AHIP AHM-520 Exam - 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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Buddy

4 months ago

I’m not so sure about that, could be a reserve-reduction arrangement too.

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Carman

5 months ago

Definitely a retrospective-rating arrangement, I think.

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Cordie

5 months ago

Wait, no state premium tax? That seems too good to be true.

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Lucina

5 months ago

Totally agree, it fits the description perfectly!

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Viola

5 months ago

This sounds like a minimum-premium plan.

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Stevie

5 months ago

I don't recall the specifics, but I know that the premium-delay arrangement is definitely not it.

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Catarina

5 months ago

I'm a bit confused about the terms, but I feel like the reserve-reduction arrangement could fit, too.

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Paul

5 months ago

I remember practicing a question similar to this, and I think the minimum-premium plan might be the right choice here.

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Tamar

6 months ago

I think this sounds a lot like a retrospective-rating arrangement, but I'm not completely sure.

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Stevie

6 months ago

I've got this! A and E are the compilation errors - you can't assign a double to a float without an explicit cast, and the F suffix on a float literal is not allowed in Java.

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Sylvia

6 months ago

I remember something about needing to enable multicast-direct to optimize streaming, but I'm not sure if that covers everything.

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Lamar

6 months ago

I'm thinking it might be social disapproval that's not an unconditioned punisher, because it feels more learned than instinctual.

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Ashley

10 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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Beula

9 months ago

D) Minimum-premium plan

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Quentin

9 months ago

C) Reserve-reduction arrangement

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Dwight

9 months ago

B) Premium-delay arrangement

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Catarina

10 months ago

A) Retrospective-rating arrangement

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Lauran

10 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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Alexis

9 months ago

B) Premium-delay arrangement

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Noah

9 months 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

9 months ago

A) Retrospective-rating arrangement

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Alline

11 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

9 months ago

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

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Jerry

10 months ago

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

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Lyndia

10 months ago

I think it might be a premium-delay arrangement.

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Latrice

11 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

11 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

11 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

11 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

11 months ago

User 2

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Stevie

11 months ago

User 1

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Lisbeth

11 months ago

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

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