Final Practice Exam

Question 1

Skilled nursing facility benefits under Medicare Part A are provided only if the beneficiary has had a hospitalization of at least how many days?

A.) One day
B.) Two days
C.) Three days
D.) Five days
E.) Seven days

Answer 1

C.) Three days

Module: 11
Reference: Strategic Benefits Management, Second
Edition, page 439.
Study Guide, Second Edition, page 6, Objective 1.4.

Question 2

Leaders in the data analytics industry developed a Healthcare Analytics Adoption Model that has a number of levels of analytics adoption that an organization passes through as it gains sophistication in using its data to drive improvement. In this model, what is the highest level of sophistication?

A.) Automated internal reporting
B.) Waste and care variability reduction
C.) Population health management and suggestive analytics
D.) Clinical risk intervention and predictive analytics
E.) Personalized medicine and prescriptive analytics

Answer 2

E.) Personalized medicine and prescriptive analytics

Module: 7
Reference: Strategic Benefits Management, Second
Edition, page 266.
Study Guide, Second Edition, page 16, Objective 3.3.

Question 3

The maximum premium that can be paid for a qualified longevity annuity contract is an indexed statutory amount of:

A.) $75,000
B.) $100,000
c.) $150,000
D.) $200,000

Answer 3

D.) $200,000

Module: 8
Reference: Strategic Benefits Management, Second
Edition, page 297.
Study Guide, Second Edition, page 12, Objective 2.4
SECURE 2.0 RIJ, page 20, “Expansion of QLAC Exemption”
section.

Question 4

An initial Summary Plan Description must be distributed to participants within how many days after the date the plan becomes subject to Employee Retirement Income Security Act (ERISA) disclosure requirements?

A.) 30
B.) 45
c.) 60
D.) 90
E.) 120

Answer 4

E.) 120

Module: 3
Reference: Strategic Benefits Management, Second
Edition, page 72.
Study Guide, Second Edition, page 8, Objective 1.6.

Question 5

Generally, under best practice standards, how often should an Employee Retirement Income Security Act investment committee meet?

A.) Every month
B.) Every other month
C.) Quarterly or twice a year
D.) Once a year
E.) Every other year

Answer 5

C.) Quarterly or twice a year

Module: 3
Reference: Strategic Benefits Management, Second
Edition, page 80.
Study Guide, Second Edition, page 13, Objective 2.9.

Question 6

Which of the following statements regarding the procedures required to establish an Employee Retirement Income Security Act (ERISA) employee welfare benefit plan is correct?

A.) An ERISA plan is officially created only when the board of directors of the sponsoring company approves the plan.
B.) An ERISA plan is started when contributions are made to the plan.
C.) An ERISA plan is considered to be established only when the participants can reasonably assume the plan is in existence.
D.) A plan must follow a rigid set of requirements to establish an ERISA plan.
E.) No particular formalities are required to create an ERISA plan.

Answer 6

E.) No particular formalities are required to create an ERISA plan.

Module: 1
Reference: Strategic Benefits Management, Second
Edition, pages 8-9.
Study Guide, Second Edition, page 6, Objective 1.3.

Question 7

A pension plan investment carries an expense of 2 %. If the expenses are decreased by 50 basis points, what will be the new level of expenses?

A.) 1.00%
B.) 1.10%
c.) 1.25%
D.) 1.50%
E.) 1.75%

Answer 7

D.) 1.50%

Module: 6
Reference: Strategic Benefits Management, Second
Edition, page 242-243.
Study Guide, Second Edition, page 17, Objective 4.1.

Question 8

If a defendant plan administrator in a Section 502(c)(1) penalty case is utilizing a no “clear notice” defense, he or she is claiming the plaintiff:

A.) Lacked standing to request the documents
B.) Failed to make a sufficiently specific request
C.) Sent the request to the wrong person
D.) Requested documents not subject to the Section 502(c)(1)penalty
E.) Made a claim barred by the statute of limitations

Answer 8

B.) Failed to make a sufficiently specific request

Module: 9
Reference: Strategic Benefits Management, Second
Edition, pages 373-376.
Study Guide, Second Edition, page 16, Objective 4.10.

Question 9

A Department of Labor audit quality study showed the percentage of
employee benefit plan audits that had “Unacceptable-Major” deficiencies that adversely affected overall audit quality. This percentage was approximately:

A.) 2%
B.) 4%
C.) 10%
D.) 40%
E.) 90%

Answer 9

D.) 40%

Module: 5
Reference: Strategic Benefits Management, Second
Edition, page 188.
Study Guide, Second Edition, page 11, Objective 2.3.

Question 10

What was the effect of the U.S. Supreme Court ruling in Tibble v. Edison?

A.) The failure to properly monitor an investment fund once selected would be exposed to fiduciary breach claims for six years from the date of such monitoring
failure.
B.) Participant lawsuits against plan fiduciaries for improperly monitored plan investments must be initiated within four years from the date of the impropriety.
C.) The maximum time period participants and beneficiaries have to sue fiduciaries for violation of their responsibilities was extended to 12 years.
D.) The time period participants and beneficiaries have to sue fiduciaries for violation of their responsibilities was reduced to five years.
E.) For qualified default investment alternatives (QDlAs), participants never lose their ability to sue for violation of fiduciary duties.

Answer 10

A.) The failure to properly monitor an investment fund once selected would be exposed to fiduciary breach claims for six years from the date of such monitoring
failure.

Module: 6
Reference: Strategic Benefits Management, Second
Edition, pages 225.
Study Guide, Second Edition, page 7, Objective 1.2.

Question 11

The Federal Trade Commission (FTC) case against a medical transcription services company dealt with the exposure of personal medical information. According to the FTC, the settlement in this case demonstrated:

A.) That companies must be held to high standards with regard to third-party vendor management and oversight when it involves personal information
B.) That Employee Retirement Income Security Act plan fiduciaries should encourage third-party vendors to use cloud management of personal information whenever possible
C.) That the distinction between personally identifiable information (PI’) and protected health information (PHI) does not provide an excuse for careless management of health information
D.) That settlements in cases of this type will be enforced for five years
E.) That personal health information is more important that personal investment information

Answer 11

A.) That companies must be held to high standards with regard to third-party vendor management and oversight when it involves personal information

Module: 4
Reference: Strategic Benefits Management, Second
Edition, page 122.
Study Guide, Second Edition, page 12, Objective 3.5.

Question 12

Plan fiduciaries must understand the core difference between “active” and “passive” investment strategies. Which of the following statements best describes this difference?

A.) Passive funds are not overly concerned about investment fees, while active funds take major steps to reduce fees.
B.) Passive funds typically seek to match the performance of an index of securities, while active funds attempt to outperform the market.
C.) Passive funds make no efforts to seek out investments but rather allow investment dealers to contact them.
D.) Passive funds do not participate in “revenue sharing,” while active funds encourage this practice.
E.) Passive funds do not actively market their products, while active funds are heavily involved in marketing.

Answer 12

B.) Passive funds typically seek to match the performance of an index of securities, while active funds attempt to outperform the market.

Module: 8
Reference: Strategic Benefits Management, Second
Edition, pages 318.
Study Guide, Second Edition, page 23, Objective 6.2(a).

Question 13

Hospice care benefits available under Medicare are for terminally ill
persons who have a life expectancy of how many months or less?

A.) Three months
B.) Six months
C.) Nine months
D.) 12 months
E.) 18 months

Answer 13

B.) Six months

Module: 11
Reference: Strategic Benefits Management, Second
Edition, pages 439-440.
Study Guide, Second Edition, page 7, Objective 1.6.

Question 14

A person’s Social Security primary insurance amount (PIA) is which of the following?

A.) The worker’s average indexed monthly earnings (Al ME)
B.) The total benefit for the worker’s family
C.) The retirement benefit for the retired workers spouse
D.) The spouse’s survivor benefit
E.) The worker’s monthly retirement benefit at full retirement age

Answer 14

E.) The worker’s monthly retirement benefit at full retirement age

Module: 10
Reference: Strategic Benefits Management, Second
Edition, pages 393.
Study Guide, Second Edition, page 13, Objective 4.1.

