449_Final

Bill is 45, base pay is 100,000 and 50,000 in commission. What is cost of insurance included in Bills compensation?

100,000 x 2 = 200,000 - 50,000 = 150,000/1000 = 150 150 x .15 = 15 x 12mo = $270

16.1 Cyndy separates from service from Z Corp. on Jan. 15, 2016. She was enrolled in the company group health insurance plan, HMO level, single coverage, monthly premium of $250.00. Which of the following are true regarding Cobra continuation coverage? A. Cyndy has until April 30th to pay the Feb., March and April premiums, assuming she enrolled in Cobra in the allowed time frame. B. Cyndy has 45 days to enroll in Cobra, should she need health insurance coverage. C. Only QHDHP are covered under Cobra. D. The monthly premium cost will be $250.00

A

17.6 Amy is covered by an own occupation definition disability plan. The premium is paid by her employer. She is a graphic artist by training. Which of the following is true if she were on a dr. verified disability? A. Amy could resume work as a full time receptionist with no impact to her disability benefit. B. No taxes due on any benefit received. F C. Own occ disability insurance costs about the same as any occupation disability insurance. F D. Premiums paid by her employer aren't deductible on corporate tax return.

A

Hugh Green's employer, Jolly Foods, granted Hugh a stock option under its employee stock purchase plan to buy 200 shares of Jolly Foods stock for $10 per share when the market price was $13 per share. A year and a half later, when the stock had a value of $15 per share, Hugh exercised his option. Fourteen months later, when the stock was $17 per share, Hugh sold his stock. In the year of sale, Hugh had to report _____ as W-2 income and ____ as capital gains a. $600, $800 b. $600, $1400 c. $1,000, $400 d. $300, $1100 e. $1,100, $400

A

The *cost* of Employer paid group term life insurance is excludable from income up what amount? Per IRS Code Section 79. A. $50,000 B. $20,000 C. All cost is taxable D. Never a taxable event

A

Which of the following is false about the CDHC model? A. Employees rely solely on Employer health insurance coverage. B. Employees are encouraged to use good consumer behavior when *shopping* for medical care. C. Employees often use a Health Savings Account to cover medical expenses. D. The CDHC model often saves the employee money.

A

Which of the following parts of Medicare is (are) completely funded by payroll tax? a. Hospital Insurance b. Medical Insurance c. Medicare Advantage d. Prescription Drug Insurance e. Medicare Supplement Insurance

A

Which of the following statement about deferred compensation is false? A. it is a qualified retirement plan B. it increases the executive's wage replacement ratio by deferring compensations to post-retirement. C. Can provide incentives for hard work. D. Incentives tied to company's stock performance.

A

Which of the following statement is incorrect? A. Medicaid Part A is free for most of those who are eligible B. Medicare Part B premium increases with your income C. Medicare Part C premium increases with your income D. Medicare Part D premium increases with your income

A

Which Medicare coverage pays for prescription drugs? A. Medicare Part A B. Medicare Part B C. Medicare Part C D. Medicare Part D

ANS: Medicare Part D pays for prescription drug coverage Part A pays for hospital expenses Part B pays for medical expenses Part C combines part A, part B, and usually part D

Among the events, which does not qualify for COBRA 1. Reduction in hours of employment 2. Divorce or Legal Separation 3. Loss of Dependent Child Status 4. Death of the covered Employee 5. Termination(voluntary or Involuntary) - due to gross misconduct

Answer : 5 Termination should not be due to gross misconduct

Sarah is a 24 year old girl with low income and prides herself on never being sick since 1996. Which of the following is Sarah eligible for? A. Medicare B. Medicaid C. Both D. Neither

Answer : B. Medicaid Eligibility is allowed for low income pregnant people. She is not eligible for Medicare because she is younger than 65, does not have kidney failure, and is not currently disabled.

Steve is 40 years old, he is an employee at the financial planning firm. He earns a base compensation of $45,000. Besides the base compensation, he also earn $4,500 in commission. The employer pays two times base pay in life insurance benefits. Which of the following is true? A. Steve should name his son as the beneficiary of this life insurance policy B. The face value of his life insurance will be $99000 C. The face value of his life insurance will be $90000 D. Steve can choose what amount he needs for his life insurance policy.

