EMPLOYEE BENEFITS CERTIFICATION
GBA 3 Practice Exam |100 Questions| With Correct
Solutions!! 2026/2027
A+
Complete Blueprint Coverage
A+ 5 100%
QUESTIONS VERIFIED CORE DOMAINS COVERED RATIONALES INCLUDED
CATEGORIES
ERISA Regulatory Framework
Benefits Industry and Plan Design
Health and Welfare Benefits
Plan Documentation, Compliance and Reporting
Cybersecurity, Privacy and Plan Audits
STUVIAACTUALEXAM
, ERISA REGULATORY FRAMEWORK
Q1
A mid-sized manufacturing firm begins paying 50% of the premium for a group medical policy covering all
full-time employees and their dependents. No formal written plan document exists, yet employees receive
summary brochures and the employer handles enrollment. Under ERISA, a court is most likely to find that
an employee welfare benefit plan has been established because:
A. Any employer contribution toward medical premiums automatically creates a formal ERISA plan
regardless of other factors
B. A reasonable employee could ascertain the intended benefits, class of beneficiaries, source of financing,
and procedure for obtaining benefits from the surrounding circumstances
C. The presence of an insurance policy alone satisfies the statutory definition of a plan, fund, or program
D. ERISA requires a written instrument only for pension plans, so welfare plans need no documentation to
be recognized
Correct Answer: B
Rationale:
Courts apply a facts-and-circumstances test: an ERISA plan exists if a reasonable person can determine the benefits,
beneficiaries, funding source, and claims procedure. Mere premium contribution or an insurance policy is not
dispositive by itself, and ERISA does require a written instrument for welfare plans once a plan is found to exist.
Q2
An employer maintains a program that reimburses employees for the cost of eyeglasses up to $200 per
year and pays the reimbursements from general corporate assets. The program covers only active
employees and has no separate trust. Which statement best describes the ERISA status of this
arrangement?
A. It is excluded from ERISA because it is a payroll practice of limited value
B. It is an ERISA welfare plan because it provides a listed medical benefit through employer assets
C. It is exempt from ERISA reporting because the annual benefit is under $250
D. It is treated as a cafeteria plan and therefore falls outside Title I of ERISA
Correct Answer: B
Rationale:
Vision care is a medical benefit listed in ERISA section 3(1). Paying the benefit from general assets still constitutes a
plan funded by the employer; the payroll-practice safe harbor is limited to unfunded vacation, holiday, or similar
payments of normal compensation, not medical reimbursements.
,GBA 3 Practice Exam |100 Questions| With Correct Solutions!! 2026/2027 High-Yield Study Guide
ERISA REGULATORY FRAMEWORK
Q3
A plan sponsor discovers that its group life insurance plan covers part-time employees who work fewer
than 20 hours per week, contrary to the written plan document that restricts eligibility to full-time
employees. Under ERISA fiduciary standards, the plan administrator's first obligation is to:
A. Immediately terminate coverage for the part-time employees to match the written document
B. Follow the terms of the plan document unless those terms are inconsistent with ERISA
C. Amend the document retroactively to include the part-time employees already covered
D. Seek a Department of Labor advisory opinion before taking any action
Correct Answer: B
Rationale:
ERISA section 404(a)(1)(D) requires fiduciaries to administer the plan in accordance with its written terms insofar as
those terms are consistent with the statute. The administrator must therefore follow the existing eligibility language
while considering a prospective amendment if broader coverage is desired.
Q4
An employer that sponsors a self-funded medical plan with stop-loss coverage receives a claim for a $1.2
million hospital stay. The stop-loss attachment point is $750,000. The plan document states that benefits
are payable only to the extent the stop-loss carrier reimburses the plan. Which ERISA principle is most
directly implicated by this language?
A. The exclusive-benefit rule requiring that plan assets be used solely for participants
B. The requirement that a plan's claims procedure provide a full and fair review
C. The prohibition against a plan document making benefit payments contingent on the availability of
stop-loss reimbursement
D. The fiduciary duty to diversify plan investments
Correct Answer: C
Rationale:
DOL and case law treat stop-loss as a plan asset protection mechanism, not a condition of participant benefits. A plan
provision that conditions payment on stop-loss recovery improperly shifts the risk of non-reimbursement onto
participants and violates ERISA's requirement that benefits be determined under the plan's terms without external
contingencies of this type.
