: B

    Explanation: Section 799.02(b) permits the action if it is "based on sound actuarial principles and actual or reasonably anticipated experience." A positive test alone cannot control.

    Reference: California Code, INS 799.02 — California Insurance Code §799.02(a)–(b)

  10. 10After the first four annual periods, when must a California LTC producer complete the recurring eight hours of LTC training?

    1. A. Before every monthly sale
    2. B. Once every ten years
    3. C. Before each license renewal
    4. D. Only after a complaint

    Answer: C

    Explanation: Section 10234.93(a)(4)(A) then requires eight hours "prior to each license renewal." It is a renewal-cycle duty, not a monthly or complaint-triggered one.

    Reference: California Code, INS 10234.93 — California Insurance Code §10234.93(a)(4)(A)

Topics in this practice bank

These topics describe the available practice for Accident and Health or Sickness Agent License Examination. Review the examination outline and its sources for scope and allocation details.

  • I. General Insurance
    • I.A.Basic Insurance Concepts and Principles (7 questions of the 18 General Insurance questions) Be able to: 1.Identify the definition of insurance (California Insurance Code section 22) 2.Recognize the definition of risk 3.Differentiate between a pure risk and a speculative risk 4.Identify the definition of peril 5.Identify the definition of hazard 6.Differentiate between moral, morale, and physical hazards 7.Identify the definition of the law of large numbers 8.Identify the definition or the correct usage of the term loss exposure 9.Identify risk management techniques 10.Identify risk situations that present the possibility of a loss 11.Recognize the requisites of an ideally insurable risk 12.Identify the definition of insurable events (California Insurance Code section 250) 13.Identify and apply the definitions of insurable interest, the principle of indemnity and utmost good faith 14.Identify the steps in the underwriting process 15.Identify the meaning of adverse selection and profitable distribution of exposures
    • I.B. Contract Law (4 questions of the 18 General Insurance questions) 1.Be able to compare contract law and tort law 2.Be able to identify the four basic elements of a contract a.Agreement, offer, and acceptance b.Competent parties c. Legal purpose d.Consideration 3.Be able to identify the meaning and effect of the following special characteristics of an insurance contract a.Contract of adhesion b.Conditional contract c.Aleatory d.Unilateral e.Personal 4.Be able to identify the term “insurance policy” (California Insurance Code section 380) 5.Be able to identify the meaning and effect of each of the following on a contract: a.Concealment (California Insurance Code section 333) i.Be able to identify information that does not need to be communicated in a contract: 1)Known information 2)Information that should be known 3)Information which the other party waives 4)Information that is excluded by a warranty and not material to the risk 5)Information that is excepted from insurance and not material to the risk 6)Information based on personal judgment (California Insurance Code section 339) b.Warranty (California Insurance Code sections 440 through 445, and 447) i.Know that a warranty may be expressed or implied ii.Know that violation of a material warranty allows the other party to rescind the contract c.Representations (California Insurance Code sections 350 through 361) i. Know when a representation can be altered or withdrawn (California Insurance Code section 355) ii.Know that a representation is false when the facts fail to correspond with its assertions or stipulations (California Insurance Code section 358) iii.Know that a representation cannot qualify an express provision in a contract of insurance, but it may qualify an implied warranty (California Insurance Code section 354) d.Misrepresentation (California Insurance Code sections 780 through 784) e.Materiality (California Insurance Code section 334) i.Know that materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts on the party to whom the communication is due 6.Be able to identify when an insurer has the right of rescission (California Insurance Code sections 331, 338, 359, and 447) a.Know that either intentional or unintentional concealment entitles an injured party to rescission of a contract (California Insurance Code section 331) 7.Be able to identify six required specifications for all insurance policies (California Insurance Code section 381) a.The parties between whom the contract is made b. The property or life insured c.The interest of the insured in property insured, if he is not the absolute owner thereof d.The risks insured against e.The period during which the insurance is to continue f.Either: i.A statement of the premium ii.If the insurance is of a character where the exact premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined and paid g.Know that the financial rating of the insurer is not required to be specified in the insurance policy (California Insurance Code section 381) 8.Given an insurance situation, be able to identify the following terms correctly: a.Application, policy, rider b.Cancellation, lapse, grace period c.Rate, premium, earned and unearned premium
