Benefits Final Exam
A profit-sharing plan provides benefits that are less certain and may even be completely discretionary on the employer's part (although they must be allocated in a nondiscriminatory way).
True
Depending on how they are designed, retirement plans can be targeted to increase or decrease turnover in certain types of workers.
True
Employer contributions to the plan and plan earnings are not subject to payroll taxes such as Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax (FUTA).
True
One reason that an employee might not appreciate their retirement plan is because employees believe they will not stay at the organization long enough to vest in benefits.
True
Only a defined-benefit plan needs an actuary on an ongoing basis
True
Qualified plans must have non-forfeiture provisions
True
Qualified plans require funding in advance of payment.
True
Retirement plans can help attract and retain the type of work force needed to help businesses achieve their objectives.
True
Retirement plans can help increase current productivity
True
Stock bonus plans are a form of profit-sharing plans
True
Treasury regulations are binding on all taxpayers
True
When a former employee begins to receive benefits, the taxes paid on the benefits may be lower because the retiree is likely to be in a lower tax bracket.
True
1. Check all that apply to Defined benefit plans: One-time lump sum payment. Employee bears investment risk. Employee contributions neither permitted nor required. Usually favors younger employees with shorter service and mid-level pay brackets. Costs usually are easy to estimate with some certainty; no variation based on the plan's investment return. An actuary is required to calculate contributions and to assist in benefit calculations; usually requires distributions only at retirement; forefeitures by non-vested participants are not tracked in individual accounts.
-Employee contributions neither permitted nor required. -An actuary is required to calculate contributions and to assist in benefit calculations; usually requires distributions only at retirement; forfeitures by non-vested participants are not tracked in individual accounts.
. All of the following are circumstances under which an employer may allow an employee to have time off with pay EXCEPT for which of the following? A. Active military duty B. Voting time C. Jury duty D. A death in the family E. Sabbatical leaves
A
. Which of the following statements concerning the federal Family and Medical Leave Act is (are) correct? I. It requires an employee to provide 30 days' notice for foreseeable leaves for birth, adoption, or planned medical treatment. II. It applies to any employer with more than 15 employees. A. I only B. II only C. Both I and II D. Neither I or II
A
A group legal expense plan under which an employee can select his or her own attorney is an example of a: A. open-panel plan. B. scheduled plan. C. comprehensive plan. D. advocacy-panel plan. E. closed-panel plan.
A
A qualified long-term care insurance contract must meet all of the following requirements EXCEPT: A. The contract must provide a cash surrender value. B. The contract must be guaranteed renewable. C. The contract must comply with specified consumer protection provisions. D. Policyholder dividends must be applied as future reductions in premiums or to increase future benefits.
A
A qualified profit-sharing plan is similar to a qualified money-purchase pension plan in which of the following respects? A. Employer contributions are tax deductible. B. There is no limit on the amount of a participant's compensation that can be taken into account in the contribution formula. C. Retirement benefits provided to employees are projected actuarially. D. The employer is normally allowed to make contributions up to 30 percent of payroll.
A
All of the following are characteristics of a qualified plan EXCEPT? A. funding after employee retirement. B. nondiscrimination rules. C. limitations on benefits or employer contributions D. may require termination of employment before funds can be withdrawn.
A
All of the following are common exclusions found in dental insurance plans EXCEPT: A. routine oral examinations. B. duplicate dentures. C. services without uniform professional endorsement. D. purely cosmetic services.
A
All of the following are contract provisions common to various types of medical expense benefits EXCEPT: A. the amounts set for co-pays and deductibles. B. eligibility provisions. C. claims provisions. D. coordination of benefit provisions.
A
All of the following are exclusions in group long-term care policies, EXCEPT: A. institutional care received inside the United States. B. war. C. treatment for drug or alcohol abuse. D. attempted suicide.
A
All of the following can be classified as life-style management programs EXCEPT: A. routine physicals. B. smoking cessation. C. stress management. D. weight reduction.
A
All of the following cause the need for long-term care, EXCEPT: A. the ability of families to provide full care. B. increasing costs. C. the inadequacy of insurance protection. D. an aging population.
A
All of the following statements concerning the portability provisions of the Health Insurance Portability and Accountability Act are correct EXCEPT: A. They apply only to insured health plans of employers with 50 or more employees. B. They require an employer to give persons losing group coverage a certificate that specifies the period of creditable coverage under the plan they are leaving. C. They allow a late enrollee in a plan to be subject to a pre-existing conditions period of 18 months. D. They require any waiting period for coverage to run concurrently with any preexisting conditions period.
A
All of the following statements concerning the portability provisions of the Health Insurance Portability and Accountability Act are correct EXCEPT: A. They apply only to insured health plans of employers with 50 or more employees. B. They require an employer to give persons losing group coverage a certificate that specifies the period of creditable coverage under the plan they are leaving. C. They allow a late enrollee in a plan to be subject to a pre-existing-conditions period of 18 months. D. They require probationary period for coverage to run concurrently with any preexisting conditions period.
