Which of the following is a limited-benefit health policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Limited-benefit policies pay stated amounts for specified events rather than reimbursing actual medical expenses. The group includes travel accident, specified disease and critical illness, hospital income and confinement indemnity, accident-only, and credit disability policies. A specified disease policy that pays a fixed amount on diagnosis fits squarely in this category. Major medical, group comprehensive, and Medicare supplement plans all reimburse actual covered expenses and are not classified as limited-benefit products, because their payments track the size of the bill rather than a contract figure.
Why the other options are wrong
- B) Major medical reimburses actual covered expenses after the deductible and coinsurance, so its payments vary with the size of the bill; that is the opposite of a limited-benefit policy.
- C) Group comprehensive coverage pays covered physician and hospital costs rather than fixed, contract-defined amounts, so it does not fit the limited-benefit classification.
- D) Medicare supplement (Medigap) plans pay the cost-sharing gaps for covered Medicare services based on actual charges, not fixed amounts per event, so they fall outside the limited-benefit class.
Memory hook
Limited = fixed check regardless of the bill. Comprehensive = pays the actual covered bill.