Final Exam. Number of questions: Prerequisite: Advance Preparation: Recommended study time: Subject classification:

Transcription

1 Final Exam Course name: Course number: Affordable Care Act Tax Provisions ( Tax Year) PWX0114 Number of questions: Prerequisite: Advance Preparation: Course level: Recommended CPE credit: Recommended study time: Review Final exam None None Overview 5 CPE hours 5 hours Course format: Course materials: Subject classification: Interactive self study CPE credit calculated as 100% of total study time (i.e. 50 minute hour) Affordable Care Act Tax Provisions PDF document Taxation Course last updated: January 27, 2015 Learning objectives: Instructions: To understand coverage-related provisions, tax credits available, the shared responsibility for certain large employers to provide employee health coverage, personal income tax changes affecting taxpayers and tax credits and tax penalties authorized under the PPACA.. This copy of the exam can be used to answer questions while offline. Please note that you will still need to enter your answers online by logging into the course system with your User ID and Password. Toll free: help@funcpe.com 38 Pleasant Bend Drive The Woodlands, Texas 77382

2 Exam Name: Affordable Care Act Tax Provisions --Final Exam 1) What is guaranteed under the Patient Protection and Affordable Care Act for female participants in health plans using a network of healthcare providers? A) Access to OB/GYN care without referral or authorization B) Free OB/GYN care when provided by a network healthcare provider C) Unlimited mammography D) Free reproductive cancer screenings 2) Wall Street Wizards, Inc., a large stock brokerage, has eliminated benefits for heart surgery from its grandfathered health plan but continues to provide for all other types of cardiac treatment. In what way does its elimination of such benefits affect its grandfathered health plan status? A) Since the elimination of a necessary element of a treatment is considered the elimination of the benefit, the plan will cease to be a grandfathered health plan B) As long as benefits for other alternative types of cardiac treatment are provided, the elimination of benefits for heart surgery does not affect the plan s grandfathered status C) The plan would continue to be a grandfathered health plan only with respect to new enrollees D) The plan would cease to be a grandfathered health plan only with respect to new enrollees 3) Which of the following is NOT required in the disclosure statement that grandfathered health plans must provide? A) Contact information concerning the individual to whom to direct comments or complaints about the plan B) A statement that the plan considers itself to be a grandfathered health plan C) A description of the benefits provided under the plan D) Information concerning how participants may choose to be covered under a nongrandfathered version of the plan 4) When must a grandfathered health plan distribute its required disclosure to plan participants? A) When distributing plan materials to participants and beneficiaries B) Annually C) Every two years D) Every five years 5) What PPACA provision applies to all group and individual health plans whether or not grandfathered? A) The patient protection provision B) The pre-existing condition exclusion provision C) The provision concerning the prohibition of annual benefit limits D) The provision related to rescission of health plan coverage 6) Ellen s group health plan does not provide gynecological coverage. When will it be required under the PPACA to provide coverage for it under the pre-existing condition exclusions prohibition? A) The first plan year on or after January 1, 2015 B) The first plan year on or after January 1, 2016 C) The first plan year on or after January 1, 2014 D) Never 7) What is the maximum lifetime benefit limit an insurer may impose for plan years beginning on and after January 1, 2014 with respect to non-essential health benefits under the PPACA? A) Lifetime benefit limits on non-essential health benefits are not prohibited under the Act B) No lifetime benefit limits may be imposed under the Act C) $250,000 D) $2.5 million Course PWX Page 2 of 7

