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July 26, 2023 04:30
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| Which of the following is true about the broad view of employee benefits? 1. It only includes government-mandated benefits. 2. It considers employee benefits to be virtually any form of compensation other than direct wages paid to employees. 3. It does not include the employer’s share of Social Security tax on behalf of an employee. 4. It only includes benefits that are not underwritten or paid directly by government. | 2. It considers employee benefits to be virtually any form of compensation other than direct wages paid to employees. | |
| Which of the following are characteristics of the narrow view of employee benefits? (Choose two) I. It includes any type of plan sponsored or initiated unilaterally or jointly by employers and employees. II. It includes benefits that are underwritten or paid directly by government. III. It includes benefits that result from the employment relationship. IV. It only includes benefits that are not underwritten or paid directly by government. | I, III | |
| All of the following are components of the tripod, or three-legged stool, of economic security, EXCEPT: 1. Benefits supplied to employees by their employers through the employment relationship. 2. Benefits provided by an individual for their own welfare and for the welfare of their dependents. 3. Governmental benefit programs. 4. Benefits that are underwritten or paid directly by government. | 4. Benefits that are underwritten or paid directly by government. | |
| Which of the following is considered to fall under a broad view of employee benefits? 1. Legally required benefits 2. Payments for time not worked 3. Employer’s share of medical and medically related benefits 4. Employer’s share of retirement and savings plan payments 5. Employee discounts | All of the above | |
| Which of the following are considered to fall under a broad view of employee benefits? (Select all that apply) I. Legally required benefits II. Payments for time not worked III. Employer’s share of medical and medically related benefits IV. Employer’s share of retirement and savings plan payments V. Employee discounts | I, II, III, IV, V | |
| Which of the following is NOT considered to fall under a broad view of employee benefits? 1. Legally required benefits 2. Payments for time not worked 3. Employer’s share of medical and medically related benefits 4. Employer’s share of retirement and savings plan payments 5. Employee discounts 6. Personal expenses | Personal expenses | |
| Which of the following benefits are typically excluded when the term employee benefits is viewed and defined in a narrow sense? 1. Employer funding for Social Security and Medicare 2. Unemployment insurance 3. Workers’ compensation benefits 4. Health insurance | 1, 2, 3 | |
| When the term employee benefits is viewed and defined in a narrow sense, which of the following benefits are typically excluded? (Select all that apply) I. Employer funding for Social Security and Medicare II. Unemployment insurance III. Workers’ compensation benefits IV. Health insurance | I, II, III | |
| All of the following benefits are typically included when the term employee benefits is viewed and defined in a narrow sense, EXCEPT: 1. Employer funding for Social Security and Medicare 2. Unemployment insurance 3. Workers’ compensation benefits 4. Health insurance | 4 | |
| What is one of the business- or human resource-related reasons for firms establishing employee benefit plans? 1. To attract and retain capable employees 2. To foster corporate efficiency, productivity and improved employee morale 3. To address concerns for employees’ welfare and social objectives 4. All of the above | 4. All of the above | |
| Which of the following are business- or human resource-related reasons for firms establishing employee benefit plans? (Select all that apply) I. To increase the company's tax burden II. To attract and retain capable employees III. To foster corporate efficiency, productivity and improved employee morale IV. To address concerns for employees’ welfare and social objectives | II, III, IV | |
| All of the following are business- or human resource-related reasons for firms establishing employee benefit plans, EXCEPT: 1. To attract and retain capable employees 2. To foster corporate efficiency, productivity and improved employee morale 3. To increase the company's tax burden 4. To address concerns for employees’ welfare and social objectives | 3. To increase the company's tax burden | |
| What was a significant event in 1948 that demonstrated the impact of labor unions on employee benefits? 1. The National Labor Relations Board ruled in the Inland Steel case that the duty to bargain in good faith over wages also included insurance and fringes such as pension benefits. 2. The National Labor Relations Board ruled that wages did not include a health and accident plan. 3. The National Labor Relations Board ruled in favor of the labor unions in the W. W. Cross & Co. case. 4. The National Labor Relations Board ruled against the labor unions in the Inland Steel case. | 1 | |
| Which of the following are impacts that labor unions have had on employee benefits? (Choose two) I. Labor unions, through the collective bargaining process, have had an impact on the growth of employee benefit plans. II. Labor unions have had no impact on the growth of employee benefit plans. III. A notable event occurred in 1948 when the National Labor Relations Board ruled in the Inland Steel case that the duty to bargain in good faith over wages also included insurance and fringes such as pension benefits. IV. Shortly thereafter, in the W. W. Cross & Co. case, NLRB ruled that wages included a health and accident plan. | I, III | |
| Which of the following is NOT an impact that labor unions have had on employee benefits? 1. Labor unions, through the collective bargaining process, have had an impact on the growth of employee benefit plans. 2. A notable event occurred in 1948 when the National Labor Relations Board ruled in the Inland Steel case that the duty to bargain in good faith over wages also included insurance and fringes such as pension benefits. 3. Shortly thereafter, in the W. W. Cross & Co. case, NLRB ruled that wages included a health and accident plan. 4. Labor unions have had no impact on the growth of employee benefit plans. | 4 | |
| What does the Taft-Hartley Act, also known as the Labor-Management Relations Act, establish in the context of employee benefit planning? 1. The framework for collective bargaining over wages, hours, conditions, and terms of employment and employee benefits 2. The distinction between retirement benefits and welfare benefits 3. The regulatory framework for administration of benefits in a collective bargaining agreement 4. The legislative basis on which jointly trusteed benefit plans are founded 5. The guidelines for employee benefit planning in non-unionized workplaces | 1 | |
| Which of the following are established by the Taft-Hartley Act, also known as the Labor-Management Relations Act, in the context of employee benefit planning? (Choose all that apply) I. The framework for collective bargaining over wages, hours, conditions, and terms of employment and employee benefits II. The distinction between retirement benefits and welfare benefits III. The regulatory framework for administration of benefits in a collective bargaining agreement IV. The legislative basis on which jointly trusteed benefit plans are founded V. The guidelines for employee benefit planning in non-unionized workplaces | I, II, III, IV | |
| Which of the following is NOT established by the Taft-Hartley Act, also known as the Labor-Management Relations Act, in the context of employee benefit planning? 1. The framework for collective bargaining over wages, hours, conditions, and terms of employment and employee benefits 2. The distinction between retirement benefits and welfare benefits 3. The regulatory framework for administration of benefits in a collective bargaining agreement 4. The legislative basis on which jointly trusteed benefit plans are founded 5. The guidelines for employee benefit planning in non-unionized workplaces | 5 | |
| Which of the following is a major federal tax advantage associated with employee benefit plans? 1. Most contributions to employee benefit plans by employers are deductible as long as they are reasonable business expenses. 2. Employer contributions are always considered income to employees. 3. Benefits never accumulate tax-free to the employee in any type of retirement and capital accumulation plans. 4. All employee benefit plans are exempted from federal tax. | Most contributions to employee benefit plans by employers are deductible as long as they are reasonable business expenses. | |
| Identify the major federal tax advantages associated with employee benefit plans. (Choose two) I. Most contributions to employee benefit plans by employers are deductible as long as they are reasonable business expenses. II. Employer contributions are always considered income to employees. III. In certain types of retirement and capital accumulation plans, benefits accumulate tax-free to the employee until distributed. IV. All employee benefit plans are exempted from federal tax. | I, III | |
| Which of the following is NOT a major federal tax advantage associated with employee benefit plans? 1. Most contributions to employee benefit plans by employers are deductible as long as they are reasonable business expenses. 2. Within certain limits, these employer contributions are generally not considered income to employees. 3. In certain types of retirement and capital accumulation plans, benefits accumulate tax-free to the employee until distributed. 4. All employee benefit plans are exempted from federal tax. | All employee benefit plans are exempted from federal tax. | |
| What is one reason why the employee benefit mechanism is an effective and efficient way of providing insurance coverage? 1. It is more expensive for employees 2. It is less convenient for providers and suppliers 3. It is convenient for employees 4. It is more complex for providers and suppliers | 3. It is convenient for employees | |
| Which of the following are reasons why the employee benefit mechanism is an effective and efficient way of providing insurance coverage? (Choose two) I. It is convenient for employees II. It is more expensive for employees III. Providers and suppliers find it more convenient and simpler to communicate and market employee benefits through an employer IV. It is less convenient for providers and suppliers | I, III | |
| Which of the following is NOT a reason why the employee benefit mechanism is an effective and efficient way of providing insurance coverage? 1. It is convenient for employees 2. It is more expensive for employees 3. Providers and suppliers find it more convenient and simpler to communicate and market employee benefits through an employer 4. Employees need to search for individual coverage | 4. Employees need to search for individual coverage | |
| Which historical event led to the enhancement of the appeal of employee benefits by freezing wage increases but allowing additions or enhancements to employee benefits? 1. World War I 2. World War II 3. The Great Depression 4. The Vietnam War | World War II | |
| Which of the following factors have enhanced the appeal of employee benefits? (Select all that apply) I. Collective bargaining activity II. Favorable tax legislation III. Efficiency of the employee benefits approach IV. Price controls imposed during World War II V. The idea that the government might mandate certain benefits in the absence of private employer action VI. Legislative and regulatory measures allowing employers to integrate private plans with governmental programs | I, II, III, IV, V, VI | |
| All of the following are factors that have enhanced the appeal of employee benefits, EXCEPT: 1. Collective bargaining activity 2. Favorable tax legislation 3. Efficiency of the employee benefits approach 4. The absence of historical events that shaped the appeal of employee benefits | The absence of historical events that shaped the appeal of employee benefits | |
| What is the starting point in the design of any employee benefit plan? 1. Setting overall objectives from the standpoints of both the employer and the employees 2. Determining the budget for the plan 3. Selecting the benefits to be offered 4. Deciding the number of employees to be covered | Setting overall objectives from the standpoints of both the employer and the employees | |
| Which of the following are important considerations when starting the design of any employee benefit plan? I. Setting overall objectives from the standpoints of both the employer and the employees II. The rationale and sustainability of the plan III. The plan's strategic future outlook IV. The color scheme of the plan's documentation | I, II, III | |
| All of the following are starting points in the design of any employee benefit plan, EXCEPT: 1. Setting overall objectives from the standpoints of both the employer and the employees 2. The rationale and sustainability of the plan 3. The plan's strategic future outlook 4. The color scheme of the plan's documentation | The color scheme of the plan's documentation | |
| Which of the following is a type of overall question that should be addressed in setting benefit objectives? 1. What benefits should be provided? 2. What color should the benefit plan brochure be? 3. How many employees should be hired? 4. How should the benefit plan be communicated? | What benefits should be provided?, How should the benefit plan be communicated? | |
| Which of the following are types of overall questions that should be addressed in setting benefit objectives? (Select all that apply) I. What benefits should be provided? II. Who should be covered by the benefit plan? III. Should employees have benefit options? IV. What is the CEO's favorite color? | I, II, III | |
| Which of the following is NOT a type of overall question that should be addressed in setting benefit objectives? 1. How should the benefit plan be financed? 2. How should the benefit plan be administered? 3. How should the benefit plan be communicated? 4. What is the company's stock price? | What is the company's stock price? | |
| What is the functional approach to employee benefit planning? 1. It is a method of analysis applied to an employer’s total employee benefits program. 2. It is a method of analysis applied to an employer’s total compensation goals. 3. It is a method of analysis applied to an employer’s total cost parameters. 4. It is a method of analysis applied to an employer’s total business objectives. | 1 | |
| The functional approach to employee benefit planning is beneficial in which of the following scenarios? (Choose all that apply) I. When initially conceptualizing and designing a comprehensive benefit program while launching a new business venture. II. When evaluating proposals for new or revised benefits. III. When constructing effective communication of an employer’s total benefits program to its employees. IV. When evaluating an employer's total compensation goals. | I, II, III | |
| The functional approach to employee benefit planning is not useful in which of the following scenarios? 1. When initially conceptualizing and designing a comprehensive benefit program while launching a new business venture. 2. When evaluating proposals for new or revised benefits. 3. When constructing effective communication of an employer’s total benefits program to its employees. 4. When evaluating an employer's total compensation goals. | 4 | |
| Which of the following is NOT a reason that the functional approach is considered to be an appropriate approach for the effective planning, designing and administration of employee benefits? 1. Employee benefits are a significant element of total employee compensation and are a tax-effective way of compensating employees. 2. Employee benefits represent a large item of labor cost for employers. 3. The functional approach allows benefits to be integrated properly with each other. 4. Employee benefits were adopted by employers on a piecemeal basis, without being coordinated with existing employee benefit programs. | 4. Employee benefits were adopted by employers on a piecemeal basis, without being coordinated with existing employee benefit programs. | |
| Which of the following are reasons that the functional approach is considered to be an appropriate approach for the effective planning, designing and administration of employee benefits? (Select all that apply) I. Employee benefits are a significant element of total employee compensation and are a tax-effective way of compensating employees. II. Employee benefits represent a large item of labor cost for employers. III. The functional approach allows benefits to be integrated properly with each other. IV. Employee benefits were adopted by employers on a piecemeal basis, without being coordinated with existing employee benefit programs. | I, II, III | |
| All of the following are reasons that the functional approach is considered to be an appropriate approach for the effective planning, designing and administration of employee benefits, EXCEPT: 1. Employee benefits are a significant element of total employee compensation and are a tax-effective way of compensating employees. 2. Employee benefits represent a large item of labor cost for employers. 3. The functional approach allows benefits to be integrated properly with each other. 4. Employee benefits were adopted by employers on a piecemeal basis, without being coordinated with existing employee benefit programs. | 4. Employee benefits were adopted by employers on a piecemeal basis, without being coordinated with existing employee benefit programs. | |
| Which of the following elements should an employer seek to balance in designing a total compensation package? 1. Basic cash wages and salary 2. Current incentive compensation 3. Longer term incentive plans 4. Employee benefits 5. The employer's basic compensation philosophy and objectives | 1, 2, 3, 4, 5 | |
| In designing a total compensation package, an employer should seek to balance which of the following elements? (Select all that apply) I. Basic cash wages and salary II. Current incentive compensation III. Longer term incentive plans IV. Employee benefits V. The employer's basic compensation philosophy and objectives | I, II, III, IV, V | |
| Which of the following elements should an employer NOT consider when designing a total compensation package? 1. Basic cash wages and salary 2. Current incentive compensation 3. Longer term incentive plans 4. Employee benefits 5. The employer's basic compensation philosophy and objectives | None of the above | |
| Which of the following is a type of total compensation/benefits policy that employers may adopt? 1. Average compensation/benefits policies 2. High-compensation/benefits policies 3. Low-compensation/benefits policies 4. No-compensation/benefits policies | 1 | |
| Identify the types of total compensation/benefits policies that employers may adopt. (Select all that apply) I. Average compensation/benefits policies II. High-compensation/benefits policies III. Low-compensation/benefits policies IV. No-compensation/benefits policies | I, II, III | |
| All of the following are types of total compensation/benefits policies that employers may adopt, EXCEPT: 1. Average compensation/benefits policies 2. High-compensation/benefits policies 3. Low-compensation/benefits policies 4. No-compensation/benefits policies | 4 | |
| Which type of firm is more likely to take a liberal approach toward meeting the benefits needs and desires of its employees? 1. A developing firm in a growth industry 2. A financial institution 3. A firm in a highly competitive industry 4. A firm in a currently depressed state | 2. A financial institution | |
| Which of the following types of firms are more likely to rely on short-term-oriented incentive types of compensation? (Choose two) I. A developing firm in a growth industry II. A financial institution III. A firm in a highly competitive industry IV. A firm in a currently depressed state | I, III | |
| Which type of firm is least likely to add to their relatively fixed labor costs by adopting or liberalizing employee benefits, even if there may be a functional need for doing so? 1. A developing firm in a growth industry 2. A financial institution 3. A firm in a highly competitive industry 4. A firm in a currently depressed state | 4. A firm in a currently depressed state | |
| Which philosophy tends to relate employee benefits primarily to compensation or service in designing benefit plans within the constraints of any nondiscrimination rules? 1. Compensation/service-oriented benefit philosophy 2. Needs-oriented benefit philosophy 3. Both 4. None of the above | 1. Compensation/service-oriented benefit philosophy | |
| Which of the following are characteristics of a compensation/service-oriented benefit philosophy? (Choose two) I. The level of benefits tends to be tied to the salary or pay levels of employees and their years of service. II. It focuses on the needs of employees and their dependents. III. Employers with this philosophy typically design benefit plans primarily on this basis. IV. It relates employee benefits primarily to compensation or service in designing benefit plans within the constraints of any nondiscrimination rules. | I, IV | |
| Which of the following is NOT a characteristic of a needs-oriented benefit philosophy? 1. It focuses on the needs of employees and their dependents. 2. Employers with this philosophy typically design benefit plans primarily on this basis. 3. The level of benefits tends to be tied to the salary or pay levels of employees and their years of service. 4. None of the above | 3. The level of benefits tends to be tied to the salary or pay levels of employees and their years of service. | |
| What is the first step in applying the functional approach to employee benefit plan design, review and revision? 1. Classify employee (and dependent) needs or objectives into logical functional categories. 2. Analyze the benefits presently available under the plan. 3. Estimate the costs or savings from each of the recommendations. 4. Communicate benefit changes to employees. | 1. Classify employee (and dependent) needs or objectives into logical functional categories. | |
| Which of the following steps are involved in applying the functional approach to employee benefit plan design, review and revision? (Select all that apply) I. Classify the categories of persons the employer may want to protect. II. Decide upon the appropriate benefits, methods of financing and sources of benefits as a result of the preceding analyses. III. Implement the changes. IV. Evaluate the company's financial status. | I, II, III | |
| All of the following are steps in applying the functional approach to employee benefit plan design, review and revision, EXCEPT: 1. Classify employee (and dependent) needs or objectives into logical functional categories. 2. Classify the categories of persons the employer may want to protect. 3. Evaluate the company's financial status. 4. Decide upon the appropriate benefits, methods of financing and sources of benefits as a result of the preceding analyses. | 3. Evaluate the company's financial status. | |
| Which of the following is a type of employee need that may be covered under an employee benefit plan? 1. Medical expenses incurred by active employees and their dependents 2. Capital accumulation needs or goals 3. Needs for financial counseling and retirement counseling 4. All of the above | 4. All of the above | |
| Which of the following are types of employee needs that may be covered under an employee benefit plan? (Select all that apply) I. Needs for dependent-care assistance II. Losses resulting from property and liability exposures III. Needs for custodial-care expenses for employees or their dependents IV. Needs for educational assistance for employees and their dependents | I, II, III, IV | |
| All of the following are types of employee needs that may be covered under an employee benefit plan, EXCEPT: 1. Needs for financial counseling and retirement counseling 2. Needs for dependent-care assistance 3. Losses resulting from property and liability exposures 4. Needs for a personal vacation | 4. Needs for a personal vacation | |
| Which of the following is a category of persons that a firm may want to include in its employee benefit coverages? (a) Active full-time employees (b) Dependents of active full-time employees (c) Retired former employees (d) Dependents of retired former employees (e) Disabled employees and their dependents (f) Surviving dependents of deceased employees (g) Terminated employees and their dependents (h) Employees (and their dependents) who are temporarily separated from the employer’s service, such as during layoffs, leaves of absence, military duty, strikes and so forth (i) Individuals other than full-time active employees (for example, part-time employees, directors and so forth). | (a) Active full-time employees | |
| Which of the following categories of persons are often considered separately when determining benefit coverages? (Choose two) (I) Active full-time employees (II) Dependents of active full-time employees (III) Retired former employees (IV) Dependents of retired former employees (V) Disabled employees and their dependents (VI) Surviving dependents of deceased employees (VII) Terminated employees and their dependents (VIII) Employees (and their dependents) who are temporarily separated from the employer’s service, such as during layoffs, leaves of absence, military duty, strikes and so forth (IX) Individuals other than full-time active employees (for example, part-time employees, directors and so forth). | (I), (II) | |
| All of the following are categories of persons that a firm may want to include in its employee benefit coverages, EXCEPT: (a) Active full-time employees (b) Dependents of active full-time employees (c) Retired former employees (d) Dependents of retired former employees (e) Disabled employees and their dependents (f) Surviving dependents of deceased employees (g) Terminated employees and their dependents (h) Employees (and their dependents) who are temporarily separated from the employer’s service, such as during layoffs, leaves of absence, military duty, strikes and so forth (i) Individuals other than full-time active employees (for example, part-time employees, directors and so forth). | (i) Individuals other than full-time active employees (for example, part-time employees, directors and so forth). | |
| What is the concept of replacement ratio and how can it be used by firms for setting benefit levels of retirement and disability plans? (a) It is a percentage of the estimated final pay of an employee used in designing a retirement plan. (b) It is a ratio of average or normal earnings used in designing a disability income plan. (c) It is a ratio of the employee's current salary to the estimated final pay. (d) It is a percentage of the employee's current salary used in designing a retirement plan. | (a) It is a percentage of the estimated final pay of an employee used in designing a retirement plan. | |
| Which of the following are considered when designing a retirement plan using the concept of replacement ratio? (I) Income from Social Security (II) Various capital accumulation benefits (III) The retirement plan itself (IV) The employee's current salary | (I), (II), (III) | |
| All of the following are reasons why accumulation-oriented benefits usually involve a longer probationary period than protection-oriented benefits, EXCEPT: (a) Accumulation-oriented benefits reward an employee for relatively long service with an employer. (b) The longer probationary period is not a disadvantage for long-term employees. (c) Protection-oriented benefits protect employees and their dependents against serious loss exposures that could spell immediate financial disaster. (d) Accumulation-oriented benefits are viewed as a reward for short service. | (d) Accumulation-oriented benefits are viewed as a reward for short service. | |
| What is the impact of making a plan contributory on employee participation? 1. It increases employee participation 2. It decreases employee participation 3. It varies the levels or types of benefits in accordance with the degree of employee contributions 4. It creates an employee relations problem | 3. It varies the levels or types of benefits in accordance with the degree of employee contributions | |
| Which of the following are impacts of making a plan contributory on employee participation? (Choose two) I. It increases employee participation II. It decreases employee participation III. It varies the levels or types of benefits in accordance with the degree of employee contributions IV. It creates an employee relations problem | III, IV | |
| All of the following are impacts of making a plan contributory on employee participation, EXCEPT: 1. It increases employee participation 2. It decreases employee participation 3. It varies the levels or types of benefits in accordance with the degree of employee contributions 4. It creates an employee relations problem | 1. It increases employee participation | |
| Which of the following is an argument related to flexibility in the design of an employee benefit plan as related to the functional approach to benefit planning? 1. Flexibility in plan design such as optional participation, coverage amount and coverage options facilitates the functional approach. 2. Allowing flexibility in types and amounts of benefits works against the functional approach. 3. Flexibility in plan design has no impact on the functional approach. 4. The functional approach to benefit planning does not require flexibility in plan design. | 1 | |
| Which of the following arguments are related to flexibility in the design of an employee benefit plan as related to the functional approach to benefit planning? (Select all that apply) I. Flexibility in plan design such as optional participation, coverage amount and coverage options facilitates the functional approach. II. Allowing flexibility in types and amounts of benefits works against the functional approach. III. Flexibility in plan design has no impact on the functional approach. IV. The functional approach to benefit planning does not require flexibility in plan design. | I, II | |
| Which of the following is NOT an argument related to flexibility in the design of an employee benefit plan as related to the functional approach to benefit planning? 1. Flexibility in plan design such as optional participation, coverage amount and coverage options facilitates the functional approach. 2. Allowing flexibility in types and amounts of benefits works against the functional approach. 3. Flexibility in plan design has no impact on the functional approach. 4. The functional approach to benefit planning does not require flexibility in plan design. | 3 | |
| What is the first step that should be taken when conducting a review or audit of an existing employee benefit program to align the benefit plans for talent acquisition with organizational strategic objectives? 1. Consider recommendations for changes in the present plan. 2. Determine gaps in benefits and any overlapping benefits. 3. Evaluate alternative methods of financing benefits. 4. Communicate benefit changes to employees. | 2. Determine gaps in benefits and any overlapping benefits. | |
| When conducting a review or audit of an existing employee benefit program to align the benefit plans for talent acquisition with organizational strategic objectives, which of the following steps should be taken? (Choose two) I. Implement any changes. II. Ignore cost-saving or cost-containment techniques. III. Periodically reevaluate the plan, testing its alignment in achieving intended results. IV. Avoid communicating benefit changes to employees. | I, III | |
| When conducting a review or audit of an existing employee benefit program to align the benefit plans for talent acquisition with organizational strategic objectives, all of the following steps should be taken EXCEPT: 1. Determine gaps in benefits and any overlapping benefits. 2. Consider recommendations for changes in the present plan. 3. Ignore cost-saving or cost-containment techniques. 4. Decide on appropriate benefits and financing methods. | 3. Ignore cost-saving or cost-containment techniques. | |
| What does the concept of risk refer to within the context of employee benefit planning? 1. The inability to determine with certainty the actual number and value of claims a benefit plan will have to meet. 2. The certainty of possible losses. 3. The ability to predict the exact number of claims a benefit plan will have to meet. 4. The certainty of the actual number and value of claims a benefit plan will have to meet. | 1 | |
| In the context of employee benefit planning, the concept of risk includes which of the following? I. Uncertainty with respect to possible losses. II. The inability to determine with certainty the actual number and value of claims a benefit plan will have to meet. III. The certainty of possible gains. IV. The ability to predict the exact number of claims a benefit plan will have to meet. | I, II | |
| In the context of employee benefit planning, the concept of risk includes all of the following EXCEPT: 1. Uncertainty with respect to possible losses. 2. The inability to determine with certainty the actual number and value of claims a benefit plan will have to meet. 3. The certainty of possible gains. 4. The ability to predict the exact number of claims a benefit plan will have to meet. | 3 | |
| What is the definition of risk in relation to peril and hazard? 1. Risk is the cause of a loss. 2. Risk is a condition that increases the probability that a peril will occur. 3. Risk is defined as uncertainty concerning the possibility of a loss. 4. Risk is the severity of the loss when a peril occurs. | 3. Risk is defined as uncertainty concerning the possibility of a loss. | |
| Which of the following statements are true regarding risk, peril and hazard? (Choose all that apply) I. A peril is the cause of a loss. II. A hazard is a condition that increases the probability that a peril will occur. III. Risk is the severity of the loss when a peril occurs. IV. A hazard tends to increase the severity of the loss when a peril occurs. | I, II, IV | |