A
All of the following statements concerning the typical group long-term care insurance policy are correct EXCEPT: A. benefits are expressed as the cost of semi-private accommodations. B. benefits are subject to a waiting period with 90 days being common. C. coverage is guaranteed renewable. D. coverage is provided for skilled nursing care, intermediate care, and custodial care.
A
All the following are qualifying events under COBRA EXCEPT: A. the employee is fired for gross misconduct. B. the employee dies. C. the employee's hours is reduced so he or she is no longer eligible for coverage. D. the employee and his spouse commence a legal separation.
A
All the following can be classified as lifestyle management programs EXCEPT: A. routine physicals. B. smoking cessation. C. stress management. D. weight reduction.
A
An ASO contract stipulates all but which of the following? A. The administrator is responsible for paying claims from its own assets, if the employers account is insufficient. B. The extent of authority and responsibility. C. The provisions for terminating the administrator. D. The manner in which disputes between the employee and the managers are settled. E. None of the above
A
Ignoring any provision for the continuing of coverage, an employee=s coverage under a medical expense plan will generally cease in all of the following cases EXCEPT: A. the employee reaches age 65. B. the master contract terminates. C. the date on which employment terminates. D. the employee receives the maximum overall benefit payable under the policy.
A
Management objectives in pension plan design include which of the following? A. Help employees with retirement savings. B. Discourage recruitment. C. Discourage productivity. D. Encourage college bargaining.
A
Minimum-Premium Plans were primarily designed to _______. A. reduce state premium taxes B. lower company loses C. guard against high inflation D. increase employee benefits
A
Sam was injured due to a negligent act of his neighbor. Under what policy provision or clause does Sam's medical expense plan have the right to seek recovery from the neighbor for Sam's medical expenses? A. The subrogation provision B. The entire contract clause C. The contestability clause D. The extension-of-benefits provision
A
Sources of tax law binding all taxpayers include: I. Treasury regulations II. IRS private-letter rulings A. I only B. II only C. Both I and II D. Neither I nor II
A
The federal government encourages the adoption of qualified retirement programs for all the following reasons EXCEPT to: A. provide a tax-sheltered savings program for owners of small businesses. B. prevent retirees from becoming a burden on society. C. reduce pressures from society to increase benefits under Social Security. D. increase the nation's level of savings and capital investment.
A
The replacement of dentures may be limited to in some specified period? (such as 5 years) A. 1 B. 2 C. 3 D. 4
A
To combat the problem of adverse selection, dental insurance contracts: A. reduce benefits for a period of time. B. increase the maximum benefit. C. exclude all benefits for a period of time. D. All of the above E. None of the above
A
Which arrangement allows the employer to defer payment of monthly premiums for some time beyond the usual 30 day grace period, most commonly by 60 or 90 days? A. premium-delay arrangements B. reserve-reduction arrangements C. cost-plus arrangements D. retrospective-rating arrangements
A
Which of the following concerning time off for jury duty is true? A. Most employers grant (and may be required to grant) time off for jury duty. B. Employees called for jury duty never get compensated by their employer. C. Jury duty can only be served when the employee is on vacation. D. Employees are required to take personal days if they want to serve on jury duty.
A
Which of the following conditions, is (are) considered favorable to the self-funding of benefits? I. A nonunion situation II. A contributory plan A. I only B. II only C. Both I and II D. Neither I nor II
A
Which of the following statements about financial planning programs is (are) correct? I. Pre-retirement counseling often focuses on aspects of retirement other than financial needs. II. Programs for executives usually provide little individual counseling and focus primarily on group meetings. A. I only B. II only C. Both I and II D. Neither I or II
A
Which of the following statements concerning employee-assistance programs is (are) correct? I. They often use poor job performance as the basis for employer concern. II. They emphasize using the employee's supervisor as a counselor to solve an employee's problems. A. I only B. II only C. Both I and II D. Neither I or II
A
Which of the following statements concerning group dental insurance plans is correct? A. Dental coverage is subject to the continuation rules of COBRA. B. Most plans contain a lifetime maximum but no calendar year maximum. C. Most plans exclude benefits when a required predetermination of benefits is not obtained. D. Most plans have shorter probationary periods than medical expense plans have.
A
Which of the following statements concerning holidays is (are) correct? I. Employees who are required to work on holidays usually receive extra compensation. II. Compensation for holidays is generally tax free. A. I only B. II only C. Both I and II D. Neither I or II
A
Which of the following statements concerning premium-delay arrangements is correct? A. Its use is often contingent upon the employer's providing evidence of a satisfactory financial condition. B. The employer pays the medical care benefits directly from a corporate cash account. C. The employer is ultimately responsible for all claims. D. The usual length of the premium delay is 6 months.
A
Which of the following statements concerning the typical group long-term care insurance product is incorrect? A. The premium increases each time an insured enters a higher age bracket. B. The same level of benefits is usually provided for all levels of institutional care. C. Most plans offer fewer benefit options than are available in the individual marketplace. D. Coverage is usually available to an employee's spouse and possibly other family members.