    • I. C.The Insurance Marketplace (7 questions of the 18 General Insurance questions)
    • I.C.1.Distribution Systems 1.Be able to identify different distribution systems that include, but are not limited to, the following: a.Agency b.Direct response
    • I.C.The Insurance Marketplace (7 questions of the 18 General Insurance questions)
    • I.C.2.Producers 1.Be able to understand the general rules of agency as they apply to an agent, broker, and insurance company a.The responsibilities and duties of each b.The effect of the types of authority an agent may exercise (express, implied, and apparent) 2.With regard to the underwriting of applicants and/or insureds, be able to: a.Identify a producer’s responsibilities b.Understand the insurers’ requirements 3.Be able to define the following: a.Accident and Health or Sickness agent (California Insurance Code section 1626(a)(2)) b. Certified insurance agent (California Code of Regulations, Title 10, section 6800) c.Life agent (California Insurance Code section 1626(a)(1)) d.Life and disability insurance analyst (California Insurance Code sections 32.5, and 1831 through 1849) 4.Be able to identify the California Insurance Code definition of transact and why the definition is important (California Insurance Code sections 35, 1631, and 1633). a.Have knowledge of the penalties for transacting without a license (California Insurance Code section 1633) 5.Be able to identify: a.That the California Insurance Code prohibits certain acts by unlicensed persons (California Insurance Code section 1631) b.The penalties for such prohibited acts (California Insurance Code section 1633) 6.Written Consent in Regards to Interstate Commerce (Prohibited Persons in Insurance): a.Be able to identify what conduct is prohibited by United States Code, title 18, section 1033 b.Be able to identify what civil and criminal penalties apply (United States Code, title 18, sections 1033 and 1034) 7.Be able to identify the differences between the terms “agent” and “broker” with respect to their relationship with insurers and with their insureds a.Insurance agent means a person authorized, by and on behalf of an insurer, to transact all classes of insurance other that life, disability, or health insurance (California Insurance Code section 31) b. A life licensee is a person authorized to act as a life agent on behalf of a life insurer or a disability insurer to transact life insurance, accident and health or sickness insurance, or life and accident and health or sickness insurance (California Insurance Code section 32) c.Insurance broker means a person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health with, but not on behalf of, an insurer (California Insurance Code section 33) 8.Be able to recognize: a.The differences between the authority of an agent and a solicitor; b.That there is no such license as “accident and health or sickness solicitor” (California Insurance Code section 1704(d)) c.That an insurance solicitor is a natural person employed to aid an insurance agent or insurance broker in transacting insurance other than life, disability, or health (California Insurance Code section 1624) 9.For Insurance Agent’s Errors & Omissions insurance, be able to identify: a.The types of coverages available b.The types of losses commonly covered and not covered c.The need for the coverage 10.Be able to identify acts prohibited (unless a surplus line broker) with regard to non-admitted insurers (California Insurance Code section 703) 11.Be able to identify the prohibitions of free insurance (California Insurance Code section 777.1) 12.Be able to identify the California Insurance Code requirements for the following: a.An agency name, use of name (California Insurance Code sections 1724.5 and 1729.5) b.Change of address (California Insurance Code section 1729) c.Filing license renewal application (California Insurance Code section 1720) d.Printing license number on documents (California Insurance Code section 1725.5) 13.Be able to identify the records an insurer and agents must maintain (California Insurance Code sections 10508 through 10508.5) 14.Be able to identify the California Insurance Code specifications regarding producer application investigation, denial of applications, and suspension or revocation of license (California Insurance Code sections 1666, 1668 through 1670, and 1738) 15.Be able to identify the importance and the scope of the California Insurance Code regarding: a.The filing of a notice of appointment