| Which of the following is NOT true about risk, peril and hazard? 1. Risk is defined as uncertainty concerning the possibility of a loss. 2. A peril is the cause of a loss. 3. A hazard is a condition that increases the probability that a peril will occur. 4. Risk is the severity of the loss when a peril occurs. | 4. Risk is the severity of the loss when a peril occurs. | |
| Which of the following is a physical hazard? 1. Dishonesty in an individual 2. Defective wiring in a building 3. Carelessness due to insurance coverage 4. Unneeded medical tests | 2. Defective wiring in a building | |
| Which of the following are examples of moral and morale hazards? (Choose two) I. Arson due to dishonesty II. Higher premiums for all insureds III. Carelessness due to insurance coverage IV. Defective wiring in a building | I, III | |
| All of the following are examples of hazards, EXCEPT: 1. Defective wiring in a building 2. Dishonesty in an individual 3. Carelessness due to insurance coverage 4. Regular maintenance of fire-extinguishing equipment | 4. Regular maintenance of fire-extinguishing equipment | |
| What are the possible outcomes of a pure risk? 1. A loss, no loss or a gain 2. Only a loss or no loss 3. Only a gain or no gain 4. A loss, no loss, a gain or a huge gain | Only a loss or no loss | |
| Which of the following are examples of pure risks? (Choose all that apply) I. The risks of fire II. Acquiring a new business venture III. Illness IV. Purchase of a share of common stock | I, III | |
| All of the following are outcomes of speculative risks, except? 1. A loss 2. No loss 3. A gain 4. A huge gain | A huge gain | |
| From an employee benefit perspective, which type of pure risk is the most important to cover? 1. Market Risk 2. Personal Risk 3. Operational Risk 4. Credit Risk | Personal Risk | |
| Which of the following are considered personal risks from an employee benefit standpoint? (Select all that apply) I. Death II. Market Fluctuations III. Illness IV. Disability V. Unemployment VI. Old Age | I, III, IV, V, VI | |
| All of the following are types of personal risks from an employee benefit standpoint, EXCEPT: 1. Death 2. Illness 3. Disability 4. Market Fluctuations 5. Unemployment 6. Old Age | Market Fluctuations | |
| What does property risk involve in the context of property and legal liability risks? 1. Potential losses to the value of one’s real or personal property 2. Losses resulting from the negligent or wrongful actions of individuals 3. Losses resulting from lawsuits by injured people 4. Losses resulting from professional misconduct | 1 | |
| Which of the following are examples of potential sources of property risks? (Choose all that apply) I. Fire II. Flood III. Earthquake IV. Negligent behavior associated with the ownership and use of automobiles | I, II, III | |
| All of the following are common sources of legal liability risks EXCEPT: 1. Negligent behavior associated with the ownership and use of automobiles 2. The operations of one’s home or business 3. The manufacture and/or sale of products 4. Fire | 4 | |
| Which of the following employee benefit plans can involve property and liability risk counseling and coverages? 1. Homeowner insurance 2. Auto insurance 3. Group legal services plans 4. Financial planning and wellness programs 5. Health insurance | 1 | |
| Which of the following employee benefit plans can involve property and liability risk counseling and coverages? (Select all that apply) I. Homeowner insurance II. Auto insurance III. Group legal services plans IV. Financial planning and wellness programs V. Health insurance | I, II, III, IV | |
| Which of the following employee benefit plans does not involve property and liability risk counseling and coverages? 1. Homeowner insurance 2. Auto insurance 3. Group legal services plans 4. Financial planning and wellness programs 5. Health insurance | 5 | |
| Which of the following is a method for handling risk? 1. Avoidance 2. Control 3. Retention 4. Transfer 5. Insurance | All of the above | |
| Which of the following are methods for handling risk? (Choose all that apply) I. Avoidance II. Control III. Retention IV. Transfer V. Insurance | I, II, III, IV, V | |
| Which of the following is NOT a method for handling risk? 1. Avoidance 2. Control 3. Retention 4. Transfer 5. Insurance | None of the above | |
| Which of the following best defines insurance? 1. A contract where the insurer agrees to compensate the insured for specific losses 2. A financial investment tool 3. A method of transferring risk from one party to another 4. The pooling of fortuitous losses by transfer of such risks to insurers who agree to indemnify insureds for such losses or to render services connected with the risk. | 4 | |
| Which of the following are components of the definition of insurance? (Choose all that apply) I. The pooling of fortuitous losses II. Transfer of risks to insurers III. Insurers agree to indemnify insureds for such losses IV. Insurers render services connected with the risk V. Insurers provide financial advice | I, II, III, IV | |
| Which of the following is NOT part of the definition of insurance? 1. The pooling of fortuitous losses 2. Transfer of risks to insurers 3. Insurers agree to indemnify insureds for such losses 4. Insurers render services connected with the risk 5. Insurers provide financial advice | 5 | |
| What is the role of insurance in an employee benefit plan? 1. It is a mechanism where the insured pays money into a fund 2. It is a mechanism where the insured receives money from a fund 3. It is a mechanism where the insured does not pay any money 4. It is a mechanism where the insured does not receive any money | 1. It is a mechanism where the insured pays money into a fund | |
| From the standpoint of an employee benefit plan, which of the following are true about insurance? I. Large benefit plans may utilize insurance II. Employers that choose to self-insure will layer some sort of stop-loss coverage III. Many small- to medium-size firms rely almost exclusively on the insurance mechanism IV. Smaller firms typically do not have sufficient covered lives to allow the necessary pooling of exposure units | I, II, III, IV | |
| Which of the following is not true about insurance as a mechanism from the standpoint of an employee benefit plan? 1. Upon the occurrence of a loss, reimbursement is provided to the person suffering the loss 2. The risk has been reduced or eliminated for the insured 3. All the individuals who paid into the fund share the resulting loss 4. Insurance is the only means by which an employee benefit plan may be financed | 4. Insurance is the only means by which an employee benefit plan may be financed | |
| Which of the following is a key difference between the insurance mechanism and gambling? 1. Insurance creates a risk where one did not previously exist. 2. The risk created by gambling is a speculative risk, whereas insurance deals with pure risks. 3. Gambling involves a gain for one party at the expense of the other, whereas insurance is based on a mutual sharing of any losses that occur. 4. The winner in an insurance transaction remains in that positive situation, whereas a gambler who suffers a loss is financially restored in whole or in part to their original situation. | 2 | |
| Which of the following statements are true regarding the differences between insurance and gambling? (Choose two) I. Insurance is a mechanism for handling an existing risk, whereas gambling creates a risk where one did not previously exist. II. The risk created by gambling is a speculative risk, whereas insurance deals with pure risks. III. Gambling involves a gain for one party (the winner) at the expense of the other (the loser) whereas insurance is based on a mutual sharing of any losses that occur. IV. The loser in a gambling transaction remains in that negative situation, whereas an insured who suffers a loss is financially restored in whole or in part to their original situation. | I, II | |
| Which of the following is NOT a difference between the insurance mechanism and gambling? 1. Insurance creates a risk where one did not previously exist. 2. The risk created by gambling is a speculative risk, whereas insurance deals with pure risks. 3. Gambling involves a gain for one party at the expense of the other, whereas insurance is based on a mutual sharing of any losses that occur. 4. The winner in an insurance transaction remains in that positive situation, whereas a gambler who suffers a loss is financially restored in whole or in part to their original situation. | 4 | |
| What does the principle of indemnification in insurance imply? 1. The insured is placed in a better situation than before the loss. 2. The insured is placed in the same situation that existed prior to the loss. 3. The insured is not compensated for the loss. 4. The insured is only compensated for half of the loss. | 2 | |
| Which of the following are examples of indemnification in insurance? (Choose all that apply) I. Reimbursement for damaged property II. Medical bills III. Disability income IV. Profit from the loss | I, II, III | |
| All of the following are contrary to the principle of indemnification EXCEPT: 1. The insured is not compensated for the loss. 2. The insured is placed in a better situation than before the loss. 3. The insured is only compensated for half of the loss. 4. The insured is placed in the same situation that existed prior to the loss. | 4 | |
| Which of the following risk-handling alternatives is mutually exclusive of the others? 1. Transfer 2. Avoidance 3. Mitigation 4. Acceptance | Avoidance | |
| Which of the following risk-handling alternatives can be used together? (Select all that apply) I. Transfer II. Avoidance III. Mitigation IV. Acceptance | I, III, IV | |
| All of the following risk-handling alternatives can be used in conjunction with others, EXCEPT: 1. Transfer 2. Avoidance 3. Mitigation 4. Acceptance | Avoidance | |
| Which of the following is a risk management technique that could be used to handle the personal risk inherent in aging and the need for long-term care? 1. Insurance 2. Proper health care and living conditions 3. Identifying a means by which to pay for care from accumulated savings or from income 4. All of the above | 4. All of the above | |
| Which of the following strategies may families consider to manage the risk of needing long-term care? (Choose all that apply) I. Insurance II. Medicaid planning III. Planning with potential caregivers IV. Increased savings amounts | I, II, III, IV | |
| Which of the following is NOT a strategy that employers have used to help employees understand and plan for the risk of needing long-term care? 1. Providing access to insurance 2. Long-term care planning services through employee assistance programs 3. Offering a higher salary 4. All of the above | 3. Offering a higher salary | |
| Which of the following is a characteristic of an ideal insurable risk from the standpoint of an insurance company? 1. The loss should be intentional from the standpoint of the insured. 2. The premium should be unreasonable or economically unfeasible. 3. The loss should be both verifiable and measurable. 4. The loss should be catastrophic in nature. | The loss should be both verifiable and measurable. | |
| Which of the following are characteristics of an ideal insurable risk from the standpoint of an insurance company? (Choose two) I. The loss should be both verifiable and measurable. II. The loss should be catastrophic in nature. III. The premium should be reasonable or economically feasible. IV. The loss should be intentional from the standpoint of the insured. | I, III | |
| All of the following are characteristics of an ideal insurable risk from the standpoint of an insurance company, EXCEPT: 1. The loss should be both verifiable and measurable. 2. The loss should be catastrophic in nature. 3. The premium should be reasonable or economically feasible. 4. The loss should be accidental and unintentional from the standpoint of the insured. | The loss should be catastrophic in nature. | |
| What does the law of large numbers in insurance mean? 1. The greater the number of exposures, the more closely the actual results will approach the probable results. 2. The smaller the number of exposures, the more closely the actual results will approach the probable results. 3. The number of exposures has no effect on the actual results. 4. The number of exposures inversely affects the actual results. | 1 | |
| Which of the following statements are true about the law of large numbers in insurance? (Choose two) I. The law of large numbers means that the greater the number of exposures, the more closely the actual results will approach the probable results. II. The law of large numbers means that the smaller the number of exposures, the more closely the actual results will approach the probable results. III. The law of large numbers means that the number of exposures has no effect on the actual results. IV. The law of large numbers means that the number of exposures inversely affects the actual results. | I, IV | |
| All of the following are true about the law of large numbers in insurance, EXCEPT: 1. The greater the number of exposures, the more closely the actual results will approach the probable results. 2. The law of large numbers means that the number of exposures inversely affects the actual results. 3. The law of large numbers means that the smaller the number of exposures, the more closely the actual results will approach the probable results. 4. Insurance is based on the law of large numbers. | 3 | |
| How do employee benefit plans typically handle the possibility of catastrophic losses? 1. They ignore the possibility of catastrophic losses 2. They insure life risks, hospital and dental risks, and disability income losses 3. They use policy limitations, reinsurance and restrictions on groups insured to minimize the problem 4. They increase the premium rates to cover the potential losses | They insure life risks, hospital and dental risks, and disability income losses; They use policy limitations, reinsurance and restrictions on groups insured to minimize the problem | |
| Which of the following are ways in which employee benefit plans handle the possibility of catastrophic losses? (Choose all that apply) I. Insuring life risks, hospital and dental risks, and disability income losses II. Ignoring the possibility of catastrophic losses III. Using policy limitations, reinsurance and restrictions on groups insured to minimize the problem IV. Increasing the premium rates to cover the potential losses | I, III | |
| All of the following are ways in which employee benefit plans handle the possibility of catastrophic losses, EXCEPT: 1. Insuring life risks, hospital and dental risks, and disability income losses 2. Ignoring the possibility of catastrophic losses 3. Using policy limitations, reinsurance and restrictions on groups insured to minimize the problem 4. Increasing the premium rates to cover the potential losses | Ignoring the possibility of catastrophic losses | |
| What does the term 'adverse selection' refer to in insurance? 1. When individuals with lower-than-average risks join a group because of the availability of insurance or other benefits. 2. When individuals who have higher-than-average risks join a group or comprise a larger percentage of a group than anticipated because of the availability of insurance or other benefits. 3. When individuals with average risks join a group because of the availability of insurance or other benefits. 4. When individuals with higher-than-average risks avoid joining a group because of the lack of insurance or other benefits. | 2 | |
| Which of the following statements accurately describe the concept of adverse selection? (Choose two) I. Adverse selection exists when individuals with higher-than-average risks join a group because of the availability of insurance or other benefits. II. Adverse selection is when those with the greater probabilities of loss, and who therefore need insurance more than the average insured, attempt to obtain the coverage. III. Adverse selection occurs when individuals with lower-than-average risks join a group because of the availability of insurance or other benefits. IV. Adverse selection is when those with the lower probabilities of loss, and who therefore need insurance less than the average insured, attempt to avoid the coverage. | I, II | |
| Which of the following statements does NOT accurately describe the concept of adverse selection? 1. Adverse selection exists when individuals with higher-than-average risks join a group because of the availability of insurance or other benefits. 2. Adverse selection is when those with the greater probabilities of loss, and who therefore need insurance more than the average insured, attempt to obtain the coverage. 3. Adverse selection occurs when individuals with lower-than-average risks join a group because of the availability of insurance or other benefits. 4. Adverse selection is when those with the lower probabilities of loss, and who therefore need insurance less than the average insured, attempt to avoid the coverage. | 3 | |
| What is the process by which insurers select and classify applicants for insurance? 1. Underwriting 2. Risk Assessment 3. Policy Provision 4. Adverse Selection | Underwriting | |
| Which of the following are examples of policy provisions historically used to control adverse selection? (Select all that apply) I. Preexisting conditions clauses in medical expense policies II. Suicide clauses III. Maximum coverage amounts IV. Open enrollment period restrictions | I, II, III, IV | |
| Which of the following is NOT a method used by insurers to address the problem of adverse selection by individual applicants for insurance coverage? 1. Use of sophisticated underwriting methods 2. Supportive policy provisions 3. Increasing the premium for all policyholders 4. Controlling the spread of risks | Increasing the premium for all policyholders | |
| How does the group insurance underwriting technique used in employee benefit plans manage the problem of adverse selection differently from individual insurance? 1. Group insurance is based on the group as a unit 2. Individual insurance eligibility requirements are used for the group insurance underwriting 3. The group technique itself is used to control the problem of adverse selection 4. Adverse selection is not a problem in group insurance | 1, 3 | |
| Which of the following statements are true regarding the management of adverse selection under group insurance contracts? I. Group insurance is based on the group as a unit II. Individual insurance eligibility requirements are not used for the group insurance underwriting III. The group technique itself is used to control the problem of adverse selection IV. Adverse selection is not a problem in group insurance | I, II, III | |
| Which of the following is not a way the group insurance underwriting technique used in employee benefit plans manages the problem of adverse selection differently from individual insurance? 1. Group insurance is based on the group as a unit 2. Individual insurance eligibility requirements are used for the group insurance underwriting 3. The group technique itself is used to control the problem of adverse selection 4. Adverse selection is not a problem in group insurance | 2 | |
| Which of the following is NOT a characteristic of the group technique that enables coverages such as life and health insurance to be written as employee benefit plans by minimizing the risk of adverse selection? 1. Only certain groups are eligible 2. There should be a steady flow of lives through the group 3. There should be a minimum number of persons in the group 4. The group should be formed solely for the purpose of obtaining insurance | 4. The group should be formed solely for the purpose of obtaining insurance | |
| Which of the following are characteristics of the group technique that enable such coverages as life and health insurance to be written as employee benefit plans by minimizing the risk of adverse selection? I. Only certain groups are eligible II. There should be a steady flow of lives through the group III. There should be a minimum number of persons in the group IV. The group should be formed solely for the purpose of obtaining insurance | I, II, III | |
| All of the following are characteristics of the group technique that enable such coverages as life and health insurance to be written as employee benefit plans by minimizing the risk of adverse selection, EXCEPT: 1. Only certain groups are eligible 2. There should be a steady flow of lives through the group 3. There should be a minimum number of persons in the group 4. The group should be formed solely for the purpose of obtaining insurance | 4. The group should be formed solely for the purpose of obtaining insurance | |
| Which of the following is a reason for the liberalization of the requirements of the group technique over the years? 1. Providers of employee benefits have gained experience in handling group employee benefits. 2. The competitive environment. 3. The group selection technique has become obsolete. 4. Employee benefits no longer work on a group basis. | 1 | |
| Which of the following have contributed to the liberalization of the requirements of the group technique over the years? (Select all that apply) I. Providers of employee benefits have gained experience in handling group employee benefits. II. The competitive environment. III. The group selection technique has become obsolete. IV. Employee benefits no longer work on a group basis. | I, II | |
| All of the following are reasons for the liberalization of the requirements of the group technique over the years, EXCEPT: 1. Providers of employee benefits have gained experience in handling group employee benefits. 2. The competitive environment. 3. The group selection technique has become obsolete. 4. Employee benefits no longer work on a group basis. | 4 | |
| What is the key characteristic of an ideally insurable risk that must be present for self-funding of employee benefit plans? 1. The organization is small enough to permit the combination of a sufficiently large number of exposure units to make losses predictable. 2. The organization is big enough to permit the combination of a sufficiently large number of exposure units to make losses predictable. 3. The organization has a large number of employees. 4. The organization has a small number of employees. | 2. The organization is big enough to permit the combination of a sufficiently large number of exposure units to make losses predictable. | |
| Which of the following are characteristics of self-funding of employee benefit plans? (Choose two) I. The organization retains the risks as opposed to an insurance company taking on the risks in return for a premium. II. The organization transfers all the risks to an insurance company. III. The use of stop-loss insurance is the means by which plan sponsors transfer a portion of their risk to insurers while retaining a portion of the risk themselves by self-insuring certain risks in their employee benefit plans. IV. The organization is too small to permit the combination of a sufficiently large number of exposure units to make losses predictable. | I, III | |
| All of the following are characteristics of self-funding of employee benefit plans, EXCEPT: 1. The organization retains the risks as opposed to an insurance company taking on the risks in return for a premium. 2. The use of stop-loss insurance is the means by which plan sponsors transfer a portion of their risk to insurers while retaining a portion of the risk themselves by self-insuring certain risks in their employee benefit plans. 3. The organization is big enough to permit the combination of a sufficiently large number of exposure units to make losses predictable. 4. The organization transfers all the risks to an insurance company. | 4. The organization transfers all the risks to an insurance company. | |
| What is the percentage of the cost of treatment that indemnity plans pay for most services? 1. 50% 2. 60% 3. 80% 4. 100% | 3. 80% | |
| Which of the following features are associated with indemnity plans? (Choose all that apply) I. They are also known as traditional, fee-for-services or conventional plans. II. They require insureds to obtain permission from their physician to access specialty or diagnostic services. III. They pay as much as 100% for emergency/preventive care. IV. They only cover inpatient hospital expenses. | I, III | |
| All of the following are features of indemnity plans, EXCEPT: 1. They are also known as traditional, fee-for-services or conventional plans. 2. They require insureds to obtain permission from their physician to access specialty or diagnostic services. 3. They pay as much as 100% for emergency/preventive care. 4. They cover both inpatient and outpatient hospital expenses. | 2. They require insureds to obtain permission from their physician to access specialty or diagnostic services. | |
| What is the concept of managed care? 1. A model where insurance carriers have no role in steering health services 2. A model where insurance carriers have a role in steering health services and care while prepaying some portion of health care services 3. A model where insurance carriers only provide indemnity plans 4. A model where insurance carriers only provide health maintenance organizations (HMOs) | 2 | |
| Which of the following are true about the concept of managed care? (Choose all that apply) I. Insurance carriers have a role in steering health services and care II. Insurance carriers prepay some portion of health care services III. The managed care model only replaced traditional indemnity plans IV. The managed care model includes health maintenance organizations (HMOs) and their spin-offs | I, II, IV | |
| Which of the following is not true about the concept of managed care? 1. Insurance carriers have a role in steering health services and care 2. Insurance carriers prepay some portion of health care services 3. The managed care model only replaced traditional indemnity plans 4. The managed care model includes health maintenance organizations (HMOs) and their spin-offs | 3 | |
| Which of the following is a common type of employer-sponsored health plan offered as a sole plan or as one of several plan options? 1. An HMO plan 2. A dental plan 3. A vision plan 4. A life insurance plan | 1 | |
| Which of the following are common types of employer-sponsored health plans offered as a sole plan or as one of several plan options? (Select all that apply) I. An HMO plan II. A preferred provider organization (PPO) plan III. A point-of-service (POS) plan IV. A high-deductible health plan (HDHP) linked to a tax-advantaged individual savings account V. A pet insurance plan | I, II, III, IV | |
| All of the following are common types of employer-sponsored health plans offered as a sole plan or as one of several plan options, EXCEPT: 1. An HMO plan 2. A preferred provider organization (PPO) plan 3. A point-of-service (POS) plan 4. A pet insurance plan | 4 | |
| What does an HMO plan require an individual to do? 1. Select a primary care physician from a network of providers 2. Pay a flat dollar amount for each visit 3. File claims for reimbursement 4. All of the above | 1. Select a primary care physician from a network of providers | |
| Which of the following are true about HMO plans? (Select all that apply) I. The primary care physician is responsible for managing the individual’s care II. No benefits are available for care received outside of the HMO network of providers, except for emergency care III. Individuals have to file claims for reimbursement IV. Out-of-pocket expenses for visits are usually a flat dollar amount, called a copay | I, II, IV | |
| Which of the following is not true about HMO plans? 1. The primary care physician can authorize access to additional or specialty care 2. Benefits are available for care received outside of the HMO network of providers 3. Out-of-pocket expenses for visits are usually a flat dollar amount, called a copay 4. Individuals have no need to file claims for reimbursement | 2. Benefits are available for care received outside of the HMO network of providers | |
| What is the structure and operation of a PPO plan? 1. A PPO plan allows limited benefits for care received outside of the PPO’s preferred network and requires no referral to see a specialist. 2. A PPO plan requires a referral to see a specialist and has no benefits for care received outside of the PPO’s preferred network. 3. A PPO plan allows unlimited benefits for care received outside of the PPO’s preferred network and requires a referral to see a specialist. 4. A PPO plan requires a referral to see a specialist and allows limited benefits for care received outside of the PPO’s preferred network. | 1 | |
| Which of the following are characteristics of a PPO plan? (Choose two) I. Allows limited benefits for care received outside of the PPO’s preferred network. II. Requires a referral to see a specialist. III. Some PPO plans have tiers within the preferred network, each of the tiers with varying out-of-pocket costs. IV. For care received outside of the network, out-of-pocket costs can be significantly higher due to higher cost-sharing rates. | I, III | |
| Which of the following is NOT a characteristic of a PPO plan? 1. Allows limited benefits for care received outside of the PPO’s preferred network. 2. Requires a referral to see a specialist. 3. Some PPO plans have tiers within the preferred network, each of the tiers with varying out-of-pocket costs. 4. For care received outside of the network, out-of-pocket costs can be significantly higher due to higher cost-sharing rates. | 2 | |
| Which of the following is a characteristic of a POS plan? 1. The individual may need to select a PCP to obtain referrals for in-network specialty care or other services. 2. The out-of-pocket expenses for in-network providers are copays, similar to those of HMO plans. 3. For out-of-network providers, the out-of-pocket expenses are a percentage of the insurer’s designated prevailing fees. 4. The individual does not need to select a PCP. | 1 | |
| Which of the following characteristics are true for a POS plan? (Select all that apply) I. The individual may need to select a PCP to obtain referrals for in-network specialty care or other services. II. The out-of-pocket expenses for in-network providers are copays, similar to those of HMO plans. III. For out-of-network providers, the out-of-pocket expenses are a percentage of the insurer’s designated prevailing fees. IV. The individual does not need to select a PCP. | I, II, III | |
| Which of the following is not a characteristic of a POS plan? 1. The individual may need to select a PCP to obtain referrals for in-network specialty care or other services. 2. The out-of-pocket expenses for in-network providers are copays, similar to those of HMO plans. 3. For out-of-network providers, the out-of-pocket expenses are a percentage of the insurer’s designated prevailing fees. 4. The individual does not need to select a PCP. | 4 | |
| Which of the following is a possible difference between PPO and POS plans? 1. A primary care provider requirement by a POS but not by a PPO 2. Higher copay amounts for preferred care in a POS than in a PPO 3. A larger network of providers to choose from in a POS than in a PPO 4. Lower copay amounts for preferred care in a POS than in a PPO | 1 | |
| Identify the possible differences between PPO and POS plans. (Choose two) I. A primary care provider requirement by a POS but not by a PPO II. Higher copay amounts for preferred care in a POS than in a PPO III. A larger network of providers to choose from in a POS than in a PPO IV. Lower copay amounts for preferred care in a POS than in a PPO | I, IV | |
| All of the following are possible differences between PPO and POS plans, EXCEPT: 1. A primary care provider requirement by a POS but not by a PPO 2. Higher copay amounts for preferred care in a POS than in a PPO 3. A larger network of providers to choose from in a POS than in a PPO 4. Lower copay amounts for preferred care in a POS than in a PPO | 3 | |
| What is the rationale for High Deductible Health Plans (HDHPs) with personal savings options? 1. To provide catastrophic insurance and lower premium costs 2. To encourage participants to be better consumers of health care 3. To offer the possibility of accumulating health care savings in a tax-advantaged personal account 4. All of the above | 4. All of the above | |
| Which of the following are operating features of High Deductible Health Plans (HDHPs) with personal savings options? (Choose two) I. The account linked to the HDHP must meet regulatory requirements to receive favorable tax treatment II. The type of account that is used dictates whether employer or employee contributions, or both, may be made to fund the personal account III. The HDHP provides catastrophic insurance; it trades lower premium costs for a higher deductible IV. The HDHP offers the possibility of “accumulating” health care savings in a tax-advantaged personal account | I, II | |
| Which of the following is NOT a rationale for High Deductible Health Plans (HDHPs) with personal savings options? 1. To provide catastrophic insurance and lower premium costs 2. To encourage participants to be better consumers of health care 3. To offer the possibility of accumulating health care savings in a tax-advantaged personal account 4. To provide comprehensive coverage with low deductibles | 4. To provide comprehensive coverage with low deductibles | |
| Which of the following is a type of saving option that is coupled with HDHPs? 1. Flexible spending accounts (FSAs) 2. Health reimbursement arrangements (HRAs) 3. Health savings accounts (HSAs) 4. Retirement savings accounts (RSAs) | Retirement savings accounts (RSAs) | |
| Which of the following are types of saving options that are coupled with HDHPs? (Choose two) I. Flexible spending accounts (FSAs) II. Health reimbursement arrangements (HRAs) III. Health savings accounts (HSAs) IV. Retirement savings accounts (RSAs) | I, II | |
| All of the following are types of saving options that are coupled with HDHPs, except? 1. Flexible spending accounts (FSAs) 2. Health reimbursement arrangements (HRAs) 3. Health savings accounts (HSAs) 4. Retirement savings accounts (RSAs) | Retirement savings accounts (RSAs) | |
