Tax Considerations for Accident and Health: A - E

Question 1

__________ of insurance benefits is often determined by whether or not thepremiums were taxed

Answer 1

Taxation

Question 2

______________ on personally owned disability income policies are nondeductible
by the individual.

Answer 2

Premium payments

Question 3

Premium payments on personally owned disability income policies are ____________
by the individual.

Answer 3

nondeductible

Question 4

With personally owned Health Insurance, disability income benefits are received_________ by the individual.

Answer 4

income tax free

Question 5

In medical expense insurance policies, unreimbursed medical expenses paid for the insured, the insured’s spouse and dependents may be claimed as _________ if the expenses exceed a certain percentage of the insured’s adjusted gross income.

Answer 5

deductions

Question 6

The law permits deductions for unreimbursed expenses in excess of 10%of the adjusted gross income (AGI). However, if either the insured or the insured’s spouse was born before ________, they may continue to deduct total medical expenses that exceed 7.5% of their adjusted gross income.

Answer 6

January 2, 1952

Question 7

Premiums paid by the employer for disability income insurance for its employees are deductible as a business expense and are_________ as taxable income to the employee.

Answer 7

not considered

Question 8

Benefits received by an employee that are attributable to employer contributions are _______ to the employee as income.

Answer 8

fully taxable

Question 9

When the employer and employee share in disability insurance premium contributions, the employee’s contribution is _________

Answer 9

not deductible

Question 10

benefits received by the employee that are attributable to his or her portion of the contribution are ________ as income. The taxation of income received by the employee would depend on the type of a group plan:

Answer 10

not taxable

Question 11

_________ The employer pays the entire cost of the disability insurance premium, so the income benefi ts are included in the employee’s gross income and taxed as ordinary income

Answer 11

Noncontributory

Question 12

____________ The employee pays the entire cost of the disability insurance premium, so the income benefits are received income tax-free by the employee.

Answer 12

Fully contributory

Question 13

_______ The cost of disability insurance is paid partially by the employer and partially by the employee. The portion paid by the employee is received income tax-free and the portion paid by the employer is included in the employee’s gross income and taxed as ordinary income.

Answer 13

Partially contributory

Question 14

________ group plans usually have a benefit period of less than 2years. It is common in this type of disability income plans to place a maximum dollar amount on the benefit that will be provided regardless of earnings, and to have an elimination period (except for disability resulting from accidents).

Answer 14

Short-term disability (STD)

Question 15

_______ group plans usually pay benefits for 2 years or longer.

Answer 15

Long-term disability (LTD)

Question 16

Benefits paid to disabled employees that are attributable to the _________ are subject to Federal Insurance Contributions Act (FICA)withholding for Social Security purposes.

Answer 16

employer contribution

Question 17

Any portion of the ___________ by the employer will be considered taxable income to the employee.

Answer 17

benefit paid for and deducted