Retire Ch 11 Social Sec, Medicare, Medicaid

Question 1

“Fully insured” means that a worker has earned a certain number of quarters (generally 40) of coverage under the Social Security system.

a. True b. False

Answer 1

a. True

Question 2

Social Security benefits can be paid to the dependent parents of a deceased insured worker at age 62.

a. True b. False

Answer 2

a. True

Question 3

Medicare Part A generally pays for “places” while Part B pays for “services.”

a. True b. False

Answer 3

a. True

Question 4

Long-term care insurance does not cover hospice care.

a. True b. False

Answer 4

b. False

Question 5

If Tito had a home worth $300,000, it is possible he could qualify for Medicaid.

a. True b. False

Answer 5

a. True

Question 6

Social Security is funded through all of the following except:

a. Employee payroll tax.
b. Employer payroll tax.
c. Sales tax.
d. Self-employment tax.

Answer 6

The correct answer is c.

Employee and employer payroll tax and self-employment tax are the sources of funding for Social Security.

Sales tax does not fund Social Security.

Question 7

Brisco, now deceased, was married for 12 years. He had two dependent children, ages 10 and 12, who are cared for by their mother age 48. His mother, age 75, was his dependent and survived him. At the time of his death, he was currently but not fully insured under Social Security.

His dependents are entitled to all of the following benefits except:

a. A lump-sum death benefit of $255.
b. A children’s benefit equal to 75% of Brisco’s PIA.
c. A caretaker’s benefit for the children’s mother.
d. A parent’s benefit.

Answer 7

The correct answer is d.

A lump-sum death benefit of $255 is payable to the surviving spouse or children of the deceased worker if he was fully or currently insured.

The children’s benefit is payable because Brisco was either currently
or fully insured. It is 75% of his PIA.

The children’s mother would be entitled to a benefit for caring for the
children under the age of 16.

His dependent mother is only entitled to a benefit if he was fully insured, not currently insured

Question 8

Medicare Part A provides hospital coverage. Which of the following persons is not covered under Part A?

a. A person 62 or older and receiving railroad retirement.

b. Disabled beneficiaries regardless of age that have received Social Security for two years.

c. Chronic kidney patients who require dialysis or a renal transplant.

d. A person age 65 or older entitled to a monthly Social Security check.

Answer 8

The correct answer is a.

Medicare Part A requires a person to be age 65. People who are disabled or have permanent kidney failure are entitled to Medicare at any age.

Question 9

A person receiving Social Security benefits under full retirement age can receive earned income up to a maximum threshold without reducing Social Security benefits by the earnings test.

Which of the following count against the earnings threshold?

a. Dividends from stocks.
b. Rental income.
c. Pensions and insurance annuities.
d. Self-employment income.

Answer 9

The correct answer is d.

Earnings that count against the earnings threshold include W-2 wages and net self-employment income. All the others are not earned income for Social Security purposes.

Question 10

All of the following statements concerning Social Security benefits are correct except:

a. The maximum family benefit is determined through a formula based on the worker’s PIA.

b. If a worker applies for retirement or survivors’ benefits before their 65th birthday, they must also file a separate application for Medicare.

c. People who are disabled or have permanent kidney failure can get Medicare at any age.

d. The Social Security Administration is concerned with beneficiaries’ combined income, which, on the 1040 federal tax return, includes adjusted gross income and nontaxable interest income.

Answer 10

The correct answer is b.

If a worker applies for retirement or survivors’ benefits before his or her 65th birthday, there is no need to file a separate application for Medicare

Question 11

Deferred compensation plans are generally structured so that employees benefiting under the plan will avoid constructive receipt.

a. True b. False

Answer 11

. a. True

Question 12

For contributions to a deferred compensation plan to be taxed because of the economic benefit doctrine, there must be no restrictions or risks that the funds would not be paid to the employee

. a. True b. False

Answer 12

. a. True

Question 13

SUBSTANTIAL RISK OF FORFEITURE

Answer 13

• Another concept that establishes when income is included in a taxpayer’s taxable income
• Occurs when rights in transferred property are conditioned, directly or indirectly, upon some future occurrence
• Substantial Risk of Forfeiture exists = No income tax consequences
• No Substantial Risk of forfeiture = Income must currently be recognized as taxable

