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Free AHM-520 Exam Braindumps
Health Plan Finance and Risk Management Questions 61–65 (page: 14)

Updated On: 10-Feb-2026
Page 14 of 44
PDF with 215 Questions

The following statements are about federal laws and regulations which affect health plans that offer products and services to the employer group market. Select the answer choice containing the correct statement.

  1. Amendments to the HMO Act of 1973 require federally qualified HMOs to adjust a group's prior premiums on the basis of the group's experience during the prior rating period.
  2. The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 requires that, if a plan sponsor elects to terminate its group coverage with a health plan, then the health plan must continue its coverage for the COBRA-qualified beneficiaries in the group.
  3. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 generally requires the guaranteed renewal of healthcare coverage for certain individuals and for both small and large groups, regardless of the health status of any member.
  4. The Mental Health Parity Act (MHPA) of 1996 mandates that all health plans must offer benefits for mental healthcare.

Answer(s): C



One true statement about mandated benefit laws is that they

  1. Apply equally to self-funded and fully funded groups
  2. Require a health plan to cover certain conditions or treatments or to pay a specified level of benefits for certain conditions or treatments
  3. Have no impact on a health plan's underwriting and rating decisions
  4. Typically decrease a health plan's risk because the health plan may need to delay premium rate decreases or may be prevented from increasing premium rates

Answer(s): B



With regard to the major risk factors associated with group underwriting, it can correctly be stated that, typically,

  1. The age and gender of group plan members are not predictors of utilization of health services by group members
  2. A health plan's product design or delivery system has an impact on member selection of the health plan, unless the members are in an environment in which employees have at least two benefit options or health plans from which to choose
  3. A health plan should track demographic factors of groups only if the plan specifically adjusts for demographic factors on a group basis
  4. A large group is more likely to exhibit a consistent claims pattern, level of healthcare cost, or utilization of services than is a small group

Answer(s): D



With regard to a health plan's underwriting of groups, it can correctly be stated that, generally, a

  1. Health plan will require that contributory healthcare plans have a participation level of between 50% and 70%
  2. Health plan will decline to cover a group that has been formed for the sole purpose of obtaining healthcare coverage
  3. Health plan's underwriters will not examine the age spread of the entire group being underwritten
  4. Health plan would expect a group with a large proportion of young females to have lower healthcare costs than does a similar group with a large proportion of young males

Answer(s): B



Most organizations that obtain group healthcare coverage can be classified as one of three types of groups: employer-employee groups, multiple employer groups, and professional associations. One true statement about these types of groups is that

  1. Anti selection risk is higher for both multiple-employer groups and professional associations than it is for an employer-employee group
  2. Private employers typically present a higher underwriting risk to health plans than do public employers
  3. Individual members of a multiple-employer group or a professional association typically are required to obtain healthcare coverage through the group or association
  4. I health plan is prohibited, when evaluating the risks represented by a professional association, from considering the industry experience of the agent or broker that sells a group plan to the association

Answer(s): A



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