A
Which one of the following is NOT a common exclusion in dental plans? A.fillings B.services that are purely cosmetic C.replacement of lost dentures D.oral hygiene instruction
A
Which one of the following is NOT an example of a defined-contribution plan? A. Cash-balance pension plan B. Profit-sharing plan C. Stock bonus plan D. Section 401(k) E. ESOP F. Target-benefit plan G. Money-purchase plan
A
Which of the following are used by dental insurance plans to control claim cost and to eliminate unnecessary dental care? A. deductibles and coinsurance B. they place no limit on the frequency with which the benefits are paid C. they don=t use a calendar-year or lifetime maximum D. they limit benefits to the least expense type of accepted dental treatment.
A+D
. What is the minimum amount of a firm that a person must own in order to automatically be considered a highly compensated employee for purposes of Sec. 414(q) of the Internal Revenue Code? A. 2 percent B. 5 percent C. 10 percent D. 16 2/3 percent
B
39. Which of the following statements concerning the benefits under group dental insurance plans is (are) correct? I. The most likely benefit to be included in most plans is reimbursement for orthodontic services. II. Most plans provide a higher level of benefits for preventative and diagnostic services than for other levels of dental service. A. I only B. II only C. Both I and II D. Neither I nor II
B
A major federal tax advantage of a qualified plan is: A. employees pay taxes in advance of receiving benefits. B. earnings on plan funds accumulate tax-free. C. plan benefits are exempt from federal gift and estate taxes. D. employers receive a 10 percent tax credit for plan contributions.
B
Alternative funding methods may be advantageous to employers in all the following ways EXCEPT: A. improving cash flow. B. increasing risk charges. C. avoiding mandated benefits. D. lowering premium taxes.
B
COBRA requires that group health plans allow employees and certain beneficiaries to elect to have their current health insurance coverage extended at group rates for up to how many months following a 1st qualifying event that results in the loss of coverage for a qualified beneficiary A. 12 months B. 18 months or 36 months depending on the situation C. 24 months D. 26 months
B
Most employees and their dependents will be eligible for Medicare upon reaching age: A. 60 B. 65 C. 62 D. 55
B
Premium delay arrangement allows the employer to: A. put off payment until the company is financially able to pay. B. defers payment of monthly premiums for 60 to 90 days. C. retains an amount of the annual premium. D. None of the above E. All of the above
B
The Kenn Corporation has a self-funded benefit plan that provides medical expense benefits for all its full-time employees. The plan pays 100 percent of the medical costs of its executives but only 80 percent of the medical costs of its other employees. Last year 30 percent of the benefits were paid to the executives, who are the highly compensated employees of the firm. What percentage of any benefits paid to the executives is subject to federal income taxation? A. 0 B. 20 C. 44 D. 50
B
The need for occasional nursing and rehabilitative care that must be based on a doctor's order and which can be performed only by, or under the supervision of, skilled medical personnel is an example of: A. skilled nursing care. B. intermediate care. C. custodial care. D. home health care.
B
The term Domestic Partner Benefits refer to what type of relationship to the subscriber? A. Partners of the same sex that is financially independent B. Both same and opposite sex partners who can prove interdependence C. Married persons with a roommate D. Only those domestic partners with dependent
B
A pension plan is designed primarily to provide adequate retirement benefits to covered employees and emphasizes definitely determinable benefits and deferral of payment to retirement
True
What is the term for the portion of the insurance company's premium over and above the incurred claims and dividends which includes such items as commissions, premium taxes, risk charges and profit? A. cash flow B. retention C. revenue D. alternative funding
B
Which of the following alternative funding arrangements is the employers monthly premium based on the claims paid by the insurance company during the preceding month plus a specified retention charge that is uniform throughout the policy period? A. Minimum-Premium Plans B. Cost-Plus Arrangement C. Premium-Delay Arrangement D. Reserve-Reduction Arrangement
B
Which of the following alternative funding arrangements makes the employer responsible for paying an additional premium, if claims plus the insurance companys retention exceed the initial premium? A. A reserve-reduction arrangement B. A retrospective-rating arrangement C. A premium-delay arrangement D. A stop-loss contract
B
Which of the following alternative funding arrangements, makes the policy owner responsible for paying an additional premium, if claims plus the insurance companys retention exceeds the initial premium? A. A reserve-reduction arrangement B. A retrospective-rating arrangement C. A premium-delay arrangement D. A stop-loss contract
B
Which of the following is FALSE regarding the reasons why most life insurance benefit plans are usually not Self-Funded? A. Large claims are difficult to predict B. Claims are very frequent and difficult to predict C. Only large employers can expect stable and predictable claims on a regular basis D. None of the above
B
Which of the following is NOT normally covered (full or partials) under dental expense plans? A. twice a year check-ups B. teeth whitening or bleaching C. orthodontics
B
Which of the following is the most common type of dental coverage? A. scheduled plans B. non-scheduled plans C. combination plans D. none of the above are the most common type of dental coverage E. all of the above are equally common
B
Which of the following provisions are enacted when a person enrolls into a dental insurance plan after the eligibility period? A. increase in deductible B. excluding some of the benefits for a certain period of time C. terminating complete coverage of dental insurance including those that result from an accident D. None of the above E. All of the above
B
Which of the following statements are true? A. Retirement plans allow for most employees to retire at an average age of 32. B. The average cost of retirement benefits is less than 7% of payroll. C. Effective retirement plans never allow employees to play an active role in creating a personal benefit package. D. All of the above are true statements. E. None of the above are true statements. F. Elvis is still alive and works at Big Bob's Barbeque Shack on Monroe Street.