| Which of the following statements about FSAs, HRAs, and HSAs is correct? 1. FSAs are only offered with high-deductible health plans. 2. HRAs are employee-funded accounts established to pay health care expenses. 3. HSAs are owned by the employee and funded with tax-free contributions made either by the employee, the employer or both. 4. Unused contributions from FSAs can be rolled over from year to year. | 3 | |
| Which of the following characteristics apply to FSAs? (Choose all that apply) I. They are offered with all kinds of medical plan options. II. Individuals can elect a certain amount to be deducted on a pretax basis from their paycheck. III. Unused contributions can be rolled over from year to year. IV. Employers are required by law to make contributions to this account. | I, II | |
| All of the following are characteristics of HSAs, EXCEPT: 1. They are coupled with high-deductible health plans. 2. These accounts are owned by the employer. 3. Unused contributions from these accounts can be rolled over from year to year. 4. At age 65, withdrawals made for nonmedical expenses are only subject to ordinary income taxes. | 2 | |
| Which of the following statements is true about an in-network provider? 1. An in-network provider does not have a contract with the health insurance plan. 2. An in-network provider provides services to the member at a discount. 3. An in-network provider costs a member considerably more than those out of network. 4. An in-network provider is also known as a nonpreferred provider. | 2. An in-network provider provides services to the member at a discount. | |
| Which of the following are characteristics of an out-of-network provider? (Choose two) I. An out-of-network provider is also known as a nonpreferred provider. II. An out-of-network provider has a contract with the health insurance plan. III. An out-of-network provider costs a member considerably more than those in network. IV. An out-of-network provider provides services to the member at a discount. | I, III | |
| All of the following are true, EXCEPT: 1. An in-network provider is also known as a preferred provider. 2. An out-of-network provider costs a member considerably more than those in network. 3. Some plans may have a “tiered” network with varying out-of-pocket expenses for members. 4. An out-of-network provider provides services to the member at a discount. | 4. An out-of-network provider provides services to the member at a discount. | |
| What does an out-of-pocket expense maximum refer to in a health insurance plan? 1. The total amount a member pays for insurance premiums during a plan year 2. The maximum amount a member pays during a plan year before the health insurance begins to pay 100% of the allowed amount 3. The total balance-billed charges a member pays during a plan year 4. The total expenses for care services not covered by the health plan a member pays during a plan year | 2 | |
| Which of the following are NOT included in the out-of-pocket expense maximum in a health insurance plan? I. Insurance premiums paid by the member II. Balance-billed charges III. Expenses for care services not covered by the health plan IV. The total amount a member pays before the health insurance begins to pay 100% of the allowed amount | I, II, III | |
| All of the following are included in the out-of-pocket expense maximum in a health insurance plan EXCEPT: 1. Insurance premiums paid by the member 2. Balance-billed charges 3. Expenses for care services not covered by the health plan 4. The total amount a member pays before the health insurance begins to pay 100% of the allowed amount | 1, 2, 3 | |
| What is the definition of the terms allowed amount and usual, customary or reasonable (UCR) fee? 1. Terms used by health plans to determine the maximum amount the plan will pay for covered health care services. 2. Terms used by health plans to determine the minimum amount the plan will pay for covered health care services. 3. Terms used by health plans to determine the average amount the plan will pay for covered health care services. 4. Terms used by health plans to determine the exact amount the plan will pay for covered health care services. | 1 | |
| Which of the following statements are true regarding the terms allowed amount and usual, customary or reasonable (UCR) fee? I. These terms are used by health plans to determine the maximum amount the plan will pay for covered health care services. II. Other terms also used are eligible expense, payment allowance or negotiated rate. III. For in-network providers, if the provider charges more than the allowed amount by the health plan, the provider can charge the member for the difference. IV. For out-of-network providers, if the provider charges more than the allowed amount by the health plan, the provider can charge the member for the difference. | I, II, IV | |
| All of the following are true about the terms allowed amount and usual, customary or reasonable (UCR) fee, EXCEPT: 1. These terms are used by health plans to determine the maximum amount the plan will pay for covered health care services. 2. Other terms also used are eligible expense, payment allowance or negotiated rate. 3. For in-network providers, if the provider charges more than the allowed amount by the health plan, the provider can charge the member for the difference. 4. For out-of-network providers, if the provider charges more than the allowed amount by the health plan, the provider can charge the member for the difference. | 3 | |
| Which of the following is a special consideration given to care designated as preventive care? 1. Preventive care services are covered under health plans without any deductibles, copayments or coinsurance when provided by in-network providers. 2. Preventive care services are always free of charge. 3. Preventive care services are not covered by health plans. 4. Preventive care services are only covered by health plans when provided by out-of-network providers. | 1 | |
| Which of the following are special considerations given to care designated as preventive care? (Select all that apply) I. Preventive care services are covered under health plans without any deductibles, copayments or coinsurance when provided by in-network providers. II. Only plans deemed grandfathered, that is, in existence on March 23, 2010, may require cost sharing for specified preventive care. III. Preventive care services are always free of charge. IV. Preventive care services are not covered by health plans. | I, II | |
| Which of the following is NOT a special consideration given to care designated as preventive care? 1. Preventive care services are covered under health plans without any deductibles, copayments or coinsurance when provided by in-network providers. 2. Only plans deemed grandfathered, that is, in existence on March 23, 2010, may require cost sharing for specified preventive care. 3. Preventive care services are always free of charge. 4. Preventive care services are not covered by health plans. | 4 | |
| What was the status of prescription drug expenses in the early days of employer-sponsored health plans? 1. They represented a large portion of overall health expenditures 2. They were not covered by the plans 3. They were covered by the plans but at a high cost 4. They were covered by the plans with no additional cost | They were not covered by the plans | |
| Which of the following are functions performed by pharmaceutical benefit managers (PBMs)? I. Process prescription claims II. Reimburse pharmacies for dispensing drugs III. Perform cost containment IV. Manage acute care V. Manage chronic care | I, II, III, V | |
| Which of the following is NOT a characteristic of prescription drug coverage today? 1. Prescription drug coverage is typically carved out of medical health plans 2. Prescription drug coverage is administered by pharmaceutical benefit managers (PBMs) 3. Prescription drug expenses are subject to the same deductibles and coinsurance rates as office visits, laboratory work and other outpatient services 4. PBMs are third-party administrators contracted by plan sponsors to process prescription claims and reimburse pharmacies for dispensing drugs | Prescription drug expenses are subject to the same deductibles and coinsurance rates as office visits, laboratory work and other outpatient services | |
| What has been the impact of parity legislation on mental health and substance abuse (MH/SA) benefits? 1. It has increased the coverage for MH/SA benefits compared with medical and surgical care. 2. It has decreased the coverage for MH/SA benefits compared with medical and surgical care. 3. It has made no significant changes to the coverage for MH/SA benefits compared with medical and surgical care. 4. It has provided significantly more limited coverage for MH/SA benefits compared with medical and surgical care. | 1 | |
| Which of the following are impacts of parity legislation on mental health and substance abuse (MH/SA) benefits? (Select all that apply) I. Lower reimbursement rates for MH/SA services II. Fewer allowed visits for MH/SA services III. Lower lifetime and annual out-of-pocket maximums for MH/SA services IV. The inequities between the two types of benefits in group health plans have been rolled back | IV | |
| Which of the following has not been an impact of parity legislation on mental health and substance abuse (MH/SA) benefits? 1. Lower reimbursement rates for MH/SA services 2. Fewer allowed visits for MH/SA services 3. Lower lifetime and annual out-of-pocket maximums for MH/SA services 4. The inequities between the two types of benefits in group health plans have been rolled back | 4 | |
| What was a key objective of separating MH/SA benefits from medical and surgical coverage in the MBHO approach? 1. To control costs through better oversight of such expenses 2. To increase the popularity of MBHOs 3. To comply with the provisions of the Affordable Care Act 4. To provide a more integrated care model | 1 | |
| Which of the following statements about the evolution of delivery models for providing MH/SA benefits are true? Select all that apply. I. The MBHO approach of carving out MH/SA benefits originated in the 1980s II. The popularity of MBHOs declined in the early 2000s III. The separation of MH/SA benefits was primarily to comply with the Affordable Care Act IV. Delivery models are now repositioning MH/SA benefits in closer alignment to physical care | I, IV | |
| Which of the following did not contribute to the evolution of delivery models for providing MH/SA benefits? 1. The shift towards carving out behavioral benefits and having them provided by MBHOs 2. The decline in popularity of MBHOs in the early 2000s 3. The provisions of the Affordable Care Act 4. The objective to control costs through better oversight of expenses | 2 | |
| Which of the following is a key major reform enacted by the Patient Protection and Affordable Care Act (ACA)? 1. Expansion of eligibility for medical benefits under the federal government’s program for low-income, financially needy individuals 2. Prohibition against denial of insurance benefits for physical or mental illnesses or conditions that existed before coverage began 3. Restrictions on variation in premium rates by insurers and tax credits/subsidies for low-income individuals purchasing individual coverage 4. Establishment of marketplace exchanges to make available standardized medical plans 5. Group health insurance mandates having direct and indirect impact on employer-sponsored health plans 6. None of the above | 1 | |
| Which of the following key major reforms were enacted by the Patient Protection and Affordable Care Act (ACA)? (Select all that apply) I. Expansion of eligibility for medical benefits under the federal government’s program for low-income, financially needy individuals II. Prohibition against denial of insurance benefits for physical or mental illnesses or conditions that existed before coverage began III. Restrictions on variation in premium rates by insurers and tax credits/subsidies for low-income individuals purchasing individual coverage IV. Establishment of marketplace exchanges to make available standardized medical plans V. Group health insurance mandates having direct and indirect impact on employer-sponsored health plans | I, II, III, IV, V | |
| Which of the following was not a key major reform enacted by the Patient Protection and Affordable Care Act (ACA)? 1. Expansion of eligibility for medical benefits under the federal government’s program for low-income, financially needy individuals 2. Prohibition against denial of insurance benefits for physical or mental illnesses or conditions that existed before coverage began 3. Restrictions on variation in premium rates by insurers and tax credits/subsidies for low-income individuals purchasing individual coverage 4. Establishment of marketplace exchanges to make available standardized medical plans 5. Group health insurance mandates having direct and indirect impact on employer-sponsored health plans 6. None of the above | 6 | |
| Which of the following is a major ACA requirement that impacts employers sponsoring group health plans? 1. Play-or-pay rules requiring medium and large employers to offer health insurance to ACA-defined full-time employees or pay a penalty 2. The establishment of a list of “non-essential health benefits” 3. The elimination of lifetime maximums and the capping of out-of-pocket maximums 4. The expansion of coverage for preventive services | 1, 3, 4 | |
| Identify the major ACA requirements that impact employers sponsoring group health plans. Select all that apply. I. Play-or-pay rules requiring medium and large employers to offer health insurance to ACA-defined full-time employees or pay a penalty II. The establishment of a list of “essential health benefits” III. The elimination of lifetime maximums and the capping of out-of-pocket maximums IV. The expansion of coverage for preventive services V. Temporary tax subsidies to small employers that offer group health VI. New administrative and reporting requirements | I, II, III, IV, V, VI | |
| Which of the following is NOT a major ACA requirement that impacts employers sponsoring group health plans? 1. Play-or-pay rules requiring medium and large employers to offer health insurance to ACA-defined full-time employees or pay a penalty 2. The establishment of a list of “essential health benefits” 3. The elimination of lifetime maximums and the capping of out-of-pocket maximums 4. The expansion of coverage for preventive services 5. Temporary tax subsidies to small employers that offer group health 6. New administrative and reporting requirements 7. The requirement for employers to provide free gym memberships to all employees | 7 | |
| Which of the following services must be provided by group health plans subject to the ACA mandates without charging a deductible, copay or coinsurance? 1. Mammograms 2. Colonoscopies 3. Dental check-ups 4. Eye exams | 1, 2 | |
| Under the ACA, which of the following services are covered without charging a deductible, copay or coinsurance? (Select all that apply) I. Mammograms II. Colonoscopies III. Dental check-ups IV. Eye exams | I, II | |
| Which of the following services are not covered by the ACA mandates without charging a deductible, copay or coinsurance? 1. Mammograms 2. Colonoscopies 3. Dental check-ups 4. Eye exams | 3, 4 | |
| What does the No Surprises Act protect patients from? 1. Surprise medical bills from an out-of-network provider for emergency services 2. Surprise medical bills from an in-network provider for nonemergency services 3. Surprise medical bills from an out-of-network provider for nonemergency services at in-network facilities 4. Surprise medical bills from an out-of-network provider for emergency services by ground ambulances | 1 | |
| Which of the following are included in the No Surprises Act? (Choose all that apply) I. Protection against surprise medical bills from an out-of-network provider for emergency services II. Protection against surprise medical bills from an in-network provider for nonemergency services III. An arbitration process to resolve payment disputes between insurers and out-of-network providers IV. Protections for temporary continuity of care when a provider changes status from in-network to out-of-network | I, III, IV | |
| Which of the following is NOT a protection provided by the No Surprises Act? 1. Patients treated by an out-of-network provider will only be liable for cost-sharing amounts that apply to in-network services 2. Providers cannot send bills for any higher amounts than what is covered by the patient's insurance 3. The legislation establishes an arbitration process to resolve payment disputes between insurers and out-of-network providers 4. The act allows for surprise medical bills from an out-of-network provider for emergency services by ground ambulances | 4 | |
| What does the legislation prohibit insurers and group health plans from doing in relation to 'gag clauses'? 1. Entering into agreements with providers that include a gag clause 2. Making price or quality information available to patients 3. Disclosing provider-specific cost or quality information or data 4. Electronically accessing de-identified claims and encounter information or data for enrollees | 1 | |
| Under the legislation regarding 'gag clauses', which of the following are insurers and group health plans prohibited from doing? I. Entering into agreements with providers that include a gag clause II. Making agreements with providers that restrict the ability to disclose provider-specific cost or quality information or data III. Contracting away their right to electronically access de-identified claims and encounter information or data for enrollees IV. Allowing providers to place reasonable restrictions on public disclosure of information | I, II, III | |
| Which of the following is NOT prohibited under the legislation regarding 'gag clauses'? 1. Insurers and group health plans entering into agreements with providers that include a gag clause 2. Insurers and group health plans making agreements with providers that restrict the ability to disclose provider-specific cost or quality information or data 3. Insurers and group health plans contracting away their right to electronically access de-identified claims and encounter information or data for enrollees 4. Providers placing reasonable restrictions on public disclosure of information | 4 | |
| How is the ban on gag clauses enforced? 1. Through annual attestations submitted by insurers and group health plans 2. Through monthly reports submitted by insurers and group health plans 3. Through quarterly audits conducted by the government 4. Through random checks by the health department | Through annual attestations submitted by insurers and group health plans | |
| Which of the following are true regarding the enforcement of the ban on gag clauses and the role of Congress? (Choose two) I. The ban on gag clauses is enforced through annual attestations submitted by insurers and group health plans II. Congress has never taken action against the practice of inserting gag clauses in health-related contracts III. Congress has previously implemented bans on gag clauses in contracts between pharmacies and insurers or PBMs IV. Gag clauses had allowed pharmacists to disclose cost information to patients | I, III | |
| Which of the following is NOT true regarding the ban on gag clauses and the role of Congress? 1. The ban on gag clauses is enforced through annual attestations submitted by insurers and group health plans 2. Prior to the ban, gag clauses had prevented pharmacists from disclosing cost information to patients 3. Congress has never taken action against the practice of inserting gag clauses in health-related contracts 4. Congress has previously implemented bans on gag clauses in contracts between pharmacies and insurers or PBMs | Congress has never taken action against the practice of inserting gag clauses in health-related contracts | |
| How do payment methods influence the delivery of health care? 1. They determine the length of hospital stay 2. They affect the frequency of home health care visits 3. They have no impact on the delivery of health care 4. They influence the coordination among physicians and hospitals | 1, 2, 4 | |
| Which of the following are ways in which payment methods affect the delivery of health care? (Select all that apply) I. They determine the frequency of diagnostic imaging in physician offices II. They have no impact on the delivery of health care III. They influence the coordination among physicians and hospitals IV. They affect the number of follow-up visits | I, III, IV | |
| Which of the following is NOT a way in which payment methods affect the delivery of health care? 1. They determine the length of hospital stay 2. They influence the coordination among physicians and hospitals 3. They have no impact on the delivery of health care 4. They affect the frequency of home health care visits | 3 | |
| What are the eight basic payment methods applicable across all types of health care? 1. Per time period 2. Per beneficiary 3. Per recipient 4. Per episode 5. Per day 6. Per service 7. Per dollar of cost 8. Per dollar of charges | 1, 2, 3, 4, 5, 6, 7, 8 | |
| Which of the following are among the eight basic payment methods applicable across all types of health care? (Select all that apply) I. Per time period II. Per beneficiary III. Per recipient IV. Per episode V. Per day VI. Per service VII. Per dollar of cost VIII. Per dollar of charges | I, II, III, IV, V, VI, VII, VIII | |
| Which of the following is NOT one of the eight basic payment methods applicable across all types of health care? 1. Per time period 2. Per beneficiary 3. Per recipient 4. Per episode 5. Per day 6. Per service 7. Per dollar of cost 8. Per dollar of charges 9. Per procedure | 9 | |
| Which of the following is a basic method used to reimburse health care providers? 1. Per time period 2. Per beneficiary 3. Per recipient 4. Per episode 5. Per day 6. Per service 7. Per dollar of cost 8. Per dollar of charges 9. Per number of patients | 1, 2, 3, 4, 5, 6, 7, 8 | |
| Identify the basic methods used to reimburse health care providers. (Select all that apply) I. Per time period II. Per beneficiary III. Per recipient IV. Per episode V. Per day VI. Per service VII. Per dollar of cost VIII. Per dollar of charges IX. Per number of patients | I, II, III, IV, V, VI, VII, VIII | |
| All of the following are basic methods used to reimburse health care providers, EXCEPT: 1. Per time period 2. Per beneficiary 3. Per recipient 4. Per episode 5. Per day 6. Per service 7. Per dollar of cost 8. Per dollar of charges 9. Per number of patients | 9 | |
| What was the impact of changing the Medicare inpatient payment method from paying according to hospital costs to paying for diagnosis-related groups (DRGs) in the early 1980s? 1. Increased hospital costs 2. Decreased hospital costs 3. No change in hospital costs 4. Increased length of hospital stay | Decreased hospital costs | |
| Which of the following effects were observed when Medicare moved physician payment from per dollar of charges to per service in the early 1990s? (Select all that apply) I. Medicare was insulated from charge inflation II. Medicare was protected from growth in service volume III. Medicare spending per beneficiary for physician services grew more than twice as fast as spending for other services IV. The change led to a decrease in service volume | I, III | |
| All of the following were effects of the change in Medicare inpatient payment method from paying according to hospital costs to paying for diagnosis-related groups (DRGs) in the early 1980s, EXCEPT: 1. Decreased hospital costs 2. Shorter lengths of stay 3. Reduced growth in Medicare payment 4. Decrease in hospital margins | Decrease in hospital margins | |
| What is the main goal when designing a payment policy? 1. To create a muddle of conflicting incentives 2. To strike the right balance without creating a muddle of conflicting incentives 3. To focus only on the incentives closest to the clinical decision maker 4. To ignore the incentives that matter the most | 2. To strike the right balance without creating a muddle of conflicting incentives | |
| When designing a payment policy, which of the following are important? (Select all that apply) I. Striking the right balance II. Creating a muddle of conflicting incentives III. Focusing on the incentives closest to the clinical decision maker IV. Ignoring the incentives that matter the most | I, III | |
| When designing a payment policy, all of the following are important EXCEPT: 1. Striking the right balance 2. Creating a muddle of conflicting incentives 3. Focusing on the incentives closest to the clinical decision maker 4. Ignoring the incentives that matter the most | 4. Ignoring the incentives that matter the most | |
| Which of the following is a mechanism established to mitigate the financial incentives inherent in various payment methods and to safeguard quality? 1. Utilization review 2. Provider profiling and credentialing 3. Public reporting 4. All of the above | 4. All of the above | |
| Which of the following mechanisms are established to mitigate the financial incentives inherent in various payment methods and to safeguard quality? (Select all that apply) I. Utilization review II. Provider profiling and credentialing III. Public reporting IV. Appeals to professional ethics V. Licensure and certification VI. Peer review VII. Litigation and other disciplinary action VIII. Prohibitions against self-referral | I, II, III, IV, V, VI, VII, VIII | |
| Which of the following is NOT a mechanism established to mitigate the financial incentives inherent in various payment methods and to safeguard quality? 1. Utilization review 2. Provider profiling and credentialing 3. Public reporting 4. None of the above | 4. None of the above | |
| Which of the following is generally associated with CDHPs? 1. Low deductible 2. Personal spending account 3. Lack of information tools for enrollees 4. High deductible | High deductible | |
| Which of the following features are generally associated with CDHPs? (Choose two) I. High deductible II. Personal spending account III. Lack of information tools for enrollees IV. Low deductible | I, II | |
| All of the following are generally associated with CDHPs, EXCEPT: 1. High deductible 2. Personal spending account 3. Information tools for enrollees 4. Low deductible | Low deductible | |
| What were the motivations for developing CDHPs? 1. To control costs and promote greater value in health care spending 2. To accommodate diverse consumer preferences 3. As a backlash against managed care plans 4. To shift responsibility for health care decision making from insurers to consumers | 1, 2, 3, 4 | |
| Which of the following were motivations for developing CDHPs? (Select all that apply) I. To increase health care expenditures II. To control costs and promote greater value in health care spending III. To accommodate diverse consumer preferences IV. As a backlash against managed care plans V. To shift responsibility for health care decision making from insurers to consumers | II, III, IV, V | |
| Which of the following were NOT motivations for developing CDHPs? 1. To increase health care expenditures 2. To control costs and promote greater value in health care spending 3. To accommodate diverse consumer preferences 4. As a backlash against managed care plans 5. To shift responsibility for health care decision making from insurers to consumers | 1 | |
| Which of the following is a concern raised by critics of CDHPs? 1. Consumers may not differentiate effectively between more and less valuable care when making choices. 2. CDHPs will definitely reduce health care spending. 3. There is potential for greater risk segmentation in health insurance markets if CDHPs disproportionately attract favorable risks due to their lower premiums and higher cost sharing. 4. CDHPs will increase the quality of health care. | 1 | |
| Identify the concerns raised by critics of CDHPs. (Choose all that apply) I. Consumers may not differentiate effectively between more and less valuable care when making choices. II. There is potential for greater risk segmentation in health insurance markets if CDHPs disproportionately attract favorable risks due to their lower premiums and higher cost sharing. III. Doubts exist whether or not CDHPs will actually reduce health care spending. IV. CDHPs will increase the quality of health care. | I, II, III | |
| Which of the following is NOT a concern raised by critics of CDHPs? 1. Consumers may not differentiate effectively between more and less valuable care when making choices. 2. There is potential for greater risk segmentation in health insurance markets if CDHPs disproportionately attract favorable risks due to their lower premiums and higher cost sharing. 3. Doubts exist whether or not CDHPs will actually reduce health care spending. 4. CDHPs will increase the quality of health care. | 4 | |
| Which of the following is an aspect of cost sharing relevant to CDHPs? 1. The annual deductible 2. The plan's cost-sharing requirements after the deductible is reached 3. The annual out-of-pocket maximum 4. The monthly premium | The monthly premium | |
| Which of the following aspects of cost sharing are relevant to CDHPs? (Choose two) I. The annual deductible II. The plan's cost-sharing requirements after the deductible is reached III. The annual out-of-pocket maximum IV. The monthly premium | I, II | |
| All of the following are aspects of cost sharing relevant to CDHPs, EXCEPT: 1. The annual deductible 2. The plan's cost-sharing requirements after the deductible is reached 3. The annual out-of-pocket maximum 4. The monthly premium | The monthly premium | |
| Who can fund health reimbursement arrangements (HRAs) and health savings accounts (HSAs)? 1. Only the employer can fund both HRAs and HSAs 2. Only the employee can fund both HRAs and HSAs 3. HRAs may be funded only by the employer; HSAs may be funded by the employee, employer or both 4. Both HRAs and HSAs may be funded by the employee, employer or both | 3. HRAs may be funded only by the employer; HSAs may be funded by the employee, employer or both | |
| Identify the correct statements about health reimbursement arrangements (HRAs) and health savings accounts (HSAs). I. HRAs have no federal limit on contributions; HSAs have a maximum allowable annual contribution limit for individuals and families II. Employers may choose whether to allow funds to accumulate from year to year in HRAs III. Nonmedical use is not allowed with HRAs IV. Withdrawals from HSAs for nonmedical use are allowed but subject to income tax and penalties if the participant is under age 65 | I, II, III, IV | |
| Which of the following is NOT a feature of health reimbursement arrangements (HRAs) and health savings accounts (HSAs)? 1. HRAs may be funded only by the employer; HSAs may be funded by the employee, employer or both 2. HRAs have no federal limit on contributions; HSAs have a maximum allowable annual contribution limit for individuals and families 3. Employers may choose whether to allow funds to accumulate from year to year in HRAs 4. Withdrawals from HSAs for nonmedical use are not subject to income tax and penalties if the participant is under age 65 | 4. Withdrawals from HSAs for nonmedical use are not subject to income tax and penalties if the participant is under age 65 | |
| What effect did the Affordable Care Act (ACA) have on the development of Consumer-Driven Health Plans (CDHPs)? 1. The ACA created uncertainty for CDHPs due to concerns about meeting minimum actuarial value requirements. 2. The ACA made regulatory changes that increased the attractiveness of CDHPs. 3. The ACA had no significant impact on the development of CDHPs. 4. The ACA led to the elimination of CDHPs. | 1 | |
| Which of the following statements are true regarding the impact of the Affordable Care Act (ACA) on the development of Consumer-Driven Health Plans (CDHPs)? I. The ACA created substantial uncertainty for CDHPs. II. The ACA made regulatory changes that increased the attractiveness of CDHPs. III. CDHPs have developed a strong presence in the post-ACA health insurance market. IV. The future of CDHPs under the ACA depends largely on how price-sensitive people are and how they value high-deductible coverage. | I, III, IV | |
| Which of the following statements is NOT true regarding the impact of the Affordable Care Act (ACA) on the development of Consumer-Driven Health Plans (CDHPs)? 1. The ACA created substantial uncertainty for CDHPs. 2. The ACA made regulatory changes that increased the attractiveness of CDHPs. 3. CDHPs have developed a strong presence in the post-ACA health insurance market. 4. The future of CDHPs under the ACA depends largely on how price-sensitive people are and how they value high-deductible coverage. | 2 | |
| What was the initial uncertainty that accompanied early CDHP plan designs? 1. The tax-advantaged status of the spending account component 2. The lack of portability of HRAs 3. The maximum out-of-pocket expenditure for a qualifying plan 4. The preventive care safe harbor | The tax-advantaged status of the spending account component | |
| Which of the following were pivotal regulatory and legislative actions that clarified tax treatment and allowed for the widespread adoption of CDHP plans? I. The Internal Revenue Service (IRS) clarified that HRAs could be excluded from the taxable income of employees II. The passage of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) created the HSA III. The ACA mandated that, beginning in 2010, all plans must cover certain preventive care services with no cost sharing | I, II, III | |
| Which of the following was not a pivotal regulatory and legislative action that clarified tax treatment and allowed for the widespread adoption of CDHP plans? 1. The Internal Revenue Service (IRS) clarified that HRAs could be excluded from the taxable income of employees 2. The passage of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) created the HSA 3. The ACA mandated that, beginning in 2010, all plans must cover certain preventive care services with no cost sharing 4. The introduction of the Affordable Care Act in 2010 | The introduction of the Affordable Care Act in 2010 | |