Question 14

An employer receives a current income tax deduction for contributions to a qualified plan.

a. True b. False

Answer 14

a. True

Question 15

The Supply Chain EVP of Peak, Inc. elects to defer her current year bonus until after she retires. The bonus is based on the current year performance only. Payroll taxes must be paid in the current year.

a. True b. False

Answer 15

a. True

Question 16

All of the following statements concerning the Social Security system are correct except:

If a worker receives retirement benefits based on their own earnings record, the worker’s retirement benefits will continue whether married or divorced.

Widows and widowers, whether divorced or not, will continue to receive survivors’ benefits upon remarriage if the widow or widower is age 60 or older at the time of remarriage.

By providing the name of a country or countries to be visited and the expected departure and return dates, the Social Security Administration will send special reporting instructions to the beneficiaries and arrange for delivery of checks while abroad.

A special one-time payment of $1,000 may be made to a deceased worker’s spouse or minor children upon death.

Answer 16

A special one-time payment of $1,000 may be made to a deceased worker’s spouse or minor children upon death.

Rationale

A special one-time payment of $255 may be made to a deceased worker’s spouse or minor children upon death.

Question 17

Which of the following statements are true as to Supplemental Security Income (SSI) benefits?

1. Supplemental Security Income makes monthly payments to individuals with low income and few assets.
2. The basic monthly benefit for Supplemental Security Income in 2024 is $943 for one person and $1,415 for married couples.
3. The asset determination for Supplemental Security Income eligibility does not include the value of one’s home or car.
4. The definition of disability is satisfied when the individual is unable to engage in any substantial gainful activity due to a physical or mental problem expected to last at least three years or expected to result in death.

1 and 3.
2 and 4.
1, 2 and 3.
1, 2, 3 and 4.

Answer 17

1, 2 and 3.
Rationale

All of the statements are true except statement 4. Statement 4 is in reference to Social Security Disability Income (SSDI), and would be correct (for SSDI) if the disability was expected to last at least one year, not three years as provided.

Question 18

Which of the following concerning the Social Security and Medicare is correct?

SSI benefits are funded by the Treasury, not Social Security taxes, as are the other benefits.

The Social Security retirement benefit is payable at full retirement age with reduced benefits as early as age 59½ to anyone who has obtained at least a minimum amount of Social Security benefits.

The two Medicare trust funds are the federal Medical Insurance Trust Fund for Part A and the Supplementary Hospital Insurance Trust Fund for Part B of Medicare benefits.

Benefits can be paid to the dependent parents of a deceased insured worker at age 59½ or over.

Answer 18

SSI benefits are funded by the Treasury, not Social Security taxes, as are the other benefits.

Rationale

The Social Security retirement benefit is payable at full retirement age with reduced benefits as early as age 62 to anyone who has obtained at least a minimum amount of Social Security coverage. The two Medicare trust funds are the federal Hospital Insurance Trust Fund for Part A and the Supplementary Medical Insurance Trust Fund for Part B of Medicare benefits. Social Security benefits can be paid to the dependent parents of a deceased insured worker at age 62 or over.

Question 19

A person receiving Social Security benefits under full retirement age can receive earned income up to a maximum threshold without reducing Social Security benefits by the earnings test.

Which of the following count against the earnings threshold?

Dividends from stocks.
Rental income.
Pensions and insurance annuities.
Self-employment income.

Answer 19

Self-employment income.

Rationale

Earnings that count against the earnings threshold include W-2 wages and net self-employment income. All the others are not earned income for Social Security purposes.

Question 20

All of the following statements concerning Social Security benefits are correct except:

In order to obtain SSI benefits, an individual must be age 65 or older and must be disabled.

The number of days that Medicare covers care in hospitals and skilled nursing facilities is measured in what is termed benefit periods.

Social Security spousal benefits are available to a divorced spouse so long as the marriage lasted at least 10 years and the age requirements are met.

