AHIP Exam AHM-520 Topic 5 Question 35 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 35
Topic #: 5

Contingency risks, or C-risks, are general categories of risk that have a direct bearing on both the cash flow and solvency of a health plan. One of these C-risks, pricing risk (C-2 risk), is typically the most important risk a health plan faces. Pricing risk is crucial to a health plan's solvency because:

AA sizable portion of any health plan's assets are held in long-term investments and any shift in interest rates can significantly impact a health plan's ability to pay medical benefits

BA health plan relies heavily on the sound judgment of its management, and poor management decisions can result in financial losses for the health plan

CA situation in which actual expenses exceed the amounts budgeted for those expenses may result in the health plan failing to retain assets sufficient to cover current obligations

DA sizable portion of the total expenses and liabilities faced by a health plan come from contractual obligations to pay future medical costs, and the exact amounts of those costs are not known at the time a product's premium is established

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Suggested Answer: D

by Lili at May 05, 2022, 07:56 PM

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