| Which of the following is a characteristic of the tax treatment enjoyed by HSAs? 1. Contributions from either party—employer or employee—are treated as taxable income. 2. The total combined contributions from both employer and employee must not exceed the governmental limit. 3. Contributions to HSAs may not accumulate over time. 4. HSA withdrawals are subject to income tax even if they are used for qualified medical expenses. | 2 | |
| Which of the following are characteristics of the tax treatment enjoyed by HSAs? (Choose two) I. Contributions from either party—employer or employee—are not treated as taxable income. II. The total combined contributions from both employer and employee must exceed the governmental limit. III. Any interest, earnings or capital gains are also tax-exempt. IV. HSA withdrawals are subject to income tax if they are used for nonqualified medical expenses. | I, III | |
| Which of the following is not a characteristic of the tax treatment enjoyed by HSAs? 1. Contributions from either party—employer or employee—are not treated as taxable income. 2. The total combined contributions from both employer and employee must not exceed the governmental limit. 3. Contributions to HSAs may accumulate over time. 4. HSA withdrawals are not subject to income tax if they are used for nonqualified medical expenses. | 4 | |
| Which of the following statements about the Flexible Spending Account (FSA) is true? 1. The FSA is a new variation on the HRA or the HSA. 2. The FSA predates both the HRA and HSA. 3. The FSA was introduced after the HRA and HSA. 4. The FSA is exclusively utilized in connection with CDHPs. | 2. The FSA predates both the HRA and HSA. | |
| Which of the following are true about the Flexible Spending Account (FSA)? I. The FSA predates both the HRA and HSA. II. The FSA was introduced after the HRA and HSA. III. The FSA is commonly utilized with more traditional health plans. IV. The FSA is exclusively utilized in connection with CDHPs. | I, III | |
| Which of the following statements about the Flexible Spending Account (FSA) is not true? 1. The FSA predates both the HRA and HSA. 2. The FSA was introduced after the HRA and HSA. 3. The FSA is commonly utilized with more traditional health plans. 4. The FSA is exclusively utilized in connection with CDHPs. | 2. The FSA was introduced after the HRA and HSA. | |
| What happens to unused funds left in an FSA at the end of a plan year? 1. They are completely forfeited by a plan participant 2. They are carried over to the next plan year 3. They are refunded to the participant 4. They are donated to a charity | 1 | |
| Which of the following statements are true regarding unused funds in an FSA at the end of a plan year? (Choose two) I. They are subject to the 'use it or lose it' rule II. They are completely forfeited by a plan participant III. They are not subject to any rules IV. They are refunded to the participant | I, II | |
| Which of the following is NOT true about unused funds in an FSA at the end of a plan year? 1. They are subject to the 'use it or lose it' rule 2. They are completely forfeited by a plan participant 3. They are carried over to the next plan year 4. The participant is perceived as 'self-insuring' for certain medical expenses not covered in the base medical plan | 3 | |
| Which of the following is a type of FSA beyond those offered to reimburse participants for medical expenses? 1. Dependent-care FSAs 2. Parking and transit expense reimbursement FSAs 3. Adoption assistance FSAs 4. All of the above | 4. All of the above | |
| Which of the following types of FSAs are permitted under the law? (Select all that apply) I. Dependent-care FSAs II. Non-employer sponsored premium reimbursement FSAs III. Parking and transit expense reimbursement FSAs IV. Adoption assistance FSAs | I, II, III, IV | |
| All of the following are types of FSAs permitted under the law, EXCEPT: 1. Dependent-care FSAs 2. Non-employer sponsored premium reimbursement FSAs 3. Parking and transit expense reimbursement FSAs 4. Employer-sponsored premium reimbursement FSAs | 4. Employer-sponsored premium reimbursement FSAs | |
| Which of the following is a feature of High Deductible Health Plans (HDHPs)? 1. All HDHPs operate identically 2. HDHPs provide insurance coverage for health care expenses 3. HDHPs do not allow the use of in-network or out-of-network providers 4. HDHPs do not have an annual deductible | 2. HDHPs provide insurance coverage for health care expenses | |
| Which of the following are possible delivery models for receiving health care services through HDHPs? (Choose all that apply) I. Preferred Provider Organization (PPO) II. Health Maintenance Organization (HMO) III. Point of Service (POS) program IV. Health Reimbursement Arrangement (HRA) | I, II, III | |
| Which of the following is NOT a feature of High Deductible Health Plans (HDHPs)? 1. The annual deductible needs to be met before plan benefits are paid 2. They allow for the accumulation of savings to assist in funding current and future medical expenses 3. They do not offer the choice of using in-network or out-of-network providers 4. Most service delivery occurs through a PPO, HMO, or POS program | 3. They do not offer the choice of using in-network or out-of-network providers | |
| Which of the following is a fundamental characteristic of an HRA? 1. The HRA is a type of employee-funded health benefit plan. 2. Employees can submit evidence of qualified health expenses to their employer for reimbursement. 3. The HRA sponsor is required to link reimbursements to participation in an HDHP. 4. Employees are allowed to make voluntary contributions to their HRAs. | 2. Employees can submit evidence of qualified health expenses to their employer for reimbursement. | |
| Which of the following are fundamental characteristics of an HRA? (Select all that apply) I. The HRA is a type of employer-funded health benefit plan. II. Employees can submit evidence of qualified health expenses to their employer for reimbursement. III. The HRA sponsor is required to link reimbursements to participation in an HDHP. IV. Employees are prohibited from making any sort of voluntary contribution to their HRAs. | I, II, IV | |
| Which of the following is NOT a fundamental characteristic of an HRA? 1. The HRA is a type of employer-funded health benefit plan. 2. Employees can submit evidence of qualified health expenses to their employer for reimbursement. 3. The HRA sponsor is required to link reimbursements to participation in an HDHP. 4. Employees are prohibited from making any sort of voluntary contribution to their HRAs. | 3. The HRA sponsor is required to link reimbursements to participation in an HDHP. | |
| Which legislative measure resulted in an expansion of the use of the HRA concept by allowing small businesses with fewer than 50 employees to reimburse their employees for purchasing health insurance? 1. The Small Business Health Care Relief Act 2. The Affordable Care Act 3. The Health Insurance Portability and Accountability Act 4. The Employee Retirement Income Security Act | The Small Business Health Care Relief Act | |
| Which of the following measures contributed to the expansion of HRA applications? (Choose all that apply) I. The Small Business Health Care Relief Act II. A presidential executive order in 2017 III. The proposed regulations issued on October 29, 2018 IV. The Affordable Care Act | I, II, III | |
| All of the following measures resulted in an expansion of the use of the HRA concept EXCEPT: 1. The Small Business Health Care Relief Act 2. A presidential executive order in 2017 3. The proposed regulations issued on October 29, 2018 4. The Patient Protection and Affordable Care Act | The Patient Protection and Affordable Care Act | |
| What is a requirement for employers to offer their employees an IMC-HRA? 1. The employer must require participants to enroll in individual medical insurance coverage complying with the Public Health Service Act (PHSA). 2. The employer can offer both an IMC-HRA and a traditional general health plan (GHP) to the same class of employees. 3. The employer does not need to specify in the IMC-HRA plan document the class or classes of employees eligible to participate in the IMC-HRA. 4. A balance in an IMC-HRA would not be forfeited if the employee loses their individual coverage. | 1 | |
| Which of the following are requirements for employers to offer their employees an IMC-HRA? (Choose two) I. The employer must require participants to enroll in individual medical insurance coverage complying with the Public Health Service Act (PHSA). II. The employer can offer both an IMC-HRA and a traditional general health plan (GHP) to the same class of employees. III. Prior to the beginning of the plan year, an employer must specify in the IMC-HRA plan document the class or classes of employees eligible to participate in the IMC-HRA. IV. A balance in an IMC-HRA would not be forfeited if the employee loses their individual coverage. | I, III | |
| Which of the following is not a requirement for employers to offer their employees an IMC-HRA? 1. The employer must require participants to enroll in individual medical insurance coverage complying with the Public Health Service Act (PHSA). 2. An IMC-HRA is subject to Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation if an individual experiences a triggering qualifying event. 3. The employer can offer both an IMC-HRA and a traditional general health plan (GHP) to the same class of employees. 4. When offering an IMC-HRA to one or more classes of employees, the same terms of coverage must apply for all employees within the covered class or classes. | 3 | |
| Which of the following is an ongoing operational issue related to maintaining an IMC-HRA? 1. Employees must be given the opportunity to opt out of an IMC-HRA and to waive future reimbursements from the account annually. 2. The IMC-HRA is not subject to any annual substantiation and verification procedures. 3. Employers are not required to provide any written notice to eligible employees. 4. The IMC-HRA is not subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA), COBRA and the Medicare Secondary Payer Rules. | 1 | |
| Which of the following are ongoing operational issues related to maintaining an IMC-HRA? (Choose two) I. Employees must be given the opportunity to opt out of an IMC-HRA and to waive future reimbursements from the account annually. II. The IMC-HRA is not subject to any annual substantiation and verification procedures. III. At least 90 days prior to the beginning of the plan year an employer must provide eligible employees with a written notice. IV. The IMC-HRA is not subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA), COBRA and the Medicare Secondary Payer Rules. | I, III | |
| Which of the following is not an ongoing operational issue related to maintaining an IMC-HRA? 1. Employees must be given the opportunity to opt out of an IMC-HRA and to waive future reimbursements from the account annually. 2. The IMC-HRA is subject to annual substantiation and verification procedures. 3. At least 90 days prior to the beginning of the plan year an employer must provide eligible employees with a written notice. 4. The IMC-HRA is not subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA), COBRA and the Medicare Secondary Payer Rules. | 4 | |
| What is the purpose of an excepted benefits HRA (EB-HRA)? 1. To provide a tax-advantaged benefit beyond the employer’s GHP to employees who choose to be covered by short-term medical insurance 2. To provide a tax-advantaged benefit to employees who are seeking to be reimbursed for the cost of copays, deductibles, or other expenses not covered by the GHP or other excepted benefits 3. To provide a tax-advantaged benefit to employees who are seeking to be reimbursed for the cost of gym memberships 4. To provide a tax-advantaged benefit to employees who are seeking to be reimbursed for the cost of personal travel expenses | 1, 2 | |
| Which of the following are covered by an excepted benefits HRA (EB-HRA)? (Select all that apply) I. Short-term medical insurance II. Limited-scope dental or vision expenses III. Benefits for long-term care, nursing home care, home health care or community-based care IV. Personal travel expenses | I, II, III | |
| Which of the following is NOT a purpose of an excepted benefits HRA (EB-HRA)? 1. To provide a tax-advantaged benefit beyond the employer’s GHP to employees who choose to be covered by short-term medical insurance 2. To provide a tax-advantaged benefit to employees who are seeking to be reimbursed for the cost of copays, deductibles, or other expenses not covered by the GHP or other excepted benefits 3. To provide a tax-advantaged benefit to employees who are seeking to be reimbursed for the cost of gym memberships 4. To provide a tax-advantaged benefit to employees who are seeking to be reimbursed for the cost of personal travel expenses | 3, 4 | |
| What is a requirement for an employer to offer an EB-HRA? 1. The employer must provide a GHP that satisfies the PHSA requirements to the same participants who meet eligibility requirements for the EB-HRA for the same plan year. 2. The employer can offer the EB-HRA only to individuals who have a serious medical condition. 3. The employer does not need to file a Form 5500 if it has more than 100 EB-HRA participants. 4. The employer can reimburse premiums for individual medical insurance coverage under a GHP (other than COBRA) or Medicare Parts B and D through the EB-HRA. | 1 | |
| Which of the following are requirements for an employer to offer an EB-HRA? (Select all that apply) I. The employer must provide a GHP that satisfies the PHSA requirements to the same participants who meet eligibility requirements for the EB-HRA for the same plan year. II. The employer can offer the EB-HRA only to individuals who have a serious medical condition. III. An employer with more than 100 EB-HRA participants must file a Form 5500 if it is not including the EB-HRAs as part of the employer’s “medical plan” Form 5500 filing. IV. The employer can reimburse premiums for individual medical insurance coverage under a GHP (other than COBRA) or Medicare Parts B and D through the EB-HRA. | I, III | |
| Which of the following is not a requirement for an employer to offer an EB-HRA? 1. The employer must provide a GHP that satisfies the PHSA requirements to the same participants who meet eligibility requirements for the EB-HRA for the same plan year. 2. The employer can offer the EB-HRA only to individuals who have a serious medical condition. 3. An employer with more than 100 EB-HRA participants must file a Form 5500 if it is not including the EB-HRAs as part of the employer’s “medical plan” Form 5500 filing. 4. The employer can reimburse premiums for individual medical insurance coverage under a GHP (other than COBRA) or Medicare Parts B and D through the EB-HRA. | 2 | |
| What was the initial expectation for the adoption of CDHP plans? 1. The majority of employers would drop their traditional health plans and exclusively provide CDHPs 2. CDHPs would be offered as a choice within a menu of plan offerings 3. CDHPs would be rejected by most employers 4. CDHPs would be adopted by all employers without exception | 1 | |
| Which of the following statements are true about the adoption of CDHP plans? (Choose all that apply) I. CDHPs have received widespread acceptance among employer groups II. The early explosive growth of CDHPs has moderated over time III. More than 50% of employers solely offer a CDHP IV. The more typical scenario is for employers to offer a CDHP as a choice within a menu of plan offerings | I, II, IV | |
| Which of the following did not happen with the adoption of CDHP plans? 1. CDHPs were rejected by most employers 2. The majority of employers dropped their traditional health plans and exclusively provided CDHPs 3. CDHPs were offered as a choice within a menu of plan offerings 4. CDHPs received widespread acceptance among employer groups | 2 | |
| What impact has the prevalence of CDHP offerings had on the occurrence of overinsurance in the marketplace? 1. It has increased the occurrence of overinsurance 2. It has reduced the occurrence of overinsurance 3. It has had no impact on the occurrence of overinsurance 4. It has made the occurrence of overinsurance unpredictable | It has reduced the occurrence of overinsurance | |
| Which of the following are effects of the prevalence of CDHP offerings in the marketplace? (Choose two) I. It has educated employees generally regarding the cost of health care II. It has increased the occurrence of overinsurance III. It has brought greater cost transparency into the marketplace IV. It has increased the expenditure of wasted premium dollars | I, III | |
| Which of the following is NOT an effect of the prevalence of CDHP offerings in the marketplace? 1. It has reduced the occurrence of overinsurance 2. It has educated employees generally regarding the cost of health care 3. It has brought greater cost transparency into the marketplace 4. It has increased the occurrence of overinsurance | It has increased the occurrence of overinsurance | |
| What conditions may limit the possibility for CDHPs to achieve dramatically greater cost-containment gains? 1. Lack of access to reliable, relevant information 2. All health care spending is 'shoppable' 3. Certain procedures can be compared for price 4. Limits are established within the HDHP on what an individual could incur in terms of maximum out-of-pocket costs | 1, 3, 4 | |
| Which of the following conditions may limit the possibility for CDHPs to achieve dramatic cost-containment gains? (Choose all that apply) I. Consumers have access to reliable, relevant information II. All health care spending is 'shoppable' III. Certain procedures can be compared for price IV. Limits are established within the HDHP on what an individual could incur in terms of maximum out-of-pocket costs | I, III, IV | |
| Which of the following conditions does NOT limit the possibility for CDHPs to achieve dramatic cost-containment gains? 1. Lack of access to reliable, relevant information 2. All health care spending is 'shoppable' 3. Certain procedures can be compared for price 4. Limits are established within the HDHP on what an individual could incur in terms of maximum out-of-pocket costs | 2 | |
| What role do CDHPs play in employee health plan selection? 1. They provide a cost-effective medical plan option to many workers 2. They allow workers to assess their own personal health risk 3. They trade off premium costs for either higher out-of-pocket costs or potential health care savings 4. They are not included in plan sponsor medical plan menus | They provide a cost-effective medical plan option to many workers | |
| Which of the following are benefits of CDHPs in employee health plan selection? (Choose two) I. They provide a cost-effective medical plan option to many workers II. They allow workers to assess their own personal health risk III. They trade off premium costs for either higher out-of-pocket costs or potential health care savings IV. They are not included in plan sponsor medical plan menus | I, II | |
| Which of the following is not a role of CDHPs in employee health plan selection? 1. They provide a cost-effective medical plan option to many workers 2. They allow workers to assess their own personal health risk 3. They trade off premium costs for either higher out-of-pocket costs or potential health care savings 4. They are not included in plan sponsor medical plan menus | They are not included in plan sponsor medical plan menus | |
| Which of the following is a factor that is likely to impact the prevalence of employer support for CDHPs and the selection of CDHP plans by employees when given the choice between CDHPs and other medical plan offerings? 1. Escalation in medical cost inflation 2. General economic prosperity 3. Labor market conditions 4. Employer willingness and ability to cost-share with employees in underwriting medical expenses 5. The popularity of the CDHP choice from the perspective of both the plan sponsor and the individual participant | All of the above | |
| Which of the following factors are likely to impact the prevalence of employer support for CDHPs and the likelihood that employees will choose CDHPs when given a choice of plan selection? (Select all that apply) I. Escalation in medical cost inflation II. General economic prosperity III. Labor market conditions IV. Employer willingness and ability to cost-share with employees in underwriting medical expenses V. The popularity of the CDHP choice from the perspective of both the plan sponsor and the individual participant | I, II, III, IV, V | |
| All of the following are factors that are likely to impact the prevalence of employer support for CDHPs and the selection of CDHP plans by employees when given the choice between CDHPs and other medical plan offerings, EXCEPT: 1. Escalation in medical cost inflation 2. General economic prosperity 3. Labor market conditions 4. Employer willingness and ability to cost-share with employees in underwriting medical expenses 5. The popularity of the CDHP choice from the perspective of both the plan sponsor and the individual participant 6. The color of the company's logo | 6. The color of the company's logo | |
| Which of the following is a difference between medicine and dentistry? 1. Physicians typically practice in groups, while many dentists practice almost exclusively in individual offices. 2. Dental care is rarely cosmetic, while medical care often is. 3. Dental expenses are generally higher, less predictable and less budgetable than medical expenses. 4. There is a lesser emphasis on prevention in dentistry than in medicine. | 1 | |
| Which of the following are differences between medicine and dentistry? (Choose two) I. Many individuals may require only preventive or no medical care for years but, because of the need for preventive dentistry, the need for regular dental care is almost universal. II. Because of its emphasis on prevention, dental treatment often is considered elective and is sometimes postponed unless there is pain or trauma. III. Because the need for major dental care is life-threatening and time-critical, dentists’ charges for major courses of treatment cannot be discussed in advance of the treatment. IV. Dentistry often offers a variety of alternative procedures for the treatment of disease and the restoration of teeth that may be equally effective but can vary widely in their degree of complexity and cost. | I, II, IV | |
| Which of the following is NOT a difference between medicine and dentistry? 1. Dental expenses generally are lower, more predictable and budgetable, with the average medical claim being much higher than the average dental claim. 2. There is a greater emphasis on prevention in dentistry than in medicine. 3. While medical care is rarely cosmetic, dental care often is. 4. Under the Affordable Care Act, dental coverage is an essential benefit for adults. | 4 | |
| Which organization provides dental care coverages? 1. Insurance companies 2. Blue Cross and Blue Shield associations 3. State dental association plans 4. Self-insured, self-administered plans 5. Group practice or health maintenance organization (HMO)-type plans 6. Non-profit organizations | 1 | |
| Select the organizations that provide dental care coverages. (Choose all that apply) I. Insurance companies II. Blue Cross and Blue Shield associations III. State dental association plans IV. Self-insured, self-administered plans V. Group practice or health maintenance organization (HMO)-type plans VI. Non-profit organizations | I, II, III, IV, V | |
| All of the following organizations provide dental care coverages, EXCEPT: 1. Insurance companies 2. Blue Cross and Blue Shield associations 3. State dental association plans 4. Self-insured, self-administered plans 5. Group practice or health maintenance organization (HMO)-type plans 6. Non-profit organizations | 6 | |
| Which of the following is a basic approach to dental plans that resembles today's medical plans? 1. Fee-for-service indemnity approach 2. Preferred provider organization approach 3. Dental health maintenance organization approach 4. All of the above | 4. All of the above | |
| Which of the following approaches to dental plans are prevalent in today's medical plans? (Choose two) I. Fee-for-service indemnity approach II. Preferred provider organization approach III. Dental health maintenance organization approach | II, III | |
| All of the following are basic approaches to dental plans that resemble today's medical plans, EXCEPT: 1. Fee-for-service indemnity approach 2. Preferred provider organization approach 3. Dental health maintenance organization approach 4. Dental discount plan approach | 4. Dental discount plan approach | |
| Which of the following is NOT a professional treatment category in dentistry? 1. Diagnostic 2. Preventive 3. Restorative 4. Cardiology | 4. Cardiology | |
| Identify the professional treatment categories in dentistry. (Choose all that apply) I. Diagnostic II. Preventive III. Restorative IV. Cardiology V. Endodontics VI. Periodontics VII. Oral surgery VIII. Prosthodontics IX. Orthodontics X. Pedodontics XI. Implantology | I, II, III, V, VI, VII, VIII, IX, X, XI | |
| All of the following are professional treatment categories in dentistry EXCEPT: 1. Diagnostic 2. Preventive 3. Restorative 4. Cardiology 5. Endodontics 6. Periodontics 7. Oral surgery 8. Prosthodontics 9. Orthodontics 10. Pedodontics 11. Implantology | 4. Cardiology | |
| Which of the following is a general grouping of dental procedures used in the design of dental plans? 1. Preventive and diagnostic procedures 2. Minor restorative procedures 3. Orthodontic expenses 4. All of the above | 4. All of the above | |
| Identify the general groupings of dental procedures that are used in the design of dental plans. (Select all that apply) I. Preventive and diagnostic procedures II. Minor restorative procedures III. Major restorative work IV. Orthodontic expenses V. Implantology services | I, II, III, IV | |
| All of the following are general groupings of dental procedures used in the design of dental plans, EXCEPT: 1. Preventive and diagnostic procedures 2. Minor restorative procedures 3. Orthodontic expenses 4. Implantology services | 4. Implantology services | |
| What is the operation of a scheduled dental plan? 1. Scheduled plans pay a fixed allowance for each dental procedure. 2. Scheduled plans pay a variable allowance for each dental procedure. 3. Scheduled plans pay a fixed allowance for each medical procedure. 4. Scheduled plans pay a variable allowance for each medical procedure. | 1. Scheduled plans pay a fixed allowance for each dental procedure. | |
| Which of the following are advantages of scheduled dental plans? (Choose all that apply) I. Cost control II. Uniform payments III. Ease in understanding the plan IV. Employee relations reasons related to employee appreciation of the plan V. Benefit levels must be examined and potentially changed periodically to maintain reimbursement objectives. | I, II, III, IV | |
| All of the following are disadvantages of scheduled dental plans, EXCEPT: 1. Benefit levels must be examined and potentially changed periodically to maintain reimbursement objectives. 2. Plan reimbursement levels will vary in different locations according to cost of dental care in that area unless multiple schedules are utilized. 3. If scheduled benefits are set near the maximum of the reasonable and customary range, dentists who usually charge less than the prevailing rates may be influenced to adjust their charges upward. 4. Cost control. | 4. Cost control. | |
| What is the most common type of dental plan offerings? 1. Scheduled dental plans 2. Nonscheduled dental plans 3. Semi-scheduled dental plans 4. None of the above | Nonscheduled dental plans | |
| Which of the following are characteristics of nonscheduled dental plans? (Choose all that apply) I. They cover some percentage of the reasonable and customary charges II. The usual and customary charge typically is set between the 75th and the 90th percentile III. They generally include a deductible IV. They reimburse at the same levels for all classes of procedures | I, II, III | |
| All of the following are true about nonscheduled dental plans, EXCEPT: 1. They cover some percentage of the reasonable and customary charges 2. The usual and customary charge typically is set between the 75th and the 90th percentile 3. They generally include a deductible 4. They reimburse at the same levels for all classes of procedures | They reimburse at the same levels for all classes of procedures | |
| What is one advantage of nonscheduled dental plans? 1. The dollar payment may vary by area and dentist 2. The percentage of total cost reimbursed by the plan is uniform 3. There is a built-in automatic adjustment for inflation and variations in the relative value of specific procedures 4. All of the above | 4. All of the above | |
| Which of the following are disadvantages associated with nonscheduled dental plans? (Select all that apply) I. Cost control can be a problem because benefit levels adjust automatically for increases in the cost of care in periods of rapidly escalating prices II. Once a plan is installed on a nonscheduled basis, the opportunities for modest benefit improvements are limited III. It is always clear in advance what the specific payment of a particular service will be either to the patient or the dentist IV. Except for claims for which predetermination of benefits is appropriate, it rarely is clear in advance what the specific payment of a particular service will be either to the patient or the dentist | I, II, IV | |
| Which of the following is not a disadvantage of nonscheduled dental plans? 1. Cost control can be a problem because benefit levels adjust automatically for increases in the cost of care in periods of rapidly escalating prices 2. Once a plan is installed on a nonscheduled basis, the opportunities for modest benefit improvements are limited 3. It is always clear in advance what the specific payment of a particular service will be either to the patient or the dentist 4. Except for claims for which predetermination of benefits is appropriate, it rarely is clear in advance what the specific payment of a particular service will be either to the patient or the dentist | 3. It is always clear in advance what the specific payment of a particular service will be either to the patient or the dentist | |
| Which of the following best describes a combination dental plan? 1. A plan where all procedures are reimbursed on a scheduled basis 2. A plan where certain procedures are reimbursed on a scheduled basis while others are reimbursed on a nonscheduled basis 3. A plan where all procedures are reimbursed on a nonscheduled basis 4. A plan where no procedures are reimbursed | 2 | |
| Which of the following characteristics are true for a combination dental plan? (Choose two) I. Seeks to provide a balance between the need to emphasize preventive care and cost control II. Shares many of the same disadvantages as scheduled and nonscheduled plans for certain types of expenses III. Reimburses all procedures on a scheduled basis IV. Does not reimburse any procedures | I, II | |
| Which of the following is NOT a characteristic of a combination dental plan? 1. Seeks to provide a balance between the need to emphasize preventive care and cost control 2. Shares many of the same disadvantages as scheduled and nonscheduled plans for certain types of expenses 3. Reimburses all procedures on a scheduled basis 4. Certain procedures are reimbursed on a scheduled basis while others are reimbursed on a nonscheduled basis | 3 | |
| What is the main purpose of an incentive dental plan? 1. To promote sound dental hygiene through increasing reimbursement levels 2. To discourage individuals from visiting the dentist regularly 3. To increase the cost of dental procedures 4. To limit the number of dental visits per year | To promote sound dental hygiene through increasing reimbursement levels | |
| Which of the following characteristics are true for an incentive dental plan? (Choose all that apply) I. Incentive coinsurance provisions generally apply only to preventive and maintenance procedures II. The plan sponsor absorbs the cost of any accumulated neglect III. Coinsurance levels typically increase from year to year for those who obtained needed treatment in prior years IV. Deductibles may or may not be included in these plans | I, III, IV | |
| All of the following are characteristics of an incentive dental plan, EXCEPT: 1. The plan encourages individuals to visit the dentist regularly 2. The plan sponsor absorbs the cost of any accumulated neglect 3. The plan generally reimburses at one level during the first year 4. Deductibles may or may not be included in these plans | The plan sponsor absorbs the cost of any accumulated neglect | |
| Which of the following is a design peculiarity of orthodontic benefits within dental plans? 1. Orthodontic benefits are often written without other dental coverage. 2. Maximums are typically expressed on a lifetime basis. 3. There are often high deductibles. 4. Orthodontic coverage is limited to persons over the age of 19. | Maximums are typically expressed on a lifetime basis. | |
| Identify the design peculiarities of orthodontic benefits within dental plans. (Choose two) I. Orthodontic benefits are almost never written without other dental coverage. II. Orthodontic problems are likely to recur once they have been corrected. III. Many plans limit orthodontic coverage to persons under the age of 19. IV. A common coinsurance level for orthodontia expenses is 75%. | I, III | |
| All of the following are design peculiarities of orthodontic benefits within dental plans, EXCEPT: 1. Orthodontic benefits are almost never written without other dental coverage. 2. Maximums are typically expressed on a lifetime basis. 3. There are often high deductibles. 4. Many plans limit orthodontic coverage to persons under the age of 19. | There are often high deductibles. | |
| Which of the following is a factor that affects the cost of a dental plan? 1. The design of the plan 2. The type of plan 3. The employer's approach to plan implementation 4. The treatment of preexisting conditions | 1, 3 | |
| Identify the issues to be addressed in designing a dental plan. (Select all that apply) I. Deductibles II. Coinsurance III. Plan maximums IV. Treatment of preexisting conditions V. Whether covered services should be limited VI. Questions concerning orthodontic coverage | I, II, III, IV, V, VI | |