to transact accident and health or sickness insurance (California Insurance Code sections 1704 and1705) b.An inactive license (California Insurance Code section 1704(b)) c.Cancellation of a license by the licensee in the licensee's possession or in the employer’s possession (California Insurance Code section 1708) 16.Be able to identify the scope and effect of the California Insurance Code regarding termination of a (producer’s) license, including when producers dissolve a partnership (California Insurance Code sections 1708 through 1712.5) 17.Be able to identify and apply: a.The definition of the term "fiduciary" b.Producer fiduciary duties (California Insurance Code sections 1733 through 1735) 18.Be able to identify the continuing education (CE) requirements for: a.An individual licensed as an accident and health or sickness agent (California Insurance Code sections 1749.3 through 1749.33) i.Accident and health or sickness agents also licensed as a property and casualty may complete 24 hours of continuing education in either license type, three (3) hours of which must be in ethics (California Insurance Code sections 1749.3(b) and 1749.33(b)) ii.An agent writing long-term care insurance (LTC) (California Insurance Code section 10234.93) iii.Agents writing applications for Partnership coverage must also meet additional CE requirements for the California Partnership for Long-Term Care (CPLTC) (California Code of Regulations, Title 22, section 58056) iv.The total hours of continuing education required for the accident and health or sickness agent are not increased by LTC or CPLTC 19.Be able to identify the definition of “administrator” (California Insurance Code section 1759) 20.Concerning a Life and Disability Insurance Analyst license, be able to identify the requirements and prohibitions for charging fees (California Insurance Code section 1848) The following License Examination Objectives are derived from the California Insurance Code and codes of ethics of major industry organizations. This is the basis for accident and health or sickness examination questions. 21.Be able to identify and apply the meaning of the following: a.Place the customer's interest first b.Know your job and continue to increase your level of competence c.Identify the customer’s needs and recommend products and services that meet those needs d.Accurately and truthfully represent products and services e.Use simple language; talk the layman’s language when possible f.Stay in touch with customers and conduct periodic coverage reviews g.Protect your confidential relationship with your client h.Keep informed of and obey all insurance laws and regulations i.Provide exemplary service to your clients j.Avoid unfair or inaccurate remarks about the competition 22.Be able to identify that the California Insurance Code and the California Code of Regulations identify many unethical and/or illegal practices, but they are NOT a complete guide to ethical behavior 23.Be able to identify special ethical concerns that may occur when dealing with Senior Citizens 24.Be able to identify the alterations an agent may make to an applicant's written disability application (California Insurance Code section 10382)
    • I.C. The Insurance Marketplace (7 questions of the 18 General Insurance questions)
    • I.C.3.Insurers 1.Be able to differentiate between: a.Admitted and non-admitted insurers (California Insurance Code sections 24 through 25) b.Domestic, foreign and alien insurers (California Insurance Code sections 26 through 27) c.Regulation of an admitted insurer and non-admitted insurer, and the potential consequences for consumers (California Insurance Code sections 24, 25, and 1760 through 1780) 2.Be able to identify the penalty for unlawfully acting as an insurer without a certificate of authority (California Insurance Code section 703) 3.Be able to identify the functions of the following major operating divisions of insurers: marketing or sales, underwriting, claims, and actuarial 4.Be able to identify that a primary insurer (e.g., ceding company) is the insurance company who transfers its loss exposure to another insurer in a reinsurance transaction 5.Know that any person, association, organization, partnership, business trust, limited liability company, or corporation capable of making a contract may be an insurer (California Insurance Code sections 19 and 150) 6.Be able to differentiate between mutual, stock, and fraternal insurers a.Earned surplus b.Divisible surplus as policy dividends
    • I.C.The Insurance Marketplace (7 questions of the 18 General Insurance questions)