, GBA 3 Practice Exam |100 Questions| With Correct Solutions!! 2026/2027 High-Yield Study Guide
ERISA REGULATORY FRAMEWORK
Q5
A multiemployer health plan's board of trustees consists of an equal number of employer and union
representatives. One employer trustee also owns a third-party claims administrator that the plan has used
for ten years. Before renewing the TPA contract, the board must:
A. Obtain an independent appraisal of the TPA's fees and document that the arrangement is no less
favorable than arm's-length terms
B. Automatically disqualify the employer trustee from any vote on the renewal
C. File a Form 5500 prohibited-transaction exemption request with the DOL
D. Convert the arrangement to a fixed-fee contract to avoid any conflict
Correct Answer: A
Rationale:
The transaction is a potential prohibited transaction under ERISA section 406 because of the trustee's ownership
interest. The statutory and class exemptions (and prudent process) require that the plan pay no more than reasonable
compensation and that the decision be made with documented due diligence showing the arrangement is at least as
favorable as an arm's-length deal.
Q6
An employee who has been covered under a group long-term disability plan for four years becomes
disabled and begins receiving benefits. Eighteen months later the carrier discovers that the employee
failed to disclose a pre-existing back condition on the original enrollment form. The plan's contestability
clause allows rescission only within the first two years of coverage. The carrier's ability to terminate
benefits is best described as:
A. Permitted because material misrepresentation voids the contract ab initio regardless of time limits
B. Barred by the contestability period that has already expired under the plan terms and state law principles
incorporated by ERISA
C. Allowed only if the plan obtains a court order finding intentional fraud
D. Controlled exclusively by the insurer's underwriting manual rather than the plan document
Correct Answer: B
Rationale:
Once the contestability period has run, the insurer (and the plan) generally cannot rescind coverage for misstatements
short of fraud proven under applicable standards. ERISA requires the plan to follow its own written terms; the expired
contestability window therefore protects the participant.
GBA 3 Practice Exam |100 Questions| With Correct
Solutions!! 2026/2027
A+
Complete Blueprint Coverage
A+ 5 100%
QUESTIONS VERIFIED CORE DOMAINS COVERED RATIONALES INCLUDED
CATEGORIES
ERISA Regulatory Framework
Benefits Industry and Plan Design
Health and Welfare Benefits
Plan Documentation, Compliance and Reporting
Cybersecurity, Privacy and Plan Audits
STUVIAACTUALEXAM
, ERISA REGULATORY FRAMEWORK
Q1
A mid-sized manufacturing firm begins paying 50% of the premium for a group medical policy covering all
full-time employees and their dependents. No formal written plan document exists, yet employees receive
summary brochures and the employer handles enrollment. Under ERISA, a court is most likely to find that
an employee welfare benefit plan has been established because:
A. Any employer contribution toward medical premiums automatically creates a formal ERISA plan
regardless of other factors
B. A reasonable employee could ascertain the intended benefits, class of beneficiaries, source of financing,
and procedure for obtaining benefits from the surrounding circumstances
C. The presence of an insurance policy alone satisfies the statutory definition of a plan, fund, or program
D. ERISA requires a written instrument only for pension plans, so welfare plans need no documentation to
be recognized
Correct Answer: B
Rationale:
Courts apply a facts-and-circumstances test: an ERISA plan exists if a reasonable person can determine the benefits,
beneficiaries, funding source, and claims procedure. Mere premium contribution or an insurance policy is not
dispositive by itself, and ERISA does require a written instrument for welfare plans once a plan is found to exist.
Q2
An employer maintains a program that reimburses employees for the cost of eyeglasses up to $200 per
year and pays the reimbursements from general corporate assets. The program covers only active
employees and has no separate trust. Which statement best describes the ERISA status of this
arrangement?