Question 15

A global trend taking place in defined contribution retirement plans is:

A.) Greater reliance on plans with default investments
B.) Emphasis on participant-brokerage accounts
C.) Solutions based on exchange-traded fund (ETF) only plans
D.) Less emphasis on paternalistic solutions
E.) Pursuit of multivendor, choice-oriented investment options

Answer 15

A.) Greater reliance on plans with default investments

Module: 12
Reference: Strategic Benefits Management, Second
Edition, page 511.
Study Guide, Second Edition, page 22, Objective 4.8.

Question 16

Approximately how many individuals are working in occupations covered by Social Security?

A.) 5 out of 10 workers
B.) 6 out of 10 workers
C.) 7 out of 10 workers
D.) 8 out of 10 workers
E.) 9 out of 10 workers

Answer 16

E.) 9 out of 10 workers

Module: 10
Reference: Strategic Benefits Management, Second
Edition, page 389.
Study Guide, Second Edition, page 9, Objective 2.1.

Question 17

Which of the following statements best describes whether the attorney-client privilege is applicable in the area of employee benefits plans?

A.) Those involved in plan activities can be assured that the attorney client privilege always applies.
B.) As a general rule, it applies; however, courts have increasingly recognized that an exception may exist in communications involving administrative activities.
C.) As a general rule, it applies; however, courts have increasingly recognized that an exception may exist in communications involving fiduciary activities.
D.) The Employee Retirement Income Security Act (ERISA) stipulates that this privilege is not available under any circumstance to plan representatives.
E.) Case law in this area is unsettled.

Answer 17

C.) As a general rule, it applies; however, courts have increasingly recognized that an exception may exist in communications involving fiduciary activities.

Module: 9
Reference: Strategic Benefits Management, Second
Edition, pages 346-347.
Study Guide, Second Edition, page 8, Objective 1.9.

Question 18

How much are the civil penalties imposed by the Employee Retirement Income Security Act against certified public accounting (CPA) firms that perform deficient plan audits?

A.) From $1 ,000 to $2,000 per day, depending upon the decision of the Employee Benefits Security Administration
B.) $2,000 per day until the problems are resolved
C.) $1,000 per day until the problems are resolved
D.) An indexed statutory amount per day until the problems are resolved
E.) Zero

Answer 18

E.) Zero

Module: 5
Reference: Strategic Benefits Management, Second
Edition, page 189.
Study Guide, Second Edition, page 12, Objective 2.6.

Question 19

Which of the following types of benefits may not be offered in a cafeteria plan?

A.) 401(k) plan
B.) 403(b) elective deferrals
C.) Short-term disability coverage
D.) Long-term disability coverage
E.) COBRA continuation coverage premiums

Answer 19

B.) 403(b) elective deferrals

Module: 2
Reference: Study Guide, Second Edition, pages 46-47.
Study Guide, Second Edition, page 20, Objectives 6.2 and
6.3.

Question 20

Under federal law, the value of benefits provided to an employee’s same sex civil union partner:

A.) Is exempt from federal income tax
B.) Is not exempt from federal income tax
C.) Is exempt from federal income tax up to a cap
D.) May be exempt dependent on the employee’s state of domicile
E.) Is exempt if it qualifies for the Internal Revenue Code’s de minimis benefits exclusion

Answer 20

B.) Is not exempt from federal income tax

Module: 2
Reference: Study Guide, Second Edition, page 33.
Study Guide, Second Edition, page 10, Objective 2.4.

Question 21

Provider network contracts of an administrative services only (ASO)
agreement for a self-funded health plan allow a limited time period for recovering claims that were identified as overpaid. This period is usually:

A.) Six months
B.) One year
C.) Three years
D.) Five years
E.) Eight years

Answer 21

B.) One year

Module: 7
Reference: Study Guide, Second Edition, page 31.
Study Guide, Second Edition, page 18, Objective 4.6.

Question 22

What is the highest rate at which Social Security benefits can be taxed, depending on the person’s income and tax bracket?

A.) 10%
B.) 25%
C.) 50
D.) 85%
E.) 100%

Answer 22

D.) 85%

Module: 10
Reference: Strategic Benefits Management, Second
Edition, page 401.
Study Guide, Second Edition, page 19, Objective 6.1.

Question 23

The Employee Retirement Income Security Act generally requires
qualified retirement plan assets to be diversified. However, there is an exception to this important diversification requirement. What is this exception?

A.) Assets need not be diversified if, under the circumstances, it is clearly prudent not to do so.
B.) Assets need not be diversified if the plan has total assets exceeding a specified amount.
C.) Assets need not be diversified if the plan obtains approval of the appropriate regulatory authorities.
D.) Assets need not be diversified if the plan assets consist entirely of U.S. government securities.
E.) Assets need not be diversified if the plan contains no innovative investments.

Answer 23

A.) Assets need not be diversified if, under the circumstances, it is clearly prudent not to do so.

Module: 8
Reference: Strategic Benefits Management, Second
Edition, page 312. Study Guide, Second Edition, page 18,
Objective 4.6

Question 24

When an employee takes an international assignment, the employee
might be given “tax protection.” This practice refers to which of the
following?

A.) Requiring an employee to pay a tax equal to the home jurisdiction tax he or she would have paid had he or she remained in his or her home
B.) Guaranteeing the employee will be reimbursed for the higher cost of living in the foreign country
C.) Reimbursing the employee only in the event he or she pays higher taxes as a result of the international assignment
D.) Paying any additional amounts equal to the higher cost of living in the home country
E.) Allocating additional compensation to employees on foreign assignments to account for higher housing taxes

Answer 24

C.) Reimbursing the employee only in the event he or she pays higher taxes as a result of the international assignment

Module: 12
Reference: Strategic Benefits Management, Second
Edition, pages 485-486.
Study Guide, Second Edition, page 13, Objective 2.6.

Question 25

Which of the following statements regarding the ways in which the U.S. health care system is different from health care systems in other
countries is correct?

A.) Medical benefit service pricing in the U.S. has been subject to legal ceilings and regulated pricing controls.
B.) The U.S. is the only large economy in the world that does not offer its citizens universal access to medical care.
C.) Malpractice insurance premiums have been less of a problem in the U.S. than in most other developed countries.
D.) In the U.S., employees are generally able to unilaterally adjust plan provisions in order to improve benefits.
E.) The U.S. system has many restrictions and/or deterrents in terms of the funding vehicle choices that are available for medical plans.

Answer 25

A not E

E.) The U.S. system has many restrictions and/or deterrents in terms of the funding vehicle choices that are available for medical plans.

Module: 12
Reference: Strategic Benefits Management, Second
Edition, pages 490-491.
Study Guide, Second Edition, page 14, Objective 3.1.

Question 26

Which of the following is a Supreme Court case that made it difficult to argue that an Employee Retirement Income Security Act plan should not have a contractual limitations period if certain requirements are met?

A.) Heimeshoff v. Hartford Life & Accident Insurance Company
B.) Gobeille v. Liberty Mutual Insurance Company
C.) Donovan v. Dillingham
D ) United States v. Windsor
E.) Sulyma v. Intel

Answer 26

A.) Heimeshoff v. Hartford Life & Accident Insurance Company

Module: 9
Reference: Strategic Benefits Management, Second
Edition, page 344.
Study Guide, Second Edition, page 7, Objective 1.6.

Question 27

A social security totalization agreement might be involved when an
employee takes an international assignment. Which of the following
statements best describes the purpose of this type of agreement?

A.) The agreement requires an employee to pay a tax equal to the home jurisdiction tax he or she would have paid had he or she remained in his or her home.
B.) The agreement is designed to reimburse the employee in the event he or she pays higher taxes as a result of the international assignment.
C.) The agreement provides relief from dual social security coverage and taxation under both systems and integrates or synchronizes the benefits earned under more than one system.
D.) The agreement allows an international employee the right to postpone Social Security taxes for a short period.
E.) The agreement produces a tax that is the average of the two tax rates between the home country and the host country.

Answer 27

C.) The agreement provides relief from dual social security coverage and taxation under both systems and integrates or synchronizes the benefits earned under more than one system.

