Today s Cafeteria Plans. Course #5550G/QAS5550G Exam Packet

Transcription

1 Today s Cafeteria Plans Course #5550G/QAS5550G Exam Packet

2 TODAY S CAFETERIA PLANS (COURSE #5550G/QAS5550G) COURSE DESCRIPTION Cafeteria plans are unique vehicles through which employers have been able to offer attractive packages of nontaxable (and taxable) benefits to employees while realizing significant cost savings. This course explains the rules governing the evolving, and increasingly popular health plans, such as Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs). It covers cafeteria plans and the other plans from their implementation to their administration in accordance with IRS regulations. Uses material entitled Today s Cafeteria Plans. No prerequisites. Course level: Basic. Course #5550G/QAS5550G 10 CPE hours. LEARNING ASSIGNMENTS and OBJECTIVES As a result of studying each assignment, you should be able to meet the objectives listed below each individual assignment ASSIGNMENT SUBJECT 1 Introduction to Cafeteria Plans Qualified Benefits and Individuals Elections and Changes to Cafeteria Plans Study the course materials from pages 1-1 to 3-22 Complete the review questions at the end of each chapter Answer the final exam questions 1 to 20 Objectives: To identify the features of cafeteria plans, including their advantages and disadvantages To list which benefits and individuals are qualified under the Internal Revenue Code To describe the requirements for election to and changes to cafeteria plans Exam Page -1

3 ASSIGNMENT SUBJECT 2 Introduction to Health Spending Accounts Health Savings Accounts Study the course materials from pages 4-1 to 5-61 Complete the review questions at the end of each chapter Answer the final exam questions 21 to 35 Objectives: To describe the options that exist for employers to provide for the payment of health care expenses To explain the features of a health savings account (HSA) and the associated eligibility requirements ASSIGNMENT SUBJECT 3 Health Reimbursement Arrangements Flexible Spending Accounts Medical Savings Accounts Health Coverage Tax Credit Study the course materials from pages 6-1 to 9-6 Complete the review questions at the end of each chapter Answer the final exam questions 36 to 50 Objectives: To list the features of a health reimbursement arrangement (HRA), including which expenses are covered To explain how the flexible spending account can be used to reimburse medical expenses To identify the features of an Archer Medical Savings Account (MSA), including the limits that can be contributed To describe who qualifies for the health coverage tax credit Exam Page -2

4 ASSIGNMENT 4 Complete the Answer Sheet and Course Evaluation and mail to PES for credit NOTICE This course and test have been adapted from materials and information contained in the text entitled Today s Cafeteria Plans and any supplemental material provided. This course is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice and assumes no liability whatsoever in connection with its use. Since laws are constantly changing, and are subject to differing interpretations, we urge you to do additional research and consult appropriate experts before relying on the information contained in this course to render professional advice. Professional Education Services, LP 2012 Program publication date: 01/20/12 Exam Page -3