Benefits are payable at any age to workers who have enough Social Security credits and who have a severe physical or mental impairment that is expected to prevent them from doing “substantial” work for a year or more or who have a condition that is expected to result in death

Answer 20

In order to obtain SSI benefits, an individual must be age 65 or older and must be disabled.
Rationale

In order to obtain SSI benefits, an individual must either be age 65 or older OR must be disabled

Question 21

Which of the following individuals is more likely to have a need for long-term care insurance?

• Gonzo has always had low-paying jobs and owns a small home and little else.
• Rosita has worked as a middle manager her entire career and has pension and Social Security income, in addition to a home and a modest amount of savings.

Gonzo.
Rosita.
Neither.
Both

Answer 21

Rosita.

Rationale

Gonzo will likely qualify easily for Medicaid as he does not seem to have any sources of income and only has a small home, of which the equity is not counted. Rosita has a couple sources of income that are counted toward Medicaid. Therefore, she could use LTC to minimize risk exposure.

Question 22

Ellen taught at Fun Academic University for 25 years and is filing for Social Security retirement benefits this year, when she turns age 72. Her PIA is $1,000 per month as adjusted for inflation.

How much in benefits will Ellen receive assuming her full retirement age was 66?

$1,320.
$1,360.
$1,480.
$1,587.

Answer 22

$1,320.

Rationale

Delayed benefits will increase at 8% per year of delay up until age 70.

Therefore, Ellen’s benefit will be 32% higher than her PIA. She has no increase for delaying beyond age 70 and the 8% increase is not compounded

Question 23

Joyce and Melvin have been married for 30 years. In 2024, they received $22,000 of Social Security benefits and had $12,000 of interest income.

What portion of the Social Security benefit is taxable?

$0.
$6,000.
$10,200.
$11,000.

Answer 23

$0.
Rationale

The lesser of:

50% of $22,000 = $11,000

Or

0.5 [$12,000 + 0.5 ($11,000) - $32,000] < 0

Since the answer calculated is less than $0, none of the Social Security benefits received by Joyce and Melvin are taxable

Question 24

Emile is single and received $28,000 of dividend income during the year. He also received $18,000 of Social Security benefits.

What portion of his Social Security benefits are taxable?

$0.
$7,050.
$9,000.
$15,300

Answer 24

$7,050.

Rationale

The lesser of:

85% of $18,000 = $15,300

or

0.85 [$28,000 + 0.5 ($18,000) - $34,000] = $2,550
plus $4,500
equals $7,050

Question 25

Which of the following statements are true for the PIA of individuals who first become eligible for retirement benefits in 2024?

1. Their PIA is 90% of the first $1,174 of their AIME, plus other amounts.
2. Their PIA is 32% of their AIME over $1,174 up to $7,078, plus other amounts.
3. Their PIA is 15% of their AIME that exceeds $7,078, plus other amounts.

1 and 2.
1 and 3.
All of the above statements are true.

Answer 25

All of the above statements are true.

Rationale

For individuals who first become eligible for retirement benefits or disability insurance benefits in 2024 or who die in 2024 before becoming eligible for benefits, their PIA will be the sum of:

90 percent of the first $1,174 of their AIME, plus
32 percent of their AIME over $1,174 up to $7,078, plus
15 percent of their AIME that exceeds $7,078.
(Maximum PIA for 2024 is $3,822)

Question 26

Antoine immigrated from Italy last century, became a citizen and has worked the better part of his life in the United States, for which he is truly thankful. His full retirement age (normal retirement age) for Social Security benefits is age 66, but after a hard life working, he wants to retire at age 63 and travel throughout America and back to his homeland.
If his benefit at age 66 is $1,000 per month, how much will he receive in Social Security retirement benefits if he begins receiving benefits at age 63?

$700.00.
$800.00.
$812.50.
$1,000.00. The same benefit, he will simply not receive it for as long.

Answer 26

800.00.

Rationale

The benefit reduction for early retirement is 5/9ths of 1% for the first 36 months. If Antoine retires 3 years early at age 63, then his retirement benefit will be reduced by 20% to $800 per month.

Question 27

Emma Kate qualifies for a retirement benefit of $250 and a spouse’s benefit of $400.
At her full retirement age, she will receive which of the following?