Answer is C, because life insurance is based on the base compensation

How many day does an employee have to enroll in cobra post separation of employment? How many days is provided to pay first premium with all additional catch up payments? A. 45; 60 B. 60; 60 C. 60; 45 D. 60; 60

Answer is C. "An employee has 60 days to enroll in Cobra post separation of employment. An additional 45 days is provided to pay first premium but all months of coverage must be *caught up* at that time."

For an Incentive Stock Option (ISO),which of the following are true? A. for special tax treatment, you must hold the stock for 2 years from the grant date B. can be offered to employees only C. can be offered to anyone including consultants and directors D. both A & B are true

Answer: B Explanation: For special tax treatment, you must hold the stock for 2 years from the grant date and 1 year from the excise date which makes answer A false and answer D false. ISOs can only be offered to employees, NQSO is the plan that can be offered to anyone so answer C is incorrect.

Which of the following statements are incorrect? Medicare benefits people over the age 65 Medigap helps pay deductibles and co-insurance incurred under Medicare Parts B and C Medicaid benefits people with low incomes Medicare is the primary payer for people who are dual eligible

Answer: B Medigap helps pay deductibles and co-insurance incurred under Medicare Parts A and B.

Which is true about group life insurance? A. You have to take an exam in order to be eligible for group life insurance B. It is beneficial and more cost efficient for unhealthy people to have it C. The employees has copies of the master contract D. After an employee changes jobs, they can always bring the insurance with them

Answer: B because since unhealthy people are more at risk, usually their health insurance will be higher. However, since it is a group insurance plan, they are able to get life insurance for cheaper costs.

Which of the following statements about Medicare is false? a) Part A is funded by FICA tax and is free for most people b) Part B and D premiums decrease with income c) Part C premiums varies by plan d) There is a penalty for late enrollment for part D and the penalty amount is added to your monthly part D premium

Answer: B is false. Part B and D premiums INCREASE with income.

Which of the following is NOT an exception to the 10% early withdrawal penalty from an IRA? A. Higher Education Expenses B. Medical expenses that exceed 10% of your AGI C. Attainment of age 65 D. Payment of health insurance premiums by unemployed persons E. None of the above

Answer: C. Attainment of age 59 1/2 is an exception to the rule. Age 65 is the full retirement age for those born in or before 1937.

Assume the employer pays for the group disability policy on you. Which of the following is true considering the taxation of premiums and benefits? A) Premiums are taxable income to the employee, and benefits are taxable income to the employee B) Premiums are taxable income to the employee, and benefits are not taxed income to the employee C) Premiums are not taxed to the employee, and benefits are taxable to the employee D) Premiums are not taxed to the employee, and benefits are tax-free

Answer: C. Premiums are not taxed to the employee, and benefits are taxable to the employee. If your employer pays your disbaility insurance policy, disability benefits are taxable to you and the employer can deduct the premiums paid. Found on Slide 21: Life and Group Disability Plans

Which of the following would qualify someone as a Highly Compensated Employee? a. employee who owns 4% b. non owner employee who receives compensation of $150,000 c. family member who owns 6% d. b & c only e. All of the above

Answer: D HCE's can either be employees who own >5% (including family members) or receive compensation of excess of $120,000 or non-owner employees who receive compensation in excess of $120,000

Which of the following is not an advantage of group benefit? A) Lower rate B) Better Coverage C) Employer can deduct the cost D) Employee can deduct the amount of premium paid by the employer

Answer: D, employee could only deduct the cost that they paid but not for the employer's part.

Which of the following is true regarding COBRA? A) Employees have 60 days to provide the first payment after enrollment B) Employees have 40 days to provide the first payment after enrollment C) Employees have 45 days to enroll after the separation of employment D) Employees have 60 days to enroll after the separation of employment

Answer: D; employees have 60 days to enroll after the separation of employment and then 45 days to provide the first payment after enrollment

Which of the following is not a leading cause of new disability claims? A. Cancer B. Mental Disorders C. Cardiovascular Disease D. Injuries and Poisoning E. Diabetes

Answer: E According to our lecture slides, the Council for Disability Awareness in 2012 listed A-D in addition to musculoskeletal/connective tissue disorders as the five leading causes of new disability claims.

