- (Topic 1)
The Sanford Group, a provider group, entered into a risk contract with a health plan. Sanford has purchased aggregate stop-loss coverage with an attachment point of 115% of the group's predicted healthcare costs of $2,000,000 for the year. Sanford has a copayment of 10% for any costs above the attachment point. If Sanford's actual costs for the year are $2,800,000, then, according to the terms of the aggregate stop-loss agreement, the amount that Sanford is responsible for is

1. A. $2,080,000
2. B. $2,300,000
3. C. $2,350,000
4. D. $2,380,000

Correct Answer: C

- (Topic 2)
A health plan's costs can be classified as committed costs or discretionary costs. An example of a discretionary cost for a health plan is the cost of its

1. A. Facilities
2. B. Executive salaries
3. C. Employee training
4. D. Equipment

Correct Answer: A

- (Topic 1)
The following statements are about a health plan's underwriting of small groups. Select the answer choice containing the correct statement.

1. A. Almost all states prohibit health plan s from rejecting a small group because of the nature of the business in which the small business is engaged.
2. B. Most states prohibit health plans from setting participation levels as a requirement for coverage, even when coverage is otherwise guaranteed issue.
3. C. In underwriting small groups, a health plan's underwriters typically consider both the characteristics of the group members and of the employer.
4. D. Generally, a health plan's underwriters require small employers to contribute at least 80% of the cost of the healthcare coverage.

Correct Answer: C

- (Topic 2)
A primary reason that a financial analyst would measure the Tapestry health plan's return on assets (ROA) is to determine the

1. A. Amount of net income per share of Tapestry's common stock
2. B. Rate of return on the book value of the stockholders' investment in Tapestry
3. C. Proportion of earnings paid out to Tapestry stockholders in the form of cash dividends
4. D. Efficiency of Tapestry's management

Correct Answer: D

- (Topic 1)
Two sets of financial accounting standards are generally accepted accounting principles (GAAP) and statutory accounting practices (SAP). One true statement about these financial accounting standards is that

1. A. State laws and regulations in the United States govern the implementation of GAAP, but not the implementation of SAP
2. B. Health plans must prepare their financial statements for their external users according to applicable laws, regulations, and accounting principles, particularly GAAP
3. C. GAAP specifically focuses on the requirements of insurance regulators and policyholderinterests
4. D. The Financial Accounting Standards Board (FASB) is a private organization whose purpose is to establish and promote SAP in the United States

Correct Answer: B