Both $250 and $400.
The higher of her benefit or her spouse’s benefit.
Her spouse’s benefit of $400.
Her benefit of $250 plus $150 from her spouse’s benefit

Answer 27

Her benefit of $250 plus $150 from her spouse’s benefit.total $400 ( the spouses amount )

Rationale

Emma Kate will receive her benefit plus an additional amount due to the higher spousal benefit.

Question 28

Part B of Medicare is considered to be supplemental insurance and provides additional coverage to participants.
Which of the following is true regarding Part B coverage?

The election to participate must be made at the time the insured is eligible for Part A Medicare and at no time after.

The premiums for Part B are paid monthly through withholding from Social Security benefits.

Once a participant elects Part B, they must maintain the coverage until death.

Coverage under Part B does not include deductibles or coinsurance.

Answer 28

The premiums for Part B are paid monthly through withholding from Social Security benefits.

Rationale

Only option b is correct. Option a is incorrect because participation can occur after the initial eligibility. Participation is not required to be maintained for life, and Part B does have deductibles and/or coinsurance

Question 29

In terms of qualifying for Medicaid, which of the following is counted as income?

Nutritional assistance.
Veterans benefits.
Federal housing benefits.
Home energy assistance.

Answer 29

Veterans benefits.
Rationale

Veterans benefits and other income sources are counted. However, nutritional assistance, housing, and energy benefits are not counted towards income for purposes of Medicaid

Question 30

Social Security is funded through all of the following except:

Employee payroll tax.
Employer payroll tax.
Sales tax.
Self-employment tax

Answer 30

Sales tax.

Rationale

Employee and employer payroll tax and self-employment tax are the sources of funding for Social Security. Sales tax does not fund Social Security.

Question 31

Brisco, now deceased, was married for 12 years.
He had two dependent children, ages 10 and 12, who are cared for by their mother age 48.
His mother, age 75, was his dependent and survived him.
At the time of his death, he was currently but not fully insured under Social Security.

His dependents are entitled to all of the following benefits except:

A lump-sum death benefit of $255.
A children’s benefit equal to 75% of Brisco’s PIA.
A caretaker’s benefit for the children’s mother.
A parent’s benefit.

Answer 31

A parent’s benefit.

Rationale

A lump-sum death benefit of $255 is payable to the surviving spouse or children of the deceased worker if he was fully or currently insured.

The children’s benefit is payable because Brisco was either currently or fully insured. It is 75% of his PIA.

The children’s mother would be entitled to a benefit for caring for the children under the age of 16.

His dependent mother is only entitled to a benefit if he was fully insured, not currently insured.

Question 32

Which of the following statements concerning state recovery of Medicaid costs is correct?

The state may place liens on the homes of Medicaid recipients during their lifetimes.

The state may recover assets from a Medicaid recipient’s estate during the spouse’s lifetime.

A house that was an exempt asset during the individual’s lifetime cannot be the subject of state recovery after the individual’s death.

States generally try to use liens to recover gifts made by Medicaid recipients.

Answer 32

The state may place liens on the homes of Medicaid recipients during their lifetimes.

Rationale

The state may place liens on homes of Medicaid recipients during their lifetimes.
The state can obtain payment of liens when properties are sold. During the spouse’s lifetime, the state may not recover assets from a Medicaid recipient’s estate.
An asset that is exempt during the recipient’s lifetime, such as a house or car, can be the subject of recovery by a state after the individual’s death. Liens are used to recover Medicaid expenses, not to recover gifts made by the Medicaid recipients.
The period of ineligibility (penalty period) is the way the states deal with gifts.

Question 33

All of the following statements concerning Social Security benefits are correct except:

The maximum family benefit is determined through a formula based on the worker’s PIA.

If a worker applies for retirement or survivors’ benefits before their 65th birthday, they must also file a separate application for Medicare.

People who are disabled or have permanent kidney failure can get Medicare at any age.

The Social Security Administration is concerned with beneficiaries’ combined income, which, on the 1040 federal tax return, includes adjusted gross income and nontaxable interest income.

Answer 33

If a worker applies for retirement or survivors’ benefits before their 65th birthday, they must also file a separate application for Medicare.

