Federal Tax Considerations for accident and health insurance

In group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?

100%

Under a Key Person disability income policy, premium payments

Are made by the business and are not tax-deductible.

What are the tax implications for employer contributions to Health Reimbursement Accounts?

Employer contributions are tax deductible as business expenses

How are excess funds in an employee's health savings account (HSA) handled?

The funds can be carried forward to the next year

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation

They are tax deductible

Which of the following is true regarding benefits paid to disabled employees?

They may be subject to taxation if the premium was paid by the employer.

Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that the contributions are

tax deductible

Defined-benefit plans

the employer specifies an amount of benefits promised to the employee

Which of the following is not true of Disability Buy-Sell coverage?

Benefits are considered taxable income to the business.

Group disability income insurance premiums paid by the employer are

Deductible by the employer as an ordinary business expense

Under what employer-provided plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

Disability Income

How are individually-owned disability income benefits taxed once received by the insured?

Disability benefits are not taxed; they are received income tax free

How long do short-term disability group plans pay benefits?

For a period of less than 2 years

In order to be eligible for coverage by an HSA, an individual must also be covered by what type of health plan?

High Deductible Health Plan (HDHP)

Which of the following is INCORRECT concerning taxation of disability income benefits?

If paid by the individual, the premiums are tax deductible.

How are benefits received by the business from a key person disability insurance?

Income tax free

How are the benefits of group accidental death and dismemberment policy received?

Income tax free

The benefits received by the business in a Disability Buy-Sell policy are

Income tax free

Under a fully contributory health plan, how are benefits received by the employee?

Income tax free

What is the tax advantage of the employer paying premiums for its employees for disability income insurance?

Premiums are deductible as a business expense

Which of the following is correct regarding the taxation of group medical expense premiums and benefits?

Premiums are tax deductible and benefits are not taxed

In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received?

no tax

Under what condition are group disability income benefits received by an employee NOT taxable as income?

When the benefits received are equal or less than the employee's percentage of the contribution.

Tax deductible

a qualified expense that may reduce the amount of income subject to taxation

Premiums for Employer Groups Health Insurance

deductible as a business expense and are not considered as taxable income to the employee.

Defined-contribution plans

focus on contributions rather than on the benefits they will pay out

Benefits received by an employee that are attributable to employer contributions

fully taxable to the employee as income.

Adjusted gross income

gross income (all income from whatever sources) minus adjustments to income