    • I.C.4.Market Regulation – General 1.Be able to identify: a.The California Insurance Code and how it may be changed b.The California Code of Regulations, Title 10, chapter 5 and how it may be changed c.How the Insurance Commissioner is selected and the responsibilities of the position (California Insurance Code sections 12900 and 12921) 2.Be able to identify that the California Department of Insurance Department) has jurisdiction over entities that provide coverages designed to pay for health care providers' services and expenses unless the health care providers are appropriately licensed or certified by other governmental agencies (California Insurance Code section 740) a.The Department is the primary regulator of issuers of most Preferred Provider Organization (PPO) and Exclusive Provider Organization (EPO) plans and other disability insurance companies b.The California Department of Managed Health Care is the Primary regulator of issuers of all Health Maintenance Organization (HMO) and Point of Service (POS) plans, and some PPO and EPO plans, http://www.dmhc.ca.gov/ 3.Be able to identify the correct application of the Unfair Practices article, including its prohibitions and penalties (California Insurance Code sections 790 through 790.15) a. Know that only the Commissioner may enforce the provisions of the Unfair Practices Act 4.Be able to identify the privacy protection provisions of: a.The Gramm-Leach-Bliley Act (GLBA)/California Financial Information Privacy Act (California Financial Code sections 4050 through 4060) b.Insurance information and Privacy Protection Act regarding practices, prohibitions and penalties (California Insurance Code sections 791 through 791.29) 5.Be able to define an insolvent insurer (California Insurance Code section 985) a.Know the definition of Paid-in Capital (California Insurance Code sections 36 and 985) b.Know that it is a misdemeanor to refuse to deliver any books, records, or assets to the Commissioner once a seizure order has been executed in an insolvency proceeding (California Insurance Code section 1013) 6.Be able to identify the scope and correct application of the conservation proceedings described in California Insurance Code sections 1011, 1013, and 1016 7.Be able to identify the purpose and scope of the California Insurance Code concerning the California Life and Health Insurance Guarantee Association (CLHIGA) (California Insurance Code sections 1067.02(a)(1) and 1067.02(b)(1)) a. Basic coverage and exclusions of CLHIGA (California Insurance Code sections 1067 through 1067.18) 8.Be able to identify the scope and correct application of the False and Fraudulent Claims article of the Code (California Insurance Code sections 1871 and 1871.4) a.Efforts to combat fraud (California Insurance Code sections 1872, 1874.6, 1875.8, 1875.14, 1875.20, and 1877.3(b)(1)) b.That if an insured signs a false claim form, the insured may be guilty of perjury 9.Be able to identify the requirements for discontinuance and replacement of Group Disability Insurance (California Insurance Code sections 10128.1 through 10128.4) 10.Be able to identify discriminatory practices prohibited by the California Insurance Code (California Insurance Code sections 10140 through 10145) 11.Be able to identify the meaning of shall and may (California Insurance Code section 16) 12.Be able to identify the requirements for notice by mail and by electronic transmission (California Insurance Code sections 38 and 38.6)
    • I.C. The Insurance Marketplace (7 questions of the 18 General Insurance questions)
    • I.C.5.Fair Claims Settlement Practices Regulations (California Code of Regulations Title 10, chapter 5, subchapter 7.5, article 1) 1.Be able to identify a definition of the following: a.Claimant (California Insurance Code section 2695.2(c)) b.Notice of legal action (California Code of Regulations Title 10, section 2695.2(o)) c.Proof of claims (California Insurance Code section 2695.2(s)) 2.Be able to identify File and Record Documentation (California Code of Regulations, Title 10, section 2695.3) 3.Be able to identify Duties upon Receipt of Communications (California Insurance Code section 2695.5) 4.Be able to identify Standards for Prompt, Fair and Equitable Settlements (California Code of Regulations, Title 10, sections 2695.7(a), (b), (c), (g), and (h))
  • II. General Concepts of Medical and Disability Insurance
    • II.A.General Concepts (4 questions of the 4 Health and Disability Insurance questions) 1.Be able to identify and/or apply your understanding of the following: a.Accidental means vs. accidental bodily injury Accident vs. sickness Coinsurance Copayment Deductible Elimination period Extension of benefits Gatekeeper concept Managed care Master policy owner Preexisting conditions Probationary period Stop-loss provision Waiver of premium Waiting period b.Cancellation and renewability features (e.g., cancellable, optionally renewable, conditionally renewable, guaranteed renewable, noncancelable) 2.Be able to identify a definition of the following limited insurance policies: a.Travel accident b.Specified or dread disease and critical illness c.Hospital income and hospital confinement indemnity d.Accident only e.Credit disability 3. Be able to describe limited benefit plans according to: a.Policies that provided benefits for expenses incurred for an accidental injury only b.Policies that pay fixed dollar amounts for specified diseases or other specified impairments c.Policies that provide benefits for specified limited services d.Indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies
