CFP: Insurance Planning UPDATED
Questions and CORRECT Answers
Which of the following is a benefit provided by Medicare Part B?
a. coverage for prescription drugs can be self-administered
b. coverage for a skilled nursing home stay up to 100 days
c. free preventative care services
d. hospital care beyond 150 days of one stay - CORRECT ANSWER free preventative care
services - medicare b coverage for prescription drugs limited to drugs that cannot be self-
administered and others Medicare part A
Mr. Thomas is turning age 65. He is going to elect Medicare A but not buy Medicare B. Can he
get a Medigap policy?
a. no, the gap is too large
b. yes, but it will only cover him for Medicare A
c. Yes, it will completely cover him for Medicare A but will only partially pay under the B
portion
d. no - CORRECT ANSWER no - cannot buy it unless he enrolls in Medicare B
Which type of prescription drugs are not covered by Medicare Part B?
a. certain oral cancer drugs
b. injections at the doctor's office
c. self-administered drugs
d. drugs with types of durable medical equipment
e. no - CORRECT ANSWER self-administered drugs - even if you did not know about
answer d, answer c is not covered
,Sally just turned age 65. If she qualifies for Social Security, which of the following is true.
a. if Sally applies at age 65 for Medicare A and B, she is automatically covered
b. if Sally applies at age 65 for Medicare A only, she can never apply for Medicare B later
c. if Sally declines coverage at age 65, she can never apply for Medicare A or B later
d. if Sally applies for Medicare B at a later date (after age 65), the coverage is automatic, and the
premium is the same as age 65 - CORRECT ANSWER if Sally applies at age 65 for
Medicare A and B, she is automatically covered
Which of the following is not true about employee group health insurance?
a. employees may use PPO physicians or go elsewhere under a PPO plan
b. employees must use the HMO gatekeeper first under an HMO plan
c. HMOs emphasize cost containment
d. HMOs have a fixed monthly fee
e. PPOs provide medical care on a prepaid basis - CORRECT ANSWER PPOs provide
medical care on a prepaid basis - provided on a fee-for-service basis
Steve is married with two children. Steve works TTI Inc. which has 50 employees. The company
offers an HMO plan. If Steve divorces his wife, which of the following is true if he has family
coverage under the HMO?
He will get 18 months of COBRA coverage
His ex-wife will get 18 months of COBRA coverage
His ex-wife will get 36 months of COBRA coverage
His children will get 36 months of COBRA coverage
There is no COBRA under an HMO plan - CORRECT ANSWER III only - with an
employer-provided HMO plan, a divorced spouse will get 36 months of COBRA coverage
,Most business days, ABC company employs 12 full-time employees and 18 part-time employees.
If a full-time participating employee terminates, will he or she be covered under COBRA?
a. yes, the company has more than 20 employees. coverage will continue for 18 months
b. yes, the company has more than 20 employees. coverage will continue for 36 months.
c. no, the company has less than 20 employees
d. no, more than half of the total employees must be full-time employees - CORRECT
ANSWER yes, the company has more than 20 employees. coverage will continue for 18
months - company has 21 employees (12 +(18*.5))
Which of the following is false about HSA contribution rules?
a. contributions can be made by the employer, the individual, or both
b. contributions made by the employer are tax-deductible and not taxable to the individual
c. contributions made by the individual are an above-the-line tax deduction for AGI
d. contributions are not aggregated - CORRECT ANSWER contributions are not
aggregated - contributions from employee and employer are not combined
Sally has an HSA plan with a $2,200 deductible. If she incurs $2,600 of medical expenses, what
will be her tax? - CORRECT ANSWER The HSA trustee will reimburse the $2,200 out of
the HSA account tax-free, and the insurance will reimburse the remaining $400 tax-free
Which of the following are true about HSA distributions?
HSA distributions can be used to pay the premiums for qualified long-term care insurance
HSA distributions not used for qualified medical expenses are subject to a 20% penalty unless
the individual dies, is disabled, or reaches the age of Medicare eligibility
Money left in an HSA account at age 65 (or older) can be withdrawn tax-free for any purpose
without penalty
, HSA distributions taken to pay qualified medical expenses are tax-free - CORRECT
ANSWER I, II, and IV - money left in HSA at age 65 withdrawn for anything other than
health care is taxed at ordinary income
Jane has an HSA with with a $2,300 deductible. Jane recently made a Medical claim for $3,000.
The insurance carrier reimbursed her $700. Jane took a $2,300 distribution from her HSA for the
remaining $2,300 for qualified medical expenses. Is the distribution taxable?
a. no amount is taxable
b. 65% is taxable
c. 35% is taxable
d. 100% is taxable - CORRECT ANSWER no amount is taxable - distributions used for
qualified medical expenses are tax-free, 65/35 related to contributions
An individual in an HSA becomes eligible for Medicare. Does he/she become ineligible as a
participant?
a. yes, even if they enroll in Medicare
b. yes, HSAs stop at age 65
c. no, they can remain an HSA participant
d. no, Medicare is not an issue with HSA plans - CORRECT ANSWER no, they can
remain an HSA participant - eligibility for Medicare does not preclude HSA contributions, only
when enrolled in Medicare A and B
Which insurance type policy premiums are an eligible expense under an HSA plan?