Rationale

If a worker applies for retirement or survivors’ benefits before their 65th birthday, there is no need to file a separate application for Medicare.

Question 34

Antoine immigrated from Italy last century, became a citizen and has worked the better part of his life in the United States, for which he is truly thankful. His full retirement age for Social Security benefits is age 66, but after a hard life working, he wants to retire at age 63 and travel in America and back to his homeland. He sold his restaurant for $150,000 and was retained by the acquiring company as a consultant for a one-year period. His consulting fee this year will be $50,000 and the benefit he expects to receive from Social Security is $2,000 per month.

Which of the following statements is correct?

Antoine should delay receiving Social Security retirement benefits until after this year because he will be in a high tax bracket due to the sale of his business.

Antoine should delay receiving Social Security retirement benefits until after this year because there will be such a large reduction in benefits due to his consulting income and the sale of the business.

Antoine should begin receiving Social Security benefits today because although there is a reduction in benefits today, there will be an increase after full retirement age.

Antoine would be better off beginning Social Security benefits next year.

Answer 34

Antoine would be better off beginning Social Security benefits next year.

Rationale

Option a is not the best answer - however, Antoine is likely to be in a higher tax bracket because of the sale and the consulting income.

Option b is not correct because the sale of the business is not earned income and will not cause in a reduction of benefits. His consulting income is earned income.

Option c is not correct - benefits reduced due to retirement before FRA are permanently reduced, although any benefit reduction due to the earnings test will be offset by an increase in benefits after full retirement age.

Option d is correct as his earned income will be lower and his tax bracket will likely be lower.

Question 35

Which of the following concerning the Social Security system is correct?

Workers entitled to retirement benefits can currently take early retirement benefits as early as age 59½.

A worker who takes early retirement benefits will receive a reduced benefit because they will receive more monthly benefit payments as payments commence earlier than if the worker had waited and retired at full retirement age.

Family members of an individual who are eligible for retirement or disability benefits include a spouse if the spouse is at least 59½ years old or under 59½ but caring for a child under age 16.

Generally, individuals who are over the age of 62 and receive Social Security benefits automatically qualify for Medicare benefits

Answer 35

A worker who takes early retirement benefits will receive a reduced benefit because they will receive more monthly benefit payments as payments commence earlier than if the worker had waited and retired at full retirement age.

Rationale

Workers entitled to retirement benefits can currently take early retirement benefits beginning at age 62. Family members of an individual who is receiving retirement or disability benefits include a spouse if the spouse is at least 62 years old or under 62 but caring for a child under age 16.

Generally, individuals who are age 65 or over and receive Social Security benefits automatically qualify for Medicare.

Question 36

On the day Wilbur Webb entered a nursing home, he and his wife, Charlotte, had countable assets of $88,000.
What amount must the Webbs spend down for Wilbur to be eligible for Medicaid?

$42,000.
$44,000.
$86,000.
$88,000.

Answer 36

$42,000.
Rationale

Charlotte is entitled to one-half of the countable assets for her community spouse resource allowance or $44,000. Wilbur is entitled to retain $2,000, so the Webbs must spend down $44,000 – $2,000 = $42,000.

Question 37

For Medicare beneficiaries, the maximum stay in a skilled nursing facility during a benefit period cannot exceed how many days?

20 days.
60 days.
80 days.
100 days.

Answer 37

100 days.
Rationale

Medicare limits coverage for skilled nursing care to 100 days per year. The first 20 days have no coinsurance, but days 21 - 100 have a relatively high coinsurance.

Question 38

Estelle, age 75, is a widow with no close relatives. She is very ill, unable to walk, and confined to a custodial nursing home.
Which of the following programs is likely to pay benefits towards the cost of the nursing home?

1. Medicare may pay for up to 80 additional days of care after a 20-day deductible.
2. Medicaid may pay if Estelle has income and assets below state-mandated thresholds.

1 only.
2 only.
Both 1 and 2.
Neither 1 nor 2.

Answer 38

2 only.

Rationale

Statement 1 is incorrect because Medicare covers all costs for the first 20 days of skilled nursing home care and covers the next 80 days with a coinsurance, provided that the nursing home stay occurs after at least a 3-day inpatient hospital stay.