  • III. Medical Expense Insurance
    • III.A. Individual Insurance (14 questions of the 45 Accident and Health or Sickness Insurance questions) 1. Be able to identify the: a.Main types of plans i.Health Maintenance Organizations (HMOs) ii.Preferred Provider Organizations (PPOs) iii.Exclusive Provider Organizations (EPOs) b.Consumer Driven Health Plans (CDHPs) i.Health Reimbursement Arrangements (HRAs) ii.Medical Savings Accounts (MSAs) iii.High Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs) iv. Flexible Spending Arrangements (FSAs) c.Optional coverages i.Adult Dental ii.Adult Vision iii.Know that limited pediatric dental and vision benefits are mandatory d.Contract issues and provisions (deductibles, grace period, elimination periods, right to terminate, coordination of benefits, coinsurance, deductible, co-pays, maximum out of pocket expense) e.Common exclusions and limitations
    • III.B.Group Medical Expense Insurance (8 questions of the 45 Accident and Health or Sickness Insurance questions) 1.Know the following characteristics of group medical expense insurance: a.Eligible groups (California Insurance Code sections 10270.5, 10270.505, 10270.55 and 10270.57) i.Small groups (2 through 100 employees) ii. Large groups (101+ employees) iii.Contributory vs. noncontributory participation requirements b.Coverage forms i.Care Plans (HMO, POS, PPO, EPO) ii.Self-funded/self-insured plans 1)Know that self-insured “Association” health plans are prohibited by regulation. iii. Consumer-driven models 1)Flexible Spending Accounts (FSAs) 2)Health Reimbursement Accounts (HRAs) 3)Health Savings Accounts (HSAs) c.Coverage for dependents of insured employees (California Insurance Code section 10270.65) i.Registered domestic partners (California Insurance Code section 10121.7) d.Blanket insurance (California Insurance Code section 10270.2) 2.Large group health insurance underwriting considerations a.Occupational class(es) represented b.Group size and prior claims experience 3.Small group health insurance a.Guaranteed issue b.Businesses with 25 or fewer employees may be eligible for federal premium tax credits i.Must purchase health insurance through the Covered California for Small Business (CCSB) program c.Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) i.Individual Coverage Health Reimbursement Arrangement (ICHRA) 4.Be able to identify the impact of the following legislation on group health insurance a.Employee Retirement Income Security Act (ERISA) b.Consolidated Omnibus Budget Reconciliation Act (COBRA 1985) c.Americans with Disabilities Act (ADA) d.Health Insurance Portability and Accountability Act (HIPAA) e.Family and Medical Leave Act (FMLA) f.Pregnancy Discrimination Act g.Mental Health Parity Act h.Affordability under Patient Protection and Affordable Care Act (PPACA) i.Employer “Shared Responsibility” payments and other penalties i.Cal-COBRA
    • III.C.Patient Protection and Affordable Care Act (PPACA) (Public Law 111 through 148) (8 questions of the 45 Accident and Health or Sickness Insurance questions) 1.Be able to identify the purpose of the Act 2.Overview a.Modified Adjusted Gross Income (MAGI) eligibility for Medi-Cal i.Individuals age 19 through 64 qualify with household income up to 138 percent of the Federal Poverty Level (FPL) ii.Children under age 19 qualify if household income is up to 266 percent FPL b.MAGI eligibility for Cost Sharing Reductions (CSR) i.Consumers qualify for varying CSRs between 138 percent and 250 percent FPL c.Know that health insurance is now guaranteed issue i.Know the definition of Open Enrollment Period ii.Know the requirements for a Special Enrollment Period d.Advance Premium Tax Credits (APTCs) may be available to certain households with income not more than 400 percent FPL i.Calculated by California Health Benefit Exchange (Covered California) and paid by the Exchange to insurers 3.PPACA Definitions a.Qualified Health Plan (QHP) b.Guaranteed issue - all new group and individual health policies c.Advanced Premium Tax Credits d.Essential Health Benefits e.Open Enrollment Period (OEP) f.Special Enrollment Period (SEP) requirements g.Cost Sharing Reductions h.Health plan metal tiers - Bronze, Silver, Gold, Platinum 4.Be able to identify and differentiate between a.QHP – Qualified Health Plan b.Minimum Essential Coverage i.Minimum actuarial value requirement of each “metal tier” of benefits c.Essential Health Benefits 5.California Health Benefit Exchanges (Individual Exchange and Covered California for Small