Insurance

Question 1

Taxability of disability insurance premiums and benefits

Answer 1

1. Individual owns contract and pays premium: non-deductible premiums, tax-free benefits
2. Section 162 bonus: Employee owns contract and employers pays premium. Premiums are deductible by the employer as a bonus. Paid with after-tax dollars. Benefits tax-free to Employee.
3. Employee owns contract, employer pays premium under salary continuation plan (group plan). Premiums deductible by employer, benefits taxable to employee.

Question 2

ACV for personal property

Answer 2

ACV is replacement value less depreciation

Question 3

Property loss calculations

How much will insurance pay?

Answer 3

If insurance carried is less than insurance required (80% residential, 90% commercial) then the insurer will pay the greater of:

1. ACV, or
2. (Insurance carried / insurance required) x loss

where insurance required equals replacement cost times coinsurance percentage

Question 4

What types of property typically should have a personal property endorsement floater?

Answer 4

Valuable property such as:

Jewelry
Golfer’s equipment
Art
Stamps
Coins

Question 5

Personal property coverage is provided on what basis?

Answer 5

Valued basis (agreed upon)

Question 6

What type of property is typically covered under replacement cost basis?

Answer 6

Dwelling (structure)

Question 7

What type of property is typically covered on an actual cash value basis?

Answer 7

Property (contents)

Question 8

When will life insurance be included in a decedent’s estate?

Answer 8

• Proceeds were paid to executor of the estate
• Decedent possessed incident of ownership
• Decedent gifted his/her policy within 3 years of death

Question 9

Basic benefits under Medicare Part A

Answer 9

1. Hospital care
2. Nursing home or extended care facility
3. Home health services
4. Care in a hospice

Question 10

Medicare Part B coverage

Answer 10

1. Physicians’ services
2. Home health services
3. Diagnostic tests
4. Outpatient services of a participation hospital
5. Some oral anti-cancer drugs

Question 11

1040X

Answer 11

Amended return

Question 12

1040A

Answer 12

Simpler than 1040, but more complex than 1040EZ

Question 13

Medicare Part B premium is based on what?

Answer 13

AGI two years prior

Also, delaying Medicare application (after 65) results in higher premiums

Question 14

Medicare Part A premium

Answer 14

Generally zero

Question 15

Patient pays only a flat deductible for Medicare Part A inpatient services for first ____ days.

Answer 15

60

Question 16

Medicare Part D

Answer 16

Outpatient prescription drugs

“Donut hole” coverage gap