Chapter 9: Federal Tax Considerations for Accident and Health Insurance

What percentage of individually-owned disability income benefits is taxable?

0%

Employers can reduce health plan costs by coupling a HRA with

A high deductible health plan.

Under a Key Person disability income policy, premium payments

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

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?

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

Which type of insurance provides funds for a business organization to purchase the business interest of a disabled partner?

Disability Buy-Sell

Under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

Disability Income

Other than for a qualified life event, when can a change be made in benefits for a Flexible Spending Account (FSA)?

During the open enrollment period

Health Savings Accounts (HSAs) are designed to

Help individuals save for qualified health expenses.

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

Income tax free.

Which of the following is NOT true regarding a flexible spending account?

It does not have limits on contributions.

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

Which of the following describes taxation of individual disability income insurance premiums and benefits?

Premiums are not tax deductible, and benefits are not taxable.

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.

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.

Which of the following determines whether disability insurance benefits are taxed?

Whether the premiums were tax deductible