Business (CCSB)) a.Consumers must purchase a QHP through Covered California to obtain Premium Tax Credits i.Know that the CCSB program serves small businesses with up to 50 employees b.Know that agents writing applications for QHPs through Covered California must first complete all Covered California agent agreements and certification requirements 6.Know that coverage for children under a parent’s individual or group policy may extend through 26th birthday or unless the child qualifies as a disabled dependent a.Know that COBRA permits a child who “ages out” of a group health plan to continue coverage under the group plan for up to 36 months 7.Know the definition of Medical Loss Ratio (MLR) a.Individual Plans 80 percent b.Group plans 85 percent c.Know that any insurer that fails the MLR test in a calendar year for all plans in a given market segment (individual or group) must refund excess premiums to consumers enrolled in plans in that market segment
    • III.D.Senior Health Products (15 questions of the 45 Accident and Health or Sickness Insurance questions) 1.Medicare a.Be able to describe Original Medicare and Medicare Advantage b.For Medicare, be able to identify who is eligible for coverage: i.Citizens and legal residents aged 65 or older 1)Must enroll at first eligibility or be subject to late enrollment penalties (10 percent of applicable premium for twice the length of time a beneficiary was not enrolled in Part A, 10% lifetime penalty per each 12-month period not enrolled in Part B) 2)Legal residents must have been in the United States at least five years 3)Monthly Part A premiums required when beneficiary is not “Fully Insured” under Social Security a)30 through 39 credits b)0 through 29 credits ii.Social Security Disability (SSDI) – two years iii.End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS, known as “Lou Gehrig’s Disease”) c.Medicare Part A (Hospital Insurance), be able to identify: i.Inpatient coverage (does not include physician or surgeon charges) ii.Benefit period (beginning and ending dates) iii.Hospital admission annual deductible iv.Co-payments for hospital days 61 to 90, and the 60 lifetime reserve days 1)When lifetime reserve days are exhausted, there is no out-of-pocket maximum for hospitalizations beyond 90 days v.Home care and hospice may be covered following a hospitalization vi.Mental health inpatient hospitalization lifetime limitations d.Medicare Part B – (Medical Insurance) be able to identify: i.Enrollment in Part B 1)Initial Eligibility Period (seven-month window) 2)Automatic eligibility at age 65 for citizens and legal residents entitled to Part A. 3)Enrollment may be rejected or delayed without penalty while covered by any employer-sponsored health plan 4)Special Enrollment Period (eight-month window) 5)General Enrollment Period (January 1 to March 31) ii.A monthly premium is paid by all beneficiaries. High-income beneficiaries are assessed higher monthly premiums. iii.Annual deductible iv.Coinsurance – Generally 80-20 v.Benefits 1)Medically necessary outpatient health and diagnostic services 2)Physicians and surgeon’s services (in and out of hospital) 3)Home and hospice care not covered under Part A 4)No annual out-of-pocket maximum for Part B claims 5)Payment differences between using approved physicians vs. non-approved physicians e.Medicare Supplement Insurance, be able to identify: i.The federally standardized Medicare Supplement policies and the gaps in Medicare coverage they are designed to fill 1)Basic (or “core”) benefits of Plan A are applicable to all plans 2)The additional benefits included in plans B, C, D, F (including High Deductible and Innovative options), G, K, L, M, and N. ii.California Insurance Code requirements regarding the following: 1) Benefits required in each standardized plan (California Insurance Code section 10192.8) and Medicare Select plans (California Insurance Code section 10192.10) a)Know that insurers offering Medicare Supplement policies must offer Medicare Supplement Plan A and either Plan C or F b)Open enrollment period described in California Insurance Code section 10192.11 and application questions described in California Insurance Code section 10192.18 c)Guaranteed issue periods described in California Insurance Code section 10192.12 d)Permitted commissions (California Insurance Code section 10192.16) e)Inappropriate sales and replacement (California Insurance Code section 10192.20) f)Know that a person cannot receive benefits from more than one Medicare Supplement plan and that applications must include a question to identify persons who already are enrolled in a Medicare Supplement plan g)Know that Medicare Advantage is not a Medicare Supplement plan and does not coordinate with Medicare Supplement plans iii.The Medicare disclosure requirements for: a)Outline of coverage (California Insurance Code section 10192.17(l)(3)(G)) b)Application (California