Question 39

Medicare Part A provides hospital coverage. Which of the following persons is not covered under Part A?

A person 62 or older and receiving railroad retirement.

Disabled beneficiaries regardless of age that have received Social Security for two years.

Chronic kidney patients who require dialysis or a renal transplant.

A person 65 or older entitled to a monthly Social Security check.

Answer 39

A person 62 or older and receiving railroad retirement.

Rationale

Medicare Part A requires a person to be age 65. People who are disabled or have permanent kidney failure are entitled to Medicare at any age.

Question 40

Fatima is a widow and 82 years of age.
She gave her three children $20,000 each three years ago and has exhausted all of her other assets. Fatima has just entered a nursing home that costs $6,000 per month and applied for Medicaid.
The average monthly cost of nursing home care in Fatima’s state is $6,000.

How long after entering the nursing home will Fatima be eligible for Medicaid payment of her nursing home care?

0 months.
4 months.
10 months.
60 months.

Answer 40

10 months.

Rationale

The 60-month lookback period for the gifts to the three children will cause a penalty period of 10 months ($60,000 of gifts made during the 60 months prior to applying for Medicaid divided by the $6,000 average cost of care = 10 months).

Since all of her other assets have already been exhausted, she would otherwise qualify for Medicaid immediately, however, due to the penalty period, she will not be able to receive Medicaid benefits for 10 months

Question 41

A worker’s AIME:

Must be determined by converting actual earnings into current dollars through an indexing factor.

Is determined from wage information over prior years’ work.

Uses the highest 35 years of indexed earnings (for workers that worked at least that long).

All of the above.

Answer 41

All of the above.
Rationale

All of the above are correct.

Question 42

Raymond is turning 65 years of age and has been receiving Social Security benefits. Which of the following statements concerning his eligibility for Medicare benefits is correct?

Raymond can sign up for Part A without Part B, but he cannot sign up for Part B later.

Raymond will be enrolled automatically in Parts A and B.

If Raymond signs up for Part B later, the premium will be the same as at age 65.

If Raymond declines Part A and Part B, he will be able to sign up at any time after age 65.

Answer 42

Raymond will be enrolled automatically in Parts A and B.
Rationale

A person who is already receiving Social Security benefits when they reach age 65 will be automatically enrolled for Medicare unless they sign a form electing not to be covered. If a person enrolls in Part A, the person can enroll later in Part B, but only during specified periods each year. If a person enrolls during one of the general enrollment periods (January to March each year), coverage will become effective on the first day of the month following the month during which they enroll. The premiums will increase for delayed enrollment.

Question 43

Ted and Joan Kramer are planning for Joan to enter a nursing home. The Kramers would like to apply for Medicaid benefits to pay for Joan’s care, but they currently have assets of $290,000 in excess of the $2,000 that Joan is permitted to retain when qualifying for Medicaid. What should they do to spend down assets so Joan will be eligible immediately?

Transfer $290,000 of assets to Ted, and Ted will buy a Medicaid-compliant annuity with any assets exceeding the community spouse’s resource allowance.

Transfer half of the $290,000 of excess assets to Ted, and Joan will use her half to buy a Medicaid-compliant annuity.

Transfer the community spouse’s resource allowance to Ted, and Ted will buy a Medicaid-compliant annuity.

Transfer all of their assets to Ted, and Ted will use only the community spouse’s resource allowance to buy a Medicaid-compliant annuity.

Answer 43

Transfer $290,000 of assets to Ted, and Ted will buy a Medicaid-compliant annuity with any assets exceeding the community spouse’s resource allowance.

Rationale

The Kramers will want to spend down their assets to the point where Ted is left with the community spouse’s resource allowance. Any amount of assets can be transferred from the Medicaid applicant to the community spouse, but assets above the community spouse’s resource allowance will need to be spent before Medicaid benefits will begin. The assets exceeding the community spouse’s resource allowance can be spent for a Medicaid-compliant annuity, and this transaction will be a permissible transfer. The annuity income will be paid to the community spouse, and the income is not taken into account for purposes of determining the resident spouse’s Medicaid benefits

Question 44

Which of the following are correct?

