CEBS GBA 2 EXAM | COMPLETE QUESTIONS WITH EXPERT
SOLUTIONS| 2026 LATEST UPDATED| A+
Benefits of STD group policies - (answer)Ensures that experienced professionals are managing
claims, gives access to return-to-work support and fraud-prevention services, and locks in a fixed
amount of monthly financial obligation (premiums) regardless of the disability benefits being
paid.
The law of large numbers states that: - (answer)As the size of the same increases, the sample
mean gets closer to the population mean.
Indemnification - (answer)Indemnification of losses means reimbursement to the insured if a loss
occurs. In theory, indemnification restores the individual to their preexisting state had the loss
not occurred.
Adverse Selection - (answer)Occurs because individuals and businesses that are more likely to
have claims are more inclined to purchase insurance than those that are less likely to have
claims. This exists because individuals know more about their health status than do insurers.
Moral Hazard - (answer)Premise that payments are made only for random losses which creates
moral hazard. Moral hazard is faced by insurers because individuals are more likely to use
unneeded health services when they are not paying the full cost of those services.
Coinsurance - (answer)A type of insurance in which the insured pays a share of the payment
made against a claim in excess of the deductible.
Third-Party Payers - (answer)Generic term for any outside party, insurance company or a
government program, which pays for part or all of a patient's health care services. Health insurers
can be categorized into two broad groupings: private insurers and public programs.
,Medicare - (answer)A federal program of health insurance established by Congress in 1965 to
provide medical benefits to persons 65 years of age and older. Also covers health care costs
associated with selected disabilities and illnesses, regardless of age.
Medicaid - (answer)Began in 1966. A federal and state assistance program that pays for health
care services for people who cannot afford them. Mandatory nursing home benefit added in
1972.
Four Characteristics of Insurance - (answer)1. Pooling of losses.
2. Payment only for random losses.
3. Risk transfer.
4. Indemnification
Pooling of losses - (answer)Is the basis of insurance. Pooling = losses are spread over a large
group of individuals. Pooling involves the grouping of a large number of homogeneous exposure
units. People or things having the same risk characteristics. Law of large numbers applies.
Payment only for random losses - (answer)A random loss is one that is unforeseen and
unexpected and occurs as a result of chance. With insurance, payments are made only for random
losses.
Risk transfer - (answer)The transfer of risk from an insured to an insurer. Insurance involves risk
transfer. The exception to risk transfer is self-insurance. The insurer is in a better financial
position to bear the risk than the insured because of the law of large numbers.
Private Insurers - (answer)Blue Cross/Blue Shield, Commercial Insurers, and Self-insurers.
Blue Cross Blue Shield - (answer)Blue Cross Blue Shield organizations trace their roots to the
Great Depression, when both hospitals and physicians were concerned about their patients'
ability to pay health care bills.
,Blue Cross - (answer)Multiple insurance programs offered by hospitals. Hospitals provided
services to program members who made fixed payments to hospitals. Programs expanded from
single-hospital programs to multi-hospital plans called hospital service plans. The Blue Cross
name was officially adopted by most of these plans in 1939.
Blue Shield - (answer)Similar to Blue Cross plans. Providers were physicians not hospitals. 36
Blue Cross Blue Shield organizations today. The Blues are independent corporations that belong
to a single national association with set standards. The Blues provide health care coverage for
106 million individuals.
Commercial Insurers - (answer)Private, non-government insurers who are often the insurance
options available through employers. All commercial insurance companies are taxable (for-
profit) entities.
Self-Insurers - (answer)Establishes a self-funded plan to cover potential losses instead of
transferring the risk to an insurance company. Large groups, especially employers, are good
candidates for self insurance. Today, most large groups are self-insured.
Public Insurers - (answer)Government is a major insurer and direct provider of health care
services. Government provides health care services through the U.S. Department of Veterans
Affairs, the U.S. Department of Defense and TRICARE program. The government provides or
mandates insurance programs, such as workers' compensation, Medicare and Medicaid.