Insurance Code section 10192.18(a)(6)) c)Replacement (California Insurance Code section 10192.18(e)) d)Commissioner’s Annual Rate Guide (California Insurance Code section 10192.20(e)(4)) f.For Medicare Part C (Medicare Advantage), describe the managed care aspects of the coverage provided by health care organizations i.HMO and PPO models ii.Private Fee for Service plans (PFFS) iii.Special Needs Plans (SNP) 1)Medicare – Medi-Cal dual eligible – Dual Special Needs Plans (D-SNP) a)Purpose b)Eligibility - who is eligible, including those with a Share of Cost 2)Persons with ESRD iv.Know that enrollment in a stand-alone PDP automatically terminates enrollment in a Medicare Advantage plan v.Coverage 1)Must cover all benefits provided under Original Medicare but may cover claims to a greater extent than Original Medicare 2)May reduce out-of-pocket costs for senior health care 3)May include additional health care benefits not covered by Original Medicare 4)May include optional and/or “value added” services and benefits g.For Medicare Part D (Prescription Drug Plan) be able to identify: i.Enrollment is optional 1)That failure to maintain “creditable coverage” for prescription drugs after age 65 may result in a lifetime one percent per month premium penalty for each month without such coverage ii.Premiums, deductibles and copayments iii.Be able to identify how Medicare enrollment periods: 1)Initial Enrollment Period (IEP) A.Annual Enrollment Period (AEP) also known as Open Enrollment Period (OEP) B.Special Enrollment Period (SEP) iv.That PDPs may be purchased as stand-alone plans or embedded within Medicare Advantage plans (“MAPD”). v.That a beneficiary may enroll in a PDP if they are enrolled in Part A and/or Part B vi.The coverage periods, deductibles, and co-payments in a PDP vii.The coverage gap and catastrophic coverage, and when each applies to a beneficiary viii.Insurance companies must create and annually file a formulary 1)Be able to explain formulary “tiers” and their importance 2)A formulary must include at least two drugs in each treatment category, but is not required to include all drugs h.Be able to identify how Medicare claims payments are handled under the Original Medicare Fee for Service program: i.Medicare claims are submitted by health care providers and approved medical equipment suppliers to Centers for Medicare and Medicaid Services’ (CMS) ii.“Medicare assignment” vs. non-assignment iii.What information is provided in a “Medicare Summary Notice” (MSN) iv.Common coverage exclusions for Part A and B v.When a beneficiary has the Right of Appeal and how an appeal is processed 2.Health Insurance and Counseling Advocacy Program (HICAP) a.Be able to identify that HICAP is a federally mandated, state and federally funded program that provides free assistance to Medicare beneficiaries and their families concerning Medicare, Medicare Advantage, Medicare Supplement Insurance, Prescription Drug Plans, Medi-Cal, and Long-Term Care Insurance i.The educational services, consumer advocacy, and legal assistance provided ii.The program is administered by the Department of Aging and operated locally by Area Agencies on Aging iii.HICAPs provide assistance by phone or in person, some HICAPs can also provide legal assistance in regard to Medicare and Medi-Cal. 1)Contact information for the local HICAP agencies can be found at: https://www.aging.ca.gov/ProgramsProviders/AAA/AAA_Listing.aspx 3. Centers for Medicare & Medicaid Services (CMS) compliance and regulations that agents and brokers are required to adhere to before assisting consumers with selecting and enrolling in qualified health plans (QHPs) a.Third Party Marketing Organization (TPMO) Disclaimer b.Call Recording c.Permission to Contact d.Scope of Appointment e.Marketing Rules f. Events & Appointments g.Websites h.Secret Shoppers (enforcement of consumer protections)
  • IV. Disability Income Insurance
    • IV.A.Individual Disability Income Insurance Underwriting, Pricing, Claims (4 questions (5 percent) on the examination) 1.Purpose of underwriting a.Prevention of adverse selection b.Properly classify risks i.Be able to differentiate between preferred, standard, and substandard risk classification ii.Underwriting responses to substandard risks 2.Process of underwriting a.Be able to identify the responsibility of the agent as the field underwriter i.Field underwriting prior to application ii.The agent’s report iii.Know that the insurers must not make unfair distinctions between individuals in underwriting for the risk of human immunodeficiency virus (HIV) and acquired immune deficiency syndrome (AIDS) (California Insurance Code section 799) iv.Know that insurers may not unfairly discriminate on the basis of tests of a person’s genetic characteristics (California Insurance Code Section of 10146) 1)“Genetic characteristics” means any scientifically or medically identifiable gene or