CH 15 Federal Tax Considerations for Health Insurance Flashcards
Under a fully contributory health plan, how are benefits received by the employee?
Income tax free
How are benefits received by the business from a key person disability insurance?
Income tax free
In group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?
100%
How are the benefits of group accidental death and dismemberment received
Income tax free
How long do short term disability group plans pay benefits?
For a period of less than two years
How are individually owned disability income benefits taxed once received by the insured?
Disability benefits are not taxed; they are received income tax for
What are the tax implications for employer contributions to health reimbursement account?
Employer contributions are tax deductible as business expenses
What is the tax advantage of the employer paying premiums for its employees for disability income insurance?
Premiums are deductible As a business expense
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)
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 excess funds in an employees health savings account (HSA) handled?
The funds can be carried forward to the next year
Which of the following statements about HRA is TRUE?
A) The account allows roll-over of unused balances at the end of the year at the employer’s discretion
B) The account allows roll-over of unused balances at the end of the year at the employee’s discretion
C) The account only allows roll-over og half the unused balances at the end of the year
D) The account does not allow roll-over of unused balances at the end of the year
The account allows roll-over of unused balances at the end of the year at the employer’s discretion.
How can LTC benefits be received tax free by an individual?
A) If the amount of the premium paid exceeds 4% of the individuals income
B) Only if the individual itemizes the premiums
C) Only if the individual does not itemize the premiums
D) In any case, benefits are received tax free
In any case, benefits are received tax free.
Which type of insurance provides funds for a business organization to purchase the business interest of a disabled partner?
A) Disability interest Buy-out
B) Corporate transfer
C) Corporate disability
D) Disability buy-sell
Disability buy-sell.
Susan owns an individual long-term care insurance plan and is able to deduct the premiums from her taxes. What income will be imposed on the benefits she receives?
A) State income tax
B) Federal and state income tax
C) None
D) Federal income tax
None.
Under a key person disability income policy, premium payments
A) Are made by the business and are tax-deductible
B) Are made by the business and are not tax-deductible
C) Are made by the employee and are not tax-deductible
D) Are made by the employee and are tax-free
Are made by the business and are not tax-deductible.
Employers can reduce health plan costs by coupling a health reimbursement account (HRA) with
A) Nothing; HRAs cannot be couple with any other health plan
B) A high deductible health plan
C) A low deductible health plan
D) An IRA
A high deductible health plan.
How are employer contributions to health reimbursement accounts treated in regards to taxation?
A) They are taxed as a regular business expense
B) They are treated as income tax for the employer
C) They are excluded from all taxation
D) They are tax deductible
They are tax deductible.
Which of the following is not true of disability buy-sell coverage?
A) The policies provide funds for the business organization to purchase the business interest of a disabled partner
B) Benefits are considered taxable income to the business
C) It is typically written to cover partners or corporate officers of a closely held business
D) Premium payments are not deductible to the business
Benefits are considered taxable income to the business.
A noncontributory group disability income plan has a 30 day waiting period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive
A) $14,000, none of which is taxable
B) $14,000, all of which is taxable
C) $12,000, none of which is taxable
D) $12,000, all of which is taxable
$12,000, all of which is taxable.
Which of the following determines whether disability insurance benefits are taxed?
A) Contract provisions
B) If the total of benefits paid meets the minimum state taxation standard
C) Whether the premiums were tax deductible
D) State statutes
Whether the premiums were tax deductible.
When may an insured deduct unreimbursed medical expenses paid under a long-term care policy?
A) Only if the insured does not itemize the expenses
B) When the expenses exceed a certain percentage of the insured’s adjusted gross income
C) Only if the insured is age 65 or older
D) All LTC expenses are tax deductible
When the expenses exceed a certain percentage of the insured’s adjusted gross income.
The limits of a health reimbursement account are set by
A) State statutes
B) The insurer
C) Federal regulation
D) The employer
The employer.
Group disability income insurance premiums paid by the employer are
A) Taxable to the employee
B) Tax deductible by the employee
C) Tax deferred to the employer
D) Deductible by the employer as an ordinary business expense
Deductible by the employer as an ordinary business expense.
S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct?
A) 25%
B) 50%
C) 75%
D) 100%
100%.
Which of the following is true regarding benefits paid to disabled employees?
A) They are exempt from taxation if any portion of the premium was paid by the employee
B) Tax withholding is required if the employee paid the premium
C) Disability benefits are not taxed
D) They may be subject to taxation if the premium was paid by the employer
They may be subject to taxation if the premium was paid by the employer.