Module: 12
Reference: Strategic Benefits Management, Second
Edition, page 488.
Study Guide, Second Edition, page 13, Objective 2.7.

Question 28

The cost of an administrative claims audit in a self-funded health plan typically will be:

A.) Less than 1% of total annual claim spending
B.) Approximately 5% of total annual claim spending
C.) Approximately 10% of total annual claim spending
D.) Approximately 15% of total annual claim spending
E.) More than 20% of total annual claim spending

Answer 28

A.) Less than 1% of total annual claim spending

Module: 7
Reference: Study Guide, Second Edition, page 33.
Study Guide, Second Edition, page 21 , Objective 4.12.

Question 29

Which of the following is a group that has been explicitly identified as
being vulnerable to significant litigation risk when employer securities are part of a retirement plan’s investment portfolio?

A.) Plan participant beneficiaries
B.) Plan fiduciaries
C.) Investment plan advisors
D.) Plan record keepers
E.) Brokerage account holders

Answer 29

B.) Plan fiduciaries

Module: 8
Reference: Strategic Benefits Management, Second
Edition, pages 327-328.
Study Guide, Second Edition, page 26, Objective 6.9.

Question 30

One of the basic disclosure documents required by the Employee
Retirement Income Security Act is the Summary of Benefits and Coverage. It must be presented in a uniform format and cannot exceed how many double-sided pages?

A.) 10
B.) 8
C.) 6
D.) 4
E.) 2

Answer 30

D.) 4

Module: 1
Reference: Strategic Benefits Management, Second
Edition, page 30.
Study Guide, Second Edition, page 17, Objective 3.6.

Question 31

Form 5500 and other financial reports statutorily must be kept for a
minimum of how many years after the filing date?

A.) One
B.) Two
C.) Four
D.) Six
E.) Ten

Answer 31

D.) Six

Module: 6
Reference: Strategic Benefits Management, Second
Edition, pages 236-237.
Study Guide, Second Edition, page 14, Objective 3.2.

Question 32

What is the best description of the coverage provided by “Medigap”
insurance policies?

A.) Medigap is basically prescription drug coverage.
B.) Medigap pays the premiums for Part A coverage.
C.) Medigap is designed to pay hospice benefits.
D.) Medigap is coverage for long-term care benefits.
E.) Medigap covers health care service charges, such as copayments, coinsurance and deductibles, not covered by Medicare Parts A and B.

Answer 32

E.) Medigap covers health care service charges, such as copayments, coinsurance and deductibles, not covered by Medicare Parts A and B.

Module: 11
Reference: Strategic Benefits Management, Second
Edition, page 447.
Study Guide, Second Edition, page 14, Objective 3.5.

Question 33

At a minimum, if there have been no material changes in the plan, the Employee Retirement Income Security Act requires employers to prepare and distribute new Summary Plan Descriptions to participants at least

A.) 2 years
B.) 3 years
C.) 5 years
D.) 7 years
E.) 10 years

Answer 33

E.) 10 years

Module: 1
Reference: Strategic Benefits Management, Second
Edition, page 25.
Study Guide, Second Edition, page 15, Objective 3.2.

Question 34

A study calculated the relative impact of three drivers of worker wealth accumulation upon retirement. The drivers were savings, investing and fees. Which of the following statements regarding these wealth accumulation drivers is (are) correct?

l. The most important driver, by far, was saving.
ll. Attempting to get the lowest level of fees might detract from fiduciary
oversight and investment selections.
Ill. The level of fees had a very major relative impact.

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 34

B.) I and II only

Module: 6
Reference: Strategic Benefits Management, Second
Edition, pages 246-247 and 250.
Study Guide, Second Edition, pages 18 and 19, Objectives
4.3 and 4.4.

Question 35

Which of the following statements regarding Medicare Part D is (are)
correct?

l. Part D is voluntary.
ll. Part D provides prescription drug insurance coverage.
Ill. Part D offers premium and cost-sharing subsidies for low-income
enrollees.

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) l, Il and Ill

Answer 35

E.) l, Il and Ill

Module: 11
Reference: Strategic Benefits Management, Second
Edition, page 442.
Study Guide, Second Edition, page 10, Objective 2.4.

Question 36

Which of the following statements regarding the differences between a market-driven approach to employee plan communications and the traditional approach to such communications is (are) correct?

l. In the traditional approach, the communication tone is direct, while it is neutral in the market-driven approach.
ll. In the traditional approach, messages are sent to a single mass
audience, but messages are targeted to specific audiences in the market-driven approach.
Ill. Success is hard to measure in the traditional approach, while it is
directly measurable in the market-driven approach.

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 36

D.) Il and Ill only

Module: 3
Reference: Strategic Benefits Management, Second
Edition, page 87.
Study Guide, Second Edition, page 16, Objective 3.5.

Question 37

Which of the following encompass(es) the definition of data analytics in the health care context?

l. It is a process of inspecting, cleaning, transforming, interpreting and modeling data.
ll. Its objective is to discover trends, patterns and other information that can support benefit plan decisions and changes.
Ill. It strengthens the relationship between third-party payors and health care providers.

A.) Il only
B.) Ill only
C.) I and Il only
D.) Il and Ill only
E.) l, Il and Ill

Answer 37

C.) I and Il only

Module: 7
Reference: Study Guide, Second Edition, page 24.
Study Guide, Second Edition, page 6, Objective 1.1.

Question 38

To be eligible for Social Security disability income benefits, a person must meet which of the following requirements?

l. Be disability insured
ll. Satisfy a 12-month waiting period
Ill. Be physically, not mentally, disabled

A.) None
B.) I only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 38

B.) I only

Module: 7
Reference: Study Guide, Second Edition, page 24.
Study Guide, Second Edition, page 6, Objective 1.1.

Question 39

Which of the following statements regarding the Employee Benefits
Security Administration (EBSA) and the quality of plan audits is (are)
correct?

l. EBSA concluded that a certified public accountant (CPA) firm’s peer
review rating has little bearing on the firm’s plan audit compliance.
ll. EBSA concluded that audit firms that perform a larger number of
employee benefit plan audits each year tend to have a greater incidence
of audit deficiencies.
Ill. EBSA has found numerous audit cases where no audit work was
performed or there was a lack of evidence of audit work performed.

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 39

C.) I and Ill only

Module: 5
Reference: Strategic Benefits Management, Second
Edition, pages 189 and 191.
Study Guide, Second Edition, pages 11 and 12, Objectives
2.5 and 2.7.

Question 40

Which of the following statements regarding qualified longevity annuity contracts (QLACs) is (are) correct?

l. Currently, the value of a QLAC is excluded for required minimum
distribution (RMD) purposes from an individual’s account balance.
ll. Defined benefit plans can utilize QLACs.
Ill. Contracts with cash surrender values can qualify for a QLAC.

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 40

A.) I only

Module: 8
Reference: Strategic Benefits Management, Second
Edition, pages 296-298.
Study Guide, Second Edition, page 12, Objectives 2.2-2.4.

Question 41

Internal controls for employee benefit plans generally fall into specific major categories. Which of the following is (are) included among these major categories of internal controls?

l. Plan documentation and any amendments
ll. Plan testing and administration
Ill. Controls at any third-party administrator

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 41

E.) l, Il and Ill

Module: 3
Reference: Strategic Benefits Management, Second
Edition, pages 90-91.
Study Guide, Second Edition, page 19, Objective 4.3.

Question 42

When selecting a plan service provider and evaluating the cybersecurity issues involved in the process, an Employee Retirement Income Security Act (ERISA) plan fiduciary should consider taking which of the following steps?

l. Establishing due diligence standards for vetting and tiering providers based on the sensitivity of data being shared
ll. Drafting a clear, binding contract that transfers fiduciary liability to the plan’s service providers
Ill. Conducting periodic risk assessments

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 42

C.) I and Ill only

Module: 4
Reference: Strategic Benefits Management, Second
Edition, pages 120 and 122-125.
Study Guide, Second Edition, pages 9 and 14, Objectives
2.4 and 4.1.