chromosome that is known to be a cause of a disease or disorder that is presently not associated with any symptoms of any disease or disorder (California Insurance Code section 10147(b)) b.Completing the application i.The application must be completed accurately and truthfully to the best of the agent’s ability ii.Know that basic underwriting requirements will vary based on the company c.Know that additional information may be required if an application reveals certain health conditions or other risk exposures i.MIB Inc. (formerly “Medical Information Bureau”) report ii.Attending Physician’s Statement (APS) iii.Credit and/or inspection report iv.Department of Motor Vehicle (DMV) report v.Hazardous activity questionnaires (e.g., aviation, scuba diving, auto/boat/motorcycle racing) vi.Additional medical testing (e.g., electrocardiogram (EKG), treadmill examination, physician examination) 3.Underwriting outcomes a.Insurer b.Insured c.Agent 4.Be able to identify the following rate-making components: a.Morbidity b.Insurer expenses c.Investment return d.Benefit duration i.Probationary period ii.Elimination period 5.For disability income insurance, be able to identify: a.The need for the coverage b.Definitions of partial and total disability (including Social Security definition) and eligibility requirements c.The difference between occupational and nonoccupational coverage d.Reasons for insurer limitations on coverage amounts e.Purposes of and needs for long-term disability vs. short-term disability policies i.Reasons why persons might need only one or both coverages 6.Be able to identify the uses of disability income: a.Individual disability income policy b.Business overhead expense policy c.Business disability buyout policy d.Group disability income policy e.Key employee and partner policies 7.Be able to identify how and why each of the following applies to eligibility and/or rating factors to influence rating structures: a.Age b.Gender d.Job classification e.Avocations f.Health (past and present) 8.Be able to identify the income tax liabilities on premiums and benefits for the participants and of sponsors of the following policies: a.Group b.Individual 9.Be able to identify each of the following provisions and/or riders for Disability Insurance: a.Maximum and minimum benefits b.Notice of claim c.Automatic increase provision / future purchase provision d.Own occupation vs. any occupation definitions of disability e.Cost of living rider f.Benefit period g.Social insurance substitute (or supplement) rider h.Benefit integration i.Residual disability j.Recurring disability k.Rehabilitation benefit l.Transplant benefit
  • V. Long-Term Care Insurance
    • V.A.Long-Term Care (California Insurance Code section 10231) (4 questions (5 percent) on the examination) 1.Regarding long-term care insurance, be able to identify: a.Why this coverage might be needed (i.e. Medicare limitations, Medi-Cal eligibility) b.The standard levels of care i.Skilled nursing ii.Intermediate nursing iii.Custodial or non-skilled nursing iv.Home care v.Community based services c.Places services are generally provided i.Nursing homes ii.Assisted living facilities iii.Residential care facilities for the elderly (RCFE) iv.Home setting, personal care v.Hospice care vi.Respite care vii.Adult day care centers d.The triggers for policy benefits – Activities of Daily Living (ADL), Cognitive Impairment or Alzheimer’s disease e.Marketing standards and responsibilities including Health Insurance Counseling and Advocacy Program (HICAP) (California Insurance Code section 10234.95(c)(3)) f.Available forms of LTC Coverage i.Individual and group policies 1)Tax qualified 2)Non-tax qualified 3)California Partnership for Long-Term Care (California Code of Regulations, Title 10, section 58056) 4)Endorsement/rider to life or annuity policies g.Guaranteed renewability and rates 2. Consumer protection regarding long-term care insurance: a.Know the requirement for producers to complete LTC training prior to selling products (California Insurance Code section 10234.93) b.Be able to identify the provisions about duty of honesty, good faith, and fair dealing (California Insurance Code section 10234.8) c.Be able to identify the provisions about replacement of long-term care insurance unnecessarily (California Insurance Code section 10234.85) d.Be able to identify the disclosure requirements for cold lead advertising (California Insurance Code sections 10234.9(c) and 10234.93(b)(3)) e.Be able to identify the provisions about suitability standards (California Insurance Code section 10234.95) i.Know the requirements to complete a LTC Insurance Personal Worksheet f.Be able to identify the provisions about replacement coverage (California Insurance Code section 10234.97(a) and (b)) i.Know the limitations on producer compensation for replaced policies

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