5 TODAY S CAFETERIA PLANS (COURSE #5550G/QAS5550G) EXAM OUTLINE COURSE EXPIRATION DATE: Per AICPA and NASBA standards, this course must be completed within one year from the date of purchase. TEST FORMAT: The following final exam, consisting of 50 true/false and/or multiple choice questions, is based specifically on the material included in this course. The answer sheet must be completed and returned to PES for CPE certification. You will find the answer sheet at the back of this exam packet so that you may easily remove it and use it while taking your test. LICENSE RENEWAL INFORMATION: The Today s Cafeteria Plans course (#5550G/QAS5550G) qualifies for 10 CPE hours. PROCESSING: Your exam will be graded promptly. You must score 70% or better to pass. When you pass, your certificate of completion will be mailed. If you do not pass, we will give you a courtesy call to inform you of this and then another answer sheet will be sent to you free of charge. GRADING OPTIONS: Please choose only one of the following. There is no additional charge for any of these grading options. Make sure to fill out your answer sheet completely prior to submitting it. ONLINE GRADING Visit our website at Login to your account (if you are a first-time user you must set up a new user account). Go to the MY CPE tab and click the My CPE Exams in Progress folder. If your exam is not already located in this folder, click Add Exam Previously Purchased and follow the instructions. MAIL Your exam will be graded and your certificate of completion mailed to you the same day we receive it. Your certificate will be dated according to the postmark date; therefore, you do not need to overnight your exam. Please mail your answer sheet to: Professional Education Services, LP 4208 Douglas Blvd., Ste 50 Granite Bay, CA FAX Your exam will be graded and you will be contacted either via phone or fax with your results within 4 business hours of receipt. A copy of your graded exam and certificate of completion will be mailed to you the same day we receive it. Your certificate will be dated according to the fax date. If you choose to fax your exam, please do not mail it. Your fax will serve as the original. Please refer to the attached answer sheet for further instructions on fax grading. Fax number (916) Thank you for using Professional Education Services. We appreciate your business!! Exam Page -4

6 TODAY S CAFETERIA PLANS (COURSE #5550G/QAS5550G) FINAL EXAM The following questions are either true or false and/or multiple choice. Please indicate your choice on the enclosed Answer Sheet. 1. A cafeteria plan allows participating employees to choose between receiving at least one qualified benefit and: a) a defined benefit plan b) cash c) contributions to a retirement plan 2. Which of the following is a qualified benefit that may be offered as part of a cafeteria plan: a) accident and health insurance b) group-term life insurance up to $50,000 c) 401(k) contributions 3. Employee contributions to the cafeteria plan are usually made by: a) not providing employees with periodic raises b) payments made by the employee into the cafeteria plan c) salary reduction agreements between the employer and the employee 4. One of the key benefits to employers achieved by offering a cafeteria plan is: a) savings on payroll taxes b) a happier workforce c) less union organizing activity d) fewer IRS payroll audits 5. A cafeteria plan must contain which of the following elements: a) specific description of each benefit available under the plan and the period of coverage b) the rules governing which employees are eligible to participate in the plan c) the procedures for making elections under the plan, including when elections may be made 6. A cafeteria plan may offer coverage under a group-term life insurance plan of up to: a) $10,000 b) $50,000 c) $100,000 d) $500, A cafeteria plan may not include which of the following benefits: a) athletic facilities b) educational assistance c) employee discounts 8. The annual amount of a benefit for dependent care assistance in a cafeteria plan cannot exceed: a) $5,000 b) $10,000 c) $25,000 d) $50, A cafeteria plan may include payment for expenses for medical care not covered by insurance including: a) co-insurance payments b) dental services c) eye exams 10. Which of the following persons are generally not eligible for participation in a cafeteria plan: a) current common-law employees b) owners of more than two percent of the stock in an S corporation c) full-time life insurance agents who are current statutory employees d) certain leased employees who provide services on a substantially full-time basis Exam Page -5