Question 43

Which of the following statements regarding the Employee Retirement Income Security Act’s main requirements for plan assets is (are) correct?

l. Plan assets may be used only to pay plan benefits and cannot be used to pay administration expenses.
ll. A fidelity bond must be purchased to cover every person who handles plan funds.
Ill. All plan assets must be held in a legal trust.

A.) Il only
B.) Ill only
C.) I and Il only
D.) I and Ill only
E.) Il and Ill only

Answer 43

A.) Il only

Module: 1
Reference: Strategic Benefits Management, Second
Edition, page 16.
Study Guide, Second Edition, page 12, Objective 2.3.

Question 44

Which of the following statements regarding payroll taxes and employee benefit plans is (are) correct?

l. Employees and employers pay the same rate of payroll taxes on wages up to the Social Security tax wage base.
ll. Once wages exceed the Social Security tax wage base, payroll taxes are only paid by employees.
Ill. Distributions from a tax-sheltered retirement plan will be subject to income taxes but not to any payroll taxes.

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 44

C.) I and Ill only

Module: 9
Reference: Strategic Benefits Management, Second
Edition, pages 342-343.
Study Guide, Second Edition, page 7, Objectives 1.2-1.3.

Question 45

Which of the following would be treated as an Employee Retirement
Income Security Act health and welfare plan?

l. Short-term, unfunded disability income plan
ll. Short-term, insured disability income plan
Ill. Compensation paid to an employee while on active military leave

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 45

B.) Il only

Module: 1
Reference: Strategic Benefits Management, Second
Edition, pages 10-11.
Study Guide, Second Edition, pages 7 and 8, Objectives 1.5
and 1.6.

Question 46

Which of the following statements regarding health reimbursement
arrangements (HRAs) is (are) correct?

l. Any amount not used by an employee by the end of the plan year can be carried over to the next plan year at the employer’s discretion.
ll. HRAs are a popular option in cafeteria plans.
Ill. HRAs can be funded by employers and employees.

A.) None
B.) I only
C.) Ill only
D.) I and Ill only
E.) Il and Ill only

Answer 46

B.) I only

Module: 2
Reference: Study Guide, Second Edition, page 39.
Study Guide, Second Edition, page 14, Objective 4.1.

Question 47

The auditor’s letter following an audit of an Employee Retirement Income Security Act plan includes which of the following?

l. Significant difficulties encountered during the audit
ll. A description of the specifics testing thresholds or amounts used
during the audit
Ill. The process management used to develop accounting estimates,
including fair market value estimates, and the basis for the auditor’s
conclusions as to the reasonableness of those estimates

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 47

C.) I and Ill only

Module: 5
Reference: Strategic Benefits Management, Second
Edition, page 202.
Study Guide, Second Edition, page 16, Objective 3.4.

Question 48

Which of the following statements regarding the accounting and
reporting requirements for defined benefit pension plans (in FASB’s
Accounting Standards Codification (ASC) Topic 960) is (are) correct?

l. The plan’s financial statements should be prepared on the cash basis of accounting, not the accrual basis.
ll. Accumulated plan benefit information may not be disclosed in the
notes to the financial statements.
Ill. The actuarial present value of accumulated plan benefits should be based on employees’ earnings and service rendered before the
measurement date.

A.) I only
B.) Il only
C.) Ill only
D.) I and Ill only
E.) Il and Ill only

Answer 48

C.) Ill only

Module: 5
Reference: Strategic Benefits Management, Second
Edition, page 181.
Study Guide, Second Edition, page 8, Objective 1.5.

Question 49

Which of the following statements regarding documentable health plan trends that emerged during the COVID-19 pandemic is (are) correct?

l. Employers absorbed a larger percentage of health premiums for their employees.
ll. There was decreased participation in high deductible health plans
(HDHPs).
Ill. Lower HDHP selection levels occurred by the Millennial age
demographic.

A.) I only
B.) Il only
C.) I and Il only
D.) Il and Ill only
E.) l, Il and Ill

Answer 49

A.) I only

Module: 7
Reference: Text, Second Edition, pages 269-270.
Study Guide, Second Edition, page 11, Objectives 2.4.

Question 50

Which of the following statements regarding home health agency (HHA) care under Medicare is (are) correct?

l. It may be provided in the residence of a homebound beneficiary.
ll. It may provide full-time nursing care if medically necessary.
Ill. It is covered by Part C of Medicare.

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 50

A.) I only

Module: 11
Reference: Strategic Benefits Management, Second
Edition, page 439.
Study Guide, Second Edition, page 7, Objective 1.5.

Question 51

Which of the following statements regarding whether or not a severance arrangement is considered an employee benefit plan and subject to the Employee Retirement Income Security Act (ERISA) is (are) correct?

l. Court cases have concluded that oral arrangements can constitute a
severance plan and become regulated by ERISA.
ll. A one-time payment to an executive at the termination of employment will definitely constitute a severance plan subject to ERISA.
Ill. If termination payments extend over a period of years, the plan will
certainly be subject to ERISA as a severance arrangement.

A.) I only
B.) Ill only
C.) I and Il only
D.) Il and Ill only
E.) l, Il and Ill

Answer 51

A.) I only

Module: 9
Reference: Strategic Benefits Management, Second
Edition, pages 349 and 351-353.
Study Guide, Second Edition, pages 9 and 10, Objectives
2.1-2.6.

Question 52

Which of the following statements regarding cyberattacks on employee
benefit plans is (are) correct?

l. Health care systems and insurers appear to be at significant risk for
cyberattacks because electronic health records are particularly valuable to cybercriminals.
ll. Actual security breaches of employee benefit data have been quite uncommon.
Ill. Security measures for health care records are often not properly
implemented.

A.) Il only
B.) Ill only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 52

C.) I and Ill only

Module: 4
Reference: Strategic Benefits Management, Second
Edition, pages 1 17-118.
Study Guide, Second Edition, page 5, Objective 1.1.

Question 53

Which of the following is (are) purposes served by international pension plans (IPPs)?

l. An IPP can greatly reduce the total pension costs for a company.
ll. An IPP can be used as a plan option in locations with weak retirement systems.
Ill. An IPP can be used as a retirement plan for expatriates who are ineligible for local retirement systems that require citizenship.

A.) I only
B.) Il only
C.) Ill only
D.) I and Ill only
E.) Il and Ill only

Answer 53

E.) Il and Ill only

Module: 12
Reference: Strategic Benefits Management, Second
Edition, page 514.
Study Guide, Second Edition, page 22, Objective 4.9.

Question 54

Most companies have goals for their defined contribution retirement
plans that fall into one or more of three categories. Which of the following is (are) among these categories?

l. Paternalism—the desire, or perhaps the feeling of obligation, to help employees prepare adequately for retirement
ll. Competitive benefits—benefits to attract and retain workers
Ill. Public policies alignment— flexible plan provisions designed to
support government labor participation targets

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 54

D.) I and Il only

Module: 12
Reference: Strategic Benefits Management, Second
Edition, pages 505-506.
Study Guide, second Edition, page 20, Objective 4.5.

Question 55

Which of the following statements concerning how health savings
accounts (HSAs) are taxed is (are) correct?

l. Employer contributions are generally excluded from the employee’s gross Income.
ll. Contributions to an HSA made by or for a covered individual up to the
maximum annual limit are deductible by the individual.
Ill. HSAs cannot be offered as part of a cafeteria plan.

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 55

D.) I and Il only

Module: 2
Reference: Study Guide, Second Edition, page 42.
Study Guide, Second Edition, page 16, Objective 4.4.

Question 56

Which of the following statements regarding macro trends impacting the day-to-day operations of most human resources (HR) teams is (are)
correct?

l. Health care costs are increasing, but historically are more modest than general price inflation.
ll. COVID-19 accelerated the trend for many industries to become more
risk averse and to restrict spending.
Ill. Economic changes surrounding COVID-19 have made talent acquisition and retention easier for most employers.

A.) Il only
B.) Ill only
C.) I and Il only
D.) I and Ill only
E.) Il and Ill only

Answer 56

A.) Il only

Module: 7
Reference: Text, Second Edition, page 268.
Study Guide, Second Edition, page 9, Objective 2.1.