| All of the following are issues to be addressed in designing a dental plan EXCEPT: 1. Deductibles 2. Coinsurance 3. Plan maximums 4. The employer's approach to plan implementation | 4 | |
| Which of the following is a reason for including deductibles in the design of a dental plan? 1. To promote early detection of dental problems 2. To control the cost of claims administration 3. To increase the cost of the dental plan 4. To discourage individuals from getting dental procedures | 2. To control the cost of claims administration | |
| Which of the following statements are true regarding the use of deductibles in dental plans? (Choose two) I. Deductibles are always written on a calendar year basis II. Deductibles can help control the cost of claims administration III. All dental services are usually subject to a deductible IV. Early detection and treatment of dental problems can lead to fewer claims in the long term | II, IV | |
| Which of the following is NOT a common practice when using deductibles in dental plans? 1. Deductibles are written on a calendar year basis 2. Deductibles are written on a lifetime basis 3. All dental services are subject to a deductible 4. Deductibles are used to control the cost of claims administration | 3. All dental services are subject to a deductible | |
| What is one advantage of lifetime deductibles in dental plans? 1. It promotes early overutilization by those anxious to take advantage of the benefits of the plan. 2. It avoids the cost to the plan of the accumulated dental neglect of the participants. 3. Once satisfied, lifetime deductibles are of no further value for the presently covered group. 4. The lifetime deductible introduces employee turnover as an important cost consideration of the plan. | 2. It avoids the cost to the plan of the accumulated dental neglect of the participants. | |
| Which of the following are disadvantages of lifetime deductibles? (Choose two) I. A lifetime deductible promotes early overutilization by those anxious to take advantage of the benefits of the plan. II. Once satisfied, lifetime deductibles are of no further value for the presently covered group. III. The lifetime deductible introduces employee turnover as an important cost consideration of the plan. IV. If established at a level that will have a significant impact on claim costs and premium rates, a lifetime deductible may result in adverse employee reaction to the plan. | I, II | |
| Which of the following is NOT a disadvantage of lifetime deductibles? 1. A lifetime deductible promotes early overutilization by those anxious to take advantage of the benefits of the plan. 2. Once satisfied, lifetime deductibles are of no further value for the presently covered group. 3. The lifetime deductible introduces employee turnover as an important cost consideration of the plan. 4. If established at a level that will have a significant impact on claim costs and premium rates, a lifetime deductible may result in adverse employee reaction to the plan. | None of the above | |
| What is the typical reimbursement level for preventive and diagnostic expenses under most dental plans? 1. 50% to 60% 2. 70% to 85% 3. 80% to 100% 4. 100% to 120% | 80% to 100% | |
| Which of the following statements are true regarding dental plans? (Choose all that apply) I. Most dental plans are designed so that the patient pays a portion of the costs for all but preventive and diagnostic services. II. Orthodontics, implantology and occasionally major replacements have the lowest reimbursement levels. III. Most plans have a calendar year maximum for nonorthodontic expenses and sometimes a separate lifetime maximum. IV. The major concern about how to treat preexisting conditions in a dental plan concerns the replacement of teeth extracted after the date of coverage. | I, II, III | |
| Which of the following is not a typical way preexisting conditions are handled in dental plans? 1. They may be excluded. 2. They are treated as any other condition. 3. They are covered on a limited basis. 4. They are subject to a yearly maximum. | They are subject to a yearly maximum. | |
| Which of the following is an important consideration in the design of a dental plan? 1. The range of procedures to be covered 2. The color of the dental office 3. The brand of dental equipment used 4. The location of the dental office | 1 | |
| Which of the following procedures are occasionally excluded from dental plans? (Select all that apply) I. Orthodontics II. Implantology III. Surgical periodontics IV. Temporomandibular joint (TMJ) dysfunction therapy | I, III, IV | |
| All of the following are important considerations in the design of a dental plan, EXCEPT: 1. The range of procedures to be covered 2. The color of the dental office 3. Whether or not the plan covers preventive and maintenance expenses 4. The inclusion of orthodontics and implantology | 2 | |
| Which plan design feature has the most significant impact on dental plan costs? 1. Change in dental plan deductibles 2. Change in benefit maximums 3. Changes in the amount of coinsurance 4. Inclusion of orthodontics in the base plan | Change in dental plan deductibles | |
| Which of the following plan design features have a definite effect on dental plan costs? (Choose all that apply) I. Change in dental plan deductibles II. Change in benefit maximums III. Changes in the amount of coinsurance IV. Inclusion of orthodontics in the base plan | I, III, IV | |
| All of the following plan design features have a significant impact on dental plan costs, EXCEPT: 1. Change in dental plan deductibles 2. Change in benefit maximums 3. Changes in the amount of coinsurance 4. Inclusion of orthodontics in the base plan | Change in benefit maximums | |
| What is the total dollar amount of reimbursement for John Doe's dental treatment on February 21, 20XX, given the XYZ Corporation's dental plan and the incurred expenses? 1. $100 2. $125 3. $150 4. $175 | 2 | |
| Which of the following statements are true regarding the XYZ Corporation's dental plan and John Doe's dental treatment expenses between March 12 and May 6, 20XX? I. The full-mouth x-ray is excluded from the reimbursement because the limitation of one full-mouth x-ray every three years was met with the February 21 claim. II. The $800 expenses for extractions are subject to a $50 deductible and reimbursed at 75%. III. The remaining $900 expenses for the bridge are reimbursed at 50%. IV. The benefits calculated exceed the dollar limits for the calendar year. | I, II, III | |
| Which of the following is NOT a feature of the XYZ Corporation's dental plan as it applies to John Doe's dental treatment expenses? 1. The full-mouth x-ray is excluded from the reimbursement because the limitation of one full-mouth x-ray every three years was met with the February 21 claim. 2. The $800 expenses for extractions are subject to a $50 deductible and reimbursed at 75%. 3. The remaining $900 expenses for the bridge are reimbursed at 50%. 4. The benefits calculated exceed the dollar limits for the calendar year. | 4 | |
| Which of the following is a characteristic of a dental plan’s covered group that should be considered in the cost of the plan? 1. Ages of the participants 2. The distribution by gender of the group 3. The location of the group 4. The favorite color of the participants | The favorite color of the participants | |
| Which of the following characteristics of a dental plan’s covered group should be considered in the cost of the plan? (Choose two) I. The location of the group II. The favorite sports team of the participants III. The incomes of the participants IV. The favorite food of the participants | I, III | |
| All of the following are characteristics of a dental plan’s covered group that should be considered in the cost of the plan, EXCEPT: 1. The occupations of the group members 2. The distribution by gender of the group 3. The favorite movie of the participants 4. The location of the group | The favorite movie of the participants | |
| Which of the following is a safeguard used by insurance companies to discourage adverse selection in the underwriting of contributory dental plans? 1. Combining dental plan participation and contributions with medical plan participation 2. Allowing unlimited enrollment at any time 3. Not requiring any dental examinations before joining the plan 4. Requiring participants to remain in the plan for a specified minimum time before being eligible to drop coverage. | 1 | |
| Which of the following are safeguards used by insurance companies to discourage adverse selection in the underwriting of contributory dental plans? (Choose two) I. Combining dental plan participation and contributions with medical plan participation II. Allowing unlimited enrollment at any time III. Requiring dental examinations before joining the plan, and limiting or excluding treatment for conditions identified in the exam IV. Not requiring participants to remain in the plan for a specified minimum time before being eligible to drop coverage. | I, III | |
| Which of the following is NOT a safeguard used by insurance companies to discourage adverse selection in the underwriting of contributory dental plans? 1. Combining dental plan participation and contributions with medical plan participation 2. Allowing unlimited enrollment at any time 3. Requiring dental examinations before joining the plan, and limiting or excluding treatment for conditions identified in the exam 4. Requiring participants to remain in the plan for a specified minimum time before being eligible to drop coverage. | 2 | |
| What does a predetermination-of-benefits provision in a dental plan require? 1. The dentist to prepare a treatment plan that shows the work and cost before any services begin 2. The dentist to perform the services without any prior plan 3. The dentist to discuss the treatment plan with the patient only 4. The dentist to prepare a treatment plan only for emergency services | 1 | |
| Which of the following are true about a predetermination-of-benefits provision in a dental plan? (Choose all that apply) I. The treatment plan is generally required only for nonemergency services II. The treatment plan is required only if the cost is expected to exceed some specified level III. The carrier processes this information to determine exactly how much the dental plan will pay IV. The dental consultant discusses the treatment plan with the dentist after performing the services | I, II, III | |
| Which of the following is NOT true about a predetermination-of-benefits provision in a dental plan? 1. The treatment plan is generally required only for nonemergency services 2. Selected claims are referred to the carrier’s dental consultants to assess the appropriateness of the recommended treatment 3. The dental consultant discusses the treatment plan with the dentist after performing the services 4. The carrier processes this information to determine exactly how much the dental plan will pay | 3 | |
| Which of the following is true about how dental technology affects dental plan design? 1. New techniques are not covered until they have a proven track record of success. 2. New procedures are covered as any other service under the plan once they are officially recognized by the American Dental Association. 3. New techniques are covered as any other service under the plan once they are officially recognized by the American Dental Association. 4. New procedures are not covered until they are recognized by the American Dental Association and have a proven track record of success. | 4. New procedures are not covered until they are recognized by the American Dental Association and have a proven track record of success. | |
| Which of the following are true about how dental technology affects dental plan design? (Choose two) I. New techniques are covered as any other service under the plan once they are officially recognized by the American Dental Association. II. New procedures are not covered until they are recognized by the American Dental Association and have a proven track record of success. III. New techniques are not covered until they have a proven track record of success. IV. New procedures are covered as any other service under the plan once they are officially recognized by the American Dental Association. | I, II | |
| Which of the following is NOT true about how dental technology affects dental plan design? 1. New techniques are covered as any other service under the plan once they are officially recognized by the American Dental Association. 2. New procedures are not covered until they are recognized by the American Dental Association and have a proven track record of success. 3. New techniques are not covered until they have a proven track record of success. 4. New procedures are covered as any other service under the plan once they are officially recognized by the American Dental Association. | 4. New procedures are covered as any other service under the plan once they are officially recognized by the American Dental Association. | |
| What benefits do vision care plans typically include? 1. Routine eye examinations and certain ocular tests 2. Coverage for certain products such as lenses, standard-type frames and contact lenses 3. Frequency limits on the number of times a participant can receive a benefit 4. All of the above | 4. All of the above | |
| Which of the following approaches are used in designing a vision care plan? (Choose all that apply) I. Schedule-of-benefits approach II. Preferred provider networks III. Flexible benefits approaches IV. Coverage for services/products when a nonnetwork provider is used | I, II, III, IV | |
| All of the following are covered under vision care plans EXCEPT: 1. Routine eye examinations and certain ocular tests 2. Coverage for certain products such as lenses, standard-type frames and contact lenses 3. Adult vision benefits and hearing-related benefits under the Affordable Care Act 4. Frequency limits on the number of times a participant can receive a benefit | 3. Adult vision benefits and hearing-related benefits under the Affordable Care Act | |
| Which of the following is typically covered by standard surgical and major medical policies? 1. Hearing aids 2. Otologic examinations 3. Audiometric examinations 4. All of the above | 1 | |
| Which of the following are typically included in a separate hearing care benefits package? (Choose two) I. 80% reimbursement for services and materials up to a maximum of $500 to $1,000 II. Frequency of benefit availability is usually between 2 to 5 years III. Coverage for eye care IV. Preferred provider plans in which access to a panel would result in discounts for audiologist fees as well as hearing-aid instruments | I, II | |
| All of the following are typically covered in a separate hearing care benefits package EXCEPT: 1. Otologic examinations 2. Audiometric examinations 3. Hearing instruments 4. Dental care | 4 | |
| What was the most common way to describe a prescription drug plan before the widespread adoption of carved-out plans? 1. A prescription drug benefit within a health plan member’s major medical coverage or a separate benefit sold as a rider to the major medical package. 2. A separate benefit sold as a standalone package. 3. A prescription drug benefit within a health plan member’s minor medical coverage. 4. A prescription drug benefit sold as a standalone package. | A prescription drug benefit within a health plan member’s major medical coverage or a separate benefit sold as a rider to the major medical package. | |
| Which of the following are features of the modern 'carved-out' prescription drug plan? (Choose all that apply) I. Offers payers discounts on normal pharmacy charges. II. Electronic claims administration according to benefit requirements. III. Utilization reports. IV. Programs to reduce costs through mail service and the internet. V. Rebates from manufacturers for volume purchasing. | I, II, III, IV, V | |
| All of the following are reasons why most employers have discontinued the 'prior generation' prescription drug plans, except: 1. Plan members had to submit receipts to a claims administrator or insurance company. 2. Plan members were reimbursed for prescription drugs in the same manner as for medical expenses. 3. These plans offered payers discounts on normal pharmacy charges. 4. Participants had to pay the full cost at the pharmacy and then file a claim for reimbursement. | These plans offered payers discounts on normal pharmacy charges. | |
| Which of the following is a common element of a modern-day prescription drug plan? 1. Member eligibility cards 2. Free gym membership 3. Free annual health check-up 4. Free dental check-up | Member eligibility cards | |
| Identify the common elements of a modern-day prescription drug plan. (Choose all that apply) I. Member eligibility cards II. Online claims adjudication III. Tiered copays or deductibles and coinsurance IV. Pharmacy networks providing discounts for branded medications V. Maximum allowable cost (MAC) pricing for generics VI. Mail service VII. Formularies and/or preferred drug lists VIII. Prior authorizations for certain high-cost medications IX. Therapeutic interchange or switching X. Free annual health check-up | I, II, III, IV, V, VI, VII, VIII, IX | |
| All of the following are common elements of a modern-day prescription drug plan, EXCEPT: 1. Member eligibility cards 2. Online claims adjudication 3. Tiered copays or deductibles and coinsurance 4. Free annual health check-up | Free annual health check-up | |
| Which price is typically involved in the supply chain of pharmaceutical drugs within the domain of employer-sponsored prescription drug plans? (a) Average wholesale price (AWP) (b) Wholesale acquisition cost (WAC) (c) Maximum allowable cost (MAC) (d) Average manufacturer price (AMP) | (a), (b), (c), (d) | |
| Select all that apply. Within the domain of employer-sponsored prescription drug plans, which of the following prices are involved in the supply chain of pharmaceutical drugs? (I) Average wholesale price (AWP) (II) Wholesale acquisition cost (WAC) (III) Maximum allowable cost (MAC) (IV) Average manufacturer price (AMP) | (I), (II), (III), (IV) | |
| All of the following are prices involved in the supply chain of pharmaceutical drugs within the domain of employer-sponsored prescription drug plans, EXCEPT: (a) Average wholesale price (AWP) (b) Wholesale acquisition cost (WAC) (c) Maximum allowable cost (MAC) (d) Average manufacturer price (AMP) (e) Retail price | (e) | |
| Which of the following is a design and management option available to employers for a pharmacy benefit plan? 1. Manage the benefit and adjudicate claims internally 2. Outsource the benefit management to a health plan, PBM or TPA 3. Contract directly with pharmacies and adjudicate claims internally 4. None of the above | 1, 2, 3 | |
| Which of the following design and management options are available to employers for a pharmacy benefit plan? (Select all that apply) I. Manage the benefit and adjudicate claims internally II. Outsource the benefit management to a health plan, PBM or TPA III. Contract directly with pharmacies and adjudicate claims internally IV. Outsource the benefit management to a third-party insurance company | I, II, III | |
| Which of the following is NOT a design and management option available to employers for a pharmacy benefit plan? 1. Manage the benefit and adjudicate claims internally 2. Outsource the benefit management to a health plan, PBM or TPA 3. Contract directly with pharmacies and adjudicate claims internally 4. Outsource the benefit management to a third-party insurance company | 4 | |
| What does a prescription drug card program provide to its participants when they present their prescription to a participating pharmacy? 1. The pharmacist uses a computer network to get answers to a number of questions 2. The employee typically pays a fixed copayment 3. The payer is billed at a prenegotiated discount rate 4. The employee is given free medication | The pharmacist uses a computer network to get answers to a number of questions, The employee typically pays a fixed copayment, The payer is billed at a prenegotiated discount rate | |
| Which of the following are associated with the process when an employee presents their prescription drug card to a pharmacy that is in the network? (Select all that apply) I. The drug is checked if it is covered by the plan II. The individual's eligibility for the medication is confirmed III. Any limitations associated with the medication are checked IV. The employee is given free medication | I, II, III | |
| Which of the following is not a part of the process when an employee presents their prescription drug card to a pharmacy that is in the network? 1. The pharmacist uses a computer network to get answers to a number of questions 2. The employee typically pays a fixed copayment 3. The payer is billed at a prenegotiated discount rate 4. The employee is given free medication | The employee is given free medication | |
| Which of the following is a common exclusion from employer-sponsored prescription drug plans? 1. Medications for smoking cessation 2. Over-the-counter medications 3. Biotechnology medications 4. Federal legend drugs | 1, 2 | |
| Which of the following are typically excluded from employer-sponsored prescription drug plans? (Select all that apply) I. Medications for hair loss II. Drugs for investigational use III. Lifestyle drugs IV. State-restricted drugs | I, II, III | |
| All of the following are typically included in prescription drug plan benefits EXCEPT: 1. Federal legend drugs 2. State-restricted drugs 3. Over-the-counter medications 4. Injectable insulin | 3 | |
| What is the primary factor contributing to the dramatic increases in prescription drug costs? 1. Increased volume, mix and availability of products 2. Direct-to-consumer advertising 3. Aging population 4. Biotechnology drug spending | Increased volume, mix and availability of products | |
| Which of the following factors have been cited as contributing to the dramatic increases in prescription drug costs? (Choose all that apply) I. Increased volume, mix and availability of products II. Direct-to-consumer advertising III. Aging population IV. Biotechnology drug spending | I, II, III, IV | |
| All of the following are factors contributing to the dramatic increases in prescription drug costs, EXCEPT: 1. Increased volume, mix and availability of products 2. Direct-to-consumer advertising 3. Aging population 4. Decrease in the number of available drugs | Decrease in the number of available drugs | |
| Which tier in a four-tier prescription drug plan is intended for specialty drugs? 1. First tier 2. Second tier 3. Third tier 4. Fourth tier | 4. Fourth tier | |
| In a four-tier prescription drug plan, which of the following tiers are correct? (Choose all that apply) I. The first tier is for generics II. The second tier is for nonpreferred generics and preferred brands III. The third tier is for nonpreferred or nonformulary brands IV. The fourth tier is for over-the-counter drugs | I, II, III | |
| All of the following are features of a four-tier prescription drug plan EXCEPT: 1. The first tier is for generics 2. The second tier is for nonpreferred generics and preferred brands 3. The third tier is for nonpreferred or nonformulary brands 4. The fourth tier is for over-the-counter drugs | 4. The fourth tier is for over-the-counter drugs | |
| What is the purpose of a prior authorization program in a drug plan? 1. To restrict coverage for certain drugs based on the patient’s conditions 2. To increase the cost of medication 3. To limit the quantity of medication a patient can receive 4. To allow patients to take higher doses less frequently | 1 | |
| Which of the following are characteristics of a prior authorization program and a quantity limits provision in a drug plan? (Choose two) I. The physician must call in to the entity administering the program II. They increase the cost of medication III. They restrict the number of dosage units that can be dispensed IV. They allow patients to take higher doses less frequently | I, III | |
| Which of the following is NOT a characteristic of a prior authorization program in a drug plan? 1. The physician must call in to the entity administering the program 2. It restricts coverage for certain drugs based on the patient’s conditions 3. It increases the cost of medication 4. Many drugs that are subject to PA programs have monthly costs that range from $250 to $2,000 per month | 3 | |
| What is one reason for the popularity of standalone prescription drug plans? 1. Under a medical plan that directly reimbursed drug expenditures, there were typically no discounts for prescription drug coverage. Plan sponsors could pay as much as 10% above the AWP rather than 15% below it. 2. Medical claims processors often did not require detailed receipts for prescription drugs and therefore could not review the prescriptions for coverage as effectively as is done with the PBMs’ online claims processing systems. 3. Limited data was available in report format for reviewing drug trends because of a lack of detailed information from the claims processing systems. 4. Rebates and other cost-savings programs, which are available in prescription benefit plans, are not available through medical claims processors. | 1 | |
| Which of the following are reasons for the popularity of standalone prescription drug plans? (Choose two) I. Under a medical plan that directly reimbursed drug expenditures, there were typically no discounts for prescription drug coverage. Plan sponsors could pay as much as 10% above the AWP rather than 15% below it. II. Medical claims processors often did not require detailed receipts for prescription drugs and therefore could not review the prescriptions for coverage as effectively as is done with the PBMs’ online claims processing systems. III. Limited data was available in report format for reviewing drug trends because of a lack of detailed information from the claims processing systems. IV. Rebates and other cost-savings programs, which are available in prescription benefit plans, are not available through medical claims processors. | I, II | |
| All of the following are reasons for the popularity of standalone prescription drug plans, EXCEPT: 1. Under a medical plan that directly reimbursed drug expenditures, there were typically no discounts for prescription drug coverage. Plan sponsors could pay as much as 10% above the AWP rather than 15% below it. 2. Medical claims processors often did not require detailed receipts for prescription drugs and therefore could not review the prescriptions for coverage as effectively as is done with the PBMs’ online claims processing systems. 3. Limited data was available in report format for reviewing drug trends because of a lack of detailed information from the claims processing systems. 4. Rebates and other cost-savings programs, which are available in prescription benefit plans, are not available through medical claims processors. 5. Standalone prescription drug plans offer less coverage than medical plans. | 5 | |
| What is the primary factor that influences the cost of prescription drug benefits? 1. The demographics of the population 2. The cost of the drugs 3. The utilization of prescriptions by the members 4. The ability of the plan to manage costs | All of the above | |
| Which of the following factors influence the cost of prescription drug benefits? (Select all that apply) I. The demographics of the population II. The cost of the drugs III. The utilization of prescriptions by the members IV. The ability of the plan to manage costs V. The costs charged by the PBM VI. Fraud and prescription misuse | I, II, III, IV, V, VI | |
| All of the following are factors that influence the cost of prescription drug benefits, EXCEPT: 1. The demographics of the population 2. The cost of the drugs 3. The utilization of prescriptions by the members 4. The ability of the plan to manage costs 5. The costs charged by the PBM 6. Fraud and prescription misuse 7. The color of the drug packaging | 7. The color of the drug packaging | |
| What is one advantage of a mail service program (MSP) that allows a more generous quantity amount to be filled, such as a 90-day supply, compared with a 30- to 34-day supply in a retail sale? 1. MSPs save patients time and money 2. MSPs are typically underused 3. MSPs have a higher cost of dispensing 4. MSPs are less popular additions to the benefit design | MSPs save patients time and money | |
| Which of the following are advantages of a mail service program (MSP) that allows a more generous quantity amount to be filled, such as a 90-day supply, compared with a 30- to 34-day supply in a retail sale? I. MSPs save patients time and money II. MSPs offer a lower cost of dispensing III. MSPs allow quality control through automation IV. MSPs are typically underused | I, II, III | |
| All of the following are advantages of a mail service program (MSP) that allows a more generous quantity amount to be filled, such as a 90-day supply, compared with a 30- to 34-day supply in a retail sale, EXCEPT: 1. MSPs save patients time and money 2. MSPs offer a lower cost of dispensing 3. MSPs allow quality control through automation 4. MSPs are typically underused | MSPs are typically underused | |
| Which of the following is a common technique plan sponsors use to control pharmacy costs? 1. Review the design of the pharmacy benefit and how it fits into the overall medical program. 2. Increase the pharmacy network to the largest size without compromising access. 3. Discourage generic drug substitution. 4. Ignore the financial impact of new drugs and therapies. | Review the design of the pharmacy benefit and how it fits into the overall medical program. | |
| Which of the following are common techniques plan sponsors use to control pharmacy costs? (Choose two) I. Reduce the pharmacy network to the smallest size without compromising access. II. Offer mail service or 90-day retail point-of-service prescriptions as a convenient option to members. III. Adopt a plan design that discourages generic drug substitution. IV. Ignore the financial impact of new drugs and therapies. | I, II | |
| Which of the following is NOT a common technique plan sponsors use to control pharmacy costs? 1. Use a formulary that is designed to promote cost-effective and clinical therapeutic drugs coupled with a rebate program that passes on 100% of the rebates to the plan sponsor. 2. Practice utilization management that targets high-cost users and intervenes with physicians and patients to ensure quality outcomes. 3. Offer physician profiling that highlights high-cost physicians with low-acuity patients coupled with an incentive program to dispense appropriate medications. 4. Discourage communication of cost trends to plan members. | Discourage communication of cost trends to plan members. | |
| Which type of drug utilization review (DUR) program occurs at the point of service and flags potential overuse based on clinical monitoring criteria? 1. Concurrent DUR 2. Retrospective DUR 3. Prospective DUR | Concurrent DUR | |
| Which of the following are types of drug utilization review (DUR) programs? (Select all that apply) I. Concurrent DUR II. Retrospective DUR III. Prospective DUR IV. Therapeutic switching programs | I, II, III | |
| All of the following are types of drug utilization review (DUR) programs, EXCEPT: 1. Concurrent DUR 2. Retrospective DUR 3. Prospective DUR 4. Therapeutic switching programs | Therapeutic switching programs | |
| What is the primary purpose of a formulary in a health plan or PBM? 1. To provide a list of preferred drugs 2. To provide a list of all available drugs 3. To provide a list of drugs that are not preferred 4. To provide a list of drugs that are not available | 1. To provide a list of preferred drugs | |
| Which of the following are involved in the design of a formulary? (Choose all that apply) I. Physicians II. Pharmacists III. Nurses IV. Pharmacoeconomists V. Ethicists VI. The lay public VII. Plan administration | I, II, III, IV, V, VI, VII | |
| Which of the following is not a characteristic of a formulary? 1. It is designed by a process of evaluation and analysis 2. It is usually under the auspices of a pharmacy and therapeutics (P&T) committee 3. It selects drugs within a category that are least cost-effective 4. It is very effective at moving patients to lower cost drugs and maximizing rebate potentials | 3. It selects drugs within a category that are least cost-effective | |
| Which type of formulary allows plan enrollees any covered prescription drug prescribed for them? 1. Open formulary 2. Preferred formulary 3. Closed formulary | Open formulary | |
| Which of the following statements are true about formularies? (Choose all that apply) I. Preferred formularies encourage patients to use the preferred or formulary drugs in return for a reduced copayment. II. Closed formularies mean that the plan will not cover the nonformulary drug. III. Open formularies are typically found in hospital settings and tightly managed HMO programs. | I, II | |
| All of the following are true about formularies, EXCEPT: 1. Open formularies allow plan enrollees any covered prescription drug prescribed for them. 2. Preferred formularies encourage patients to use the preferred or formulary drugs in return for a reduced copayment. 3. Closed formularies are typically found in hospital settings and tightly managed HMO programs. | Closed formularies are typically found in hospital settings and tightly managed HMO programs. | |
| Which of the following is a nonformulary cost-management tool available to contain prescription drug costs? 1. Network management, better discounts with retail and mail-order programs, and monitoring performance to avoid fraud and abuse 2. Designing plans that meet the objectives of the overall benefit program 3. Quantity limits and maximum dollar limits on all prescriptions 4. Step-therapy programs to ensure that prescribing complies with national guidelines for treatment of particular diseases | All of the above | |
| Which of the following nonformulary cost-management tools are available to contain prescription drug costs? (Select all that apply) I. Prospective review of new drugs and early policy determination II. Clinical management through a thorough pharmacy case management program III. Other DUR programs, such as concurrent and prospective programs IV. Quality data management that provides early intervention reporting | I, II, III, IV | |
