Deck 10: Employer-Sponsored Retirement Plans and Health Insurance Programs

Question 1

A company uses graduated first-dollar-of-profits formula for their profit-sharing plans.They choose to share 4% of the first $10 million of after-tax profits and 7% of the after-tax profits in excess of that level.If this company's after-tax profit were $15 million last year,how much of this profit would be distributed to the employees?

A)$1,200,000
B)$1,000,000
C)$750,000
D)$600,000

Answer 1

C

Question 2

This term refers to the percentage of the health bill the insured employee is required to pay.

A)coinsurance
B)co-admission
C)co-premiums
D)co-payment

Answer 2

A

Question 3

A new employee comes into your office and asks you how many hours a year he has to work to qualify towards his vesting requirements.What would you tell him?

A)1,000
B)1,400
C)800
D)1,200

Answer 3

A

Question 4

Which of the following types of insurance plans provides protection against health care expenses in the form of cash benefits paid to the insured or directly to the provider after the services are rendered?

A)point-of-service plans
B)managed care plans
C)fee-for-service plans
D)health savings accounts

Question 5

What type of retirement plan is a 401(k)?

A)defined contribution
B)defined benefit
C)qualified benefit
D)nonqualified benefit

Question 6

Your company asked you to come up with a contribution plan that invests the contributions in company securities and distributes the payouts in stock instead of cash.Which plan would you suggest they use?

A)employee stock option plan (ESOP)
B)401(k)s
C)profit sharing plan
D)point-of-service plan (POS)

Question 7

This type of defined contribution plan,also known as a CODA,permits only private sector or tax-exempt employers' employees to tax defer part of their compensation to the trust of a qualified plan.

A)401(k)plan
B)profit sharing plan
C)gain sharing plan
D)incentive plan

Question 8

Common HMO copayment amounts for each doctor's visit vary between

A)$15-$50.
B)$0-$3.
C)$50-$75.
D)$100-$150.

Question 9

What is another name for health maintenance organizations (HMOs)?

A)outpatient medical services
B)prepaid medical services
C)inpatient medical services
D)on-call medical services

Question 10

Which of the following is NOT a benefit covered by fee-for-service plans?

A)hospitalization benefits
B)dentist visits
C)physician visits
D)surgical benefits

Question 11

What specifies the rate at which participants accumulate benefits?

A)accrual rules
B)combination procedures
C)Sarbanes-Oxley
D)build-up rules

Question 12

What are the two types of fee-for-service plans?

A)health savings accounts,indemnity plans
B)health savings accounts,health reimbursement plans
C)health reimbursement plans,indemnity plans
D)indemnity plans,self-funded plans

Question 13

Which of the following is associated with 401(k)plans?

A)Employees pay taxes on their contribution.
B)Employees do not pay taxes on their contributions.
C)Investment gains are taxed.
D)Employees cannot deduct their contributions from taxable income.

Question 14

Which of the following represents the most approximate percentage for private sector employees who have access to at least one employer-sponsored health insurance program in 2010?

A)20%
B)50%
C)70%
D)90%

Question 15

What type of pension plan commonly includes profit-sharing plans,stock bonus plans,and employee stock ownership plans?

A)defined benefit
B)defined contribution
C)deferred contribution
D)deferred benefit

Question 16

According to the provisions in her health insurance plan with Get Well Insurance,Ursula's coinsurance payment would be $50 if she goes to Dr.Kitt but will only be $25 if she goes to Dr.Matthew.She probably belongs to what type of insurance plan?

A)point-of-service plan (POS)
B)preferred provider organization (PPO)
C)health maintenance organization (HMO)
D)fee-for-service plan

Question 17

This is the condition for which medical advice,diagnosis,care,or treatment was received or recommended during a designated period prior to coverage.

A)preadmission certification
B)preexisting condition
C)second opinions
D)exclusion criteria

Question 18

Companies establish retirement plans following which of these three design configurations?

A)defined benefit,defined contribution,hybrid
B)qualified benefit,qualified contribution,hybrid
C)qualified benefit,nonqualified benefit,hybrid
D)funded,unfunded,hybrid

Question 19

What is coinsurance?