Medicare Part A - (answer)Hospital and some skilled nursing facility coverage. Part C: Managed
care coverages offered by private insurance companies and can be selected in lieu of Parts A and
B. Also called Medicare Advantage Plans. Part D: Prescription Drug coverage.
Medicare Part B - (answer)Physician services, ambulatory surgical services, outpatient services,
and other miscellaneous services.
Medicare Part C - (answer)Managed care coverages offered by private insurance companies and
can be selected in lieu of Parts A and B. Also called Medicare Advantage Plans.
, Medicare Part D - (answer)Prescription Drug coverage.
Managed Care Plan - (answer)Managed care plans combine the provision of health care services
and the insurance function into a single entity. The aim of this entity is to both increase the
quality of care and to decrease the cost of health care services. The common feature in managed
care plans is that the insurer has a mechanism by which it controls, or at least influences,
patients' utilization of health care services.
Preferred Provider Organization (PPO) - (answer)Evolved during the 1980s. A hybrid of HMOs
and traditional health insurance plans that use cost saving strategies of HMOs. Do not mandate
that beneficiaries use specific providers. Financial incentives to use providers that are part of the
provider panel. Do not require beneficiaries to use preselected gatekeeper physicians.
Health Maintenance Organization (HMO) - (answer)One type of managed care plan. Based on
the premise that the traditional insurer-provider relationship creates incentives that reward
providers for treating patients' illnesses while offering little incentive for providing prevention
and rehabilitation services.
Provider Panel - (answer)The group of providers - say doctors and hospitals - designated as
preferred by a managed care plan. Services delivered by providers outside of the panel may be
only partially covered, or not covered at all, by the plan.
Primary drawback with HMO care delivery model - (answer)From a patient perspective, HMOs
have several drawbacks, including a limited network of providers and the assignment of a
primary care physician, often called a gatekeeper, who acts as the initial contact and authorizes
all services received from the HMO.
Managed Fee-for-Service Plans - (answer)Most insurance companies apply managed care
strategies to their more conventional plans. These plans use preadmission certification, utilization
review and second surgical opinions to control inappropriate utilization.
Traditional Plans - (answer)Traditional plans are created by insurers that either directly own a
provider network or create one through contractual arrangements with independent providers.
SOLUTIONS| 2026 LATEST UPDATED| A+
Benefits of STD group policies - (answer)Ensures that experienced professionals are managing
claims, gives access to return-to-work support and fraud-prevention services, and locks in a fixed
amount of monthly financial obligation (premiums) regardless of the disability benefits being
paid.
The law of large numbers states that: - (answer)As the size of the same increases, the sample
mean gets closer to the population mean.
Indemnification - (answer)Indemnification of losses means reimbursement to the insured if a loss
occurs. In theory, indemnification restores the individual to their preexisting state had the loss
not occurred.
Adverse Selection - (answer)Occurs because individuals and businesses that are more likely to
have claims are more inclined to purchase insurance than those that are less likely to have
claims. This exists because individuals know more about their health status than do insurers.
Moral Hazard - (answer)Premise that payments are made only for random losses which creates
moral hazard. Moral hazard is faced by insurers because individuals are more likely to use
unneeded health services when they are not paying the full cost of those services.
Coinsurance - (answer)A type of insurance in which the insured pays a share of the payment
made against a claim in excess of the deductible.
Third-Party Payers - (answer)Generic term for any outside party, insurance company or a
government program, which pays for part or all of a patient's health care services. Health insurers
can be categorized into two broad groupings: private insurers and public programs.
,Medicare - (answer)A federal program of health insurance established by Congress in 1965 to
provide medical benefits to persons 65 years of age and older. Also covers health care costs
associated with selected disabilities and illnesses, regardless of age.
Medicaid - (answer)Began in 1966. A federal and state assistance program that pays for health
care services for people who cannot afford them. Mandatory nursing home benefit added in
1972.
Four Characteristics of Insurance - (answer)1. Pooling of losses.
2. Payment only for random losses.
3. Risk transfer.
4. Indemnification
Pooling of losses - (answer)Is the basis of insurance. Pooling = losses are spread over a large
group of individuals. Pooling involves the grouping of a large number of homogeneous exposure
units. People or things having the same risk characteristics. Law of large numbers applies.