| All of the following are nonformulary cost-management tools available to contain prescription drug costs, EXCEPT: 1. Network management, better discounts with retail and mail-order programs, and monitoring performance to avoid fraud and abuse 2. Designing plans that meet the objectives of the overall benefit program 3. Quantity limits and maximum dollar limits on all prescriptions 4. Increasing the price of prescription drugs | 4 | |
| What are the two main types of Disease State Management (DSM) programs? 1. Medical model and Therapy-directed model 2. Therapy-directed model and Patient-centered model 3. Medical model and Patient-centered model 4. Therapy-directed model and Disease-centered model | Medical model and Therapy-directed model | |
| Which of the following criticisms have been leveled at Disease State Management (DSM) programs? (Choose all that apply) I. Lack of standardized methods to judge success and return on investment (ROI) II. Programs are thinly veiled advertisements from drug manufacturers III. DSM-targeted diseases are low-hanging fruit IV. The benefits of these programs are back-loaded | I, II, III | |
| All of the following are criticisms of Disease State Management (DSM) programs, EXCEPT: 1. Lack of standardized methods to judge success and return on investment (ROI) 2. Programs are thinly veiled advertisements from drug manufacturers 3. DSM-targeted diseases are low-hanging fruit 4. The programs are too expensive for patients to afford | The programs are too expensive for patients to afford | |
| What is the definition of evidence-based medicine? 1. An approach to medical decision making that emphasizes scientific evidence and statistical methods for evaluating outcomes and risk of treatments. 2. A method of treating patients based on their personal beliefs and preferences. 3. A system of medicine that relies solely on traditional methods and practices. 4. A response to arrive at objective decisions in the face of mass media advertising, direct-to-consumer advertising of drugs, and the promotions of pharmaceutical and device manufacturers. | 1, 4 | |
| Which of the following are characteristics of evidence-based medicine? (Select all that apply) I. Emphasizes scientific evidence and statistical methods for evaluating outcomes and risk of treatments. II. Relies solely on traditional methods and practices. III. Is a response to arrive at objective decisions in the face of mass media advertising, direct-to-consumer advertising of drugs, and the promotions of pharmaceutical and device manufacturers. IV. Is a method of treating patients based on their personal beliefs and preferences. | I, III | |
| Which of the following is NOT a characteristic of evidence-based medicine? 1. Emphasizes scientific evidence and statistical methods for evaluating outcomes and risk of treatments. 2. Is a response to arrive at objective decisions in the face of mass media advertising, direct-to-consumer advertising of drugs, and the promotions of pharmaceutical and device manufacturers. 3. Relies solely on traditional methods and practices. 4. Is a method of treating patients based on their personal beliefs and preferences. | 3, 4 | |
| What is the typical operation of a network system in a prescription drug program? 1. Employees must have their prescriptions filled by a network pharmacy, except in emergencies 2. Pharmacies join networks and provide services at reduced rates in exchange for volume business 3. A tight network of pharmacy providers allows PBMs to control costs and quality effectively 4. All of the above | 4. All of the above | |
| Which of the following are components of a network system in a prescription drug program? (Choose all that apply) I. Structure of and services provided by pharmacy benefit management (PBM) entities II. Sources of PBM profits III. Rebates under PBMs IV. Plan sponsor considerations in PBM selection | I, II, III, IV | |
| All of the following are true about a network system in a prescription drug program, EXCEPT: 1. Employees must have their prescriptions filled by a network pharmacy, even in emergencies 2. Pharmacies join networks and provide services at reduced rates in exchange for volume business 3. A tight network of pharmacy providers allows PBMs to control costs and quality effectively 4. Structure of and services provided by pharmacy benefit management (PBM) entities are part of the network system | 1. Employees must have their prescriptions filled by a network pharmacy, even in emergencies | |
| What is the primary function of a PBM? 1. Streamlining and improving the prescribing and dispensing process through online and real-time claims adjudication 2. Maintaining a retail network of pharmacies and a mail-order option 3. Offering limited DUR online at the point of sale or dispensation 4. Providing data and reporting regarding drug use 5. Controlling the cost of prescriptions dispensed through clinical and financial programs | All of the above | |
| Which of the following are functions of a PBM? (Select all that apply) I. Streamlining and improving the prescribing and dispensing process through online and real-time claims adjudication II. Maintaining a retail network of pharmacies and a mail-order option III. Offering limited DUR online at the point of sale or dispensation IV. Providing data and reporting regarding drug use V. Controlling the cost of prescriptions dispensed through clinical and financial programs | I, II, III, IV, V | |
| Which of the following is not a function of a PBM? 1. Streamlining and improving the prescribing and dispensing process through online and real-time claims adjudication 2. Maintaining a retail network of pharmacies and a mail-order option 3. Offering limited DUR online at the point of sale or dispensation 4. Providing data and reporting regarding drug use 5. Controlling the cost of prescriptions dispensed through clinical and financial programs 6. Providing medical advice to patients | 6 | |
| Which of the following is a common service that PBMs provide? 1. Claims processing 2. Car rental services 3. Food catering 4. Hotel booking | Claims processing | |
| Which of the following are common services that PBMs provide? (Choose two) I. Claims processing II. Account management and support for plan design alternatives, trend analysis and general advice regarding prescription drugs III. A retail network of pharmacies for the purchase of medication at discounts IV. Car rental services | I, II | |
| Which of the following is NOT a common service that PBMs provide? 1. Claims processing 2. Account management and support for plan design alternatives, trend analysis and general advice regarding prescription drugs 3. A retail network of pharmacies for the purchase of medication at discounts 4. Car rental services | Car rental services | |
| Which of the following is a way PBMs generate profits? 1. Charging payers an administrative fee per transaction based on the number of prescriptions or employees 2. Retaining rebate administrative fees negotiated with manufacturers 3. Filling mail service prescriptions from their wholly owned mail-order pharmacies 4. Investing in real estate | Investing in real estate | |
| Which of the following are ways PBMs generate profits? (Choose two) I. Charging payers an administrative fee per transaction based on the number of prescriptions or employees II. Retaining rebate administrative fees negotiated with manufacturers III. Filling mail service prescriptions from their wholly owned mail-order pharmacies IV. Investing in real estate | I, II, III | |
| All of the following are ways PBMs generate profits, EXCEPT: 1. Charging payers an administrative fee per transaction based on the number of prescriptions or employees 2. Retaining rebate administrative fees negotiated with manufacturers 3. Filling mail service prescriptions from their wholly owned mail-order pharmacies 4. Investing in real estate | Investing in real estate | |
| What is the practice of zero-balance billing in the context of PBMs and pharmacies? 1. It is when pharmacies collect the entire copay even when the cost of the drug is less than the copay. 2. It is when pharmacies refund the difference between the copay and the actual cost of the drug. 3. It is when PBMs charge pharmacies for the difference between the copay and the actual cost of the drug. 4. It is when PBMs refund the difference between the copay and the actual cost of the drug to the plan sponsor payer. | 1 | |
| Which of the following statements are true regarding zero-balance billing? I. PBMs use zero-balance billing to extract greater discounts from pharmacies for their clients. II. When the pharmacy keeps the entire copay, the plan sponsor payer loses. III. The individual plan participant will pay more when zero-balance billing is practiced. IV. Payers should not question PBMs as to whether zero-balance billing occurs. | I, III | |
| Which of the following is NOT a consequence of zero-balance billing? 1. PBMs extract greater discounts from pharmacies for their clients. 2. The plan sponsor payer loses when the pharmacy keeps the entire copay. 3. The individual plan participant pays more. 4. Payers are encouraged to question PBMs as to whether zero-balance billing occurs. | 2 | |
| What is a rebate under a prescription drug program? 1. An agreement between a PBM and a drug manufacturer to secure significant reductions in the cost of prescription drugs 2. A discount given by drug manufacturers based on utilization 3. A reward given by drug manufacturers to PBMs that are able to encourage a significant percentage of enrollees to switch to the company’s key products 4. A method to increase the market share of a drug manufacturer | 1 | |
| Which of the following are features of a rebate under a prescription drug program? I. The growth in rebates paid to payers has paralleled the rise of pharmacy benefit inflation and the advent of multitiered copay designs II. At one time, manufacturers would discount solely based on utilization III. Manufacturers now often require an increase in market share before giving discounts IV. With rebates, drug manufacturers reward PBMs that are able to encourage a significant percentage of enrollees to switch to the company’s key products | I, II, III, IV | |
| Which of the following is not a feature of a rebate under a prescription drug program? 1. The growth in rebates paid to payers has paralleled the rise of pharmacy benefit inflation and the advent of multitiered copay designs 2. At one time, manufacturers would discount solely based on utilization 3. Manufacturers now often require an increase in market share before giving discounts 4. With rebates, drug manufacturers reward PBMs that are able to encourage a significant percentage of enrollees to switch to the company’s key products 5. Rebates are a method to decrease the cost of prescription drugs for the consumer | 5 | |
| Which of the following is NOT a factor an employer should consider in the selection process of a PBM? 1. Cost 2. Claim administration 3. Service delivery 4. The color of the PBM's logo | 4 | |
| Which of the following factors should an employer consider in the selection process of a PBM? (Select all that apply) I. Options and pricing of the network of providers that the PBM offers II. Whether the PBM owns the mail-order program III. If the PBM's service and performance offerings are backed by guarantees and significant financial penalties IV. The PBM's favorite color | I, II, III | |
| All of the following are factors an employer should consider in the selection process of a PBM, EXCEPT: 1. The types of DUR edits performed routinely 2. The types of educational programs offered to patients 3. The PBM's favorite sports team 4. The results of the PBM's programs | 3 | |
| Which of the following is considered a severe mental illness? 1. Schizophrenia 2. Bipolar disorder 3. Major depressive disorder 4. All of the above | 4. All of the above | |
| Which of the following are characteristics of severe mental illnesses? (Choose all that apply) I. They are generally considered biologically based disorders. II. They affect the brain. III. They profoundly disrupt a person’s thinking, feeling, mood, ability to relate to others and capacity for coping with the demands of life. IV. They are always nonbiologically based. | I, II, III | |
| All of the following are true about severe mental illnesses, EXCEPT: 1. They are generally considered biologically based disorders. 2. They affect the brain. 3. They profoundly disrupt a person’s thinking, feeling, mood, ability to relate to others and capacity for coping with the demands of life. 4. They are always nonbiologically based. | 4. They are always nonbiologically based. | |
| Which of the following is a category into which mental disorders can be loosely categorized? 1. Adjustment disorders 2. Cardiovascular disorders 3. Respiratory disorders 4. Digestive disorders | Adjustment disorders | |
| Mental disorders can be loosely categorized into which of the following categories? (Choose two) I. Adjustment disorders II. Cardiovascular disorders III. Anxiety disorders IV. Respiratory disorders | I, III | |
| All of the following are categories into which mental disorders can be loosely categorized, EXCEPT: 1. Adjustment disorders 2. Anxiety disorders 3. Cardiovascular disorders 4. Eating disorders | Cardiovascular disorders | |
| Why did insurers start to place limits on outpatient mental health care after World War II? 1. Treatment often continued for indefinite lengths of time 2. There was much subjectivity surrounding mental disorders and treatment methods 3. The cost of treatment was too high 4. There was a lack of mental health professionals | Treatment often continued for indefinite lengths of time, There was much subjectivity surrounding mental disorders and treatment methods | |
| Which of the following are reasons insurers started to place limits on outpatient mental health care after World War II? (Choose two) I. Treatment often continued for indefinite lengths of time II. There was much subjectivity surrounding mental disorders and treatment methods III. The cost of treatment was too high IV. There was a lack of mental health professionals | I, II | |
| All of the following are reasons insurers started to place limits on outpatient mental health care after World War II, EXCEPT: 1. Treatment often continued for indefinite lengths of time 2. There was much subjectivity surrounding mental disorders and treatment methods 3. The cost of treatment was too high 4. There was a lack of mental health professionals | The cost of treatment was too high, There was a lack of mental health professionals | |
| What was the typical mental health care coverage under health maintenance organizations (HMOs) in the 1980s? 1. Unlimited hospital coverage for mental illnesses 2. Maximum dollar limit of $1,000 per year for mental health outpatient treatment 3. Maximum reimbursement per visit ranging from $25 to $40 for mental health outpatient treatment 4. Same coinsurance rates for medical and mental health care coverage | 2. Maximum dollar limit of $1,000 per year for mental health outpatient treatment 3. Maximum reimbursement per visit ranging from $25 to $40 for mental health outpatient treatment | |
| Which of the following were typical characteristics of mental health care benefits of health maintenance organizations (HMOs) in the 1980s? (Choose two) I. Hospital coverage was restricted to 30-45 days per mental illness or 30 or 60 days per year II. For medical illnesses, the number of days was usually unlimited III. The most common limitations for mental health outpatient treatment were a maximum dollar limit of $1,000 per year IV. Coinsurance rates were the same for medical and mental health care coverage | I, III | |
| Which of the following was NOT a typical characteristic of mental health care benefits of health maintenance organizations (HMOs) in the 1980s? 1. Hospital coverage was restricted to 30-45 days per mental illness or 30 or 60 days per year 2. For medical illnesses, the number of days was usually unlimited 3. The most common limitations for mental health outpatient treatment were a maximum dollar limit of $1,000 per year 4. Coinsurance rates were the same for medical and mental health care coverage | 4. Coinsurance rates were the same for medical and mental health care coverage | |
| What is a behavioral health care carve-out program? 1. A program that combines mental health and chemical dependency services with a medical plan 2. A program that separates mental health and chemical dependency services from a medical plan and provides them separately 3. A program that only provides mental health services 4. A program that only provides chemical dependency services | 2. A program that separates mental health and chemical dependency services from a medical plan and provides them separately | |
| Which of the following are reasons for employers to choose a behavioral health care carve-out program? (Select all that apply) I. It is usually managed by firms that specialize in behavioral health treatment II. It allows large, self-funded employers to offer the same behavioral health benefits across all health plans offered III. It allows a health plan to minimize adverse selection IV. It promotes integrated, coordinated care | I, II, III | |
| All of the following are reasons for employers to choose a behavioral health care carve-out program, EXCEPT: 1. It is usually managed by firms that specialize in behavioral health treatment 2. It allows large, self-funded employers to offer the same behavioral health benefits across all health plans offered 3. It allows a health plan to minimize adverse selection 4. It promotes integrated, coordinated care | 4. It promotes integrated, coordinated care | |
| What are psychotropic medications? 1. Drugs that affect psychic function, behavior or experience 2. Drugs that are used to treat physical illnesses 3. Drugs that are used to enhance athletic performance 4. Drugs that are used to treat allergies | 1. Drugs that affect psychic function, behavior or experience | |
| Which of the following challenges do psychotropic medications pose for MBHOs? (Select all that apply) I. They account for a significant part of the overall cost of health care II. MBHOs do not manage the prescription drug benefit but bear the responsibility for managing the behavioral care for their members III. MBHOs are often unaware of whether the psychotropic medications prescribed to their members are of the appropriate types and dosages IV. MBHOs have full control over the prescription and management of these medications | I, II, III | |
| All of the following are challenges posed by psychotropic medications for MBHOs, EXCEPT: 1. They account for a significant part of the overall cost of health care 2. MBHOs do not manage the prescription drug benefit but bear the responsibility for managing the behavioral care for their members 3. MBHOs are often unaware of whether the psychotropic medications prescribed to their members are of the appropriate types and dosages 4. MBHOs have full control over the prescription and management of these medications | 4. MBHOs have full control over the prescription and management of these medications | |
| What is the main reason the historical MBHO business model has come under criticism in recent times? 1. It focuses on managing cost and utilization 2. It focuses on improving clinical outcomes 3. It focuses on integration with medical health benefits 4. It considers insourcing management of behavioral health and substance use disorder benefit services into health plans | 1 | |
| Which of the following are reasons why the historical MBHO business model has come under criticism in recent times? (Select all that apply) I. Its focus on managing cost and utilization II. Lack of focus on improving clinical outcomes III. Lack of integration with medical health benefits IV. Consideration of insourcing management of behavioral health and substance use disorder benefit services into health plans | I, II, III, IV | |
| Which of the following is NOT a reason why the historical MBHO business model has come under criticism in recent times? 1. Its focus on managing cost and utilization 2. Lack of focus on improving clinical outcomes 3. Lack of integration with medical health benefits 4. Consideration of insourcing management of behavioral health and substance use disorder benefit services into health plans | 2 | |
| Which legislative initiative tends to favor a carve-in, rather than a carve-out model for delivering behavioral health and substance use disorder benefits? 1. The Affordable Care Act (ACA) 2. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) 3. The Health Insurance Portability and Accountability Act (HIPAA) 4. All of the above | 1. The Affordable Care Act (ACA) | |
| Which of the following legislative initiatives and regulatory actions have “tipped the scales” in favor of a carve-in model for delivering behavioral health and substance use disorder benefits? (Select all that apply) I. The Affordable Care Act (ACA) II. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) III. The Health Insurance Portability and Accountability Act (HIPAA) | I, II, III | |
| All of the following are reasons why employer groups chose to move their employees out of carve-out plans into carve-in plans, EXCEPT: 1. The ACA and its emphasis on integrated, holistic health approaches 2. The creation of a much larger administrative burden for carve-out plans relative to carve-ins in complying with parity 3. Constraints on information access/sharing and firewalls restricting the transfer of protected health information 4. The cost and utilization management practices of the carve-out model potentially at the expense of clinical outcomes | 4. The cost and utilization management practices of the carve-out model potentially at the expense of clinical outcomes | |
| What was the main objective of the Mental Health Parity Act of 1996 (MHPA)? 1. To establish parity between mental health benefits and other health benefits 2. To apply to the individual insurance market 3. To require plan sponsors to include mental health benefits in their benefit packages 4. To apply to substance abuse and chemical dependency treatment | To establish parity between mental health benefits and other health benefits | |
| Which of the following provisions were included in the Mental Health Parity Act of 1996 (MHPA)? (Select all that apply) I. Prevented group health plans from placing lower annual or lifetime dollar limits on mental health benefits than on medical and surgical benefits II. Allowed for limits on inpatient days, prescription drugs, outpatient visits and raising deductibles III. Applied only to groups that offered mental health benefits and had more than 50 workers IV. Required plan sponsors to include mental health benefits in their benefit packages | I, II, III | |
| Which of the following was NOT a reason why the Mental Health Parity Act of 1996 (MHPA) largely failed to accomplish its objective? 1. The act allowed for limits on inpatient days, prescription drugs, outpatient visits and raising deductibles 2. The act did not apply to the individual insurance market 3. The act required plan sponsors to include mental health benefits in their benefit packages 4. The act did not apply to substance abuse and chemical dependency treatment | The act required plan sponsors to include mental health benefits in their benefit packages | |
| What did the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) add to the Mental Health Parity Act (MHPA)? 1. It extended the rules to substance use disorder benefits 2. It allowed for separate deductibles for mental health and substance use disorder benefits 3. It allowed for separate out-of-pocket maximums for mental health and substance use disorder benefits 4. It allowed for a separate plan for mental health services or substance use disorder benefits only | 1 | |
| Which of the following are requirements of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)? (Choose all that apply) I. Financial requirements and treatment limitations for mental health and substance use disorder benefits must be no more restrictive than those for medical/surgical benefits II. Deductibles and out-of-pocket maximums can accumulate separately for medical/surgical benefits and mental health and substance use disorder benefits III. Treatment limits can refer to the frequency of treatments, number of visits, days of coverage, days in a waiting period or similar limits IV. Plans can avoid the law by setting up a plan for mental health services or substance use disorder benefits only | I, III | |
| Which of the following is NOT a requirement of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)? 1. Financial requirements and treatment limitations for mental health and substance use disorder benefits must be no more restrictive than those for medical/surgical benefits 2. Deductibles and out-of-pocket maximums can accumulate separately for medical/surgical benefits and mental health and substance use disorder benefits 3. Treatment limits can refer to the frequency of treatments, number of visits, days of coverage, days in a waiting period or similar limits 4. Plans can avoid the law by setting up a plan for mental health services or substance use disorder benefits only | 4 | |
| Which of the following is a provision of the MHPAEA? 1. Plans may impose financial requirements on MH/SUD benefits that are more restrictive than the predominant financial requirements applied to medical/surgical benefits. 2. The parity requirements apply separately to each of six classifications of benefits. 3. Separate cost-sharing requirements for MH/SUD benefits are allowed even if they are equivalent to those for medical/surgical benefits. 4. The law includes two new disclosure requirements. | 2. The parity requirements apply separately to each of six classifications of benefits. | |
| Which of the following are provisions of the MHPAEA? (Select all that apply) I. The law requires parity for both quantitative and nonquantitative treatment limitations. II. Separate cost-sharing requirements for MH/SUD benefits are allowed even if they are equivalent to those for medical/surgical benefits. III. The law includes two new disclosure requirements. IV. Plans may impose financial requirements on MH/SUD benefits that are more restrictive than the predominant financial requirements applied to medical/surgical benefits. | I, III | |
| Which of the following is NOT a provision of the MHPAEA? 1. The law requires parity for both quantitative and nonquantitative treatment limitations. 2. The parity requirements apply separately to each of six classifications of benefits. 3. Separate cost-sharing requirements for MH/SUD benefits are allowed even if they are equivalent to those for medical/surgical benefits. 4. The law includes two new disclosure requirements. | 3. Separate cost-sharing requirements for MH/SUD benefits are allowed even if they are equivalent to those for medical/surgical benefits. | |
| Which of the following plans is generally subject to MHPAEA? 1. Retiree-only group health plans 2. Group health plans sponsored by employers employing 51 or more employees 3. Self-insured small private employer plans covering 50 or fewer employees 4. Large self-funded nonfederal governmental employers who opt out of the requirements of MHPAEA. | 2. Group health plans sponsored by employers employing 51 or more employees | |
| Which of the following plans are generally subject to MHPAEA? I. Group health plans sponsored by employers employing 51 or more employees II. Grandfathered and nongrandfathered individual policies III. Small nongrandfathered insured plans subject to the ACA’s essential health benefit provisions IV. Self-insured small private employer plans covering 50 or fewer employees | I, II, III | |
| All of the following plans are generally exempt from MHPAEA provisions, EXCEPT: 1. Retiree-only group health plans 2. Group health plans sponsored by employers employing 51 or more employees 3. Individual or group health insurance coverage offering only excepted benefits 4. Self-insured nonfederal governmental plans covering 50 or fewer employees | 2. Group health plans sponsored by employers employing 51 or more employees | |
| Which of the following is an example of a nonquantitative treatment limitation (NQTL) that would require parity under MHPAEA? 1. Medical management standards that limit benefits based on medical necessity 2. Prescription drug formulary limits 3. Standards for provider admission to participate in a network 4. All of the above | 4. All of the above | |
| Identify the nonquantitative treatment limitations (NQTLs) that would require parity under MHPAEA. (Select all that apply) I. Medical management standards that limit or exclude benefits based on whether the treatment is experimental or investigative II. Prescription drug formulary limits III. Standards for provider admission to participate in a network, including reimbursement rates IV. Plan methods for determining usual, customary and reasonable charges V. Requirements to use lower cost therapies in a progression approach, commonly referred to as step therapy | I, II, III, IV, V | |
| Which of the following is NOT an example of a nonquantitative treatment limitation (NQTL) that would require parity under MHPAEA? 1. Medical management standards that limit benefits based on medical necessity 2. Prescription drug formulary limits 3. Standards for provider admission to participate in a network 4. None of the above | 4. None of the above | |
| Which of the following is a recommendation made in the Compliance Tool for developing an internal compliance plan? 1. Conducting training and education 2. Ensuring retention of records and information 3. Conducting internal monitoring and compliance reviews on a regular basis 4. Responding to potential violations and developing corrective actions 5. None of the above | 1. Conducting training and education | |
| Which of the following are recommendations made in the Compliance Tool for developing an internal compliance plan? (Choose all that apply) I. Conducting training and education II. Ensuring retention of records and information III. Conducting internal monitoring and compliance reviews on a regular basis IV. Responding to potential violations and developing corrective actions V. None of the above | I, II, III, IV | |
| Which of the following is NOT a recommendation made in the Compliance Tool for developing an internal compliance plan? 1. Conducting training and education 2. Ensuring retention of records and information 3. Conducting internal monitoring and compliance reviews on a regular basis 4. Responding to potential violations and developing corrective actions 5. None of the above | 5. None of the above | |
| What items would the Compliance Tool identify as likely to be requested by a DOL examiner in the event of a DOL audit on the parity of MH/SUD benefits to medical/surgical benefits? 1. Documentation of the methodology in the application of NQTLs to both MH/SUD benefits and medical/surgical benefits offered under the plan 2. Documentation and guidelines, claims processing policies and procedures or other standards that the plan has relied upon as the basis for determining its compliance with applying NQTL to MH/SUD benefits and medical/surgical benefits 3. Samples of covered and denied benefit claims relating to MH/SUD benefits and medical/surgical benefits 4. Documentation of that entity’s compliance with MHPAEA if a plan delegates management of benefits to another entity 5. Any MHPAEA testing completed by the plan as it relates to the financial requirements or treatment limits applied to MH/SUD benefits. | 1, 2, 3, 4, 5 | |
| Which of the following items would a DOL examiner likely request in the event of a DOL audit on the parity of MH/SUD benefits to medical/surgical benefits? (Select all that apply) I. Documentation of the methodology in the application of NQTLs to both MH/SUD benefits and medical/surgical benefits offered under the plan II. Documentation and guidelines, claims processing policies and procedures or other standards that the plan has relied upon as the basis for determining its compliance with applying NQTL to MH/SUD benefits and medical/surgical benefits III. Samples of covered and denied benefit claims relating to MH/SUD benefits and medical/surgical benefits IV. Documentation of that entity’s compliance with MHPAEA if a plan delegates management of benefits to another entity V. Any MHPAEA testing completed by the plan as it relates to the financial requirements or treatment limits applied to MH/SUD benefits. | I, II, III, IV, V | |
| Which of the following items would not be requested by a DOL examiner in the event of a DOL audit on the parity of MH/SUD benefits to medical/surgical benefits? 1. Documentation of the methodology in the application of NQTLs to both MH/SUD benefits and medical/surgical benefits offered under the plan 2. Documentation and guidelines, claims processing policies and procedures or other standards that the plan has relied upon as the basis for determining its compliance with applying NQTL to MH/SUD benefits and medical/surgical benefits 3. Samples of covered and denied benefit claims relating to MH/SUD benefits and medical/surgical benefits 4. Documentation of that entity’s compliance with MHPAEA if a plan delegates management of benefits to another entity 5. Any MHPAEA testing completed by the plan as it relates to the financial requirements or treatment limits applied to MH/SUD benefits. | None of the above | |
| Which group purchases the majority of behavioral health care benefits sold in the United States today? 1. Small groups 2. Large groups 3. Individual consumers 4. Government agencies | 2. Large groups | |
| Which of the following channels are used to sell behavioral health care benefits? (Select all that apply) I. Large brokerage and consulting firms II. Small independent brokers III. Large MBHO sales forces IV. Health carrier sales forces | I, III, IV | |
| All of the following are channels through which behavioral health care benefits are sold, EXCEPT: 1. Large brokerage and consulting firms 2. Large MBHO sales forces 3. Health carrier sales forces 4. Small independent insurance agencies | 4. Small independent insurance agencies | |