7 11. If a cafeteria plan favors key employees : a) all participating employees are subject to increased withholding b) an employer must include in their wages the value of taxable benefits they could have selected from the cafeteria plan c) the cafeteria plan is illegal under federal law d) the employer is subject to criminal penalties 12. A cafeteria plan generally cannot provide for deferred compensation other than a: a) SIMPLE or SEP b) whole life insurance group plan c) 401(k) plan 13. Under a 2005 IRS ruling, participants in a cafeteria plan will receive an additional grace period of what length in which to incur and reimburse eligible expenses from the prior year s remaining unused benefits: a) two-and-a-half months b) four months c) six months 14. Which of the following statements about the impact of state law on cafeteria plans is correct: a) most states apply a tax on cafeteria plan benefits even if not subject to federal tax b) roughly half the states apply a tax on cafeteria plan benefits to employees with annual income in excess of $100,000 c) most states follow federal law in their tax treatment of qualified benefits d) both a and b above 15. In order to be treated as non-discriminatory for a plan year, federal law provides that a cafeteria plan must: a) not discriminate in favor of male employees b) not discriminate in favor of Caucasian employees c) not discriminate in favor of highly compensated participants 16. Generally, a cafeteria plan may not permit participants to elect their benefit coverage, benefit reimbursement, or salary reduction for less than: a) six months b) 12 months c) 18 months d) 24 months 17. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) generally requires: a) group health plans to permit individuals to be enrolled for coverage following the loss of other coverage b) companies with at least 20 employees to offer group health insurance c) insurance companies to offer coverage to everyone regardless of health conditions 18. A change in status sufficient to allow a cafeteria plan participant to change his or her elections includes which of the following: a) a change in legal marital status b) a change in the number of dependents c) a change in employment status 19. Which of the following statements is true about an employee s right to revoke coverage or cease payment of his or her share of group health plan premiums while taking unpaid FMLA: a) an employer must either allow an employee on unpaid FMLA leave to revoke coverage, or continue coverage but allow the employee to discontinue payment of his or her share of the premium for group health plan coverage b) the FMLA has no impact on cafeteria plans c) an employer is not required to maintain the employee s health insurance when they are on unpaid FMLA leave Exam Page -6

8 20. When an employee is on an FMLA leave, the employer is: a) required to maintain the employee s non-health benefits b) not required to maintain the employee s nonhealth benefits c) required to maintain the employee s non-health benefits for key employees only d) required to maintain the employee s non-health benefits as mandated by state law 21. For 2011, what is the statutory limit on the amount of money that can be contributed to health care flexible spending accounts: a) $2,000 annually b) $5,000 annually c) $10,000 annually d) there is no statutory limit 22. Medical savings accounts are savings accounts used to pay for: a) medical expenses of family members not covered by insurance b) unreimbursed health care expenses c) emergency medical care 23. Funds in a medical savings account are controlled by: a) a government trustee b) the participant s employer c) the account holder d) either a or c above 24. Health reimbursement accounts consist of funds: a) set aside by individuals to pay for unreimbursed medical expenses b) set aside by employers and employees to pay for catastrophic medical expenses c) set aside by employers to reimburse employees for qualified medical expenses d) set aside by employers to reimburse employees for non-qualified medical expenses 25. What type of companies are eligible for health reimbursement arrangements: a) companies with fewer than 25 employees b) companies with fewer than 100 employees c) companies without group health coverage d) companies of all sizes 26. Which of the following groups is eligible to be a trustee of a health savings account: a) a bank b) an insurance company c) anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRA) or an Archer Medical Savings Account 27. Which of the following is not one of the benefits of a health savings account: a) individuals can claim a tax deduction for contributions they, or someone other than their employer, make to an HSA even if the individual does not itemize their deductions on Form 1040 b) there are no eligibility requirements c) contributions to an HSA made by an individual s employer (including contributions made through a cafeteria plan) may be excluded from the individual s gross income d) the contributions remain in an individual s account from year to year until they are used 28. To be eligible for a health savings account, an individual must be covered by: a) any employer-provided group health insurance plan b) Medicare c) a High Deductible Health Plan (HDHP) Exam Page -7

