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California Health Practice Exam

20 exam-style questions drawn from the same bank as our full California Health course (California Accident and Health or Sickness Agent Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. Which of the following most accurately summarizes the federal income tax treatment of disability income insurance?
Premiums and benefits are always tax-free regardless of who pays the premium because IRC §104(a)(3) blanket-exempts all accident-and-health benefits from gross income on the individual returnGroup disability benefits are always tax-free under §106 because they flow through an employer plan; individual disability benefits are always taxable as ordinary income under §61 because they are not employer-sponsoredPremiums and benefits are always taxable regardless of who pays the premium because §61 treats employer-sponsored health-related arrangements as constructive compensation to the workerThe tax character of the premium controls the tax character of the benefit: after-tax premium produces tax-free benefits; pre-tax employer premium produces taxable benefits
2. An applicant's real estate license was revoked for cause three years before she applied for an insurance license. Under Cal. Ins. Code section 1669, what may the Commissioner do?
Deny without a hearing, since a license was revoked within five yearsIssue the license, since another agency's action is irrelevantDeny only after notice and a hearing under the Government CodeDeny only if the revocation happened in the last two years
3. A health care service plan licensed under the Knox-Keene Act issues an evidence of coverage to a Visalia member. Which vocabulary and regulator go with that product?
A contract to an enrollee, regulated by the Department of Managed Health CareA policy to an insured, regulated by the Department of Insurance under section 740A certificate to a policyholder, regulated by Covered California as the exchangeA rider to a beneficiary, regulated by the Department of Aging through HICAP
4. A captive agent's only appointment is terminated when he leaves the company. What is the status of his permanent license under Cal. Ins. Code section 1704(b)?
Active, so he may keep writing with any admitted insurer he likesCanceled, so he must pass the examination again to be relicensedSuspended, until the Commissioner holds a hearing to restore itInactive, and a new appointment before expiration reactivates it
5. An insurer wants to require an HIV test from a disability income applicant in Oakland. Under Cal. Ins. Code section 799 and following, what is required?
The test may be required only if the applicant answers a question about sexual orientationNothing; the insurer may test any sample it collects without telling the applicantWritten informed consent, confidentiality, and treatment like other comparable conditionsThe test is prohibited in disability income underwriting in every circumstance
6. Medicare eligibility under the '24-month rule' refers to:
A 24-month US residency requirement for lawful permanent residents before they may enroll in any part of Medicare at age 65 under the federal eligibility frameworkA 24-month statutory waiting period after enrollment in Medicare Part A before Part B medical benefits actually begin under the integrated coverage calendarAutomatic Medicare eligibility for a person who has been entitled to Social Security Disability Insurance (SSDI) benefits for 24 monthsA 24-month income-history look-back applied by SSA when computing the Part B IRMAA income-related premium surcharge for any newly enrolling beneficiary
7. Which statement about dental and vision benefits in a California individual health plan is correct?
Neither adult nor pediatric dental and vision may be included in a medical policyLimited pediatric dental and vision are mandatory; adult dental and vision are optionalAdult dental and vision are mandatory, and pediatric dental and vision are optionalBoth adult and pediatric dental and vision are mandatory essential health benefits
8. Under the ACA, a non-grandfathered individual major-medical plan may set premiums based on which of the following factors?
Only age and geographic rating area; tobacco surcharges were eliminated for non-grandfathered plans by federal rulemakingHealth status at issue, gender of the primary insured, and prior claims history during the look-back rating window applicable to that book of businessAge (within a 3-to-1 cap), tobacco use (within a 1.5-to-1 cap), geographic rating area, and family compositionAny factor the carrier can demonstrate is actuarially justified under filed rates approved by the state insurance commissioner
9. A PPO member deliberately selects an out-of-network plastic surgeon for an elective cosmetic procedure and is later balance billed. Under the No Surprises Act that balance bill is:
Permitted, but only if the surgeon gave written notice 72 hours before surgeryProhibited, because elective surgery is ancillary care at an in-network facilityProhibited, because the Act reaches every out-of-network bill sent to a memberPermitted, because the Act reaches emergency, ancillary, and air ambulance care
10. A company sells a plan under which, for a monthly fee, it will replace a customer's furnace filter every six months and repair the furnace if it breaks down. Applying Cal. Ins. Code section 22, which part of the plan fails the definition of insurance, and why?