Payment only for random losses - (answer)A random loss is one that is unforeseen and
unexpected and occurs as a result of chance. With insurance, payments are made only for random
losses.
Risk transfer - (answer)The transfer of risk from an insured to an insurer. Insurance involves risk
transfer. The exception to risk transfer is self-insurance. The insurer is in a better financial
position to bear the risk than the insured because of the law of large numbers.
Private Insurers - (answer)Blue Cross/Blue Shield, Commercial Insurers, and Self-insurers.
Blue Cross Blue Shield - (answer)Blue Cross Blue Shield organizations trace their roots to the
Great Depression, when both hospitals and physicians were concerned about their patients'
ability to pay health care bills.
,Blue Cross - (answer)Multiple insurance programs offered by hospitals. Hospitals provided
services to program members who made fixed payments to hospitals. Programs expanded from
single-hospital programs to multi-hospital plans called hospital service plans. The Blue Cross
name was officially adopted by most of these plans in 1939.
Blue Shield - (answer)Similar to Blue Cross plans. Providers were physicians not hospitals. 36
Blue Cross Blue Shield organizations today. The Blues are independent corporations that belong
to a single national association with set standards. The Blues provide health care coverage for
106 million individuals.
Commercial Insurers - (answer)Private, non-government insurers who are often the insurance
options available through employers. All commercial insurance companies are taxable (for-
profit) entities.
Self-Insurers - (answer)Establishes a self-funded plan to cover potential losses instead of
transferring the risk to an insurance company. Large groups, especially employers, are good
candidates for self insurance. Today, most large groups are self-insured.
Public Insurers - (answer)Government is a major insurer and direct provider of health care
services. Government provides health care services through the U.S. Department of Veterans
Affairs, the U.S. Department of Defense and TRICARE program. The government provides or
mandates insurance programs, such as workers' compensation, Medicare and Medicaid.
Medicare Part A - (answer)Hospital and some skilled nursing facility coverage. Part C: Managed
care coverages offered by private insurance companies and can be selected in lieu of Parts A and
B. Also called Medicare Advantage Plans. Part D: Prescription Drug coverage.
Medicare Part B - (answer)Physician services, ambulatory surgical services, outpatient services,
and other miscellaneous services.
Medicare Part C - (answer)Managed care coverages offered by private insurance companies and
can be selected in lieu of Parts A and B. Also called Medicare Advantage Plans.
, Medicare Part D - (answer)Prescription Drug coverage.
Managed Care Plan - (answer)Managed care plans combine the provision of health care services
and the insurance function into a single entity. The aim of this entity is to both increase the
quality of care and to decrease the cost of health care services. The common feature in managed
care plans is that the insurer has a mechanism by which it controls, or at least influences,
patients' utilization of health care services.
Preferred Provider Organization (PPO) - (answer)Evolved during the 1980s. A hybrid of HMOs
and traditional health insurance plans that use cost saving strategies of HMOs. Do not mandate
that beneficiaries use specific providers. Financial incentives to use providers that are part of the
provider panel. Do not require beneficiaries to use preselected gatekeeper physicians.
Health Maintenance Organization (HMO) - (answer)One type of managed care plan. Based on
the premise that the traditional insurer-provider relationship creates incentives that reward
providers for treating patients' illnesses while offering little incentive for providing prevention
and rehabilitation services.
Provider Panel - (answer)The group of providers - say doctors and hospitals - designated as
preferred by a managed care plan. Services delivered by providers outside of the panel may be
only partially covered, or not covered at all, by the plan.
Primary drawback with HMO care delivery model - (answer)From a patient perspective, HMOs
have several drawbacks, including a limited network of providers and the assignment of a
primary care physician, often called a gatekeeper, who acts as the initial contact and authorizes
all services received from the HMO.
Managed Fee-for-Service Plans - (answer)Most insurance companies apply managed care
strategies to their more conventional plans. These plans use preadmission certification, utilization
review and second surgical opinions to control inappropriate utilization.
Traditional Plans - (answer)Traditional plans are created by insurers that either directly own a
provider network or create one through contractual arrangements with independent providers.
