17 Free Arizona Life & Health Practice Questions: Medical Plans; Group Health; Specialized Health Insurance (2026)

Answer: D

The out-of-pocket maximum is the most the insured will pay for covered services in a plan year, including deductible, coinsurance, and copays. Once this limit is reached, the plan pays 100% of covered services. Here, the individual out-of-pocket maximum is $5,000, so the insured will pay no more than that amount, regardless of the total expenses incurred. Options A and B are incorrect because they represent only the deductible amounts, not the total out-of-pocket limit. Option C is incorrect because it ignores the out-of-pocket maximum provision, which caps the insured's liability.

Answer: D

The ACA requires all non-grandfathered individual and small group plans to cover ten categories of essential health benefits, which include mental health and substance use disorder services. Options A, B, and C are not essential health benefits: routine foot care for healthy individuals is not covered, weight loss programs without a medical condition are not required, and cosmetic surgery for aesthetic purposes is explicitly excluded as an EHB.

Answer: D

In group health plans, employees who initially decline coverage may enroll during open enrollment, but the plan may impose a waiting period (e.g., 30 days) for late entrants to prevent adverse selection. The plan does not require evidence of insurability for group health insurance enrollment. Option A is incorrect because waiting periods for late entrants are common. Option B is incorrect because evidence of insurability is not required for group health enrollment. Option C is incorrect because waiving coverage initially does not permanently bar future enrollment.

Answer: D

Individuals with end-stage renal disease (ESRD) are eligible for both Medicare Part A and Part B immediately upon diagnosis, without the usual 24-month waiting period that applies to those eligible due to disability. There is no waiting period for ESRD-based eligibility. Option A incorrectly applies the 24-month disability waiting period. Option B invents incorrect waiting periods. Option C is incorrect because ESRD is a qualifying condition for Medicare eligibility regardless of age.

Answer: A

Under COBRA, a qualifying event such as voluntary or involuntary termination of employment (for reasons other than gross misconduct) or reduction in hours allows the covered employee, their spouse, and dependent children to elect continuation coverage for up to 18 months. The 29-month period applies only if a disability determination is made within the first 60 days of COBRA coverage, extending the standard 18 months. The 36-month period applies to other qualifying events such as death of the covered employee, divorce or legal separation, or a dependent child losing dependent status. Option D is incorrect because COBRA provides the right to continue coverage, not an immediate termination.

Answer: A

Specified disease or dread disease insurance policies typically provide benefits only upon diagnosis of specific conditions as defined in the policy. Many such policies distinguish between invasive and non-invasive (or in situ) forms of cancer, paying benefits only for invasive cancer. Since the insured was diagnosed with melanoma in situ (non-invasive), which is explicitly excluded or not covered under the policy's terms for invasive cancer, the policy will pay $0. Option B is incorrect because the benefit is not paid for non-invasive diagnoses. Options C and D are incorrect as the policy does not provide partial benefits for non-invasive cancer; it pays the full lump-sum only for invasive cancer or nothing.

Answer: D

In an embedded deductible structure (common in family health plans), each individual has their own individual deductible that must be met before the plan begins paying for that individual's services, but payments toward an individual's deductible also count toward the family deductible. Once any individual meets their individual deductible, that amount (up to the individual deductible limit) is credited to the family deductible. In this case, the family member incurred $300 in expenses, but the individual deductible is $250. Therefore, the first $250 applies to satisfy that individual's deductible and is also credited toward the family deductible. The remaining $50 does not count toward either deductible because the individual's deductible has already been met. Thus, $250 applies toward the family deductible. Option A is incorrect because payments do count. Option B is incorrect because only the amount up to the individual deductible counts toward the family deductible in an embedded structure. Option C is incorrect as it confuses the family deductible amount with the amount credited.

Answer: A

The ACA requires that non-grandfathered health plans in the individual and small group markets cover essential health benefits (EHBs) in ten statutory categories: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services (including oral and vision care). Option B is incorrect because while states have flexibility in selecting a benchmark plan to define EHB details, the ten categories are federally mandated and do not vary by state in terms of inclusion. Option C is incorrect because grandfathered plans are exempt from many ACA requirements, including the obligation to cover EHBs. Option D is incorrect because while pediatric dental and vision are EHB categories, adult dental and vision are not automatically included as EHBs; they may be offered as separate or bundled benefits but are not required under the ACA's EHB framework for adults.

Answer: D

D is correct. Federal COBRA applies only to group health plans of employers with 20 or more employees, so this 15-employee plan is outside COBRA entirely. Where it applies, a dependent child who loses dependent status has a 36-month continuation right; employees who lose coverage through termination or reduced hours have 18 months, extended to 29 months for a qualifying disability. A, B and C quote COBRA periods that would be correct for a larger employer; for small employers only state continuation rules can apply.