The entire plan, because a monthly fee is not consideration sufficient to form a contract of insuranceNeither part, because both involve a contract in which one party undertakes an obligation to anotherThe filter replacement, because a scheduled service that is certain to occur is not a contingent or unknown eventThe repair promise, because a repair is a service rather than an indemnity for loss, damage, or liability
11. An insured with a $2,500 in-network deductible, 80/20 coinsurance, and a $7,000 out-of-pocket maximum has paid $0 toward the deductible so far this plan year. He has outpatient surgery with an in-network allowed amount of $12,000. Excluding any flat copays, his total cost-share for this surgery is:
$2,400, 20% coinsurance applied to the full allowed amount$2,500, the deductible only, because the carrier pays the rest at 80%$7,000, the full out-of-pocket maximum is owed on any major procedure$4,400, the $2,500 deductible plus 20% coinsurance on the remaining $9,500
12. Under Cal. Ins. Code section 10147(b), which fact is a genetic characteristic that an insurer may not use to unfairly discriminate?
A family history of disease disclosed in answer to an application questionA symptomatic disorder confirmed by the applicant's attending physicianA diagnosed and treated condition that the applicant's parent also hadA gene known to cause a disease, where the applicant presently has no symptoms of it
13. An employee's partner is registered with the Secretary of State as her domestic partner. On what terms must her group plan, which covers spouses, cover the partner?
On individual terms, at the insurer's individual rateOn the same terms as a spouse under section 10121.7As an adult dependent child through the 26th birthdayOnly after the employer files a partner rider with CDI
14. The 'medically necessary' standard in a major-medical insuring clause generally requires that a service be:
The least expensive treatment option available within the plan's contracted network, even when not the most clinically appropriate, under the carrier's cost-effective-alternative substitution clauseClinically appropriate to diagnose or treat the condition, consistent with generally accepted standards of medical practice, and not primarily for the convenience of the patient or providerRecommended by any state-licensed physician, regardless of clinical justification, so long as the recommendation appears in the contemporaneously documented medical record submitted with the claimPre-approved by a federal review board appointed by HHS under ACA §2719A before the carrier may pay the claim on any non-emergency inpatient or outpatient service ordered by the treating physician
15. A client is terminated from his job in May and loses his employer health coverage. Outside of open enrollment, how long is his window to enroll in individual coverage?
60 days from the qualifying event, under a special enrollment period90 days from the qualifying event, under a special enrollment periodHe must wait for the next annual open enrollment period to enroll30 days from the qualifying event, under a special enrollment period
16. What does the principle of indemnity provide?
That the insured is restored to the financial position held before the loss, no better and no worseThat the insured receives the full replacement cost of any property lost, regardless of its conditionThat the insurer pays the face amount stated in the policy whenever a covered event occursThat the insured may collect from every policy covering the loss until the total equals the premium paid
17. An agent arrives for a scheduled Medicare supplement appointment in a senior's home and, finding she likes her doctor, switches to a Medicare Advantage pitch. Which rule has the agent broken?
The permission to contact rule, because every home visit is unsolicited contactThe educational event rule, because home visits may not include plan detailsThe scope of appointment rule, because Medicare Advantage was not on itThe call recording rule, because home meetings must be recorded in full
18. Which of the following are the four elements required to form a contract of insurance?
Insurable interest, indemnity, utmost good faith, and considerationCompetent parties, legal purpose, a premium payment, and an applicationOffer and acceptance, consideration, a written policy, and a financial ratingOffer and acceptance, consideration, competent parties, and legal purpose
19. An insurer quoting a 400-employee roofing contractor charges more than it charges a 400-employee accounting firm, citing the contractor's occupations and its claims history. Is that permitted?
No; every employer group must be community rated on age, region and family size onlyNo; large groups are guaranteed issue and therefore may not be rated on any group characteristicYes, but only the occupational class may be used, because claims experience is barred for all groupsYes; a large group may be underwritten and experience rated on occupational class, size and prior claims experience
20. After the Commissioner issues a seizure order against an insurer, an agency refuses to deliver the insurer's files and the premium it holds until its unpaid commissions are settled. Under Cal. Ins. Code section 1013, what is the agency's exposure?
A misdemeanor: up to $1,000, up to one year, or bothNone, because it is owed commissions by the insurerA civil penalty of $5,000 for each file it withholdsA felony punishable by a fine of up to $100,000

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