3 8) Julie lied on her application for an individual health insurance policy to obtain the coverage. If her policy provides for a one year contestable period, what is the longest period following the effective date of the policy within which her insurer may rescind the policy for her misrepresentation of a material fact? A) Rescission is prohibited once the policy is issued B) No time period applies to permitted rescissions for fraud and misrepresentation of a material fact C) One year D) Six months 9) Which of the following protections for females enrolled in health plans utilizing a network of providers is required under the PPACA? A) Obstetrical and gynecological care must be provided B) Network plans must make a gynecologist available to be designated the primary care provider C) Access to OB/GYN care provided under the plan may be made without authorization or referral D) Cost sharing is prohibited when obtaining OB/GYN care 10) If a grandfathered group health plan it will lose its grandfathered health plan status. A) Reduces its contribution rate by 5% B) Increases its percentage cost-sharing requirement by 5% C) Increases its fixed amount cost-sharing D) Increases its fixed amount copayment 11) MegaMutual is permitted to vary individual health insurance coverage premiums based only on a proposed insured s A) health history B) gender C) age and tobacco use D) occupation and recreational activities 12) The PPACA requires all of the following EXCEPT A) Health plans cannot impose benefit limitations on out-of-network emergency services that are not imposed on in-network emergency services B) Health plans must provide benefits for emergency services C) Health plans are prohibited from imposing additional requirements on out-of-network emergency services that are not imposed on in-network emergency services D) Health plans are prohibited from requiring prior authorization for emergency services 13) Which of the following benefits must be provided under a catastrophic health plan without the need to first meet the deductible? A) Three primary care visits B) Emergency services C) Benefits for pre-existing conditions D) Laboratory services 14) What tax penalty applies to a health savings account distribution for other than payment of qualified medical expenses if no exception to the penalty applies? A) 10% B) 15% C) 20% D) 50% 15) Hank paid $1,000 for over-the-counter drugs for which he had obtained a prescription. What is the maximum amount he may withdraw from his health savings account to cover the costs of the drugs without the distribution being a nonqualified distribution? Course PWX Page 3 of 7

4 B) $500 C) $750 D) $1,000 16) Phyllis, age 70, took a $10,000 distribution from her health savings account to make a downpayment on a vacation home. What nonqualified distribution tax penalty would be imposed? B) $1,000 C) $1,500 D) $2,000 17) What is the maximum amount that may be contributed to an employer s flexible spending account for medical expenses in 2014? A) $10,000 B) $2,550 C) $5,000 D) No dollar limit applies to flexible spending account contributions for medical expenses. 18) Helen, age 45, has 2014 unreimbursed medical expenses totaling $20,000 and an adjusted gross income of $170,000. What is the amount of such medical expenses she can deduct? B) $7,250 C) $3,000 D) $20,000 19) Shirley files a single federal income tax return and has an earned income of $225,000. For what additional HI tax imposed on high earners, if any, is she liable? B) $225 C) $2,050 D) $2,250 20) Arthur, a single taxpayer, has a modified adjusted gross income in 2014 of $240,000. For what Medicare net investment income surtax would he be liable if his net investment income is $60,000? A) $760 B) $1,520 C) $2,280 D) $9,120 21) Joyce is age 30, unmarried with no dependents. Although her earnings for 2014 were substantial, she has chosen not to obtain health insurance coverage. If her earnings exceed the threshold for filing a tax return by $50,000, for what penalty for failure to maintain health insurance coverage would she be liable? B) $95 C) $325 D) $500 22) An individual is considered unable to afford health insurance coverage and exempt from PPACA penalties if the required contribution would exceed of household income. A) 2% B) 5% C) 8% D) 10% Course PWX Page 4 of 7

5 23) Howard s adjusted gross income is $50,000. What is his modified adjusted gross income (MAGI), for purposes of calculating his household income, if he received $6,000 in tax-exempt income, $5,000 in capital gains and $15,000 of Social Security income was excluded from his gross income? A) $55,000 B) $61,000 C) $71,000 D) $76,000 24) Tax credits are available to qualified individuals who are offered, but not enrolled in, employersponsored insurance to assist them in purchasing insurance if the self-only premium payable by the taxpayer exceeds of household income. A) 6.5% B) 8% C) 9.5% D) 11.5% 25) Phyllis, age 65, itemizes deductions on her federal income tax return. What would her medical expense deduction be in 2014 if her adjusted gross income was $50,000 and her total medical expenses were $9,000? A) $4,000 B) $5,250 C) $9,000 D) $0 26) Peter is married and files a joint tax return. If he has a modified adjusted gross income of $250,000, which included $10,000 in capital gains, $2,000 in interest earnings, $5,000 in royalties and a $6,000 traditional IRA distribution in 2014, what is the additional tax imposed under the PPACA on his net investment income? B) $646 C) $874 D) $1,900 27) What is a taxpayer s expected contribution towards payment of health insurance premiums, for purposes of the refundable tax credit under the PPACA, if the taxpayer s household income is 100% of the federal poverty level? A) 0% B) 2% C) 4% D) 9.5% 28) What is the threshold amount of undistributed net investment income retained by a non-grantor trust that will avoid the 3.8% net investment income tax in 2014? A) $12,150 B) $125,000 C) $200,000 D) $250,000 29) Phil s Pizza Shop, a small employer, is eligible to receive a nonrefundable $10,000 health insurance premium credit in 2014, but the employer has no income tax liability. What is the maximum period the credit may be carried forward? A) 20 years B) 5 years C) 2 years D) No maximum carry-forward period is prescribed Course PWX Page 5 of 7