| Which of the following is a typical feature of behavioral health care benefit plans? 1. Coverage for inpatient mental health treatment services 2. Coverage for dental services 3. Coverage for physical therapy 4. Coverage for outpatient mental health treatment services | 1, 4 | |
| Identify the services typically covered by behavioral health care benefit plans. (Choose all that apply) I. Inpatient mental health treatment services II. Residential treatment III. Cosmetic surgery IV. Intensive outpatient services, including psychological rehabilitation, case management and wraparound services for children | I, II, IV | |
| All of the following are typical features of behavioral health care benefit plans EXCEPT: 1. Coverage for inpatient mental health treatment services 2. Coverage for outpatient mental health treatment services 3. Coverage for cosmetic surgery 4. Coverage for intensive outpatient services, including psychological rehabilitation, case management and wraparound services for children | 3 | |
| What is the primary role of the Health Insurance Portability and Accountability Act (HIPAA) in behavioral treatment? 1. Protecting sensitive patient information 2. Providing funding for treatment 3. Regulating treatment methods 4. Setting standards for patient care | 1 | |
| Which of the following are roles of the Health Insurance Portability and Accountability Act (HIPAA) in behavioral treatment? (Select all that apply) I. Protecting sensitive patient information II. Providing funding for treatment III. Regulating treatment methods IV. Setting standards for patient care | I | |
| Which of the following is NOT a role of the Health Insurance Portability and Accountability Act (HIPAA) in behavioral treatment? 1. Protecting sensitive patient information 2. Providing funding for treatment 3. Regulating treatment methods 4. Setting standards for patient care | 2, 3, 4 | |
| Which of the following is a basic type of funding arrangement of an MBHO? 1. Fully insured 2. Shared risk 3. Administrative services only (ASO) 4. Direct payment | 1, 2, 3 | |
| Which of the following are characteristics of a fully insured funding arrangement of an MBHO? (Choose two) I. MBHOs assume the financial risk for providing behavioral services II. Purchasers pay MBHOs a predetermined, fixed premium III. If claims exceed a prespecified amount, the MBHO assumes those claim costs IV. The purchaser assumes the financial risk of the health care costs for its members | I, II | |
| All of the following are basic types of funding arrangements of an MBHO, EXCEPT: 1. Fully insured 2. Shared risk 3. Administrative services only (ASO) 4. Direct payment | 4 | |
| What was the original focus of employee assistance programs (EAPs)? 1. Substance abuse problems 2. Health and wellness programs 3. Human resource support 4. Stress management | 1 | |
| Which of the following services are provided by modern employee assistance programs (EAPs)? (Choose all that apply) I. Proactive prevention and health and wellness programs II. Management consultation III. On-site employee and employer seminars IV. Critical stress management after catastrophic workplace events | I, II, III, IV | |
| Which of the following is NOT a service provided by modern employee assistance programs (EAPs)? 1. Proactive prevention and health and wellness programs 2. Management consultation 3. On-site employee and employer seminars 4. Critical stress management after catastrophic workplace events | None of the above | |
| Which of the following is involved in providing an effective behavioral health program? 1. An integrated mental health/chemical dependency benefit 2. Employee and employer awareness of the program’s services and value 3. Appropriate use of the benefits 4. How well the behavioral vendor and its network providers prevent and manage costly disorders 5. All of the above | 5. All of the above | |
| Which of the following are involved in providing an effective behavioral health program? (Select all that apply) I. An integrated mental health/chemical dependency benefit II. Employee and employer awareness of the program’s services and value III. Appropriate use of the benefits IV. How well the behavioral vendor and its network providers prevent and manage costly disorders | I, II, III, IV | |
| All of the following are involved in providing an effective behavioral health program, EXCEPT: 1. An integrated mental health/chemical dependency benefit 2. Employee and employer awareness of the program’s services and value 3. Appropriate use of the benefits 4. How well the behavioral vendor and its network providers prevent and manage costly disorders 5. The program's popularity among employees | 5. The program's popularity among employees | |
| Who are the health professionals that comprise a typical behavioral health specialty network? 1. Clinical psychologists 2. Social workers 3. Master’s-level therapists 4. Psychiatric nurses 5. Psychiatrists 6. Medical doctors who specialize in addictionology 7. Developmental-behavioral pediatricians 8. Physical therapists | 1, 2, 3, 4, 5, 6, 7 | |
| Which of the following health professionals are part of a typical behavioral health specialty network? (Select all that apply) I. Clinical psychologists II. Social workers III. Master’s-level therapists IV. Psychiatric nurses V. Psychiatrists VI. Medical doctors who specialize in addictionology VII. Developmental-behavioral pediatricians VIII. Physical therapists | I, II, III, IV, V, VI, VII | |
| All of the following are health professionals that comprise a typical behavioral health specialty network, EXCEPT: 1. Clinical psychologists 2. Social workers 3. Master’s-level therapists 4. Psychiatric nurses 5. Psychiatrists 6. Medical doctors who specialize in addictionology 7. Developmental-behavioral pediatricians 8. Physical therapists | 8 | |
| Which behavioral health care treatment is designed for patients who need more intensive treatment than weekly outpatient therapy provides, but they require fewer hours each day than partial or day facilities provide? 1. Acute inpatient facilities 2. Partial hospital programs 3. Intensive outpatient programs | 3. Intensive outpatient programs | |
| Which of the following are characteristics of behavioral health care treatments? (Choose all that apply) I. Acute inpatient facilities are for individuals who are unable to care for themselves and may be suicidal or homicidal. II. Partial hospital programs offer intensive treatment during the day, but patients return home overnight. III. Intensive outpatient programs are designed for patients who need less intensive treatment than weekly outpatient therapy provides. | I, II | |
| All of the following are true about behavioral health care treatments, EXCEPT: 1. Acute inpatient facilities are for individuals who are unable to care for themselves and may be suicidal or homicidal. 2. Partial hospital programs offer intensive treatment during the day, but patients return home overnight. 3. Intensive outpatient programs are designed for patients who need less intensive treatment than weekly outpatient therapy provides. | 3. Intensive outpatient programs are designed for patients who need less intensive treatment than weekly outpatient therapy provides. | |
| Which of the following is a cost-containment practice of MBHOs? 1. Care access 2. Predictive modeling and risk assessment 3. Performance measurement 4. Case management 5. Utilization review and management 6. Outcomes management 7. Coordination of care 8. Depression disease management programs 9. Substance abuse relapse programs 10. None of the above | 10. None of the above | |
| Identify the cost-containment practices of MBHOs. (Select all that apply) I. Care access II. Predictive modeling and risk assessment III. Performance measurement IV. Case management V. Utilization review and management VI. Outcomes management VII. Coordination of care VIII. Depression disease management programs IX. Substance abuse relapse programs | I, II, III, IV, V, VI, VII, VIII, IX | |
| All of the following are cost-containment practices of MBHOs, EXCEPT: 1. Care access 2. Predictive modeling and risk assessment 3. Performance measurement 4. Case management 5. Utilization review and management 6. Outcomes management 7. Coordination of care 8. Depression disease management programs 9. Substance abuse relapse programs 10. None of the above | 10. None of the above | |
| Which organization grants accreditation to MBHOs? 1. National Committee for Quality Assurance 2. World Health Organization 3. United Nations 4. Utilization Accreditation Review Commission | 1 | |
| Identify the organizations that grant accreditation to MBHOs. (Choose all that apply) I. National Committee for Quality Assurance II. World Health Organization III. Utilization Accreditation Review Commission IV. Joint Commission | I, III, IV | |
| All of the following organizations grant accreditation to MBHOs, EXCEPT: 1. National Committee for Quality Assurance 2. World Health Organization 3. Utilization Accreditation Review Commission 4. Joint Commission | 2 | |
| Which of the following is an innovative approach that might succeed in meeting the critical needs of mental health patients? 1. Proactive disease management programs that operate on several fronts 2. Outreach to people who want treatment but do not know how to access it 3. Innovative ways of delivering therapy that are most accessible and cost-effective 4. Traditional face-to-face therapy sessions | Traditional face-to-face therapy sessions | |
| Which of the following innovative approaches might succeed in meeting the critical needs of mental health patients? (Select all that apply) I. Proactive disease management programs that operate on several fronts II. Outreach to people who want treatment but do not know how to access it III. Innovative ways of delivering therapy that are most accessible and cost-effective IV. Traditional face-to-face therapy sessions | I, II, III | |
| All of the following are innovative approaches that might succeed in meeting the critical needs of mental health patients, EXCEPT: 1. Proactive disease management programs that operate on several fronts 2. Outreach to people who want treatment but do not know how to access it 3. Innovative ways of delivering therapy that are most accessible and cost-effective 4. Traditional face-to-face therapy sessions | 4 | |
| Which of the following is a key benefit that a comprehensive workplace wellness program can produce over time? 1. Fewer absences 2. Increased stress 3. Decreased productivity 4. Worker dissatisfaction | 1 | |
| Which of the following are key benefits that a comprehensive workplace wellness program can produce over time? (Choose two) I. Fewer absences II. Improved productivity III. Worker dissatisfaction IV. Increased stress | I, II | |
| Which of the following is NOT a key benefit that a comprehensive workplace wellness program can produce over time? 1. Fewer absences 2. Improved productivity 3. Worker satisfaction and retention 4. Increased stress | 4 | |
| Does the affordability factor associated with wellness programs restrict their introduction solely to larger organizations? 1. Yes, only large organizations can afford wellness programs. 2. No, both large and small organizations can introduce wellness programs. 3. Yes, but only if the organization has a large budget for employee wellness. 4. No, only small organizations can afford wellness programs. | 2. No, both large and small organizations can introduce wellness programs. | |
| Which of the following are possible free initiatives that can be introduced as part of a wellness program? (Select all that apply) I. Holding regular workplace stretch breaks II. Organizing a walking program III. Instituting policies against smoking at work IV. Organizing potluck lunches featuring unhealthy foods V. Identifying on-site assets available for wellness programs (such as a nearby walking trail or a conference room suitable for wellness classes). | I, II, III, V | |
| All of the following are possible free initiatives that can be introduced as part of a wellness program, EXCEPT: 1. Holding regular workplace stretch breaks 2. Organizing a walking program 3. Instituting policies against smoking at work 4. Organizing potluck lunches featuring unhealthy foods 5. Identifying on-site assets available for wellness programs (such as a nearby walking trail or a conference room suitable for wellness classes). | 4. Organizing potluck lunches featuring unhealthy foods | |
| What is the typical cost range per employee per year for an employer to sponsor a workplace wellness program? 1. $0 to $100 2. $0 to $450 3. $100 to $500 4. $200 to $600 | $0 to $450 | |
| Which of the following are primary cost drivers when introducing a wellness program? (Select all that apply) I. Incentives II. Equipment III. Outside service providers IV. Employee salaries | I, II, III | |
| Which of the following is not a strategy for small businesses when introducing a wellness program? 1. Formulating a budget in advance 2. Determining the level of program offerings that can be facilitated with allotted resources 3. Sharing certain costs with employees 4. Ignoring the cost of equipment | Ignoring the cost of equipment | |
| What is the primary goal of a wellness program? 1. To transform your workplace culture into one that promotes healthy living 2. To increase the company's profit 3. To reduce the number of employees 4. To increase the workload of employees | To transform your workplace culture into one that promotes healthy living | |
| When initially designing a workplace wellness program, which of the following decisions should be made? (Select all that apply) I. Who is the program being designed for? II. Which health issues to address? III. What color should the program logo be? IV. How many employees should be fired? | I, II | |
| When initially designing a workplace wellness program, which of the following is NOT a key decision to be made? 1. Who is the program being designed for? 2. Which health issues to address? 3. What color should the program logo be? 4. How many employees should be fired? | How many employees should be fired | |
| Which of the following is a key ingredient that typically comprises a well-structured wellness program? 1. Health screenings 2. Fast food coupons 3. Movie tickets 4. Car wash vouchers | Health screenings | |
| Identify the key ingredients that typically comprise a well-structured wellness program. (Select all that apply) I. Health screenings II. Educational and self-help tools III. Organized activities IV. Individual follow-up and treatment V. Incentives VI. A supportive environment VII. Free gym membership VIII. Discount on electronics | I, II, III, IV, V, VI | |
| All of the following are key ingredients that typically comprise a well-structured wellness program, EXCEPT: 1. Health screenings 2. Educational and self-help tools 3. Organized activities 4. Discount on electronics | Discount on electronics | |
| Which federal law prohibits discrimination by group health plans based on an individual’s health status and makes exceptions for wellness programs to offer premium or cost-sharing discounts based on an individual’s health status in certain circumstances? 1. The Employee Retirement Income Security Act (ERISA) 2. The Americans with Disabilities Act (ADA) 3. The Genetic Information Nondiscrimination Act (GINA) | The Employee Retirement Income Security Act (ERISA) | |
| Which of the following federal laws directly address workplace wellness programs within the context of other broad rules that prohibit discrimination based on health status? (Select all that apply) I. The Employee Retirement Income Security Act (ERISA) II. The Americans with Disabilities Act (ADA) III. The Genetic Information Nondiscrimination Act (GINA) | I, II, III | |
| Which of the following federal laws does not make an exception for inquiries through voluntary wellness programs? 1. The Employee Retirement Income Security Act (ERISA) 2. The Americans with Disabilities Act (ADA) 3. The Genetic Information Nondiscrimination Act (GINA) | The Employee Retirement Income Security Act (ERISA) | |
| Which federal law establishes standards to protect the privacy of personal health information? 1. The Health Insurance Portability and Accountability Act (HIPAA) 2. The Americans with Disabilities Act (ADA) 3. The Genetic Information Nondiscrimination Act (GINA) 4. The Fair Labor Standards Act (FLSA) | 1 | |
| Identify the federal laws that deal with standards for protecting the privacy of personal health information. (Select all that apply) I. The Health Insurance Portability and Accountability Act (HIPAA) II. The Americans with Disabilities Act (ADA) III. The Genetic Information Nondiscrimination Act (GINA) IV. The Fair Labor Standards Act (FLSA) | I, II, III | |
| All of the following federal laws deal with standards for protecting the privacy of personal health information, EXCEPT: 1. The Health Insurance Portability and Accountability Act (HIPAA) 2. The Americans with Disabilities Act (ADA) 3. The Genetic Information Nondiscrimination Act (GINA) 4. The Fair Labor Standards Act (FLSA) | 4 | |
| Which of the following is a condition that health-contingent wellness programs must meet according to the Department of Labor (DOL)? 1. The reward amount is unlimited. 2. The maximum reward is 30% of the total cost of self-only group health plan coverage. 3. The maximum can be decreased to 20% of the cost of family coverage if spouses and dependents are eligible to participate in the wellness program. 4. The maximum can be further decreased to 40% if tobacco-related components are included in the wellness program. | The maximum reward is 30% of the total cost of self-only group health plan coverage. | |
| Which of the following are conditions that health-contingent wellness programs must meet according to the Department of Labor (DOL)? I. The reward amount is limited. II. The maximum reward is 30% of the total cost of self-only group health plan coverage. III. The maximum can be increased to 30% of the cost of family coverage if spouses and dependents are eligible to participate in the wellness program. IV. The maximum can be further increased to 50% if tobacco-related components are included in the wellness program. V. Health-contingent wellness programs also must be reasonably designed to promote health or prevent disease. | I, II, III, IV, V | |
| Which of the following is NOT a condition that health-contingent wellness programs must meet according to the Department of Labor (DOL)? 1. The reward amount is limited. 2. The maximum reward is 30% of the total cost of self-only group health plan coverage. 3. The maximum can be increased to 30% of the cost of family coverage if spouses and dependents are eligible to participate in the wellness program. 4. The maximum can be further increased to 50% if tobacco-related components are included in the wellness program. 5. Health-contingent wellness programs do not need to be reasonably designed to promote health or prevent disease. | Health-contingent wellness programs do not need to be reasonably designed to promote health or prevent disease. | |
| What is considered a voluntary wellness program under the ADA according to the EEOC? 1. A program that requires participation and penalizes employees who do not participate. 2. A program that neither requires participation nor penalizes employees who do not participate. 3. A program that requires participation but does not penalize employees who do not participate. 4. A program that does not require participation but penalizes employees who do not participate. | 2. A program that neither requires participation nor penalizes employees who do not participate. | |
| Which of the following are true regarding the ADA standards for wellness programs offered through a group health plan according to the EEOC? I. The program must be reasonably designed. II. The program must not be designed mainly to shift costs onto employees based on their health. III. The program must provide participants with their results, follow-up information, or advice designed to improve health. IV. The program can deny eligibility for group health plan benefits to employees who refuse to participate. | I, II, III | |
| Which of the following is NOT a requirement for wellness programs under the GINA standards according to the EEOC? 1. Wellness programs can offer incentives to spouses to provide information about their own health status. 2. Wellness programs cannot offer incentives for children of employees to disclose their genetic information or any other health information. 3. Wellness programs can condition incentives on individuals agreeing to the sale, exchange, sharing, transfer or other disclosure of their genetic information. 4. The maximum incentive applicable to the spouse was 30% of the cost of self-only coverage offered by the employer. | 3. Wellness programs can condition incentives on individuals agreeing to the sale, exchange, sharing, transfer or other disclosure of their genetic information. | |
| Which federal privacy standard requires employers with 15 or more workers to keep private all medical information they may obtain about workers? (a) ADA (b) GINA (c) HIPAA (d) EEOC | ADA | |
| Which of the following are true about the federal privacy standards applicable to workplace wellness programs? (I) ADA privacy rules apply to employers with 15 or more workers. (II) HIPAA privacy rules do not apply to wellness programs that are offered directly by employers outside of a group health plan. (III) Under all three privacy standards, it is permissible for wellness programs to share participants’ health information with their business partners for purposes of administering the program. (IV) HIPAA/ACA rules apply only to those wellness programs offered with group health plans. | I, II, III, IV | |
| Which of the following is not a federal privacy standard applicable to workplace wellness programs? (a) ADA (b) GINA (c) HIPAA (d) EEOC | EEOC | |
| Do large employers who sponsor wellness programs typically request that employees disclose personal health information? 1. Yes, through a health risk assessment (HRA) 2. Yes, through biometric screening 3. Yes, through both HRA and biometric screening 4. No, they do not request personal health information | 3 | |
| Which methods do large employers use to request personal health information from employees in their wellness programs? (Select all that apply) I. Health risk assessment (HRA) II. Biometric screening III. Personal interviews IV. Online surveys | I, II | |
| Which of the following methods are NOT typically used by large employers to request personal health information from employees in their wellness programs? 1. Health risk assessment (HRA) 2. Biometric screening 3. Personal interviews 4. Online surveys | 3, 4 | |
| Do large employers offering wellness programs to their employees generally provide incentives for their workers to disclose personal health information? 1. Yes, they provide incentives to disclose health information and achieve biometric outcomes. 2. No, they do not provide any incentives. 3. Yes, they provide incentives to disclose health information. 4. No, they only provide incentives to achieve biometric outcomes. | Yes, they provide incentives to disclose health information and achieve biometric outcomes. | |
| What types of incentives do large employers offering wellness programs to their employees generally provide? I. Incentives to disclose health information. II. Incentives to achieve biometric outcomes. III. Incentives to complete a health risk assessment. IV. Incentives to participate in physical activities. | I, II, III | |
| Which of the following is not a type of incentive that large employers offering wellness programs to their employees generally provide? 1. Incentives to disclose health information. 2. Incentives to achieve biometric outcomes. 3. Incentives to complete a health risk assessment. 4. Incentives to participate in physical activities. | Incentives to participate in physical activities. | |
| What is the effect of wellness program incentives on employee participation? 1. They significantly increase participation 2. They have no effect on participation 3. They are somewhat effective 4. They are not effective at all | 3. They are somewhat effective | |
| Which of the following are reasons why workers may opt not to participate in wellness programs? (Choose all that apply) I. To protect the privacy of their health information II. They find the program inconvenient III. They find the incentives ineffective IV. They find the financial penalties for nonparticipation burdensome | I, II, IV | |
| All of the following are true about wellness program incentives EXCEPT: 1. They significantly increase participation 2. They are somewhat effective 3. Most large employers find them not at all effective or only somewhat effective 4. Workers may find the financial penalties for nonparticipation burdensome | 1. They significantly increase participation | |
| Which of the following federal employment nondiscrimination laws prohibit employers from making inquiries about employee health information or genetic information with limited exceptions, including through voluntary workplace wellness programs? 1. The Americans with Disabilities Act of 1990 (ADA) 2. The Genetic Information Nondiscrimination Act of 2008 (GINA) 3. The Equal Employment Opportunity Commission (EEOC) 4. The Affordable Care Act (ACA) | 1, 2 | |
| Which of the following statements are true regarding the EEOC’s regulations and enforcement guidance regarding voluntary wellness programs? I. Initially, regulations and enforcement guidance defined voluntary wellness programs to be those that neither require participation nor penalize employees for nonparticipation. II. In 2016, new federal regulations issued by the EEOC redefined voluntary wellness programs to include those that impose financial incentives up to 30% of the cost of self-only coverage. III. The EEOC repealed the financial incentive provisions of its ADA and GINA wellness rules in December 2018. IV. The EEOC did not provide sufficient justification for its wellness program incentives limits. | I, II, III | |
| All of the following are requirements for a reasonably designed wellness program, EXCEPT: 1. Provide employees with advanced notice clearly explaining what medical information will be obtained. 2. Clearly state how the medical information will be used. 3. Specify who will receive the medical information. 4. Allow employers to make inquiries about employee health information without any restrictions. | 4 | |
| Which of the following is a permitted use of health information collected by employers through wellness programs? 1. To provide meaningful feedback or advice to employees about their health or risk status 2. To design effective disease management programs or treatments in aggregated form 3. To shift costs from the employer to targeted employees based on their health 4. To give an employer information to estimate future health care costs | 1, 2 | |
| Which of the following are ways that health information collected through wellness programs can be used by employers? (Choose two) I. To provide meaningful feedback or advice to employees about their health or risk status II. To design effective disease management programs or treatments in aggregated form III. To shift costs from the employer to targeted employees based on their health IV. To give an employer information to estimate future health care costs | I, II | |
| All of the following are uses of health information collected by employers through wellness programs, EXCEPT: 1. To provide meaningful feedback or advice to employees about their health or risk status 2. To design effective disease management programs or treatments in aggregated form 3. To shift costs from the employer to targeted employees based on their health 4. To give an employer information to estimate future health care costs | 3, 4 | |
| Do workplace wellness programs effectively promote health and prevent disease? 1. Yes 2. No 3. It depends on the program 4. The research is inconclusive | 2. No | |
| Which of the following are challenges in measuring the impacts of workplace wellness programs? (Select all that apply) I. Healthier individuals are more likely to participate in wellness programs II. Workplace programs come in many shapes and sizes III. Many programs focus more on health screening than health promotion programs IV. All programs are equally effective | I, II, III | |
| All of the following are true about workplace wellness programs, EXCEPT: 1. Healthier individuals are more likely to participate in wellness programs 2. Workplace programs come in many shapes and sizes 3. Many programs focus more on health screening than health promotion programs 4. All programs are equally effective | 4. All programs are equally effective | |
| What does the federal law permit regarding the collection of health information from workers? (Text, pp. 316.-317) 1. It allows the collection of health information through voluntary workplace wellness programs. 2. It prohibits the collection of health information. 3. It mandates the collection of health information. 4. It has no stance on the collection of health information. | 1. It allows the collection of health information through voluntary workplace wellness programs. | |
| Which of the following statements are true regarding the EEOC's stance on incentives in workplace wellness programs? (Text, pp. 316.-317) I. The EEOC has given notice it will revisit the issue of incentives in future rulemaking. II. The EEOC has finalized its stance on incentives and will not revisit the issue. III. Most large employer wellness programs continue to collect personal health information. IV. Failure to participate in wellness programs can substantially increase the cost that workers would otherwise pay for their health coverage. | I, III, IV | |
| Which of the following is not true regarding the collection of health information in workplace wellness programs? (Text, pp. 316.-317) 1. Federal law permits the collection of health information from workers through voluntary workplace wellness programs. 2. Most large employer wellness programs continue to collect personal health information. 3. The EEOC has given notice it will revisit the issue of incentives in future rulemaking. 4. All employers have ceased to collect employee health information. | 4. All employers have ceased to collect employee health information. | |
| What does 'financial wellness' mean? 1. Effectively managing your economic life 2. Spending beyond one's means 3. Being financially unprepared for emergencies 4. Having no access to the information and tools necessary to make good financial decisions 5. Having no plan for the future | 1 | |
| Which of the following are components of 'financial wellness'? (Select all that apply) I. Keeping spending within one’s means II. Being financially prepared for emergencies III. Having access to the information and tools necessary to make good financial decisions IV. Having a plan for the future V. Spending beyond one's means | I, II, III, IV | |
| Which of the following is NOT a component of 'financial wellness'? 1. Keeping spending within one’s means 2. Being financially prepared for emergencies 3. Having access to the information and tools necessary to make good financial decisions 4. Having a plan for the future 5. Spending beyond one's means | 5 | |
| What is the underlying concept of financial wellness? 1. Financial security 2. Employee assistance programs 3. Financial services 4. Health benefits package | Financial security | |
| Which of the following are true about employer-provided financial services and benefits? (Choose all that apply) I. They effectively integrate financial wellness and security II. They are reported as the most helpful in attaining financial security by a majority of employees III. They often consist of limited employee assistance programs designed for crises IV. They are always included in the benefits package | III | |
| All of the following are true about employer-provided financial services and benefits, EXCEPT: 1. They are often limited to employee assistance programs designed for crises 2. They are always included in the benefits package 3. They are reported as the most helpful in attaining financial security by a majority of employees 4. The underlying concept of financial wellness is financial security | They are always included in the benefits package | |
| Which of the following is missing from employer initiatives to provide financial well-being to their employees? 1. A more comprehensive approach to financial well-being 2. A focus on physical health 3. A focus on mental health 4. A focus on social well-being | 1 | |
| Which of the following are components of a more comprehensive approach to financial well-being that is often missing from employer initiatives? (Choose two) I. Helping employees build lasting financial strength II. Providing employees with a gym membership III. Leading to a more solid organization IV. Providing employees with a company car | I, III | |
| All of the following are typically included in employer initiatives to provide financial well-being to their employees, EXCEPT: 1. Helping employees build lasting financial strength 2. Leading to a more solid organization 3. Providing employees with a gym membership 4. A more comprehensive approach to financial well-being | 3 | |
| How should financial wellness programs be viewed in relation to other health-related wellness programs offered by employers? 1. They should be viewed as an addendum to other benefits programs. 2. They should be viewed in the same way as health and wellness programs, offering holistic support and advice. 3. They should only be used when employees are in financial distress. 4. They should be viewed as a separate entity from other wellness programs. | 2. They should be viewed in the same way as health and wellness programs, offering holistic support and advice. | |
| Which of the following are ways in which financial wellness programs should function like health-related wellness programs? (Choose all that apply) I. They should only take care of employees when they are in financial distress. II. They should work to prevent financial distress in the first place. III. They should offer holistic support and advice to employees. IV. They should only focus on short-term financial needs. | II, III | |