A. It is excluded from ERISA because it is a payroll practice of limited value
B. It is an ERISA welfare plan because it provides a listed medical benefit through employer assets
C. It is exempt from ERISA reporting because the annual benefit is under $250
D. It is treated as a cafeteria plan and therefore falls outside Title I of ERISA
Correct Answer: B
Rationale:
Vision care is a medical benefit listed in ERISA section 3(1). Paying the benefit from general assets still constitutes a
plan funded by the employer; the payroll-practice safe harbor is limited to unfunded vacation, holiday, or similar
payments of normal compensation, not medical reimbursements.
,GBA 3 Practice Exam |100 Questions| With Correct Solutions!! 2026/2027 High-Yield Study Guide
ERISA REGULATORY FRAMEWORK
Q3
A plan sponsor discovers that its group life insurance plan covers part-time employees who work fewer
than 20 hours per week, contrary to the written plan document that restricts eligibility to full-time
employees. Under ERISA fiduciary standards, the plan administrator's first obligation is to:
A. Immediately terminate coverage for the part-time employees to match the written document
B. Follow the terms of the plan document unless those terms are inconsistent with ERISA
C. Amend the document retroactively to include the part-time employees already covered
D. Seek a Department of Labor advisory opinion before taking any action
Correct Answer: B
Rationale:
ERISA section 404(a)(1)(D) requires fiduciaries to administer the plan in accordance with its written terms insofar as
those terms are consistent with the statute. The administrator must therefore follow the existing eligibility language
while considering a prospective amendment if broader coverage is desired.
Q4
An employer that sponsors a self-funded medical plan with stop-loss coverage receives a claim for a $1.2
million hospital stay. The stop-loss attachment point is $750,000. The plan document states that benefits
are payable only to the extent the stop-loss carrier reimburses the plan. Which ERISA principle is most
directly implicated by this language?
A. The exclusive-benefit rule requiring that plan assets be used solely for participants
B. The requirement that a plan's claims procedure provide a full and fair review
C. The prohibition against a plan document making benefit payments contingent on the availability of
stop-loss reimbursement
D. The fiduciary duty to diversify plan investments
Correct Answer: C
Rationale:
DOL and case law treat stop-loss as a plan asset protection mechanism, not a condition of participant benefits. A plan
provision that conditions payment on stop-loss recovery improperly shifts the risk of non-reimbursement onto
participants and violates ERISA's requirement that benefits be determined under the plan's terms without external
contingencies of this type.
, GBA 3 Practice Exam |100 Questions| With Correct Solutions!! 2026/2027 High-Yield Study Guide
ERISA REGULATORY FRAMEWORK
Q5
A multiemployer health plan's board of trustees consists of an equal number of employer and union
representatives. One employer trustee also owns a third-party claims administrator that the plan has used
for ten years. Before renewing the TPA contract, the board must:
A. Obtain an independent appraisal of the TPA's fees and document that the arrangement is no less
favorable than arm's-length terms
B. Automatically disqualify the employer trustee from any vote on the renewal
C. File a Form 5500 prohibited-transaction exemption request with the DOL
D. Convert the arrangement to a fixed-fee contract to avoid any conflict
Correct Answer: A
Rationale:
The transaction is a potential prohibited transaction under ERISA section 406 because of the trustee's ownership
interest. The statutory and class exemptions (and prudent process) require that the plan pay no more than reasonable
compensation and that the decision be made with documented due diligence showing the arrangement is at least as
favorable as an arm's-length deal.
Q6
An employee who has been covered under a group long-term disability plan for four years becomes
disabled and begins receiving benefits. Eighteen months later the carrier discovers that the employee
failed to disclose a pre-existing back condition on the original enrollment form. The plan's contestability
clause allows rescission only within the first two years of coverage. The carrier's ability to terminate
benefits is best described as:
A. Permitted because material misrepresentation voids the contract ab initio regardless of time limits
B. Barred by the contestability period that has already expired under the plan terms and state law principles
incorporated by ERISA
C. Allowed only if the plan obtains a court order finding intentional fraud
D. Controlled exclusively by the insurer's underwriting manual rather than the plan document
Correct Answer: B
Rationale:
Once the contestability period has run, the insurer (and the plan) generally cannot rescind coverage for misstatements
short of fraud proven under applicable standards. ERISA requires the plan to follow its own written terms; the expired
contestability window therefore protects the participant.
