AHM-520 AHIP Exam Questions and Free Practice Test

Question 25

- (Topic 1)
The Harp Company self-funds the health plan for its employees. The plan is administered under a typical administrative-services-only (ASO) arrangement. One true statement about this ASO arrangement is that

A. This arrangement prevents Harp from purchasing stop-loss coverage for its health plan

B. The amount that Harp pays the administrator to provide the ASO services is not subject to state premium taxes

C. The administrator is responsible for paying claims from its own assets if Harp's account is insufficient

D. The charges for the ASO services must be stated as a percentage of the amount of claims paid for medical expenses incurred by Harp's covered employees and their dependents

Correct Answer:B

Question 26

- (Topic 2)
The Wallaby Health Plan purchased an asset two years ago for $50,000. At the time of purchase, the asset had an appraised value of $52,000. The asset carries a value on Wallaby’s general ledger of $47,000, and its current market value is $80,000. According to the cost concept, Wallaby would report on its financial statements a value for this asset equal to:

A. $47,000

B. $50,000

C. $52,000

D. $80,000

Correct Answer:B

Question 27

- (Topic 1)
The sentence below contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have chosen. Purchasing stop-loss coverage most likely (increases / reduces) a health plan's underwriting risk and (increases / reduces) the health plan’s affiliate risk.

A. increases / increases

B. increases / reduces

C. reduces / increases

D. reduces / reduces

Correct Answer:C

Question 28

- (Topic 2)
A health plan can use segment margins to evaluate the profitability of its profit centers. One characteristic of a segment margin is that this margin

A. Is the portion of the contribution margin that remains after a segment has covered its direct fixed costs

B. Incorporates only the costs attributable to a segment, but it does not incorporate revenues

C. Considers only a segment's costs that fluctuate in direct proportion to changes in thesegment's level of operating activity

D. Evaluates the profit center's effective use of assets employed to earn a profit

Correct Answer:A

Question 29

- (Topic 2)
The Column health plan is in the process of developing a strategic plan.
The following statements are about this strategic plan. Three of the statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

A. Human resources most likely will be a critical component of Column's strategic plan because, in health plan markets, the size and the quality of a health plan's provider network is often more important to customers than are the details of a product's benefit design.

B. Column's strategic plan should only address how the health plan will differentiate its products, rather than where and how it will sell these products.

C. Column most likely will need to develop contingency plans to address the need to make adjustments to its original strategic plan.

D. Column's information technology (IT) strategy most likely will be a critical element in successfully implementing the health plan's strategic plan.

Correct Answer:B

Question 30

- (Topic 2)
The following statements are about 501(c)(9) trusts. Select the answer choice containing the correct statement:

A. In the event a 501(c)(9) trust is terminated, any funds remaining in the trust revert backto the employer.

B. In order to satisfy Internal Revenue Code (IRC) requirements, membership in a 501(c)(9) trust is mandatory for all employees.

C. Contributions made by an employer to a 501(c)(9) trust are deductible for federal income tax purposes.

D. Typically, a 501(c)(9) trust is controlled solely by the employer that established the trust.

Correct Answer:C

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