B
Which of the following statements concerning pre-retirement counseling programs is (are) correct? I. Most of the counseling is provided on an individual basis. II. Spouses of workers are often encouraged to participate. A. I only B. II only C. Both I and II D. Neither I or II
B
Which of the following statements concerning the COBRA rules for group health plans is correct? A. They apply only to employers who have 100 or more employees. B. They require group medical coverage to be made available for up to 36 months for the survivors of a covered employee. C. They apply to dental coverage only if the dental coverage is part of a major medical expense plan. D. They allow the employer to add a 5 percent administrative surcharge to the cost of coverage.
B
Which of the following statements concerning the conversion provision found in group medical expense contracts is (are) correct? I. The provision is inapplicable if a covered person is eligible for continuation of coverage under COBRA. II. The provision typically applies only if a person was covered under the group A. I only B. II only C. Both I and II D. Neither I nor II
B
Which of the following statements concerning the federal Family and Medical Leave Act is (are) correct? I. With some exceptions, a worker must be allowed to take up to 8 weeks of unpaid leave in any 12-monthly period for the birth or adoption of a child. II. With respect to retirement plans, any period of leave must be treated as continued service for purposes of vesting and eligibility to participate. A. I only B. II only C. Both I and II D. Neither I or II
B
Which of the following statements concerning the types of dental insurance plans is (are) correct? I. Most scheduled plans contain deductibles and coinsurance. II. Non-scheduled plans may actually contain a schedule of covered dental services. A. I only B. II only C. Both I and II D. Neither I nor II
B
Which of the following statements concerning the usual coordination-of-benefits provision is (are) correct? I. When two plans both have the provision and the parents are neither separated nor divorced, a father's coverage is primary for male children and a mother's coverage is primary for female children. II. When two plans both have the provision, coverage as an employee is primary to coverage as a dependent. A. I only B. II only C. Both I and II D. Neither I nor II
B
Which of the following statements concerning voluntary benefits is (are) correct? I. The major goal of most insurers in the voluntary market is to sell disability income insurance. II. Voluntary benefits in the form of individual policies are automatically portable when an employee terminates employment. A. I only B. II only C. Both I and II D. Neither I nor II
B
Which of the following statements is true? A. A death of a covered employee is not a qualified event under COBRA. B. The conversion provision found in group medical expense contracts typically applies only if a person was covered under the group contract for a minimum period of time, such as 3 months. C. Medical expense coverage must be continued for laid-off workers no matter what the size of the company. D. COBRA applies to all businesses, churches, & government plans and no one is exempt.
B
Which of the followings statements about wellness programs is (are) correct? I. Medical screening programs are typically performed by physicians. II. Lifestyle management programs are primarily designed to encourage people to modify their behavior so that they will lead healthier lives. A. I only B. II only C. Both I and II D. Neither I or II
B
Which of these procedures is typically excluded from dental plans? A. Oral surgery B. Cosmetic surgeries C. Orthodontic (braces and retainers) D. Prosthodontics (the replacement of missing teeth and structures by artificial devices, such as bridgework and dentures).
B
Which of the following is usually eligible for coverage as a dependent under a major medical expense plan? A. A spouse who is legally separated, but not divorced from the employee. B. Dependent, unmarried stepchildren under age 19. C. Dependent parents over age 65. D. Dependent, married children up to age 25 if full-time college students.
B, if not legally separated, but not divorced from the employee
35. Which of the following statements concerning group dental insurance is correct? A. Providers of coverage have liberal underwriting requirements for contributory plans because adverse selection is of little concern. B. Because of state laws, coverage is seldom self-funded or written by insurance companies. C. Under certain circumstances, services received after termination of coverage are still covered. D. Most plans have a calendar-year maximum of between $25,000 and $100,000.
C
37. Under the Health Portability and Accountabilty Act, a chronically ill person for purposes of long-term care insurance is defined to include which of the following? I. A person who is expected to be unable to perform, without substantial assistance from another person, at least two activities of daily living for a period of a least 90 days due to a loss of functional capacity. II. A person for whom substantial supervision is required to protect the individual from threats to health and safety due to severe impairment. A. I only B. II only C. Both I and II D. Neither I nor II
C
A 401(k) plan: A. is when employer contributions are given in the form of employer stock. B. sets up employer stock accounts for the employee. C. allows employees to choose to receive compensation as cash or as a contribution to a qualified profit sharing plan. D. None of the above are correct. E. All of the above are correct.