Which 2 types of accounts are pre-tax contributions? a. HSA and Traditional IRA b. HSA and Roth IRA c. Only HSA d. Only Roth IRA

Answer: a Both the HSA and Traditional IRA are pre-tax contributions. However, Traditional IRA withdrawals are taxed while HSA withdrawals are not if used for approved medical expenses. HSA withdrawals are taxed if used for non-medical expenses!

Deferred compensation plans allow the employer to take a current deduction for compensation expense while the employee can defer the income tax on the compensation. a. True b. False

Answer: b. False, With a deferred compensation plan, the employer may take a compensation deduction when the deferred compensation is taxable to the employee

ABC Corp. provides a group health insurance plan to its employees. Under ACA, which of the following is A. 15 Essential Benefits must be provided B. Dependent children up to age 26 must be C. The Cadillac Tax will be assessed to high value D. All services provided at the time of the annual physical will be covered under preventative care

C

Dr. Curt N. Short practiced medicine in a general partnership for 15 years prior to his retirement this year at age 55. Is he eligible for Medicare benefits this year? a. yes b. no

B

Jackie receives incentive stock options (ISOs) with an exercise price equal to the FMV at the date of the grant of $22. Jackie exercises these options 3 years from the date of the grant when the FMV of the stock is $30. Jackie then sells the stock 3 years after exercising for $35. Which of the following statements is (are) true? 1. At the date of grant, Jackie will have ordinary income equal to $22. 2. At the date of exercise, Jackie will have W-2 income of $8. 3. At the date of sale, Jackie will have long-term capital gain of $13. 4. Jackie's employer will not have a tax deduction related to the grant, exercise or sale of this ISO by Jackie. A. 3 only. B. 3 and 4. C. 2, 3, and 4. D. 1, 2, and 4.

B

Marguerite received nonqualified stock options (NQSOs) with an exercise price equal to the FMV at the date of the grant of $22. Marguerite exercises the options 3 years after the grant date when the FMV of the stock was $30. Marguerite then sells the stock 3 years after exercising for $35. Which of the following statements are true? 1. At the date of the grant, Marguerite will have ordinary income of $22. 2. At the date of exercise, Marguerite will have W-2 income of $8. 3. At the date of sale, Marguerite will have long term capital gain of $5. 4. Marguerite's employer will have a deductible expense in relation to this option of $22. A. 3 only. B. 2 and 3. C. 2, 3, and 4. D. 1, 2, 3, and 4

B

Which of the following statement is incorrect? A. Medicare is the primary payer if you are dual eligible. B. People who are dual eligible are usually those who have higher demand for health care. C. Medicaid offers more long-term cares than Medicare. D. Madigap helps pay deductibles and co-insurance incurred under Medicare Parts A and B.

B

Which of these is not a Life Insurance mistake? A. Naming your estate as beneficiary B. Regularly reviewing your policy C. Inadequate coverage D. Naming Minors as Beneficiaries

B. You should frequently review your policy to make sure it is up to date

Derrick forgot to enroll in a Medicare drug plan (Part D) during his initial enrollment period which ends November 31st, 2014. If he joins during the 2017 Open Enrollment Period, and his coverage began January 1st, 2017. If his base beneficiary premium is $45 in 2017, how much monthly premium would he need to pay when his coverage becomes effective?

Base premium = $45 Penalty = (1% of the average monthly prescription drug premium) * (# of months you were late) = (1% * 25 moths) = 0.25 Base + Penalty = $45 + (0.25 * $45) Premium = $56.25

16.2 The penalty assessed to the value of health insurance in excess of $27,500 for family coverage beginning in 2020 is? A. 20% B. 50% C. 40% D. $10,200

C

16.3 Kevin incurred the following costs at his last dr. visit - $450 preventative care and another $500 diagnostic testing. Which of the following are true statements? A. Preventative care is covered with 20 % cost B. Preventative care is only provided for children C. Preventative Care is available for all at no cost D. The total cost of his visit was $950

C

16.5 Carrie opens a Health Savings account. How much can she fund the HSA in 2016? Her employer offers an HMO with a $2000 annual deductible. She is 56 years A. $3350 B $5500 C $0 D $4350

C

All of the following will qualify someone for Medicare except what? a) Being 65 or older b) Under 65 but receiving social security disability insurance for over 24 months c) Being under the federal poverty line d)Having permanent Kidney failure