9 29. In order to qualify for a health savings account, an individual s minimum deductible for his or her High Deductible Health Plan for 2012 must be at least: a) $1,200 b) $2,350 c) $5,800 d) $11, Contributions to a health savings account: a) can take any form, including stocks or other securities b) can be made only by the account holder, regardless of the circumstances c) can only be made in cash d) both b and c above 31. The maximum an individual (under age 55) can contribute to a health savings account for single coverage in 2012 is: a) $1,200 b) $3,100 c) $5,950 d) $11, Which of the following statements regarding the tax benefits of a health savings account is correct: a) participants who make contributions are entitled to take an above-the-line deduction b) individuals do not have to itemize their deductions to receive a benefit from the contributions c) only the owner of the account is entitled to a tax benefit, even if a third party makes a contribution to the account 33. Funds in a health savings account can be used to pay for: a) qualified medical expenses which are covered by the individual s high deductible health plan b) any medical expense, whether it is covered by a health plan or not c) qualified medical expenses even if the expense is not covered by the individual s high deductible health plan d) any expense which the individual s doctor deems medically necessary 34. Which of the following are automatically qualified to handle health savings accounts: a) banks b) credit unions c) brokerage firms d) either a or b above 35. Which of the following statements about the tax implications of contributions to a health savings account is not correct: a) employee contributions can be made only on a pre-tax basis b) employee contributions can be made on either an after-tax or a pre-tax basis c) employee contributions made on an aftertax basis should be counted as an abovethe-line deduction on the employee s tax return d) amounts an employer contributes to their employees HSAs are generally not subject to employment taxes 36. A health reimbursement account (HRA) is: a) a savings plan for individuals without group health insurance b) a savings plan for Medicare patients only c) an IRS-approved tax-favored benefit that reimburses employees for qualified medical care expenses not reimbursed by an employer s health plan 37. Which of the following statements about which expenses are reimbursable by a health reimbursement account is correct: a) not all services rendered are reimbursable under a health reimbursement account b) all services provided by a medical practitioner are reimbursable under a health reimbursement account c) reimbursable expenses are detailed in an employer s plan d) both a and c above Exam Page -8

10 38. A health reimbursement account (HRA) is an arrangement that: a) is paid for solely by the employer and not provided pursuant to salary reduction election or otherwise under a 125 cafeteria plan b) reimburses the employee for medical care expenses incurred by the employee and the employee s spouse or dependents c) provides reimbursements up to a maximum dollar amount for a coverage period 39. Health flexible spending accounts (FSA) are usually funded through which of the following: a) voluntary salary reduction agreements with an employer b) contributions made by the employer c) a combination of a and b above 40. The benefits of a health flexible spending account (FSA) include which of the following: a) contributions made by a participant s employer can be excluded from his or her gross income b) no employment or federal income taxes are deducted from the contributions c) withdrawals may be tax free if they are used to pay qualified medical expenses 41. Contributions made to a health flexible spending account (FSA) which are not spent at the end of the plan year including the allowable grace period: a) are automatically rolled into future years b) are forfeited c) can be used during any portion of the following year d) are forfeited if the employee is no longer employed at the end of the plan year 42. Distributions from a health flexible spending account: a) must be paid only to reimburse a participant for qualified medical expenses they incurred during the period of coverage b) can be used to cover the cost of any medical treatment not covered by the individual s insurance c) can always be used to cover expenses incurred by any direct family member 43. For purposes of a health flexible spending account (FSA), which of the following is not a qualified medical expense: a) most cosmetic surgeries b) health club dues c) nutritional supplements 44. Effective January 1, 2011, the cost of which of the following generally cannot be reimbursed from a health MSA: a) prescription medications b) insulin c) non-prescription over-the-counter medications d) eye glasses 45. Medical savings accounts (MSA) are used primarily to: a) pay for the account holder s education b) pay for medical school c) pay for qualified medical expenses 46. Earnings in a medical savings account: a) are subject to federal but not state income tax in the year earned b) are subject to state but not federal income tax c) are subject to tax when withdrawn d) grow on a tax-deferred basis Exam Page -9