Question 57

When differentiating between the core services provided by third-party
administrators (TPAs) and those provided by plan advisors, which of the following is (are) subject matters in which plan advisors often provide
expertise?

l. Mutual funds
ll. Nonqualified deferred compensation arrangements
Ill. Target date fund glide paths

A.) I only
B.) Ill only
C.) I and Il only
D.) Il and Ill only
E.) l, Il and Ill

Answer 57

E.) l, Il and Ill

Module: 6
Reference: Strategic Benefits Management, Second
Edition, page 232.
Study Guide, Second Edition, page 10, Objective 2.3.

Question 58

Which of the following statements regarding Medicare administrative
contractors is (are) correct?

l. They process and pay claims for Medicare Advantage plans.
ll. They are selected through a competitive procedure.
Ill. Their responsibilities include maintaining records, establishing
controls, and safeguarding against fraud and abuse.

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 58

E.) Il and Ill only

Module: 11
Reference: Strategic Benefits Management, Second
Edition, page 452.
Study Guide, Second Edition, page 17, Objective 4.1.

Question 59

Which of the following statements regarding an Employee Retirement
Income Security Act (ERISA) plan document is (are) correct?

l. All plans must file their plan document within 60 days with the
Employee Benefits Security Administration (EBSA) agency.
ll. The plan fiduciary is obligated to follow the terms and conditions of the plan, as long as the plan is compliant with the law.
Ill. ERISA specifically defines what should be included in a plan document.

A.) None
B.) I only
C.) Il only
D.) Ill only
E.) Il and Ill only

Answer 59

C.) Il only

Module: 3
Reference: Strategic Benefits Management, Second
Edition, page 70.
Study Guide, Second Edition, page 7, Objective 1.3.

Question 60

Which of the following statements regarding the plan document for an
Employee Retirement Income Security Act (ERISA) employee welfare benefit plan is (are) correct?

l. ERISA requires every ERISA health and welfare plan to be established
and maintained in writing.
ll. An ERISA plan may still exist even if no plan document exists.
Ill. If the plan is insured, an insurance company’s master contract or summary of benefits is ordinarily sufficient to serve as a legal plan document.

A.) I only
B.) Il only
C.) I and Il only
D.) Il and Ill only
E.) l, Il and Ill

Answer 60

C.) I and Il only

Module: 1
Reference: Strategic Benefits Management, Second
Edition, pages 16 and 18.
Study Guide, Second Edition, pages 12 and 13, Objectives
2.4 and 2.5.

Question 61

Which of the following statements regarding prudent Employee
Retirement Income Security Act (ERISA) investments is (are) correct?

l. Modern portfolio theory is an important investment concept but not one associated with the management of ERISA plan assets.
ll. ERISA investments, to be prudent, must always follow mainstream and
popular strategies.
Ill. Prudent investing is not judged on the basis of how the investment
performed (i.e„ its rate of return).

A.) Il only
B.) Ill only
C.) I and Il only
D.) I and Ill only
E.) Il and Ill only

Answer 61

B.) Ill only

Module: 8
Reference: Strategic Benefits Management, Second
Edition, pages 304-305, 312 and 314.
Study Guide, Second Edition, pages 16, 18 and
19, Objectives 4.1, 4.6 and 4.8.

Question 62

The introduction of the Medicare program in 1965 led to an explosive
demand and cost acceleration in the U.S. health care system. Which of the
following has (have) been cited as a key factor that contributed to this
explosive situation?

l. The abandonment of the traditional “usual, customary and reasonable” rate reimbursement system.
ll. A third-party payment system (the state) that required complex claims
adjudication and whose early administrators engaged in massive
fraudulent activities.
Ill. A fee-for-service reward structure for providers that generated
incentives for unnecessary volumes of medical procedures.

A.) None
B.) Ill only
C.) I and Il only
D.) I and Ill only
E.) Il and Ill only

Answer 62

B.) Ill only

Module: 12
Reference: Strategic Benefits Management, Second
Edition, page 494.
Study Guide, Second Edition, page 16, Objective 3.5.

Question 63

Which of the following statements regarding the Social Security earnings test is (are) correct?

l. The earnings test applies only to dependents of a retired worker.
ll. The earnings test starts after attainment of the full retirement age.
Ill. The earnings test does not apply to investment income, dividends,
interest, rents and annuity payments.

A.) None
B.) Ill only
C.) I and Il only
D.) I and Ill only
E.) Il and Ill only

Answer 63

B.) Ill only

Module: 10
Reference: Strategic Benefits Management, Second
Edition, page 398.
Study Guide, Second Edition, page 15, Objective 4.6.

Question 64

Which of the following statements regarding the tax treatment of 401 (k) plans is (are) correct?

l. Employee elective (i.e., pretax) deferrals and employer matching
contributions are not considered wages and are not subject to federal income tax (FIT) withholding.
ll. Employee elective deferrals are not subject to Federal Insurance
Contributions Act (FICA) or Federal Unemployment Tax Act (FUTA) taxes.
Ill. Employer matching contributions are not subject to FICA and FUTA taxes.

A.) I only
B.) Il only
C.) I and Il only
D.) I and Ill only
E.) Il and Ill only

Answer 64

D.) I and Ill only

Module: 2
Reference: Study Guide, Second Edition, page 51.
Study Guide, Second Edition, page 24, Objective 7.2.

Question 65

Which of the following categories of health care services is (are) covered under Medicare Part A?

l. Hospice care
ll. Skilled nursing facility care
Ill. Ambulatory surgical center services

A.) I only
B.) Il only
C.) Ill only
D.) I and Il only
E.) Il and Ill only

Answer 65

D.) I and Il only

Module: 11
Reference: Strategic Benefits Management, Second
Edition, pages 437 and 440-441.
Study Guide, Second Edition, pages 6 and 8, Objectives 1.2
and 2.1.

Question 66

Which of the following is (are) key governing laws or industry standards that require Employee Retirement Income Security Act (ERISA) service provider management of regulated personal information?

l. The Gramm-Leach-Bliley Act controlling the ways financial institutions deal with private information of individuals
ll. Health Insurance Portability and Accountability Act (HIPAA) and its
business associate requirements
Ill. Federal Trade Commission (FTC) data security enforcement actions against company failures to oversee service providers with access to personal information

A.) Ill only
B.) I and Il only
C.) I and Ill only
D.) Il and Ill only
E.) l, Il and Ill

Answer 66

E.) l, Il and Ill

Incorrect
Module: 4
Reference: Strategic Benefits Management, Second
Edition, page 121.
Study Guide, Second Edition, page 10, Objective 3.1.

Question 67

Which of the following categories of current or former family members of deceased workers may be entitled to Social Security survivor benefits?

l. Dependent parents aged 62 or older
ll. Surviving divorced spouses with children younger than age 16
Ill. Surviving spouses regardless of their age

A.) I only
B.) Il only
C.) I and Il only
D.) I and Ill only
E.) Il and Ill only

Answer 67

C.) I and Il only

Module: 10
Reference: Strategic Benefits Management, Second
Edition, pages 398-399.
Study Guide, Second Edition, pages 16-17, Objective 5.1.

Question 68

When differentiating between the core services provided by third-party administrators (TPAs) and those provided by plan advisors, all the following are typically core services provided by TPAs EXCEPT:

A.) Preparation and maintenance of plan documents
B.) Compliance testing
C.) Form 5500 preparation
D.) Processing of loans and distributions
E.) One-on-one employee counseling

Answer 68

E.) One-on-one employee counseling

Module: 6
Reference: Strategic Benefits Management, Second
Edition, page 232.
Study Guide, Second Edition, page 10, Objective 2.2.

Question 69

An audit engagement letter should detail the responsibilities of the plan auditor. The plan auditor’s responsibilities include all the following EXCEPT:

A.) Conducting the audit in accordance with generally accepted accounting standards (GAAS)
B.) Obtaining absolute assurance about whether the financial statements are free of material misstatements, whether caused by error or fraud
C.) Obtaining an understanding of the plan and its environment, including its internal controls, to assess the risks of material misstatement of the financial statements
D.) Obtaining an understanding of the plan to possibly design the nature, timing and extent of further audit procedures
E.) The expression of an opinion on the plan’s financial statements

Answer 69

B.) Obtaining absolute assurance about whether the financial statements are free of material misstatements, whether caused by error or fraud

Module: 5
Reference: Strategic Benefits Management, Second
Edition, page 199.
Study Guide, Second Edition, page 15, Objective 3.3.