C

Amy is enrolled in her employers Qualified High Deductible Health plan. She has elected family coverage. The plan has a $3000 individual and a $5000 family deductible. If she incurred a $6,500 pharmacy expense for treatment of her MS, and this is her first expense of the plan year, what is her out of pocket cost? A. $6,500, QHDHP doesn't cover pharmacy B. $3,000 C. $5,000 D. $5,200, (80% of $6,500)

C

Kevin is a member of Parkland's faculty. He earns a base compensation of $65,000. He also earns $12,000 per year in overload pay, $3000 in sub work and $15,000 for summer session. The Employer pays two times base pay in life insurance benefits. Which of the following is true? A. Kevin should name his two young daughters as beneficiaries of this policy. B. The face value of his life insurance will be $190,000 C. The face value of his life insurance will be $130,000 D. Kevin can pick any amount he needs.

C

Mike was awarded 1,000 shares of restricted stock of B Corp at a time when the stock price was $14. Assume Mike properly makes an 83(b) election at the date of the award. The stock vests 2 years later at a price of $12 and Mike sells it then. What are Mike's tax consequences in the year he makes the 83(b) election? (a) Mike has W-2 income of $12,000. (b) Mike has a long-term capital loss of $2,000. (c) Mike has W-2 income of $14,000. (d) Mike has a $12,000 long-term capital gain

C

Which of the following is a standard pharmacy formulary? A. Generic, Formulary Tier 2, Non Brand Tier 3, and Specialty Drugs on Tiers 4 and 5 B. Generic and Specialty C. $10/$20/$50 D. $10/$20/50%

C

Claudette is 48 years old and earns $625,000, $550,000 in base pay and $75,000 in commission. Reyes Group Ltd. provides all of its employees with group term life insurance coverage equal to 2 times base pay. What is the cost of insurance that must be included in Claudette's compensation? A. $1,230 B. $1,845 C. $1,980 D. $2,115

C 1,100,000 less $50,000 = 1,050,000 1,050,000 / 1,000 = 1,050 1,050 times .15 = 157.50 times 12 months = $1,890

ABC Corp. provides a group health insurance plan to its full time employees. The value of the Plan is $1000 per month to each employee. The premiums are $800 per month per employee. There are 30 employees. Which of the following is true? A. Group health plan premiums in the amount of $24,000 per month are taxable to the employer B. Employees are taxed $12,000 per year on the value of health insurance C. Group health plan premiums in the amount of $288,000 are tax deductible by the Employer D. All of the above E. B & C

C 800x12x30=288k annual premiums *#of employees

How many days do you have to get Cobra after your previous employment? A. 45 B. 30 C. 90 D. 60

Correct Answer: D

Which of the following statement is correct? A. If you are granted the stock options or the stock appreciation rights, you'll need to pay out-of-pocket dollars to excise to realize your compensation B. ISOs can be granted to anyone, including employees, consultants and directors. C. Employer does not receive a tax reduction if no W-2 income is recognized by the employee D. The NQSO will be taxed for W-2 income on the excise date whereas the ISO will not.

D

Marisol was granted 100 NQSOs five years ago. At the time of the option grant, the value of the underlying stock was $100 and the exercise price was equal to $100. If Marisol exercises the options on August 22 of this year when the stock is valued at $145, what are the tax consequences (per share) to Marisol from exercising the options? A. $45 of W-2 income, $100 of short-term capital gain. B. $100 of W-2 income, $45 of short-term capital gain. C. $145 of W-2 income. D. $45 of W-2 income.

D

Which is of the following would not be eligible for Medicaid? A. Low income pregnant women B. Low income children (under 19 years old) C. Low income people who are older than 65 D. Low income people who are disabled E. All of the above are eligible for Medicaid

Correct answer is E. According to Medicaid eligibility all of the above scenarios would be approved to receive Medicaid benefits.

12.4 Which of the following is not??? required for qualifying disposition of ISO? A. individual must hold stock two years from date of grant, B. individual must hold stock one year from date of exercise C. The aggregate fair market value of ISO grants must be less than $100,000 per year per executive D. The aggregate fair market value of ISO at the excise date must be less than $100,000 per year per executive

D

13.2 Jennifer received 1,000 SARs at $18, the current trading price of Clippers, Inc., her employer. If Jennifer exercises the SARs three years after the grant when Clipper's stock is $20 per share, which of the following statements is true? (a) Jennifer will have an adjusted taxable basis of $18,000 in the Clippers, Inc. stock. (b) Jennifer will have W-2 income equal to $20,000. (c) Jennifer will have long-term capital gain of $2,000. (d) Jennifer will have W-2 income equal to $2,000.