Surviving spouses are entitled to 100 percent of the worker’s benefit amount after the worker dies.

Divorced spouses can also claim benefits based on their ex-spouse’s record if they were married 8 years or longer.

For someone to delay benefits until age 70 based solely on payback or breakeven, the person would have to live to at least age 92, without considering the time value of money.

All of the above are false.

Answer 44

Surviving spouses are entitled to 100 percent of the worker’s benefit amount after the worker dies.

Rationale

Option a is correct. Option b is wrong because spouses have to be married 10 years, not 8. Option c is wrong because the age is closer to 82, not 92.

Question 45

Which of the following statements concerning Medicare benefits available to those over 65 are true?

1. Medigap coverage is available to cover costs not paid for by Medicare, but only under federal guidelines.
2. A patient pays deductibles for hospital stays, but nothing for doctor visits.
3. Part A of Medicare coverage is optional for those covered by Social Security and requires a monthly premium.

1 only
2 and 3
1 and 3
1, 2, and 3

Answer 45

1 only
Rationale

Part A (hospital coverage) covers all those eligible for Social Security, without any payment of premiums.

Part B is optional and requires the payment of premiums. Medigap coverages come in only a limited number of combinations, mandated by federal regulations.

These plans pay for various costs not covered by Medicare, such as copayments and the Part A deductible.

Part A does require a deductible for hospital stays, but Part B does not fully cover routine doctor visits (other than a one-time “Welcome to Medicare” wellness visit and one annual wellness visit).

Question 46

Betty Sue, age 75, is a widow with no close relatives. She is very ill, unable to walk, and confined to a custodial nursing home. Which of the following programs is likely to pay benefits towards the cost of the nursing home?

Medicare may pay for up to 100 days of care after a 20-day deductible.

Medicaid may pay if the client has income and assets below state-mandated thresholds.

A. 1 only
B. 2 only
C. 1 and 2
D. Neither 1 nor 2

Answer 46

Solution: The correct answer is B.

Statement 1 is incorrect because Medicare covers all costs for the first 20 days of skilled nursing home care and cover the next 80 days with a deductible.

Students should know from the Insurance course that Medicaid provides for low income persons.

Question 47

Antoine immigrated from Italy last century, became a citizen and has worked the better part of his life in the United States, for which he is truly thankful. His full retirement age for Social Security benefits is age 66, but after a hard life working, he wants to retire at age 63 and travel in America and back to his homeland. After contacting the Social Security administration, they informed him that his benefit at age 63 would be $1,200 per month. Just prior to retiring, he sold his business for $100,000. Which of the following statements is correct?

The sale of the business will not impact the amount of his retirement benefits from Social Security.

The sale of the business will cause his benefits to be reduced by $1 for every $2 over the annual limit.

The sale of the business will definitely increase the portion of his Social Security benefits that are subject to income tax.

The sale of the business may cause him to pay a higher Medicare Part B premium in the year of the sale due to his higher

Answer 47

The sale of the business will not impact the amount of his retirement benefits from Social Security.

Rationale

Option b is false. The sale is not earned income. Therefore, it will not result in a reduction of benefits.

Option c is false because it might not increase the portion of the benefit subject to taxation ($100,000 is the sale price, not the taxable gain). 85 percent of his Social Security benefit may already be subject to taxation.

Option d is false, as he would not receive Medicare until age 65; however, it is possible that his Medicare premium at age 65 will be increased due to the 2 year look back for income.

Question 48

which of the following concerning the Social Security system is correct?

A. Workers entitled to retirement benefits can currently take early retirement benefits as early as age 60.

B. A worker who takes early retirement benefits will receive a reduced benefit because he or she will receive more monthly benefit payments as payments commence earlier than if the worker had waited and retired at full retirement age.

C. Family members of an individual who is eligible for retirement or disability benefits include a spouse if the spouse is at least 60 years old or under 62 but caring for a child under age 16.

D. Generally, individuals who are over the age of 62 and receive Social Security benefits automatically qualify for Medicare benefits.

Answer 48

Solution: The correct answer is B.

Workers entitled to retirement benefits can currently take early retirement benefits beginning at age 62.