Question 70

All the following are common organizational structures that multinational companies use for international assignments EXCEPT:

A.) Foreign employer The employee is simply made an employee of the host jurisdiction employer and is no longer an employee of the home jurisdiction employer.
B.) Self-employed—The employee becomes self-employed for the duration of the assignment.
C.) Employer with secondment—The employee is kept as an employee of the home jurisdiction employer and merely “seconded” from the home jurisdiction employer to the host jurisdiction employer.
D.) Dual employment—The employee becomes an employee of both the home jurisdiction employer and the host jurisdiction employer, and the two organizations agree upon some type of split regarding the employee’s compensation.
E.) Special services company—The employee is made an employee of a special services company (usually located in a tax haven jurisdiction), which seconds the employee to the host jurisdiction employer.

Answer 70

B.) Self-employed—The employee becomes self-employed for the duration of the assignment.

Module: 12
Reference: Strategic Benefits Management, Second
Edition, pages 482-483.
Study Guide, Second Edition, page 11, Objective 2.3.

Question 71

All the following are benefit plans typically subject to the Employee
Retirement Income Security Act EXCEPT:

A.) Unfunded excess benefit plans
B.) Scholarship funds
C.) Voluntary insurance products if the employer makes premium contributions
D.) Day care centers
E.) Apprenticeship programs

Answer 71

A.) Unfunded excess benefit plans

Module: 9
Reference: Strategic Benefits Management, Second
Edition, page 356.
Study Guide, Second Edition, pages 11 and 12, Objectives
3.1 and 3.2.

Question 72

Social insurance programs have characteristics that distinguish them
from other government insurance programs. All the following are
included among these distinguishing characteristics EXCEPT:

A.) Emphasis on individual equity rather than social adequacy
B.) Benefits loosely related to earnings
C.) Full funding unnecessary
D.) Financially self-supporting
E.) Compulsory participation

Answer 72

A.) Emphasis on individual equity rather than social adequacy

Module: 10
Reference: Strategic Benefits Management, Second
Edition, page 386.
Study Guide, Second Edition, page 6, Objective 1.2.

Question 73

All the following statements regarding the benefits in Medicare Parts A and B are correct EXCEPT:

A.) Part A does not cover long-term nursing care.
B.) Almost all persons entitled to PartA choose to enroll in Part B.
C.) Part A does not cover dental care, eyeglasses and hearing aids.
D.) There are no premiums for most people covered in Part B.
E.) Part B services are generally subject to a deductible and coinsurance.

Answer 73

D.) There are no premiums for most people covered in Part B.

Module: 11
Reference: Strategic Benefits Management, Second
Edition, pages 440-441, 442-443 and 448.
Study Guide, Second Edition, pages 8-9, 11 and
15, Objectives 2.1, 2.6, and 3.7.

Question 74

All the following represent types of analytics EXCEPT:

A.) Descriptive
B.) Diagnostic
C.) Predictive
D.) Rationalistic
E.) Prescriptive

Answer 74

D.) Rationalistic

Module: 7
Reference: Text, Second Edition, page 269.
Study Guide, Second Edition, page 10, Objective 2.2.

Question 75

Section 404(a) of the Employee Retirement Income Security Act (ERISA) contains the well-known “prudent man” standard for ERISA fiduciaries. All the following statements regarding this standard are correct EXCEPT:

A.) The standard requires fiduciaries to discharge their duties solely in the interest of plan participants and beneficiaries.
B.) The standard is for a person who is familiar with such matters.
C.) The standard is for an enterprise of a like character, i.e., a similar enterprise.
D.) The standard is for an enterprise with like aims, i.e., similar purposes.
E.) The standard applies when individuals are performing plan activities such as creating, amending or terminating a plan, so-called settlor functions.

Answer 75

E.) The standard applies when individuals are performing plan activities such as creating, amending or terminating a plan, so-called settlor functions.

Module: 4
Reference: Strategic Benefits Management, Second
Edition, pages 1 18 and 310.
Study Guide, Second Edition, page 7, Objective 1.5.

Question 76

All the following statements regarding the tax treatment of health
insurance plans are correct EXCEPT:

A.) Employer contributions made on behalf of an employee to a health insurance plan are generally not considered wages.
B.) Employer contributions made on behalf of an employee to a health insurance plan are not subject to federal income, Social Security & Medicare (Federal Insurance Contributions Act (FICA)), or Federal Unemployment Tax Act (FUTA) taxes.
C.) Employee contributions to health plans are included in the employee’s taxable income unless the contributions are made through a cafeteria plan.
D.) Health insurance benefits received by an employee for medical care are not considered taxable income to the employee.
E.) Health insurance benefits received either by an employee’s spouse or covered dependents for medical care are considered taxable income to the employee.

Answer 76

E.) Health insurance benefits received either by an employee’s spouse or covered dependents for medical care are considered taxable income to the employee.

Module: 2
Reference: Study Guide, Second Edition, page 30.
Study Guide, Second Edition, page 7, Objectives 1.2 and
1.3.

Question 77

It is considered prudent to include all the following items in an Employee Retirement Income Security Act (ERISA) plan document EXCEPT:

A.) Funding requirements for the plan
B.) Process for identifying and ensuring separate individuals for the roles of plan administrators and plan advocates
C.) Method for distribution of plan assets upon plan termination
D.) Claims and appeals procedures
E.) A description of how benefit payments will be made

Answer 77

B.) Process for identifying and ensuring separate individuals for the roles of plan

Module: 3
Reference: Strategic Benefits Management, Second
Edition, page 70.
Study Guide, Second Edition, page 7, Objective 1.4.

Question 78

All the following statements regarding Employee Retirement Income
Security Act (ERISA) plan investments are correct EXCEPT:

A.) Mutual funds issue redeemable shares, meaning investors wishing to leave the mutual fund can sell their shares back to the fund.
B.) Mutual funds are subject to direct regulation by ERISA.
C.) A mutual fund is required to provide appropriate disclosure documents, meaning the fiduciaries of a participant-directed plan do not need to design customized fund descriptions for participants.
D.) Collective investment trusts are pooled investment funds that are offered by a bank and only to benefit plans.
E.) Closed-end funds generally do not redeem their shares.

Answer 78

B.) Mutual funds are subject to direct regulation by ERISA.

Module: 8
Reference: Strategic Benefits Management, Second
Edition, pages 317-318 and 320-321.
Study Guide, Second Edition, pages 22-24, Objectives 6.1 ,
6.3 and 6.5.

Question 79

All the following are characteristics or features of health savings accounts (HSAs) EXCEPT:

A.) HSAs are tax-advantaged accounts used by employees to pay for medical expenses for themselves, their spouses and dependents.
B.) Contributions can be made to HSAs even after the individual enrolls in Medicare.
C.) Employers can offer HSAs to employees who are enrolled in a high-deductible health plan.
D.) Annual caps apply to the amount of contributions that may be made to HSAs.
E.) Extra catch-up contributions can be made to HSAs by individuals aged 55 and older.

Answer 79

B.) Contributions can be made to HSAs even after the individual enrolls in Medicare.

Module: 2
Reference: Study Guide, Second Edition, page 42.
Study Guide, Second Edition, page 15, Objective 4.3.

Question 80

Employer contributions toward health insurance must be made under a plan to receive favorable tax treatment. A plan exists if the plan meets any one of the elements from a specified list of requirements and if it benefits employees and their dependents. All the following are included in this list EXCEPT:

A.) The plan is in writing, and copies of the health insurance plan are made available to employees.
B.) The plan is referred to in an employment contract.
C.) The plan allocates all contributions to a trust account.
D.) The employer can document that employees contribute to the plan.
E.) Employer contributions are kept in a separate account from the employer’s salary account.

Answer 80

C.) The plan allocates all contributions to a trust account.