D

17.5 Which of the following are possible issues when naming your estate as beneficiary of your life insurance policy? A. Subject to probate B Subject to 6 month claim of creditors notice C Costly D All of the above

D

Disadvantages of an employee stock purchase plan include: a. employee bears market risk b. employee must have a source of funds to purchase the stock c. employer usually does not receive a tax deduction under an employee stock purchase plan d. all of the above e. only a and b

D

Good RX is a tool of: A. A self funded plan B. A fully insured plan C. Consumer Drive Health Care behavior D. All of the above

D

Jenna works at ABC Co. She has enrolled in the group health insurance plan, family coverage at a cost of $750 per month. She is single and has a disabled child so health insurance is very important to Jenna's family. She is moving to CA to be closer to family but hasn't secured new employment. Her last day of employment with ABC Co. is June 30. Jenna wishes to enroll in Cobra. What is the last possible date she can enroll her family? A July 1 B June 30 C August 15 D August 30

D

Sal Holbert receives restricted stock in 2009 that is deemed for tax purposes to be substantially vested in 2009 a. Sal pays tax in 2009 b. Sal's employer gets a tax deduction in 2009 c. restrictions on the stock can prohibit Sal from selling the stock in 2009 d. all of the above e. only a and b

D

Group Health Insurance Benefits include all of the following except: a.) Employer can deduct costs. b.) Lower rates. c.) Better coverage. d.) Employee can deduct costs.

D because all of the other statements are correct benefits of group Health Insurance.

13.4 Which of the following requires the employee to pay for the stock? A. ISO B. NQSO C. SAR D. RSP E. ESPP

E

17.4 Which of the following are common life insurance mistakes? A. Leaving your ex-spouse as beneficiary of your life insurance policy B. Naming your minor children as beneficiary C. Naming a trust as beneficiary for the care of your children D. Reviewing your policy on a regular basis. E. A & B

E

A Medigap policy a. will cover any out-of-pocket expenses b. is designed to help pay deductibles and coinsurance incurred by those enrolled in Part A and Part B of Medicare c. may pay for certain items or services not covered by Medicare d. a and b e. b and c

E

A self funded plan must consider which of the following during the plan design process: A. Projected Claims B. Administrative Expenses C. Stop Loss (Catastrophic) premiums D. Potential Savings E. All of the Above

E

Mary withdraws $8500 from her HSA for non medical purposes. Which of the following is true? A. If she is age 45 at the time of withdrawal, the penalty will be $1,700 B. If she is age 65 at the time of withdrawal, the penalty will be $1,700 C. Ordinary Income tax will be due. D. None of the above E. A & C

E

Which of the following types of health care is not covered under Medicare Part A a. home health visits True b. hospice care for terminally ill patients c. physical therapy d. inpatient hospital care e. post-hospital extended care

E

True or False? An employee has 75 days to enroll in Cobra post separation of employment

False (60 days)

Which part of Medicare is free for most people? Medicare Part A Medicare Part B Medicare Part C Medicare Part D

Medicare Part A is funded by FICA Tax. Part B and D premiums increase with income. Part C premiums vary by plan.

Who is NOT eligible for Medicare? A Someone who is age 43 with permanent kidney failure B Someone who is age 71 and in good health C Someone who is age 34, but has been receiving social security disability insurance income for 24 months D All of the above are eligible for Medicare

The answer is D. In order to qualify for medicare you must be 65 and older, or under 65 but have been receiving Social Security Disability Insurance (SSDI) income for 24 months, or have permanent kidney failure.

What is a drug formulary? A Pharmacy B Committee of Pharmacists C List of prescription drugs and their prices D website to buy prescription drugs

The Answer is C. A drug formulary is a list of prescription drugs, both generic and brand name, used by practitioners to identify drugs that offer the greatest overall value.

Q.When can you choose to continue your group coverage?

you quit work, are laid off,retire or are fired (not for gross misconduct) your hours are reduced so you no longer qualify for the group plan you are legally separated or divorced your child no longer qualifies as a dependent under the plan you become disabled