C
A limited-liability type of reserve reduction arrangement is designed to fund which of the following types of group insurance? A. Short-term disability B. Medical expense C. Long-term disability income D. Term life
C
According to the text, any employee who had compensation from the employer in excess of (2019, subject to indexing) during the previous year is considered a highly compensated employee. A. $50,000 B. $75,000 C. $120,000 D. $92,500 E. $100,000
C
Aggregate stop-loss coverage results in which of the following? I. An improved cash flow for the employer. II. A minimization of premium taxes. A. I only B. II only C. Both I and II D. Neither I nor II
C
All of the following are characteristics of reserve reduction agreements EXCEPT: A. employer is allowed to retain an amount of annual premium equal to the claim reserve. B. employer must pay reserves to the insurance company if contract is terminated. C. employer normally pays higher premiums in order to maintain the reserves. D. if the employer goes bankrupt and the insurance contract is not renewed, the insurance company has no responsibility to continue benefit payments.
C
All of the following are examples of payments for time not worked EXCEPT: A. holidays. B. adoption assistance. C. time off for self-inflicted injuries. D. personal time. E. vacations.
C
All of the following are exclusions imposed upon benefits for a person enrolling in a dental insurance plan after their initial eligibility period has ended EXCEPT: A. Duplicate dentures or other prosthetic devices. B. Oral hygiene instruction. C. Oral surgery. D. Services furnished by or on behalf of government agencies.
C
Companies usually pay for all of these expenses in adoption assistance EXCEPT: A. legal fees. B. adoption agencies' fees. C. clothes after custody of the child is awarded. D. the child's uninsured medical expenses.
C
Connie is covered under her employer's medical expense plan, and she is also covered as a dependent under her husband's plan. In the absence of any coordination-of-benefits provision, her plan would pay $3,300 of her $3,700 medical expenses and her husband's plan would pay $3,150. In each case, the deductibles and coinsurance would account solely for the less-than-full reimbursement. If both plans contain the usual coordination-of-benefits provision, how much will Connie collect for her medical expenses? A. $550 from her plan and $3,150 from her husband's plan B. $3,330 from her plan and nothing from her husband's plan C. $3,300 from her plan and $400 from her husband's plan D. $3,700 from her plan and nothing from her husband's plan
C
Defined-contribution pension plans include which of the following? I. Target-benefit plans II. Money-purchase plans A. I only B. II only C. Both I and II D. Neither I nor II
C
Employer contributions to Qualified Retirement plans are: I. immediately deductible to employer. II. tax deferred to employee. A. I only B. II only C. Both I and II D. Neither I nor II
C
Failure to comply with COBRA will result in a penalty of up to how much per day for each person denied coverage? A. $25 B. $50 C. $110 D. $200
C
Failure to comply with COBRA will result in an excise tax of ___________ per day for each denied coverage? A. up to $20 B. up to $50 C. up to $110 D. up to $75
C
In terms of payments for time not worked, at a minimum, employees usually receive pay for the following EXCEPT: A. New Year's Day. B. Labor Day. C. Columbus Day. D. Thanksgiving. E. Christmas.
C
Methods of alternative funding are divided into 2 categories. Which does not fall into the category including those arrangements that primarily modify traditional, fully insured group insurance contracts? A. cost-plus arrangements B. minimum-premium plans C. self-funding with stop-loss coverage D. retrospective-rating arrangement
C
Qualified retirement plans have the following tax advantages EXCEPT: A. the employer gets an immediate deduction. B. the employee is taxed only when plan benefits are received. C. the employee is taxed at the time the employer makes contributions for the employee. D. earnings on money put aside is not subject to federal income tax while in the plan fund.
C
The following are conditions that favor Total Self-funding methods EXCEPT for: A. Predictable claims. B. Non-contributory plans. C. Union situation. D. The ability to effectively and efficiently handle claims. E. All of the following are conditions that favor Total Self-funding methods for employee benefit plans.
C
The longest period one person can receive COBRA benefits is: A. 12 months B. 24 months C. 36 months D. 48 months
C
This method of alternative funding allows the employer to defer payment of monthly premiums for some time beyond the usual 30-day grace period: A. reserve-reduction arrangement B. minimum-premium plans C. premium-delay arrangements D. cost-plus arrangements
C
Under, minimum-premium arrangements: A. employer is responsible for the first 50% of claims. B. insurance company is responsible for the first 50% of claims. C. insurance company is ultimately responsible for seeing that all claims are paid. D. employer is ultimately responsible for seeing that all claims are paid.
C
What is the disadvantage when using a 501(c)(9) trust? A. It cannot be deducted for Federal income tax purposes. B. There is no flexibility regarding contributions to the trust. C. The cost of maintaining the trust may be prohibitive. D. The employer does not have the potential for earning a return on the trust.
C
What is the maximum amount of dependent-care assistance that can be received tax free by a single parent or a married person who files jointly (2019 numbers)? A. $2,000 B. $3,750 C. $5,000 D. $5,250
C
Which of the following alternative funding arrangements, is NOT a modification of a traditional, fully insured, method of funding? A. premium delay arrangement B. reserve reduction arrangement C. funding through a 501(c)(9) trust D. cost-plus arrangements E. retrospective arrangements
C
Which of the following is TRUE? A. Aggregate Stop-Loss Coverage does not protect employers against unexpectedly high levels of claims. B. A major benefit of funding through a 501(c)(9) is the ease at establishing and maintaining the trust. C. A major benefit of self-financed insurance is the ability to improve cash flow and cost savings. D. Self-funding works better in a union situation.