11 47. Archer MSAs were created to help which of the following: a) self-employed individuals and employees of certain small employers to meet medical care costs b) persons interested in studying medicine to go to medical school c) persons on Medicare to offset the cost of prescription drugs d) persons who recently lost health insurance and have catastrophic health conditions 48. To qualify for a medical savings account (MSA), an individual must be which of the following: a) self-employed and maintain a qualified high deductible health plan (HDHP) b) an employee of a qualified small business that maintains a qualified high deductible health plan (HDHP) c) a qualified small business owner with a qualified high deductible health plan (HDHP) 50. Which of the following statements about contribution rules for medical savings accounts (MSAs) is false: a) employers may make contributions to their employees Archer MSA b) an individual who is self-employed may make contributions to his or her own Archer MSA c) both an employer and an employee may make contributions to an Archer MSA in the same year d) contributions to an Archer MSA do not need to be made every year Congratulations - You ve completed the exam! 49. For purposes of qualifying for a medical savings account (MSA), a small employer is: a) generally an employer who had an average of 25 or fewer employees during either of the last two calendar years b) generally an employer who had an average of 50 or fewer employees during either of the last two calendar years c) generally an employer who had an average of 75 or fewer employees during either of the last two calendar years d) generally an employer who had an average of 150 or fewer employees during either of the last two calendar years Exam Page -10

12 TODAY S CAFETERIA PLANS #5550G/QAS5550G (10 CPE hours) ANSWER SHEET (01/12) Important Note: For certification, this answer sheet must be completed and submitted to PES for grading within one year from the date of purchase. Please use black ink and print for quicker processing thank you. Name (as it appears on your license) Address City State Zip Home Work Daytime Phone ( ) address (for online grading) License Number State Expiration Date CPA, CFP, EA (circle one) PTIN Number (if applicable) If course was ordered by another party, please indicate name here: GRADING OPTIONS Please choose only ONE of the following: ONLINE GRADING Visit our website at o Login to your account (if you are a first-time user, you must set up a new user account). o Go to the MY CPE tab and click the My CPE Exams in Progress folder. o If your exam is not already located in this folder, click Add Exam Previously Purchased and follow the instructions. Mail Mail your exam to: PES, 4208 Douglas Blvd., Ste 50, Granite Bay, CA Fax Fax your exam to (916) and choose one of the following options: Please: mail my results only or fax phone my results to: ( ) PLEASE INDICATE YOUR ANSWER BY FILLING IN THE APPROPRIATE CIRCLE A B C D A B C D A B C D 1. O O O O 21. O O O O 41. O O O O 2. O O O O 22. O O O O 42. O O O O 3. O O O O 23. O O O O 43. O O O O 4. O O O O 24. O O O O 44. O O O O 5. O O O O 25. O O O O 45. O O O O 6. O O O O 26. O O O O 46. O O O O 7. O O O O 27. O O O O 47. O O O O 8. O O O O 28. O O O O 48. O O O O 9. O O O O 29. O O O O 49. O O O O 10. O O O O 30. O O O O 50. O O O O 11. O O O O 31. O O O O 12. O O O O 32. O O O O 13. O O O O 33. O O O O 14. O O O O 34. O O O O 15. O O O O 35. O O O O 16. O O O O 36. O O O O 17. O O O O 37. O O O O 18. O O O O 38. O O O O 19. O O O O 39. O O O O 20. O O O O 40. O O O O Please complete the attached course evaluation your opinion is extremely valuable. Exam Page -11

13 Today s Cafeteria Plans #5550G/QAS5550G - Course Evaluation Rate on a scale of 1-10 with 1 being poor and 10 being excellent. 1. The course met the course objectives described in the promotional material. 2. The course was up to date, held my interest, was timely, and effective. 3. The course materials were understandable, valuable, and suitable for a correspondence course. 4. The amount of advance knowledge and stated prerequisites were appropriate. 5. The completion time was appropriate for the number of credits allowed. 6. The course met my professional education needs. Please answer the following questions mark/rate any and all that may apply 1. How would you rate PES s order desk customer service 2. What can PES do to keep you as a valued customer? 3. Any other comments regarding this course or our company would be appreciated. 4. What other courses/subjects would you like to see PES offer in the future? Mail to: Professional Education Services, LP 4208 Douglas Blvd., Ste 50, Granite Bay, CA Exam Page -12