HEALTH ONLY- Federal Tax Considerations for Health Insurance

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? A. No tax B. Tax deductible C. State income tax D. Federal income tax

A. No tax

How do employer contributions to a Health Savings Account affect the insured's taxes? A. The employer contributions are not included in the individual insured's taxable income B. The employer contributions are taxed at the same rate as the Social Security tax rate C. The employer contributions are taxed to the individual insured as earned income D. The employer contributions are deducted from the individual insured's tax calculations

A. The employer contributions are not included in the individual insured's taxable income

An insured has a $1,000 HRA account through his employer. He incurred $750 in medical expenses the first year of the plan. How much, if anything, will the insured be able to roll over toward the next year's expenses? A. $0 B. $250 C. $750 C. $1,000

B. $250

Which of the following is correct regarding the taxation of group medical expense premiums and benefits? A. Premiums are tax deductible and benefits are taxed B. Premiums are tax deductible and benefits are not taxed C. Premiums are not tax deductible and benefits are taxed D. Premiums are not tax deductible and benefits are not taxed

B. Premiums are tax deductible and benefits are not taxed

In the event of a loss, business overhead insurance will pay for A. Medical bills of the business owner B. Rent C. Loss of profits D. Salary of the business owner

B. Rent

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? A. Benefits received by the employee are free from federal income tax B. Premiums paid by the employer are deductible as a business expense C. Employee paid premiums may be deducted if certain conditions are met D. Employee benefits are tax deductible the year in which they were received

D. Employee benefits are tax deductible the year in which they were received

Which of the following statements is correct concerning taxation of long-term care insurance? A. Benefits may be taxable as ordinary income B. Premiums may be taxable as income C. Premiums are not deductible in any case D. Excessive benefits may be taxable

D. Excessive benefits may be taxable

Sue has an HSA and is planning to leave her current job for a new job. When she leaves her job, what will happen to her HSA? A. It will stay with the employer for the person who fill's Sue's position B. It will be cancelled C. It will revert back to the employer's ownership D It will continue because it is owned by Sue, not her employer

D. It will continue because it is owned by Sue, not her employer

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT A. Rent B. Utilities C. Employee payroll D. Loss of the owner's income

D. Loss of the owner's income

An HSA holder who is 65 years old decides to use the money in the account for a non health expense. Which of the following is true? A. There will be no taxes and no penalties B. There will be a tax and a 20% penalty C. There will be a 20% penalty D. There will be a tax

D. There will be a tax

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy? A. Only if the insured is 65 or older B. All LTC expenses are tax deductible C. Only if the insured does not itemize the expenses D. When the expenses exceed a certain percentage of the insured's adjusted gross income

D. When the expenses exceed a certain percentage of the insured's adjusted gross income

An employer employs 500 workers and contributes to their Health Savings Accounts (HSAs). To reduce turnover, the employer wants to tell employees that they will lose their HSAs if they league the company. Which of the following is true? A. Employees may retain their accounts when they leave provided that they reimburse the employer for the monies it contributed B. The employees own the accounts and may take them with them when they leave. The employer will have to find another way to improve retention C. The employer is permitted to retain ownership of the accounts provided they give the employees at least 30 days' notice D. The employer owns the accounts but may sell them to the employees upon request

B. The employees own the accounts and may take them with them when they leave. The employer will have to find another way to improve retention

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation? A. They are taxed as income B. They are tax deductible C. They are considered after-tax contributions D. They are not deductible

B. They are tax deductible

How are employer contributions to Health Reimbursement Accounts treated in regards to taxation? A. They are excluded from all taxation B. They are tax deductible C. They are taxed as a regular business expense D. They are treated as income tax for the employer

B. They are tax deductible

Which of the following is a feature of a disability buyout plan? A. Taxable benefits B. A short elimination period C. A lump-sum benefit payment option D. Tax deductible premiums

C. A lump-sum benefit payment option

An individual is insured under his employer's group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true? A. For the business, payments are not considered tax deductible as an ordinary business expense B. The insured can deduct his medical expense benefits from his income tax C. Benefits that are attributable to employer contributions are fully taxable to the employee as income D. The insured has to wait 2 more months to start receiving the benefits

C. Benefits that are attributable to employer contributions are fully taxable to the employee as income

Which of the following is INCORRECT concerning taxation of disability income benefits? A. If the insured paid the premiums, any disability income benefits are tax-free B. If the benefits are for a permanent loss, the benefits paid to the employee are not taxable C. If paid by the individual, the premiums are tax deductible D. If the employer paid the premiums, income benefits are taxable to the insured as ordinary income

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

The benefits received by the business in a Disability Buy-Sell policy are A. Partially taxable B. Fully taxable C. Income tax free D. Tax deductible

C. Income tax free

HSAs are owned by the individual, not the employer, which means the individual is not dependent on a particular employer to enjoy the advantages of having an HSA. What term best describes this? A. Attached B. Stationary C. Portable D. Mobile

C. Portable

When an employee covered under a health reimbursement account changes employers, the HRA A. Returns to the insurer B. Is split between the employee and the employer C. Stays with the employer D. Follows the employee

C. Stays with the employer