6 30) Bob s Fish Fry, Inc., a for-profit organization, employed 12 full-time equivalent employees in What is the maximum health insurance premium credit for which it could be eligible? A) 50% B) 25% C) 35% D) 0% 31) The Children s Shelter, a non-profit organization, employs 10 full-time equivalent employees. What is the maximum health insurance premium credit for which it could be eligible in 2014? A) 50% B) 25% C) 35% D) 0% 32) Helen s Helpers, Inc., a house cleaning company, employs 10 full-time enrolled employees and its monthly group insurance premium rates are $400 for employee-only coverage and $1,000 for family coverage, what is the minimum monthly premium contribution the firm must make in order to qualify for the credit? A) $2,000 B) $4,000 C) $5,000 D) $10,000 33) Peter is the sole stockholder of a small employer and works 3,120 hours each year in the business. How many full-time equivalent employees does the business have, for purposes of the health insurance premium credit, if 5 employees each work 2,080 hours each year and 11 other employees each work 1,040 hours each year? A) 5 B) 10 C) 16 D) 17 34) A large employer hired a new employee it expected would work part-time. If it imposes an initial measurement period of 9 months during which it tracks the hours of such employees to determine if they qualify for health insurance coverage, what is the minimum stability period it may impose during which it provides health insurance coverage for new employees found to be full-time employees? A) 3 months B) 6 months C) 9 months D) 12 months 35) If a large employer who employs 100 full-time employees fails to offer health insurance coverage and two of the employees enroll in health insurance through a state exchange and receive a premium tax credit, the employer must pay a tax penalty figured on employees. A) 70 B) 100 C) 2 D) 30 36) Big Broker, Inc. employs 80 full-time individuals and does not offer them employer-sponsored health insurance coverage. In 2016, five of its full-time employees enrolled in health insurance through a state exchange and received a premium tax credit. For what monthly tax penalty, if any, is the company liable under the PPACA? B) $833 C) $8,333 D) $13,333 Course PWX Page 6 of 7

7 37) At what level of average annual wages (adjusted for inflation) is a small employer s health insurance premium credit eliminated? A) $50,000 B) $37,500 C) $25,000 D) $20,000 38) What is the maximum waiting period a large employer may impose before a full-time employee becomes eligible to enroll in employer-sponsored health insurance coverage? A) 30 days B) 45 days C) 60 days D) 90 days 39) What is the maximum penalty applicable to an employer who employs 45 full time equivalent employees in 2014 but does not sponsor a health insurance plan providing minimum essential coverage if 15 of its employees received a tax credit when enrolling in health insurance through an insurance exchange? B) $2,500 C) $5,000 D) $10,000 40) What is the maximum percentage of employer-paid health coverage premiums a tax-exempt employer may receive as a tax credit in 2014 under the PPACA? A) 50% B) 35% C) 25% D) 15% 41) An employer that employs 200 full time equivalent employees sponsors health insurance providing minimum essential coverage for which the monthly employee premium is $800. What is the maximum monthly premium an employee whose monthly household income is $3,400 can be required to pay for the coverage? B) $323 C) $475 D) $6,300 42) In order for an employer to benefit from the transition relief relative to form W-2 reporting of the cost of health plan coverage based on the number of Forms W-2 filed, the employer must have filed fewer than Forms W-2 in the previous year. A) 100 B) 250 C) 500 D) 1,500 43) An applicable large employer must provide a written statement to its full-time employees concerning the health plan coverage provided A) Whenever requested by a participating employee B) Upon initial participation and whenever the health plan coverage is changed C) Every 2 years D) Annually Course PWX Page 7 of 7