C
Which of the following statements concerning vacations is (are) correct? I. Most plans are based on service, and the number of vacation days for a particular employee increases over time. II. Supervisory approval is generally required before vacation days can be taken. A. I only B. II only C. Both I and II D. Neither I or II
C
Which of the following statements concerning what factors other than employee benefit decisions determine the holidays on which a business is closed? I. Marketing factors may also be a determination in the holidays on which a business is closed. II. Some businesses, such as banks, are required to close on certain holidays. A. I only B. II only C. Both I and II D. Neither I or II
C
Which of the following, is a problem associated with self-funding and self-administration? A. lawsuits B. premium taxes C. risk of catastrophic claims D. cost of insuring the handicapped
C
The tax benefits of a qualified plan are: A. the employer gets a tax deferral. B. the employee gets a tax deduction. C. the employer gets a tax deferral; employee's contribution is a tax deduction. D. the employer gets a tax deduction; employee's contribution is tax deferred.
D
With stop-loss coverage, if the total claims exceeds some specified dollar limit, the insurance company assumes the financial responsibility for those claims that are over the limit, subject to the maximum reimbursement specified in the contract. The limit is usually applied on an annual basis and is expressed as some percentage of expected claims (typically is between what range)? A. 130 and 150 percent B. 135 and 145 percent C. 115 and 135 percent D. 105 and 125 percent
C
38. Which of the following statements concerning comprehensive legal expense plans is (are) correct? I. They usually exclude legal services for personal bankruptcy. II. They usually provide legal services for suits against the employer. A. I only B. II only C. Both I and II D. Neither I nor II
D
7. A qualified plan can cover any of the following EXCEPT: A. an employee of the sponsoring company. B. a partner in a partnership. C. an owner-employee of an S corporation. D. a private contractor doing work for the sponsoring company.
D
A taxpayer wishing to contest a tax assessment has three choices. Which of the following is not one of those three choices? A. Federal District Court in the taxpayers district B. United States Tax Court C. United States Claims Court D. Small Claims Court
D
Aggregate Stop-Loss coverage results in? A. a decrease in cash flow for the employer B. increased benefits for the employee C. maximization of premium taxes D. None of the above
D
All of the following are basic objectives of pension plan design EXCEPT: A. help employees with retirement saving. B. tax deferral for owners and highly compensated employees. C. help recruit, retain and retire employees. D. encourage formation of a collective bargaining unit. E. encourage productivity directly.
D
All of the following are characteristics of minimum-premium plans EXCEPT: A. the primary advantages are reduced premium tax liability and potential cash flow savings. B. the insurance company assumes the responsibility for claims beyond a specified level. C. the insurance company holds claim reserves. D. the employer must assume the administration of claims or purchase this service separately.
D
All of the following are true characteristics of Total Self-Funding for employee benefit plans, EXCEPT for: A. a nonunion situation. B. the ability to effectively and efficiently handle claims. C. the ability to obtain discounts from medical care providers, if medical expense benefits are self-funded. D. unpredictable claims.
D
All the following are reasons to recommend that an employer adopt a qualified retirement plan EXCEPT: A. certain qualified plan designs can minimize turnover in the employer's workforce by tying benefits to vesting service. B. the existence of a qualified plan allows an employer's employees to retire with dignity and without suffering a severe economic detriment. C. some qualified plans are thought to encourage employee productivity. D. small employers (employers with less than 25 employees) can cut costs by designing the plan to exclude employees who are under age 25 and who have less than three years of service.
D
Dental plans may have limitations in the form of: A. a maximum yearly amount. B. a maximum lifetime amount. C. limitations on the number of visits per year per person. D. All of the above E. None of the above
D
How many employees does an employer have to have for COBRA to apply to them? A. 10 B. 15 C. 25 D. 20
D
Most dental practices do a pretreatment review so that: A. the patient gets to know the dentist better. B. to explain patient rights. C. to review dental benefits. D. so that both the dentist and patient know how much is covered by the plan before treatment is done.
D
Retirement plans can help organizations meet their goals by: A. attracting & retaining employees with required levels of expertise and professional maturity. B. encouraging turnover among employees with appropriate levels of tenure with the firm. C. deferring the employer's actual cash flow for compensation while satisfying the employee's desire for immediate rewards and future security. D. All of the above are correct. E. None of the above are correct. F. Thirty-two percent of the above answers are correct.
D
What dependents are ineligible for coverage under a medical expense plan? A. Spouses of those covered employees B. Children of these covered employees (under the age of 23) C. Children of covered employees unable to earn their own living due to physical or mental infirmity. D. Those dependents of employees not covered.