Module: 2
Reference: Study Guide, Second Edition, page 31.
Study Guide, Second Edition, page 7, Objective 1.4.

Question 81

Monthly Social Security retirement benefits can be paid to all the
following categories of current or former family members of retired
workers EXCEPT:

A.) Spouses of retired workers if they are at least age 62 and have been married to the retired worker for at least one year
B.) Unmarried children younger than age 18
C.) Unmarried disabled children of any age provided they became disabled before age 16
D.) Spouses of any age with dependent children younger than age 16
E.) Divorced spouses if they are at least age 62 and the marriage lasted at least ten years

Answer 81

C.) Unmarried disabled children of any age provided they became disabled before age 16

Module: 10
Reference: Strategic Benefits Management, Second
Edition, page 393.
Study Guide, Second Edition, page 12, Objective 3.3.

Question 82

All the following statements of contracting issues between plan
fiduciaries and plan service providers related to privacy and data security are correct EXCEPT:

A.) The service provider should agree to cooperate with the plan fiduciary to enable the plan fiduciary to meet its regulatory and legal obligations.
B.) The service provider’s obligations for data retention, disposal and destruction should be consistent with the plan fiduciarys regulatory obligations.
C.) As between the service provider and the plan fiduciary, the plan fiduciary is the owner of the personal information.
D.) The plan fiduciary should be required to reimburse the service provider for expenses, costs and the like associated with any data breach.
E.) The service provider’s use of subcontractors should be subject to the plan fiduciarys consent.

Answer 82

D.) The plan fiduciary should be required to reimburse the service provider for expenses, costs and the like associated with any data breach.

Module: 4
Reference: Strategic Benefits Management, Second
Edition, page 124.
Study Guide, Second Edition, page 16, Objective 4.3.

Question 83

In developing an outline for establishing and administering a qualified retirement plan, all the following are key areas of responsibilities EXCEPT:

A.) Plan design and implementation
B.) Human resources (HR) requirements
C.) Fiduciary responsibilities and plan investments
D.) Internal Revenue Service and Department of Labor compliance
E.) Operational compliance

Answer 83

B.) Human resources (HR) requirements

Module: 6
Reference: Strategic Benefits Management, Second
Edition, pages 234-235.
Study Guide, Second Edition, pages 11 and 12, Objective
2.5.

Question 84

All the following are cyber threats to Employee Retirement Income
Security Act plans that have been cited by various sources EXCEPT:

A.) Phishing, where fraudulent e-mails are sent with the objective of enticing the user to interact and inadvertently provide an avenue for a cybercriminal to infiltrate a computer network
B.) Malware via external devices, where intrusive and harmful software is stored on an external drive and executed when that drive is inserted into a network computer
C.) Wire transfer e-mail fraud, where cybercriminals pretend to be federal regulators assessing hefty penalties on plans and ask fiduciaries to wire transfer fines
D.) Ransomware, where cybercriminals encrypt and seize an entire hard drive and will only release it for a high ransom
E.) Cyber breach, where an outside vendor is hacked and its credentials are used to access the targeted resource

Answer 84

C.) Wire transfer e-mail fraud, where cybercriminals pretend to be federal regulators assessing hefty penalties on plans and ask fiduciaries to wire transfer fines

Module: 4
Reference: Strategic Benefits Management, Second
Edition, page 133.
Study Guide, Second Edition, page 8, Objective 2.1.

Question 85

All the following statements concerning the Internal Revenue Service (IRS) and internal controls of employee benefit plans are correct EXCEPT:

A.) The IRS has indicated that it looks more favorably upon plans that are governed by a clear set of internal controls.
B.) The IRS has made it clear that auditors reconcile financial statements, and it is not the responsibility of auditors to be concerned with internal controls.
C.) The IRS has identified many areas as especially important for internal controls.
D.) The IRS has provided checklists to help companies keep their plans in compliance.
E.) The IRS provides tools on its website that are helpful to companies reviewing or establishing their internal controls.

Answer 85

B.) The IRS has made it clear that auditors reconcile financial statements, and it is not the responsibility of auditors to be concerned with internal controls.

Module: 3
Reference: Strategic Benefits Management, Second
Edition, pages 89-97.
Study Guide, Second Edition, pages 18, 19 and
20, Objectives 4.1-4.7.

Question 86

All the following statements regarding emerging healthcare trends
impacting benefit plans are correct EXCEPT:

A.) COVID-19 diminished the utilization of mental health services.
B.) Many employees skipped or delayed health treatments during the COVID-19 pandemic.
C.) Companies have options to take preemptive action to ensure employees are current with annual health screenings.
D.) Employers often see more expensive remedial treatments when employees defer care.
E.) Employers have altered plan design and employee communications to encourage use of telehealth services.

Answer 86

A.) COVID-19 diminished the utilization of mental health services.

Module: 7
Reference: Text, Second Edition, page 269.
Study Guide, Second Edition, page 10, Objective 2.3.

Question 87

All the following statements regarding the plan auditing process and
audit results are correct EXCEPT:

A.) A plan auditor begins the preliminary audit by seeing if controls are in place to ensure that plan operations are consistent with the plan document.
B.) Of the three severity levels of deficiency that a plan auditor can use, “significant weakness” is the strongest deficiency.
C.) One of the more common areas of deficiency involves the processing of participant contributions.
D.) Deficiencies are often found with participant loan repayments.
E.) Many plan sponsors do not follow the regulations that require the plan’s covered third-party service providers to disclose the administrative and investment costs incurred by the plan, and this type of deficiency is important because such providers are considered parties-in-interest.

Answer 87

B.) Of the three severity levels of deficiency that a plan auditor can use, “significant weakness” is the strongest deficiency.

Module: 5
Reference: Strategic Benefits Management, Second
Edition, pages 204-207.
Study Guide, Second Edition, pages 18, 19, and
20, Objectives 4.2, 4.3, 4.6, and 4.7.

Question 88

All the following statements regarding the major challenges older workers typically encounter when they need to convert their defined contribution assets to lifetime income are correct EXCEPT:

A.) The many lifetime income options available in defined contribution retirement plans cause many older workers to make poor decisions.
B.) Retirement savings may need to last anywhere from 20 to 30 years or more.
C.) Many older workers are unable to accurately calculate the amount of savings needed to generate lifetime retirement income.
D.) Not many retirees have a formal strategy for how to draw down their savings.
E.) Many older workers with moderate savings do not have access to skilled and unbiased financial advisors, or they may not know how to identify and select one.

Answer 88

A.) The many lifetime income options available in defined contribution retirement plans cause many older workers to make poor decisions.

Module: 8
Reference: Strategic Benefits Management, Second
Edition, pages 286-287.
Study Guide, Second Edition, pages 6 and 7, Objectives 1.1
and 1.2.

Question 89

An employee welfare benefit plan has several basic elements. All the
following are included among these elements EXCEPT:

A.) There must be a plan, fund or program.
B.) The plan, fund or program must meet the definition contained in the Employee Retirement Income Security Act.
C.) The plan, fund or program must be established or maintained by an employer.
D.) The plan, fund or program must be for the purpose of providing specifically listed benefits, through the purchase of insurance or otherwise.
E.) Benefits must be provided to participants and beneficiaries.

Answer 89

B.) The plan, fund or program must meet the definition contained in the Employee Retirement Income Security Act.

Module: 1
Reference: Strategic Benefits Management, Second
Edition, page 8.
Study Guide, Second Edition, pages 5 and 6, Objectives 1.1
and 1.2.

Question 90

All the following types of employee welfare benefit plans are not covered under the Employee Retirement Income Security Act and are specifically excluded under the statute EXCEPT:

A.) Government plans
B.) Church plans
C.) Plans maintained to comply with state laws on workers’ compensation
D.) Plans that cover self-employed individuals plus one or more “common law employees”
E.) Plans that cover only married shareholders of a corporation

Answer 90

D.) Plans that cover self-employed individuals plus one or more “common law employees”

Module: 1
Reference: Strategic Benefits Management, Second
Edition, pages 9-10.
Study Guide, Second Edition, page 7, Objective 1.4.

