FPC Chapter 3.5
A company's cafeteria plan provides each employee with $200.00 per month to pay for chosen
benefits. After selecting benefits, one employee has $50.00 per month left and requests
payment of $50.00 per month. This $50.00 is:
A. nontaxable compensation.
B. taxable compensation for all federal taxes.
C. taxable compensation for social security and Medicare only.
D. taxable compensation for federal income tax only. - ANS-B. taxable compensation for all
federal taxes.
Qualified expenses under a Health Flexible Spending Arrangement incurred for
over-the-counter medicine or drugs (except insulin) require:
A. health plan approval.
B. employer approval.
C. a receipt.
D. a prescription. - ANS-D. a prescription.
***The definition of eligible medical expenses changed on January 1, 2011, limiting
over-the-counter medicine to prescribed medicines. Prescribed over-the-counter medicines are
eligible expenses when the prescription is submitted as part of the reimbursement request.***
An employee has contributed $300.00 YTD into a medical flexible spending account. In
November, the employee was terminated with $100.00 remaining in the account after all
qualified reimbursements had been made. When must the employer reimburse the employee's
$100.00?
A. With the final paycheck
B. Within 30 days after termination
C. When additional qualified medical expenses are submitted
D. By January 31 along with Form W-2 - ANS-C. When additional qualified medical expenses
are submitted
Which of the following statements is true regarding Sec. 125 plans?
A. Any benefits received in cash are not taxable.
B. The benefit options must include both cash and qualified nontaxable benefits.
C. At the end of the plan year, employees receive cash payments for remaining unreimbursed
amounts.
A company's cafeteria plan provides each employee with $200.00 per month to pay for chosen
benefits. After selecting benefits, one employee has $50.00 per month left and requests
payment of $50.00 per month. This $50.00 is:
A. nontaxable compensation.
B. taxable compensation for all federal taxes.
C. taxable compensation for social security and Medicare only.
D. taxable compensation for federal income tax only. - ANS-B. taxable compensation for all
federal taxes.
Qualified expenses under a Health Flexible Spending Arrangement incurred for
over-the-counter medicine or drugs (except insulin) require:
A. health plan approval.
B. employer approval.
C. a receipt.
D. a prescription. - ANS-D. a prescription.
***The definition of eligible medical expenses changed on January 1, 2011, limiting
over-the-counter medicine to prescribed medicines. Prescribed over-the-counter medicines are
eligible expenses when the prescription is submitted as part of the reimbursement request.***
An employee has contributed $300.00 YTD into a medical flexible spending account. In
November, the employee was terminated with $100.00 remaining in the account after all
qualified reimbursements had been made. When must the employer reimburse the employee's
$100.00?
A. With the final paycheck
B. Within 30 days after termination
C. When additional qualified medical expenses are submitted
D. By January 31 along with Form W-2 - ANS-C. When additional qualified medical expenses
are submitted
Which of the following statements is true regarding Sec. 125 plans?
A. Any benefits received in cash are not taxable.
B. The benefit options must include both cash and qualified nontaxable benefits.
C. At the end of the plan year, employees receive cash payments for remaining unreimbursed
amounts.