Qualified long-term care insurance premium contracts
COBRA premiums
FSA premiums
Medicare premiums - CORRECT ANSWER I, II, and IV - when you apply for Medicare,
the HSA can pay the Medicare premium, also can pay for COBRA and LTC premiums
Questions and CORRECT Answers
Which of the following is a benefit provided by Medicare Part B?
a. coverage for prescription drugs can be self-administered
b. coverage for a skilled nursing home stay up to 100 days
c. free preventative care services
d. hospital care beyond 150 days of one stay - CORRECT ANSWER free preventative care
services - medicare b coverage for prescription drugs limited to drugs that cannot be self-
administered and others Medicare part A
Mr. Thomas is turning age 65. He is going to elect Medicare A but not buy Medicare B. Can he
get a Medigap policy?
a. no, the gap is too large
b. yes, but it will only cover him for Medicare A
c. Yes, it will completely cover him for Medicare A but will only partially pay under the B
portion
d. no - CORRECT ANSWER no - cannot buy it unless he enrolls in Medicare B
Which type of prescription drugs are not covered by Medicare Part B?
a. certain oral cancer drugs
b. injections at the doctor's office
c. self-administered drugs
d. drugs with types of durable medical equipment
e. no - CORRECT ANSWER self-administered drugs - even if you did not know about
answer d, answer c is not covered
,Sally just turned age 65. If she qualifies for Social Security, which of the following is true.
a. if Sally applies at age 65 for Medicare A and B, she is automatically covered
b. if Sally applies at age 65 for Medicare A only, she can never apply for Medicare B later
c. if Sally declines coverage at age 65, she can never apply for Medicare A or B later
d. if Sally applies for Medicare B at a later date (after age 65), the coverage is automatic, and the
premium is the same as age 65 - CORRECT ANSWER if Sally applies at age 65 for
Medicare A and B, she is automatically covered
Which of the following is not true about employee group health insurance?
a. employees may use PPO physicians or go elsewhere under a PPO plan
b. employees must use the HMO gatekeeper first under an HMO plan
c. HMOs emphasize cost containment
d. HMOs have a fixed monthly fee
e. PPOs provide medical care on a prepaid basis - CORRECT ANSWER PPOs provide
medical care on a prepaid basis - provided on a fee-for-service basis
Steve is married with two children. Steve works TTI Inc. which has 50 employees. The company
offers an HMO plan. If Steve divorces his wife, which of the following is true if he has family
coverage under the HMO?
He will get 18 months of COBRA coverage
His ex-wife will get 18 months of COBRA coverage
His ex-wife will get 36 months of COBRA coverage
His children will get 36 months of COBRA coverage
There is no COBRA under an HMO plan - CORRECT ANSWER III only - with an
employer-provided HMO plan, a divorced spouse will get 36 months of COBRA coverage
,Most business days, ABC company employs 12 full-time employees and 18 part-time employees.
If a full-time participating employee terminates, will he or she be covered under COBRA?
a. yes, the company has more than 20 employees. coverage will continue for 18 months
b. yes, the company has more than 20 employees. coverage will continue for 36 months.
c. no, the company has less than 20 employees
d. no, more than half of the total employees must be full-time employees - CORRECT
ANSWER yes, the company has more than 20 employees. coverage will continue for 18
months - company has 21 employees (12 +(18*.5))
Which of the following is false about HSA contribution rules?
a. contributions can be made by the employer, the individual, or both
b. contributions made by the employer are tax-deductible and not taxable to the individual
c. contributions made by the individual are an above-the-line tax deduction for AGI
d. contributions are not aggregated - CORRECT ANSWER contributions are not
aggregated - contributions from employee and employer are not combined
Sally has an HSA plan with a $2,200 deductible. If she incurs $2,600 of medical expenses, what
will be her tax? - CORRECT ANSWER The HSA trustee will reimburse the $2,200 out of
the HSA account tax-free, and the insurance will reimburse the remaining $400 tax-free
Which of the following are true about HSA distributions?
HSA distributions can be used to pay the premiums for qualified long-term care insurance
HSA distributions not used for qualified medical expenses are subject to a 20% penalty unless
the individual dies, is disabled, or reaches the age of Medicare eligibility
Money left in an HSA account at age 65 (or older) can be withdrawn tax-free for any purpose
without penalty
, HSA distributions taken to pay qualified medical expenses are tax-free - CORRECT
ANSWER I, II, and IV - money left in HSA at age 65 withdrawn for anything other than
health care is taxed at ordinary income
Jane has an HSA with with a $2,300 deductible. Jane recently made a Medical claim for $3,000.
The insurance carrier reimbursed her $700. Jane took a $2,300 distribution from her HSA for the
remaining $2,300 for qualified medical expenses. Is the distribution taxable?
a. no amount is taxable
b. 65% is taxable
c. 35% is taxable
d. 100% is taxable - CORRECT ANSWER no amount is taxable - distributions used for
qualified medical expenses are tax-free, 65/35 related to contributions
An individual in an HSA becomes eligible for Medicare. Does he/she become ineligible as a
participant?
a. yes, even if they enroll in Medicare
b. yes, HSAs stop at age 65
c. no, they can remain an HSA participant
d. no, Medicare is not an issue with HSA plans - CORRECT ANSWER no, they can
remain an HSA participant - eligibility for Medicare does not preclude HSA contributions, only
when enrolled in Medicare A and B
Which insurance type policy premiums are an eligible expense under an HSA plan?
Qualified long-term care insurance premium contracts
COBRA premiums
FSA premiums
Medicare premiums - CORRECT ANSWER I, II, and IV - when you apply for Medicare,
the HSA can pay the Medicare premium, also can pay for COBRA and LTC premiums