D
Which of the following are true concerning dental plan limitations on the frequency with which some benefits are paid: A. oral exams and teeth cleaning are usually limited to once every six months. B. full mouth x-rays are usually limited to once very 24 to 36 months. C. Replacement of dentures may also be limited to one time in a specified time period. D. All of the above are correct E. None of the above are correct
D
Which of the following is (are) common exclusions in most dental plan? A. duplicate dentures B. services that are purely cosmetic C. occupational injuries covered by Worker=s compensation D. All of the above E. None of the above
D
Which of the following is FALSE regarding exclusions that are found in all dental plans? A. duplicate dentures or prosthetic devices B. replacement of lost, missing, or stolen dentures or any other prosthetic devices. C. oral hygiene instruction or other training in preventative dental care. D. regular preventative dental checkups
D
Which of the following is FALSE? A. Dental insurance plans are more likely than medical expense plans to include benefit plans with routine examinations and preventive medicine. B. Defense of civil suits is almost always covered under benefits under legal expense plans. C. The increasing cost of nursing home care has increased the need for long-term care.
D
Which of the following is NOT a characteristic of minimum-premium plans? A. They result in reduced premiums. B. The insurance company assumes the responsibility for claims beyond a specified level. C. The insurance company must establish claim reserves. D. The employer must assume the administration of claims or purchase this service separately.
D
Which of the following is a form of protection for employers against an unexpectedly high level of claims? A. ASO contracts B. high deductibles C. reserve premium plan D. aggregate stop-loss plan E. All of the above
D
Which of the following is least likely to be covered under a group legal expense plan? A. IRS audits B. Personal bankruptcy C. Divorce proceedings D. Criminal defense
D
Which of the following statements about a 501(c)(9) trusts is correct? A. The trust is most suited for providing retirement benefits and deferred compensation. B. If the trust is terminated, any excess assets revert to the employer. C. Contributions made to the trust can be deducted for Federal income purposes only when they are paid as benefits. D. The trust is subject to a tax on unrelated business income if reserves are above permitted levels.
D
Which of the following statements about educational assistance programs is correct? A. Tax-free benefits can be provided for the cost of traveling to and from school. B. Benefits can be provided to highly compensated employees on a discriminatory basis. C. Tax-free benefits can be paid for courses involving sports, games, or hobbies. D. Tax-free benefits are limited to $5,250 annually (2019 numbers).
D
Which of the following statements about employee discounts is (are) correct? I. The amount of the discount is not includible in an employee's gross income, even if the discount is provided only to highly compensated employees. II. In order to avoid the receipt of taxable income, the discount must be for the purchase of investment assets, such as real estate or securities. A. I only B. II only C. Both I and II D. Neither I or II
D
Which of the following statements about the predetermination-of-benefits provision in a group dental insurance contract is (are) correct? I. Its use is required only if expenses are expected to exceed some larger figure, such as $5,000. II. No coverage is provided unless the provision is followed. A. I only B. II only C. Both I and II D. Neither I nor II
D
Which of the following statements concerning Medicare carve-outs and supplements is (are) correct? I. Under a Medicare carve-out, Medicare benefits are reduced by the amount of any benefits paid by an employer's medical expense plan. II. Medical supplements can be provided only to active employees who are covered by Medicare. A. I only B. II only C. Both I and II D. Neither I nor II
D
Which of the following statements concerning administrative-services-only contracts is (are) correct? I. The cost of the contracts is subject to state premium taxes. II. Because of ERISA, these contracts rarely include claims administration. A. I only B. II only C. Both I and II D. Neither I nor II
D
Which of the following statements concerning payroll deduction plans for property and liability insurance is (are) correct? I. The employer is responsible for soliciting participation and most other administrative functions of the plan. II. Unlike individual property and liability insurance, premiums are unaffected by factors such as age or driving record. A. I only B. II C. Both I and II D. Neither I nor II
D
Which of the following statements concerning the federal income provisions pertaining to a qualified long-term insurance contract is (are) correct? I. Coverage can be offered through a cafeteria plan on a tax-favored basis. II. Proceeds under a group policy are tax free only if the contract provides benefits in excess of $190 per day. A. I only B. II only C. Both I and II D. Neither I nor II
D
Which of the following statements is TRUE? A. The most significant cost to employers in terms of payment for time not worked is holidays. B. A highly compensated employee is one that owns more than 2% of the firm. C. The Family and Medical Leave Act of 1993 rules do not apply to private employers, only public. D. For payments for time not worked, most employers focus on the length of service an employee has completed.
D
Which of the following statements made about paid vacation plans is FALSE? A. Most paid vacation plans include a specified waiting period for new employees before the full amount of paid vacation is earned. B. In most cases, there is an increase in the amount of vacation time for a specified number of years of service. C. Employers may allow employees to carry over unused vacation days from year to year, usually within limits. D. Vacation pay is not taxed as regular income. E. Vacation programs are often designed to fit employer objectives and competition.
D
Which of the following types of group benefits is least likely to be self-funded? A. Medical expense coverage B. Short-term disability income coverage C. Long-term disability income coverage D. Term life insurance
D
Which one of the following is a respective regulatory role of Treasury Regulations, IRS Revenue Rulings, and IRS Private Letter Rulings? A. Private rulings technically apply to all taxpayers in that area. B. All regulations and rulings only deal with issues faced by people in the upper tax brackets. C. Treasury regulations are informal written rules. D. Private letter rulings are applied for, to the IRS by private taxpayers.