Family members of an individual who is eligible for retirement or disability benefits include a spouse if the spouse is at least 62 years old or under 62 but caring for a child under age 16.

Generally, individuals who are over age 65 and receive Social Security benefits automatically qualify for Medicare.

Question 49

Hasani died December 31, 2023, at age 50 leaving his wife Jamille (age 49) and 4 children ages 4, 7, 15 and 17. His PIA is $2,500 per month.

Assuming Jamille does not work how much approximately in total per month will she receive for 2023 for herself and kids (ignoring family maximums)?

A. $5,000
B. $13,125
C. $12,300
D. $15,000

Answer 49

solution: The correct answer is B.

2024 Calculation

Jamille is too young to collect as a widow.
Widow benefits begin at age 60.
Jamille will receive benefit for caring for each of the children under age 16.
Each child under age 18 will also receive 75% of the calculated PIA as a payment to them.

3 children x (2,500 x 75%) = 5,625 for care

4 children benefits x ($2,500 x 75%) = 7,500. The 17 year old will receive payments until their 18th birthday or 19th if still in school.

Add the two types of benefits together for a total of $13,125

Question 50

Hasani died December 31, 2023, at age 50 leaving his wife Jamille (age 49) and 4 children ages 4, 7, 15 and 17. His PIA is $2,500 per month. How many of these family members are entitled to receive his benefits (assuming direct deposits) in 2024?

A. 2
B. 3
C. 4
D. 5

Answer 50

Solution: The correct answer is D.

1 for her and 4 to her for the benefit of each child.

Question 51

Hasani died December 31, 2023, at age 50 leaving his wife Jamille, age 49, and 4 children ages 4, 7, 15 and 17. His PIA is $2,500 per month.
If Jamille goes back to work in 2024 and makes $100,000, how much approximately will she receive for the care of the children (ignoring family maximums)?

A. $3,500
B. $5,625
C. $6,000
D. $7,500

Answer 51

Solution: The correct answer is B.

Jamille will receive a benefit for each child she cares for under age 16. Each child under age 18 (19 if in secondary school - ie high school) will also receive a benefit directly.

For the care of the children, Jamille will receive 75% of Hasani’s calculated PIA.

2,500 x 75% = 1,875 for each of the three children under 16 = $5,625

Question 52

All of the following statements concerning the Social Security system are correct except:

A. If a worker receives retirement benefits based on his or her own earnings record, the worker’s retirement benefits will continue whether married or divorced.

B. Widows and widowers, whether divorced or not, will continue to receive survivors benefits upon remarriage if the widow or widower is age 60 or older.

C. By providing the name of a country or countries to be visited and the expected departure and return dates, the Social Security Administration will send special reporting instructions to the beneficiaries and arrange for delivery of checks while abroad.

D. A special one-time payment of $1,050 may be made to a deceased worker’s spouse or minor children upon death.

Answer 52

Solution: The correct answer is D.

A special one-time payment of $255 may be made to a deceased worker’s spouse or minor children upon death.

Question 53

Joyce and Melvin have been married for 30 years. In the current year, they received $22,000 of Social Security benefits and had $12,000 of interest income.
What portion of the Social Security benefit is taxable?

A. $0
B. $6,000
C. $10,200
D. $11,500

Answer 53

For purposes of Social Security, MAGI is equal to the taxpayer’s adjusted gross income plus tax exempt interest. The couples MAGI is $22,000 + $12,000 = $34,000. Use the following for amounts above the 1st hurdle and below the 2nd hurdle:

The lesser of:

50% of $22,000 = $11,000

or

0.5 [$12,000 + 0.5 ($22,000) - $32,000] < 0

Since the answer calculated is less than $0, none of the Social Security benefits received by Joyce and Melvin are taxable.

Question 54

Joe’s full retirement age is 67. He is considering retiring early, at age 62. How much will his retirement benefit be reduced by, if he elects to receive social security retirement benefits at age 62?

A. 10%
B. 20%
C. 30%
D. 50%

Answer 54

Solution: The correct answer is C.

5/9 × 36 = 20%

5/12 × 24 = 10%

20% + 10% = 30%