Answer: A

Critical illness (or specified disease) insurance policies typically pay a lump-sum benefit upon the diagnosis of a covered condition, such as heart attack, stroke, or kidney failure, provided the diagnosis meets the policy's specific criteria (e.g., confirmed by a specialist, meets clinical definitions) and any applicable survival period (e.g., 30 days post-diagnosis) is satisfied. The benefit is not tied to hospitalization duration, actual expenses incurred, or employment status. Option B is incorrect because hospitalization duration is not a standard requirement for benefit payment. Option C describes indemnity or reimbursement-style policies (like medical expense insurance), not lump-sum critical illness policies. Option D is incorrect as return-to-work requirements are not standard for critical illness benefits; they may apply to disability income policies.

Answer: D

During the annual open enrollment period, eligible employees and their dependents can enroll in or change their group health plan coverage without providing evidence of insurability. Open enrollment is a guaranteed issue period for all eligible individuals, regardless of prior waiver of coverage. The employee may enroll themselves and their spouse, subject to the plan's contributory requirements (paying 40% of the family premium). Option A is incorrect because evidence of insurability is not required during open enrollment. Option B is incorrect because spouses can be added during open enrollment without a qualifying event. Option C is incorrect because a prior waiver does not prohibit enrollment during open enrollment.

Answer: D

The ACA requires non-grandfathered individual and small group health plans to cover a set of preventive services (such as immunizations, screenings, and counseling) without imposing any cost-sharing requirements (copayments, coinsurance, or deductibles) when provided by in-network providers. This applies to all such plans, whether sold inside or outside the Health Insurance Marketplace. Employer-sponsored plans are also subject to this rule if they are non-grandfathered. Option A is incorrect because cost-sharing is prohibited for preventive services under the ACA. Option B is incorrect because the requirement applies beyond Marketplace plans. Option C is incorrect because the ACA prohibits annual dollar limits on essential health benefits, including preventive services.

Answer: A

For individuals who enroll in Medicare Part B during the General Enrollment Period (GEP), which runs from January 1 to March 31 each year, coverage begins on the first day of the month after they enroll. For example, if someone enrolls in February, coverage begins March 1. This is different from the Initial Enrollment Period (IEP), where coverage can begin the month of eligibility. Options B, C, and D are incorrect: coverage does not begin the same month as enrollment during the GEP, it is not fixed to July 1, and it does not defer to the following January unless there is a delay in processing, which is not standard.

Answer: A

Specified disease (dread disease) insurance policies pay a lump-sum benefit upon diagnosis of a specifically named condition, such as heart attack or stroke, as defined in the policy. Ischemic stroke is a type of stroke and would be covered if the policy lists 'stroke' as a covered condition. The benefit is paid in full upon diagnosis, assuming the diagnosis meets the policy's definition. There is no inherent reduction for cerebrovascular events, no standard waiting period for benefit payment (unlike some disability policies), and no universal 30-day survival requirement in basic dread disease policies (though some may include it, it is not universal and not indicated here). Therefore, the full $50,000 benefit is payable. Option B is incorrect because there is no waiting period for benefit payment in standard dread disease policies. Option C is incorrect as the benefit is not reduced. Option D is incorrect because a survival period is not a standard feature unless explicitly stated in the policy, which it is not in this scenario.

Answer: C

Individuals enrolled in a Medicare Advantage plan can disenroll and return to Original Medicare during two specific periods: the Annual Election Period (AEP), which runs from October 15 to December 7 each year (for coverage effective January 1), and the Medicare Advantage Open Enrollment Period (MA OEP), which runs from January 1 to March 31 (for changes effective the first of the following month). During the MA OEP, individuals can switch from one Medicare Advantage plan to another or disenroll from Medicare Advantage to return to Original Medicare. Option A is incorrect because it omits the AEP. Option B is incorrect because it omits the MA OEP. Option D is incorrect because changes are restricted to specific enrollment periods; there is no general right to disenroll at any time with notice.

Answer: C

Under federal law (including the Affordable Care Act and ERISA) and standard HMO plan provisions, emergency services must be covered at the in-network benefit level without prior authorization, even if the provider is out-of-network or the plan does not have a contract with the facility. This protects members from financial penalties for seeking necessary emergency care. Options A, B, and D are incorrect because they impose network restrictions, authorization requirements, or reduced payment levels that are not permitted for emergency services under federal regulations and standard HMO contracts.

Answer: D

HMOs require a referral from the primary care physician for specialist visits to be covered; without a referral, the service is typically not covered, except in emergencies. Arizona follows federal HMO regulations under the ACA and state insurance laws that enforce plan terms. Option A is incorrect because network status alone does not override referral requirements. Option B describes a PPO or POS plan feature, not an HMO. Option C is incorrect because appeals are for denied claims, not for bypassing contractual requirements like referrals.