D
Who has to comply with COBRA? A. Local, State, and Federal agencies and contractors working with the government whose contracts exceed $50,000 in one year. B. Employers with 10 or more employees. C. Employers with more than 3 full-time employees. D. Employers who currently has health insurance who employees 20 or more full or part-time employees during 50% of business days in the preceding calendar year.
D
An actuary is used for which type of plan? A. Profit sharing plan B. 401(k) plan C. Money-purchase plan D. ESOPs E. Defined benefit plans
E
Exclusions are found in all dental plans, but their number and type vary. Some of the more common exclusions are charges for the following: A. replacement of lost, missing or stolen dentures or of prosthetic devices. B. oral hygiene instructions or other training in preventative dental care. C. services that do not have uniform professional endorsement. D. services furnished or on behalf of governmental agencies, unless there is a requirements to pay. E. All of the above
E
Group dental benefits may be offered by: A. insurance companies. B. dental service plans. C. the "blues" D. managed care plans. E. all of the above
E
If dependent coverage is contributory, duplicate coverage may arise in all instances EXCEPT: A. an employee has two jobs. B. children are covered under both a parent's and a step parent's plan. C. an individual has coverage under a group plan that is not provided by an employer. D. All of the above E. None of the above
E
In addition to benefits and preventative treatment, benefits for dental expenses may be provided for which of the following categories of dental treatment: A. restoration B. oral surgery C. endodontics D. periodontics E. All of the above
E
In the absence of any provisions for continuation or conversion, group medical expense coverage on an employee generally ceases on the earliest of the following: A. the date on which employment terminates. B. the date on which the master contract terminates. C. the date on which the employee ceases to be eligible. D. the end of the last period for which the employee has made any requested contribution. E. All of the above
E
Retention - the portion of the insurance company's premium over and above the incurred claims and dividends includes all EXCEPT: A. commissions B. premium taxes C. risk charges D. All of the above E. None of the above
E
The term group health plan, as used in COBRA. is broad enough to include the following regardless of whether benefits are self-insured or provided through other entities such as insurance companies or HMO's except for: A. medical expense plans. B. dental plans. C. vision care plans. D. prescription drug plans. E. All of the above apply to the term group health plan as used in COBRA.
E
Under an ASO contract, the charges for services provided under contract are collected in which manner? A. a percentage of the amount of claims paid B. a flat amount per processed claim C. a flat charge per employee D. a flat charge for the employer E. All of the above
E
Which of the following are NOT providers of dental coverage? A. insurance companies B. Blue Cross and Blue Shield C. managed care plans D. self-funded plans E. All of the above are providers of dental coverage
E
Which of the following are sources of statutory law in regards to qualified plans? A. Internal revenue code B. ERISA C. Civil Rights laws D. Age discrimination E. All of the above
E
Which of the following categories of dental treatment are dental expenses provided for? A. restoration B. prosthodontics C. oral surgery D. endodontics E. All of the above
E
Which of the following is a characteristic of defined contribution plans? A. Employer bears risk B. Employee contributions are neither permitted nor required C. Usually favors older employees with higher pay brackets and longer service D. An actuary is required E. Individual accounts
E
Under what circumstances, may an employer-provided service NOT be received tax free by employees? A. The employer does not incur any significant cost or lost revenue in providing the service. B. The services must be those that are provided in the employer's line of business in which the employee actively works. C. The goods or services available for tax-free discounting must be those that are offered for sale by the employer to non-employee customers in the ordinary course of the employer's line of business in which the employee works. D. Tax-free discounts are not available for securities or real estate. E. Free parking is not considered taxable income to employees, except to the extent its monthly value exceeds $265 per month (2019, subject to indexing). F. Benefits for adoption assistance are free up to $14,080 (2019 numbers) under a qualified adoption-assistance program. G. Benefits under employee assistance programs are tax free if their purpose is to alleviate medical conditions; if treatment is for non-medical conditions, employer payments will result in taxable income for an employee. H. Financial planning programs result in taxable income if specific services are provided to employees.
F
Employees must pay a minimal tax when the employer first makes a contribution.
False
Employees only pay for interest income to employer contributions but on employer contributions themselves
False
Employer contributions to qualified retirement plans are taxed immediately but future earnings on contributions are not
False
In a defined-benefit plan, the employee bears the risk of bad investments of the plan.
False
After age 70 1/2, an employee can no longer defer income through a qualified retirement plan.
False (can continue to defer but must take minimum payouts)
Revenue rulings only apply to the individual taxpayer in question.
False, are interpretations of tax law in specific fact situations that are published by the IRS and are binding on other taxpayers where the same set of relevant facts exists.
Defined-contribution plans tend to be more costly administratively because of more complex rules and the requirement of actuarial statements.
False, defined-benefit contribution plan
Only defined-benefit plans provide individual account balances for participants.
False, defined-benefit contribution plan
Employees never pay tax on retirement plan income.
False, employers
Stock bonus plans fund primarily in the form of mutual funds
False, stock of the employer