AHIP Exam AHM-520 Topic 5 Question 66 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 66
Topic #: 5

Under the alternative funding method used by the Flair Company, Flair assumes financial responsibility for paying claims up to a specified level and deposits the funds necessary to pay these claims into a bank account that belongs to Flair. However, an insurer, which acts as an agent of Flair, makes the actual payment of claims from this account. When claims exceed the specified level, the insurer pays the balance from its own funds. No state premium tax is levied on the amounts that Flair deposits into this bank account.

From the following answer choices, choose the name of the alternative funding method described.

ARetrospective-rating arrangement

BPremium-delay arrangement

CReserve-reduction arrangement

DMinimum-premium plan

Show Suggested Answer

Suggested Answer: C

by Markus at Feb 25, 2023, 04:52 AM

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Ashley

1 months ago

Ah, the old 'you pay, I'll play' funding method. Gotta love these corporate shenanigans - it's like a game of financial hide-and-seek, but with far more paperwork.

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Quentin

2 days ago

C) Reserve-reduction arrangement

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Dwight

4 days ago

B) Premium-delay arrangement

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Catarina

18 days ago

A) Retrospective-rating arrangement

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Lauran

1 months ago

This has got to be a retrospective-rating arrangement. Flair is assuming the financial responsibility, and the insurer is just acting as an agent - that's the textbook definition.

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Noah

2 days ago

That's correct! Flair assumes financial responsibility up to a specified level and the insurer pays the balance when claims exceed that level.

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Royal

6 days ago

A) Retrospective-rating arrangement

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Alline

2 months ago

I'm not entirely sure, but the description of Flair making deposits and the insurer handling claims makes me lean towards a premium-delay arrangement. Sounds like they're deferring the premium payments.

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Pura

11 days ago

Yes, that makes sense. Flair assumes financial responsibility but delays the actual payment of claims.

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Jerry

13 days ago

I agree, it does sound like they are deferring the premium payments.

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Lyndia

1 months ago

I think it might be a premium-delay arrangement.

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Latrice

2 months ago

The fact that no state premium tax is levied on Flair's deposits makes me think this is a reserve-reduction arrangement. They're avoiding taxes on that money.

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Elroy

2 months ago

I'm not sure, but I think it could also be D) Minimum-premium plan, as Flair assumes financial responsibility up to a specified level.

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Nichelle

2 months ago

I agree with Lisbeth, because in this method, the insurer pays the balance when claims exceed the specified level.

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Fausto

2 months ago

This sounds like a minimum-premium plan to me. Flair is responsible for claims up to a certain level, and the insurer picks up the rest - that's the definition of a minimum-premium plan.

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Xochitl

1 months ago

User 2

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Stevie

2 months ago

User 1

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Lisbeth

2 months ago

I think the answer is A) Retrospective-rating arrangement.

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