Insurance MCQ

Which of the following business disability plans can create a taxable event: A. Business overhead expense B. Accidental death and dismemberment C. Key person disability insurance D. Disability buy-sell agreement Answer: A.

All of the following are ways consumers can insure themselves with 'minimum essential coverage' without having to pay a penalty under the Affordable Care Act, except: A. Purchase insurance offered by an employer B. Be self-insured C. Purchase insurance directly from an insurer in the individual market D. Enroll in a government program or purchase coverage through a state exchange Answer: B.

Which of the following best describes the general tax rules regarding employer sponsored group disability income insurance plans? A. Premiums are not deductible, the benefits are not taxable B. Premiums are deductible, the benefits are not taxable C. Premiums are not deductible, the benefits are taxable D. Premiums are deductible, the benefits are taxable Answer: D.

All of the following plans allow participants to retain benefits amounts remaining at the end of the plan year for future use, except: A. MSAs B. FSAs C. HRAs D. HSAs Answer: B.

_____ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable. A. Disability B. Long-Term Care C. Dental D. Medical Answer: A.

What is the difference between a Health Reimbursement Account (HRAs) and a Health Savings Account (HSA)? A. Employer contributions to health reimbursement accounts are limited B. HRAs are owned by the employer, and are not portable when an employee leaves C. HRAs are portable D. Cash disbursements from an HRA for non-medical reason are allowed but incur a tax-penalty Answer: B.

Victoria, age 62, calculated last year's gross income to be $60,000. When she totaled up the cost of individual Medical and Long-term Care insurance, as well as her various out-of-pocket medical costs, she discovered the total was $7,500, which meant she could deduct _______ from her taxable income. A. $7,500 B. $3,000 C. $6,000 D. $1,500 Answer: D.

The Bronze plan covers _______ of medical expenses. A. 80% B. 70% C. 50% D. 60% Answer: D.

Under the ACA, Stephen purchased a Silver plan that covered him, his wife and his 2 children, ages 17 and 24. Since he is a sole proprietor with no employees, what portion of his premiums is he able to deduct? A. Those in excess of 10% of his AGI B. Only the premiums paid for his portion of the coverage C. All of the premiums paid D. Only the premiums paid for the coverage on his children and himself Answer: C.

The 'Appeal Rights' required by the Affordable Care Act apply to: A. Denial or reduction of benefits to insureds for specific claims B. Denial of compliance with the individual mandate by the IRS C. Denial of one's application for insurance D. Denial of eligibility for a government subsidy Answer: A.

Amy owns her own individual Medical Expense Policy. Which of the following is true about the taxation of her premiums and medical expenses? A. Only unreimbursed medical expenses, excluding premiums, are deductible B. If she itemizes deductions and her medical expenses, including premiums, exceed 10% of her adjusted gross income, the portion exceeding that amount may be deducted C. Benefits she receives from her policy are taxable to the extent they exceed her premiums D. In all cases, the premiums for Medical Expense policies are deductible, but expenses are not Answer: B.

Which of the following statements regarding the termination of coverage under the ACA is true? A. Policies may be terminated for non-payment after 90 days with 30 days notice B. Policies may be terminated for fraud if there is at least 90-days notice C. Policies must have a 30 day grace period D. Coverage may be rescinded for non-payment Answer: A.

After enrolling in Medicare and purchasing a supplement, Rachel withdrew $2,000 from her HSA. She used $600 to pay her Medicare Supplement premium, $200 for out-of- pocket medical expenses, and the remaining $1,200 on a trip to celebrate her retirement. When preparing her taxes for the year, she discovered that: A. $1,200 was subject to income tax plus a 20% penalty B. $2000 was subject to income tax and a 20% penalty C. The entire amount was tax free D. $1,200 was subject to income tax Answer: D.

Which of the following disability income benefits would be received free of federal income tax? A. Employee paid-group insurance through a Cafeteria Plan B. Business overhead expense insurance C. A personal disability income insurance policy benefit D. Employer-paid group insurance Answer: C.

All of the following are used as the primary insurance policy for the insured, except: A. TRICARE for Life B. Medicare C. TRICARE Standard D. TRICARE Prime Answer: A.

When a disability buy-sell is funded by the partnership, what is the tax liability? A. The premiums are not deductible and the value of the benefit is not taxable as income B. The premiums are tax deductible and the value of the benefit is taxable as income C. The premiums are not tax deductible and the value of the benefit is taxable as income D. The premiums are tax deductible and the value of the benefit is not taxable Answer: D.

When the employer pays some or all of the cost of medical insurance for its employees, the annual amount of each employee's claims is _________. A. Taxable to the employer B. Not taxable to the employee C. Deductible to the employer D. Taxable to the insurance company Answer: B.

Premiums paid by employees for group health insurance are only deductible to the extent that __________. A. They exceed 10% of adjusted gross income B. They exceed what the employer pays for the coverage C. They are not offset by contributions to a FSA D. They exceed the national average cost of health insurance Answer: A.

When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be ____________________. A. Taxable in part, up to 60% of the employee's pretax wage B. Taxable in full, regardless of the employee's wage C. Nontaxable in full, regardless of the employee's wage D. Nontaxable up to 60% of the employee's pretax wage Answer: Individual insurance premiums are not deductible and the benefits payable are not taxable.

Active duty members of the military are required to enroll in which TRICARE plan? A. Choice + B. Select C. Prime D. Standard Answer: C.