A)when both parents have employer-sponsored insurance coverage for their children
B)two insurance companies combine to offer a group policy to an employer
C)the amount an employee has to pay out-of-pocket before the insurance kicks in
D)the percentage of covered expenses paid by the insured

Question 20

These represent a series of payments for the life of the participant and beneficiary.

A)collateral payments
B)periodic payments
C)lump sum distributions
D)annuities

Question 21

________ physicians determine when patients need the care of specialists and help to control costs by reducing the number of unnecessary visits to specialists.

Question 22

Starting January 1,2004,eligible individuals are allowed to establish HSAs under which law?

A)Health Maintenance Organization Act
B)Mental Health Parity Act
C)Medicare Prescription Drug,Improvement and Modernization Act
D)HIPAA

Question 23

According to ________ Act of 2008,a plan must calculate only one deductible for treatment related substance use disorders and medical or surgical benefits.

Question 24

Which of the following types of insurance plans are set up to cover things like dental care,vision care,and prescription drugs?

A)flexible savings plans
B)flexible services accounts
C)carve-out plans
D)health services accounts

Question 25

Jose invested $6,000 in pre-tax income into this healthcare plan but lost the $780 left in it at the end of the year because he didn't use it.What type of plan was it?

A)health savings account
B)flexible spending account
C)health reimbursement arrangement
D)fee-for service plan

Question 26

In which plan do employees possess the option to receive care from health care providers outside the designated network of physicians,paying more for the choice?

A)fee-for-service plans
B)preferred provider organizations
C)HMOs
D)point-of-service plans

Question 27

This type of consumer driven health care program allows employees to carry-over the unused funds still in their account.

A)health reimbursement account
B)health savings account
C)flexible spending account
D)flexible savings account

Question 28

________ accounts allow employees to pay for specified health care costs not covered by an employer's insurance plan.

Question 29

This consumer-driven health care option allows employees to contribute pre-tax wages annually to pay for qualified medical expenses,but they will lose the balance not used at year's end.

A)flexible spending accounts
B)health reimbursement arrangements
C)health savings accounts
D)flexible savings accounts

Question 30

What percentage of Americans experience some form of mental illness at least once during their lifetime?

A)50%
B)45%
C)20%
D)10%

Question 31

Fixed first-dollar-of-profits,graduated first-dollar-of-profits,and profitability threshold formulas establish ________ contributions.

Question 32

________ plans refer to pension plans that do not meet at least one of the minimum standard provisions.

Question 33

Under a preferred provider organization (PPO),higher ________ are set for services rendered by nonnetwork providers to discourage participants from using services outside of the network.

Question 34

Which one of the following is probably the main reason that health reimbursement accounts (HRAs)are particularly appealing to employees with relatively low salaries or hourly wages?

A)the contribution of employees is on a pretax basis
B)employees do not contribute to them
C)employees forfeit unused balances present at the end of a year
D)permits employees to carry unused balances from year to year

Question 35

Mia has Parkinson's disease but is on an insurance plan that enables her to have the drugs shipped to her house.She is probably on which type of prescription drug plan?

A)prescription card program
B)formulary
C)mail order
D)medical reimbursement

Question 36

________ are nominal payments an individual makes as a condition of receiving services.

Question 37

________ plans permit employees to defer part of their compensation to the trust of a qualified defined contribution plan.

Question 38

Marty's employer has a prescription drug plan that will only make him pay 20% of cost of his prescription if he goes only to certain pharmacies.What type of prescription drug plan does he have?

A)prescription reimbursement plan
B)medical reimbursement plan
C)mail order prescription drug plan
D)prescription card program

Question 39

IRS guidelines define ________ plans as "defined benefit plans that define benefits for each employee by reference to the amount of the employee's hypothetical account balance."

Question 40

________ refers to an employee's nonforfeitable rights to pension benefits.

Question 41

Distinguish between qualified and nonqualified retirement plans.

Question 42

Provide the definition of defined benefit plans.Then,discuss two reasons for declining participation in defined benefit plan participation.

Question 43

Compare and contrast commercial insurance (fee-for-service)and self-funded insurance.