Question 91

All the following statements regarding the maintenance of electronic
records by plan administrators are correct EXCEPT:

A.) It must be possible to index, retain, preserve and retrieve the records in a safe and accessible place.
B.) With today’s technology, all records may be electronically stored.
C.) The records must be adequately secured, organized, backed up and maintained by established procedures.
D.) The electronic records must be capable of being converted to a legible paper form.
E.) There must be no access restrictions (e.g., time or location) that would impair an individual’s ability to comply with reporting and disclosure requirements.

Answer 91

B.) With today’s technology, all records may be electronically stored.

Module: 6
Reference: Strategic Benefits Management, Second
Edition, pages 238-239.
Study Guide, Second Edition, page 16, Objective 3.5.

Question 92

All the following statements regarding fraud associated with employee benefit plans are correct EXCEPT:

A.) Studies have shown that internal controls are by far the most common method of detecting fraud.
B.) Auditors are more concerned with financial statement fraud than
misappropriation fraud.
C.) Accounting, operations and upper management tend to be the most frequent departments where fraudulent activity occurs.
D.) Human resources, boards of directors and legal are three of the departments where fraud occurrences are low.
E.) Employee support programs are effective in minimizing fraud because they provide employees with psychiatric and credit counseling at a time when they need it most before they commit fraud.

Answer 92

A.) Studies have shown that internal controls are by far the most common method of detecting fraud.

Module: 5
Reference: Strategic Benefits Management, Second
Edition, pages 214-215, 217 and 218.
Study Guide, Second Edition, pages 24-26, Objectives 6.1 ,
6.3, 6.4, and 6.5.

Question 93

All the following have been designated as very important reporting and disclosure documents required by the Employee Retirement Income Security Act for health and welfare employee benefit plans EXCEPT:

A.) A Summary Plan Description
B.) A Summary of Financial Assumptions
C.) A Summary of Material Modifications
D.) An Annual Financial Report (Form 5500)
E.) A Summary Annual Report

Answer 93

B.) A Summary of Financial Assumptions

Module: 3
Reference: Strategic Benefits Management, Second
Edition, page 69.
Study Guide, Second Edition, page 6, Objective 1.2.

Question 94

All the following statements regarding the benefits in Medicare Part A are correct EXCEPT:

A.) A benefit period starts when the beneficiary first enters a hospital and ends when there has been a break of at least 60 consecutive days since inpatient hospital or skilled nursing care was provided.
B.) There is no limit to the number of benefit periods covered by Part A during a beneficiary’s lifetime.
C.) Inpatient hospital care is normally limited to 90 days of inpatient hospital care in a benefit period.
D.) Deductibles apply to benefits, but there are no copayment requirements.
E.) A “lifetime reserve” of up to 60 total additional days of inpatient hospital care is available to those who exhaust their other benefits.

Answer 94

D.) Deductibles apply to benefits, but there are no copayment requirements.

Module: 11
Reference: Strategic Benefits Management, Second
Edition, page 440.
Study Guide, Second Edition, page 7, Objective 1.7.

Question 95

All the following statements regarding Social Security benefits and
quarters of credit are correct EXCEPT:

A.) Survivor benefits are only available if the deceased had attained a fully insured status.
B.) A person receives one quarter of credit for a specified amount of covered earnings.
C.) Credits can be earned any time during the year.
D.) The amount required to earn one credit automatically increases as average wages rise.
E.) A person is fully insured if they have 40 credits.

Answer 95

A.) Survivor benefits are only available if the deceased had attained a fully insured status.

Module: 10
Reference: Strategic Benefits Management, Second
Edition, pages 389-390.
Study Guide, second Edition, pages 9 and 10, Objectives
2.2 and 2.3.

Question 96

All the following are advantages to a plan administrator of having a venue selection clause that specifies where lawsuits may be brought and a clause that provides that a plaintiff may sue the plan only in the district where the plan is administered EXCEPT:

A.) There is administrative convenience to plan managers in dealing with lawsuits “at home.”
B.) A consistent set of rulings from a single body of circuit case law affords greater predictability on issues when there is a clear circuit split or even just a subtle nuance in local case law.
C.) A consistent legal environment enables the plan that covers participants in more than one district to operate in a more consistent manner.
D.) The plan’s informational materials, such as the summary plan description (SPD), might be well-served by a consistent body of case law.
E.) The standard of judicial review will be the de novo standard, where the judge will examine the issues without deference to prior determinations.

Answer 96

E.) The standard of judicial review will be the de novo standard, where the judge will examine the issues without deference to prior determinations.

Module: 9
Reference: Strategic Benefits Management, Second
Edition, pages 344-345.
Study Guide, Second Edition, page 8, Objectives 1.7 and
1.8.

Question 97

All the following statements regarding Summary Annual Reports (SARs) are correct EXCEPT:

A.) An SAR is considered a plan disclosure requirement under the Employee Retirement Income Security Act (ERISA).
B.) An SAR is a summary of certain information contained in the plan’s Form 5500.
C.) An SAR must be filed with the Department of Labor.
D.) ERISA requires that an SAR be given to each participant, including former employees who are still covered by the plan.
E.) An SAR does not have to be provided if the plan is totally an unfunded welfare plan under which benefits are paid solely from the general assets of the employer or employee organization maintaining the plan.

Answer 97

C.) An SAR must be filed with the Department of Labor.

Module: 1
Reference: Strategic Benefits Management, Second
Edition, pages 33-34.
Study Guide, Second Edition, page 19, Objective 4.2.

Question 98

All the following statements regarding the situation when a plan
administrator fails or refuses to produce certain plan documents in a
timely manner are correct EXCEPT:

A.) Under Section )B) the administrators penalty can be a maximum of a statutory per day amount, but additional financial penalties can be incurred under other regulatory sections.
B.) The power to invoke penalties against plan administrators for failing or refusing to produce certain plan documents has been used often.
C.) If the plan does not identify the plan administrator, the plan sponsor will be designated as the plan administrator.
D.) The purpose of the civil penalty is to compensate participants or beneficiaries for injuries.
E.) Only participants and beneficiaries may recover the civil penalty under Section

Answer 98

D.) The purpose of the civil penalty is to compensate participants or beneficiaries for injuries.

Module: 9
Reference: Strategic Benefits Management, Second
Edition, pages 362-365.
Study Guide, Second Edition, pages 13 and 14, Objectives
4.1-4.5.

Question 99

All the following statements regarding an investment policy statement (IPS) for an Employee Retirement Income Security Act (ERISA) plan that contains innovative investments are correct EXCEPT:

A.) The IPS for a plan that contains innovative investments should be more detailed than an IPS for standard investments.
B.) An IPS is expressly required under ERISA for plans that contain innovative investments.
C.) The IPS for plans that contain innovative investments should be drafted in a way that provides guidelines for investment fiduciaries but leaves some decisions to their judgement.
D.) The IPS for a plan that contains innovative investments should be carefully drafted, typically by an attorney familiar with employee benefit issues.
E.) The investment criteria in the IPS for a plan that contains innovative investments should be written in the context of meeting the needs of the participants.

Answer 99

B.) An IPS is expressly required under ERISA for plans that contain innovative investments.

Module: 8
Reference: Strategic Benefits Management, Second
Edition, page 313.
Study Guide, Second Edition, page 18, Objective 4.7.

Question 100

All the following statements regarding the composition of the investment committee for an Employee Retirement Income Security Act plan are correct EXCEPT:

A.) The investment committee should not include the chief operating officer (COO) or the chief financial officer (CFO) because their attendance will inhibit free discussion.
B.) A fiduciary to the plan should be a member of this committee.
C.) The organization’s legal counsel should either be on the committee or simply attend meetings in an advisory capacity.
D.) Although they are not usually voting members, representatives of plan providers, such as the record keeper, should attend committee meetings.
E.) It is important that the committee represent the participants, and committees may want to include members from different disciplines and different areas of the organization.

Answer 100

A.) The investment committee should not include the chief operating officer (COO) or the chief financial officer (CFO) because their attendance will inhibit free discussion.

Module: 3
Reference: Strategic Benefits Management, Second
Edition, pages 78-79.
Study Guide, Second Edition, page 12, Objective 2.7.