| All of the following are ways in which financial wellness programs should NOT function like health-related wellness programs, EXCEPT: 1. They should only take care of employees when they are in financial distress. 2. They should only focus on short-term financial needs. 3. They should work to prevent financial distress in the first place. 4. They should be viewed as a separate entity from other wellness programs. | 3. They should work to prevent financial distress in the first place. | |
| What is the first step in establishing a successful financial wellness program for employees? 1. Conducting digital engagement, interviews and examination of employees’ pay and benefits records 2. Providing a financial coach or advisor 3. Offering software to keep track of financial goals 4. Teaching the concepts of good financial health | 1. Conducting digital engagement, interviews and examination of employees’ pay and benefits records | |
| Which of the following are part of a holistic approach to financial wellness? (Choose two) I. Understanding employees’ goals when it comes to paying taxes, purchasing a home, establishing and maintaining good credit, health care, emergency preparedness, education costs, paying down debt, saving for retirement and other parts of their financial life II. Providing a financial coach or advisor III. Offering software to keep track of financial goals IV. Conducting digital engagement, interviews and examination of employees’ pay and benefits records | I, II | |
| All of the following are part of a holistic approach to financial wellness, EXCEPT: 1. Understanding employees’ goals when it comes to paying taxes, purchasing a home, establishing and maintaining good credit, health care, emergency preparedness, education costs, paying down debt, saving for retirement and other parts of their financial life 2. Providing a financial coach or advisor 3. Offering software to keep track of financial goals 4. Ignoring the individual financial circumstances of each employee | 4. Ignoring the individual financial circumstances of each employee | |
| What is the primary benefit to employees when employers foster a high level of financial wellness? 1. Increased salary 2. Better decision making 3. More vacation time 4. Improved physical health | Better decision making | |
| Which of the following are benefits to employees when employers foster a high level of financial wellness? (Select all that apply) I. Better decision making II. Improved physical health III. Successful long-term strategy management IV. More vacation time | I, III | |
| Which of the following is NOT a benefit to employees when employers foster a high level of financial wellness? 1. Better decision making 2. Successful long-term strategy management 3. More vacation time 4. Increased salary | More vacation time | |
| What are some of the benefits employers gain when their employees achieve a high level of financial wellness? 1. Increased productivity 2. Lower turnover rate 3. Reduced absenteeism 4. All of the above | 4. All of the above | |
| Which of the following are documented effects of employees' financial stress on their work performance? (Choose all that apply) I. Missing at least one day of work to handle financial problems II. Spending at least 20 hours a month working on personal financial tasks at work III. Resigning due to financial stress IV. Increased reliance on emergency EAP services | I, II, III, IV | |
| All of the following are reasons why companies should take a broader approach to their employees' financial fitness, EXCEPT: 1. Employees in stressful financial circumstances are less productive 2. One day of employee absence costs businesses an average of $348 in lost productivity 3. Employees with high financial wellness are more likely to demand higher salaries 4. Increased reliance on emergency EAP services increases the costs of these programs | 3. Employees with high financial wellness are more likely to demand higher salaries | |
| What are some ways that savings from financial wellness programs can be used to enhance employee long-term well-being? 1. Programs that enhance money management skills 2. Newsletters and other periodic publications 3. Investment, retirement, college, emergency and health care planning seminars 4. Debt- and credit-related programs 5. All of the above | 5. All of the above | |
| Which of the following are ways that financial wellness can help companies? (Choose all that apply) I. Reduce unnecessary expenditures due to absenteeism II. Expand their benefit options to include programs that enhance money management skills III. Attract and retain top-notch staff IV. Increase loyalty, higher productivity and lower costs | I, II, III, IV | |
| All of the following are ways that financial wellness can help companies, EXCEPT: 1. Reduce unnecessary expenditures due to absenteeism 2. Expand their benefit options to include programs that enhance money management skills 3. Attract and retain top-notch staff 4. Increase loyalty, higher productivity and lower costs 5. Decrease employee satisfaction | 5. Decrease employee satisfaction | |
| What are the two primary factors that contribute to the popularity of cafeteria plans? 1. The ever-increasing costs of benefits 2. A diverse workforce with vastly differing employee benefit needs 3. The tax advantages and choice in benefits selection 4. The ability to contribute toward benefits on a tax-favored basis | 1, 2 | |
| Which of the following contribute to the popularity of cafeteria plans? (Select all that apply) I. The ever-increasing costs of benefits II. A diverse workforce with vastly differing employee benefit needs III. The tax advantages and choice in benefits selection IV. The ability to contribute toward benefits on a tax-favored basis | I, II, III, IV | |
| All of the following contribute to the popularity of cafeteria plans, EXCEPT: 1. The ever-increasing costs of benefits 2. A diverse workforce with vastly differing employee benefit needs 3. The tax advantages and choice in benefits selection 4. The ability to contribute toward benefits on a tax-favored basis 5. The employer's desire to spend money on duplicated or unneeded benefits | 5 | |
| What is the tax doctrine of constructive receipt within the context of cafeteria plans? 1. It is a tax law that makes all cafeteria plan benefits taxable. 2. It is a tax law that cafeteria plans operate as an exception to, allowing participants to receive tax-free benefits. 3. It is a tax law that requires cafeteria plan participants to pay additional taxes on their benefits. 4. It is a tax law that does not apply to cafeteria plans. | 2. It is a tax law that cafeteria plans operate as an exception to, allowing participants to receive tax-free benefits. | |
| Which of the following statements are true about the tax doctrine of constructive receipt within the context of cafeteria plans? (Choose two) I. Cafeteria plans operate as an exception to the tax doctrine of constructive receipt. II. The tax doctrine of constructive receipt makes all cafeteria plan benefits taxable. III. Provided a cafeteria plan is designed in accordance with all applicable tax laws, a participant can avoid taxation and receive tax-free benefits. IV. The tax doctrine of constructive receipt requires cafeteria plan participants to pay additional taxes on their benefits. | I, III | |
| Which of the following is NOT true about the tax doctrine of constructive receipt within the context of cafeteria plans? 1. Cafeteria plans operate as an exception to the tax doctrine of constructive receipt. 2. Usually, when an individual has control over how money is spent, it becomes taxable to that individual. 3. Provided a cafeteria plan is designed in accordance with all applicable tax laws, a participant can avoid taxation and receive tax-free benefits. 4. The tax doctrine of constructive receipt makes all cafeteria plan benefits taxable. | 4. The tax doctrine of constructive receipt makes all cafeteria plan benefits taxable. | |
| What is the primary function of a cafeteria plan in connection with other employee benefit plans sponsored by an employer? 1. It is a mechanism to pay for employee benefits 2. It is a mechanism to increase employee salary 3. It is a mechanism to reduce employee benefits 4. It is a mechanism to reduce employer tax | 1. It is a mechanism to pay for employee benefits | |
| Which of the following statements are true about a cafeteria plan? (Choose all that apply) I. The cafeteria plan is an umbrella plan under which tax-favored employee benefits are offered II. The cafeteria plan is governed by Internal Revenue Code (IRC) Section 125 III. Prior to the enactment of IRC Section 125, the tax treatment of benefits involving participant choice was quite different IV. The cafeteria plan is a mechanism to reduce employee benefits | I, II, III | |
| Which of the following is NOT true about a cafeteria plan? 1. The cafeteria plan is an umbrella plan under which tax-favored employee benefits are offered 2. The cafeteria plan is governed by Internal Revenue Code (IRC) Section 125 3. The cafeteria plan is a mechanism to reduce employee benefits 4. Prior to the enactment of IRC Section 125, the tax treatment of benefits involving participant choice was quite different | 3. The cafeteria plan is a mechanism to reduce employee benefits | |
| Which of the following statements about IRC Section 125 is correct? 1. It allows all types of benefits to be included in a cafeteria plan. 2. It provides favorable tax treatment to certain benefits funded through a cafeteria plan. 3. It allows cash payments to participants to be non-taxable. 4. It allows owners, such as partners paid according to a Form K-1 or 2% or greater shareholders of an S corporation, to benefit from the plan. | 2. It provides favorable tax treatment to certain benefits funded through a cafeteria plan. | |
| Which of the following benefits are permissible under IRC Section 125? (Choose all that apply) I. Whole life insurance II. Long-term care insurance III. Health savings account (HSA) funded through a cafeteria plan IV. Cash payments to participants | III. Health savings account (HSA) funded through a cafeteria plan | |
| All of the following are true about IRC Section 125 EXCEPT: 1. It provides favorable tax treatment to certain benefits funded through a cafeteria plan. 2. It allows cash payments to participants to be non-taxable. 3. It allows owners, such as partners paid according to a Form K-1 or 2% or greater shareholders of an S corporation, to benefit from the plan. 4. It has a clearly defined scope, with some benefits that are permissible for cafeteria plan tax treatment and other benefits that may not be included in a cafeteria plan. | 3. It allows owners, such as partners paid according to a Form K-1 or 2% or greater shareholders of an S corporation, to benefit from the plan. | |
| What is the most notable advantage to an employee in receiving benefits under a cafeteria plan? 1. Preferential tax treatment 2. Increased salary 3. More vacation days 4. Better health insurance | Preferential tax treatment | |
| Which of the following are advantages to an employee in receiving benefits under a cafeteria plan? (Choose two) I. Preferential tax treatment II. Contributions are exempt from FICA and FUTA taxes III. Increased salary IV. More vacation days | I, II | |
| All of the following are advantages to an employee in receiving benefits under a cafeteria plan, EXCEPT: 1. Preferential tax treatment 2. Contributions are exempt from FICA and FUTA taxes 3. Most state and local tax laws follow the federal tax treatment 4. The employee has to pay more taxes | The employee has to pay more taxes | |
| What is the primary disadvantage to an employee in receiving benefits under the umbrella of a cafeteria plan? 1. The benefit elections must be made prior to the beginning of the plan year 2. The use-it-or-lose-it rule applies to a health care FSA 3. An employee may be worse off financially by paying for dependent-care expenses through a cafeteria spending account 4. There is no FICA-Social Security tax on cafeteria plan benefit dollars | 1 | |
| Which of the following are disadvantages to an employee in receiving benefits under the umbrella of a cafeteria plan? (Select all that apply) I. The benefit elections must be made prior to the beginning of the plan year II. The use-it-or-lose-it rule applies to a health care FSA III. An employee may be worse off financially by paying for dependent-care expenses through a cafeteria spending account IV. There is no FICA-Social Security tax on cafeteria plan benefit dollars | I, II, III, IV | |
| Which of the following is NOT a disadvantage to an employee in receiving benefits under the umbrella of a cafeteria plan? 1. The benefit elections must be made prior to the beginning of the plan year 2. The use-it-or-lose-it rule applies to a health care FSA 3. An employee may be worse off financially by paying for dependent-care expenses through a cafeteria spending account 4. There is no FICA-Social Security tax on cafeteria plan benefit dollars | None of the above | |
| What are the advantages to employers in offering their employee benefits through a cafeteria plan? 1. Financial incentives 2. Greater employee awareness of the overall value of their benefits 3. Control escalating benefit costs 4. All of the above | 4. All of the above | |
| Which of the following are advantages to employers in offering their employee benefits through a cafeteria plan? (Choose two) I. Financial incentives II. Greater employee awareness of the overall value of their benefits III. Control escalating benefit costs IV. None of the above | I, II | |
| All of the following are advantages to employers in offering their employee benefits through a cafeteria plan, EXCEPT: 1. Financial incentives 2. Greater employee awareness of the overall value of their benefits 3. Control escalating benefit costs 4. Increase in FICA and FUTA taxes | 4. Increase in FICA and FUTA taxes | |
| What is the primary disadvantage for employers in sponsoring a cafeteria plan? 1. Increased administrative complexity and costs 2. Adverse selection risk 3. Cash flow risk 4. Nondiscrimination testing | Increased administrative complexity and costs | |
| Which of the following are potential disadvantages for employers in sponsoring a cafeteria plan? I. Increased administrative complexity and costs II. Adverse selection risk III. Cash flow risk IV. Nondiscrimination testing | I, II, III, IV | |
| All of the following are potential disadvantages for employers in sponsoring a cafeteria plan, EXCEPT: 1. Increased administrative complexity and costs 2. Adverse selection risk 3. Cash flow risk 4. Payroll tax savings | Payroll tax savings | |
| Which of the following is NOT a term used to refer to cafeteria plans under IRC Section 125? 1. Flexible benefit programs 2. Choice plans 3. Premium conversion plan 4. Tax-favored contribution plan | 4. Tax-favored contribution plan | |
| Which of the following characteristics are associated with cafeteria plans under IRC Section 125? (Choose two) I. Benefits are offered to employees cafeteria-style II. Employees are always given employer money to spend III. Tax-favored contributions can be spent on additional benefits that are tax-free when paid out to the participant IV. If a plan includes only pretax premium conversion, it is referred to as a premium conversion plan | I, III | |
| All of the following are characteristics of cafeteria plans under IRC Section 125 EXCEPT: 1. They are referred to using a variety of terms 2. They allow employees to make tax-favored contributions 3. They always provide employer money for employees to spend 4. They allow employees to obtain selected employee benefits on a tax-favored basis | 3. They always provide employer money for employees to spend | |
| Which of the following is a characteristic of a premium conversion plan? 1. There are employer contributions 2. The plan is offered to employees to pay for their insurance costs on a tax-favored basis 3. The employer’s contribution to the plan is paid to the employee as cash compensation 4. The amount credited to an employee for opting out of coverage can be more than the actual cost of the coverage they are forgoing | The plan is offered to employees to pay for their insurance costs on a tax-favored basis | |
| Which of the following are characteristics of a premium conversion plan? (Choose two) I. There are no employer contributions II. The plan is perceived as a cafeteria plan in its simplest form III. The employer’s contribution to the plan is paid to the employee as cash compensation IV. The amount credited to an employee for opting out of coverage can be more than the actual cost of the coverage they are forgoing | I, II | |
| Which of the following is NOT a characteristic of a premium conversion plan? 1. There are no employer contributions 2. The plan is offered to employees so they may pay for their insurance costs on a tax-favored basis 3. The employer’s contribution to the plan is paid to the employee as cash compensation 4. The amount credited to an employee for opting out of coverage can be less than the actual cost of the coverage they are forgoing | The employer’s contribution to the plan is paid to the employee as cash compensation | |
| Which type of benefits typically provide a premium conversion feature under a flexible benefit plan? 1. Medical insurance 2. Group term life insurance not in excess of $50,000 3. Disability policies 4. Individual policies purchased through an Affordable Care Act marketplace exchange | 1, 2 | |
| Under a flexible benefit plan, which types of benefits typically provide a premium conversion feature? (Select all that apply) I. Medical insurance (including dental, vision and other types of medical coverage) II. Group term life insurance not in excess of $50,000 III. Disability policies IV. Individual policies purchased through an Affordable Care Act marketplace exchange | I, II | |
| All of the following types of benefits typically provide a premium conversion feature under a flexible benefit plan, EXCEPT: 1. Medical insurance 2. Group term life insurance not in excess of $50,000 3. Disability policies 4. Individual policies purchased through an Affordable Care Act marketplace exchange | 4 | |
| What is the simplest form of a cafeteria plan that includes FSAs? 1. A premium conversion plan 2. A medical plan 3. A reimbursement account 4. A salary deferral plan | A premium conversion plan | |
| Which of the following are features of a cafeteria plan with FSAs? (Choose all that apply) I. FSAs are funded purely by salary deferrals II. FSAs are permitted for health care reimbursements, dependent-care assistance and adoption assistance III. The coverage period for an FSA is normally 6 months IV. Employers have the option of allowing FSA participants to roll over up to $570 of unused funds to the following plan year | I, II, IV | |
| All of the following are true about a cafeteria plan with FSAs, EXCEPT: 1. FSAs offer an employee the ability to fund certain qualified benefits on a pretax basis 2. Both health care and dependent-care reimbursement accounts most often only involve employee contributions on a post-tax basis 3. A cafeteria plan may include a grace period of up to 2½ months after the end of the plan year 4. Funds from one account may not be used to reimburse expenses from another account | Both health care and dependent-care reimbursement accounts most often only involve employee contributions on a post-tax basis | |
| What is another name for a full flex plan? 1. Full choice plan 2. Full option plan 3. Full benefit plan 4. Full compensation plan | Full choice plan | |
| Which of the following are characteristics of a full flex plan? (Choose all that apply) I. Gives participants an opportunity to select among a full range of benefits II. The employer determines a dollar value for the benefits portion of total compensation III. The dollar value is in addition to any salary reductions employees choose to direct to reimbursement accounts or additional benefit purchases IV. A credit system is developed whereby credit amounts are used to fund the similarly credit-priced benefit options | I, II, III, IV | |
| Which of the following is NOT a characteristic of a full flex plan? 1. Gives participants an opportunity to select among a full range of benefits 2. The employer determines a dollar value for the benefits portion of total compensation 3. The dollar value is deducted from the employee's salary 4. A credit system is developed whereby credit amounts are used to fund the similarly credit-priced benefit options | The dollar value is deducted from the employee's salary | |
| What is the typical methodology utilized to value credits used by plan participants to purchase benefits under a flexible benefit plan? 1. Understanding the appropriate pricing parameters of the benefits and developing a pricing matrix 2. Calculating the total premium cost 3. Estimating the number of credits a participant will be given 4. Determining the acceptable level of employee contribution | Understanding the appropriate pricing parameters of the benefits and developing a pricing matrix | |
| Which of the following factors are taken into account when developing a pricing matrix for valuing credits used by plan participants to purchase benefits under a flexible benefit plan? (Select all that apply) I. The number of credits a participant will be given II. The acceptable level of employee contribution III. The number of participants expected to select each benefit offered IV. The number of credits that are expected to be paid as a cash benefit V. The purchase price of benefit options VI. The hidden employer subsidies VII. The total premium cost. | I, II, III, IV, V, VI, VII | |
| Which of the following is NOT a factor taken into account when developing a pricing matrix for valuing credits used by plan participants to purchase benefits under a flexible benefit plan? 1. The number of credits a participant will be given 2. The acceptable level of employee contribution 3. The number of participants expected to select each benefit offered 4. The number of credits that are expected to be paid as a cash benefit 5. The purchase price of benefit options 6. The hidden employer subsidies 7. The total premium cost 8. The participant's age | The participant's age | |
| Why do employers develop credit values for use in flexible benefit plans rather than use the actual dollar values associated with premium costs? 1. To make the benefits more valuable than cash 2. To offer a cash option that is not a dollar-for-dollar value 3. To smooth out benefit inequities 4. To prevent employees from being underinsured | 3 | |
| Which of the following are reasons why employers develop credit values for use in flexible benefit plans rather than use the actual dollar values associated with premium costs? I. To increase the company's profit II. To smooth out benefit inequities III. To make the benefits more valuable than cash IV. To prevent employees from being underinsured | II, III, IV | |
| All of the following are reasons why employers develop credit values for use in flexible benefit plans rather than use the actual dollar values associated with premium costs, EXCEPT: 1. To increase the company's profit 2. To smooth out benefit inequities 3. To make the benefits more valuable than cash 4. To prevent employees from being underinsured | 1 | |
| What is the main purpose of a core benefit within a flexible benefit plan? 1. To establish a minimum level of benefit coverage 2. To provide a maximum level of benefit coverage 3. To offer a variety of benefit options 4. To allow employees to cash out of a core benefit | 1. To establish a minimum level of benefit coverage | |
| Which of the following are true about a core benefit within a flexible benefit plan? (Choose two) I. It is intended to supply a basic level of protection so that employees cannot be underinsured II. It always requires that the participant select some basic health coverage and a minimum level of life insurance III. It allows an employee to cash out of a core benefit if proof of alternate coverage is supplied IV. It is designed to provide a maximum level of benefit coverage | I, III | |
| Which of the following is not a characteristic of a core benefit within a flexible benefit plan? 1. It is intended to supply a basic level of protection so that employees cannot be underinsured 2. It allows an employee to cash out of a core benefit if proof of alternate coverage is supplied 3. It always requires that the participant select some basic health coverage and a minimum level of life insurance 4. It is designed to provide a maximum level of benefit coverage | 4. It is designed to provide a maximum level of benefit coverage | |
| Which demographic cohort within an employer’s workforce typically values opportunities to reduce personal taxes through flexible benefit plans? 1. Lower paid employees 2. Higher paid employees 3. Both lower and higher paid employees 4. Neither lower nor higher paid employees | 2. Higher paid employees | |
| Which of the following elements of cafeteria plans appeal to various demographic cohorts within an employer’s workforce? (Choose two) I. Dollar maximums limiting contributions to reimbursement accounts II. A full flex plan offering a generous cash option III. Maximizing weekly take-home pay IV. Reducing personal taxes through flexible benefit plans | I, IV | |
| All of the following are elements of cafeteria plans that appeal to lower paid employees within an employer’s workforce, EXCEPT: 1. Maximizing weekly take-home pay 2. Reducing personal taxes through flexible benefit plans 3. A full flex plan offering a generous cash option 4. Adequate core benefits | 2. Reducing personal taxes through flexible benefit plans | |
| Why is it important for an employer to develop a carefully crafted communication campaign when establishing a cafeteria plan? 1. To avoid negative reactions and criticism from employees 2. To ensure employees view the cafeteria plan as a way for their employer to pay them less 3. To solicit employee input and customize the plan to meet their needs 4. All of the above | 4. All of the above | |
| Which of the following are reasons why an employer should develop a carefully crafted communication campaign when establishing a cafeteria plan? I. To avoid negative reactions and criticism from employees II. To ensure employees view the cafeteria plan as a way for their employer to pay them less III. To solicit employee input and customize the plan to meet their needs | I, III | |
| All of the following are reasons why an employer should develop a carefully crafted communication campaign when establishing a cafeteria plan, EXCEPT: 1. To avoid negative reactions and criticism from employees 2. To ensure employees view the cafeteria plan as a way for their employer to pay them less 3. To solicit employee input and customize the plan to meet their needs 4. To ensure the employer pays the employees less | 4. To ensure the employer pays the employees less | |
| Which of the following is a qualified benefit that can be offered in a cafeteria plan according to tax law? 1. Employer-provided accident or health coverage under Internal Revenue Code (IRC) Sections 105 and 106 2. Individually owned accident or health insurance policies 3. Employer-provided group term life insurance coverage excludable from income under IRC Section 79 4. Contributions to a health savings account (HSA) under IRC Section 223 | 1, 3, 4 | |
| According to tax law, which of the following qualified benefits are permitted to be included within a cafeteria plan? (Select all that apply) I. Employer-provided accident or health coverage under Internal Revenue Code (IRC) Sections 105 and 106 II. Individually owned accident or health insurance policies III. Employer-provided group term life insurance coverage excludable from income under IRC Section 79 IV. Contributions to a health savings account (HSA) under IRC Section 223 | I, III, IV | |
| According to tax law, all of the following are qualified benefits that can be offered in a cafeteria plan EXCEPT: 1. Employer-provided accident or health coverage under Internal Revenue Code (IRC) Sections 105 and 106 2. Individually owned accident or health insurance policies 3. Employer-provided group term life insurance coverage excludable from income under IRC Section 79 4. Contributions to a health savings account (HSA) under IRC Section 223 | 2 | |
| Which of the following is a taxable benefit that can be paid from a cafeteria plan? 1. Cash 2. Paid-time-off days 3. Group term life insurance in excess of $50,000 4. Health insurance | 1, 2, 3 | |
| Which of the following are examples of taxable benefits that can be paid from a cafeteria plan? (Choose all that apply) I. Cash II. Paid-time-off days III. Group term life insurance in excess of $50,000 IV. Health insurance | I, II, III | |
| All of the following are examples of taxable benefits that can be paid from a cafeteria plan, EXCEPT: 1. Cash 2. Paid-time-off days 3. Group term life insurance in excess of $50,000 4. Health insurance | 4 | |
| Which of the following is NOT considered a qualified benefit and therefore is prohibited from being funded through a cafeteria plan? 1. Contributions to medical savings accounts under IRC Section 106(b) 2. Qualified scholarships under IRC Section 117 3. Educational assistance programs under IRC Section 127 4. Certain fringe benefits under IRC Section 132 | All of the above | |
| Identify the components of total compensation that are not considered to be qualified benefits and therefore are prohibited from being funded through a cafeteria plan. I. Contributions to medical savings accounts under IRC Section 106(b) II. Qualified scholarships under IRC Section 117 III. Educational assistance programs under IRC Section 127 IV. Certain fringe benefits under IRC Section 132 V. Qualified long-term care insurance under IRC Section 7702B | I, II, III, IV, V | |
| All of the following are considered qualified benefits and therefore can be funded through a cafeteria plan, EXCEPT: 1. Contributions to medical savings accounts under IRC Section 106(b) 2. Qualified scholarships under IRC Section 117 3. Educational assistance programs under IRC Section 127 4. Certain fringe benefits under IRC Section 132 | 1, 2, 3, 4 | |
| What is a salary reduction agreement in the context of a cafeteria plan? 1. An agreement between an employee and an employer allowing the employee to defer salary and avoid constructive receipt of the compensation. 2. An agreement between an employee and an employer allowing the employee to increase salary. 3. An agreement between an employee and an employer allowing the employee to receive additional benefits without any salary reduction. 4. An agreement between an employee and an employer allowing the employee to receive salary in advance. | 1. An agreement between an employee and an employer allowing the employee to defer salary and avoid constructive receipt of the compensation. | |
| Which of the following statements are true about a salary reduction agreement in the context of a cafeteria plan? (Choose all that apply) I. The employer contributes the amount agreed upon toward the cost of certain benefits. II. The employee is buying the employee benefits on a pretax basis without the monies being considered constructively received. III. The deferred sums are subject to Federal Insurance Contributions Act (FICA-Social Security) or Federal Unemployment Tax Act (FUTA) taxes. IV. For a salary reduction agreement to be valid, it must be entered into between the employer and the employee after the beginning of the period of coverage. | I, II | |
| Which of the following is NOT true about a salary reduction agreement in the context of a cafeteria plan? 1. The employer contributes the amount agreed upon toward the cost of certain benefits. 2. The employee is buying the employee benefits on a pretax basis without the monies being considered constructively received. 3. The deferred sums are subject to Federal Insurance Contributions Act (FICA-Social Security) or Federal Unemployment Tax Act (FUTA) taxes. 4. For a salary reduction agreement to be valid, it must be entered into between the employer and the employee prior to the beginning of the period of coverage. | 3. The deferred sums are subject to Federal Insurance Contributions Act (FICA-Social Security) or Federal Unemployment Tax Act (FUTA) taxes. | |
| What is a negative election under a cafeteria plan? 1. An automatic enrollment of employees in certain benefits under a cafeteria plan. 2. A one-time election that stays in force from plan year to plan year. 3. A type of reimbursement account. 4. A limitation imposed by the ACA on health coverage. | 1 | |
| Which of the following are requirements for a valid negative election under a cafeteria plan? (Choose two) I. Employees must receive reasonable notice of the automatic deferral. II. Employees must have the option to decline coverage each plan year. III. Employees must make a one-time election. IV. Employees must change their election annually depending on family circumstances. | I, II | |
| All of the following are true about an evergreen election under a cafeteria plan, EXCEPT: 1. A participant makes a one-time election. 2. The evergreen election stays in force from plan year to plan year unless the participant elects to make a change. 3. It is often used for reimbursement accounts, particularly for dependent-care assistance. 4. The ACA imposes some limitations on this option in the case of health coverage. | 3 | |
| What is the general rule regarding a participant’s ability to revoke a benefit election during a coverage period? 1. A participant can revoke a benefit election at any time. 2. A participant cannot revoke a benefit election unless the revocation is attributable to the occurrence of certain permitted events. 3. A participant can only revoke a benefit election at the end of the coverage period. 4. A participant can revoke a benefit election only if they have a new job offer. | 2. A participant cannot revoke a benefit election unless the revocation is attributable to the occurrence of certain permitted events. | |
| Which of the following are notable exceptions to the general rule that a cafeteria plan participant may not revoke a benefit election during the period of coverage? (Select all that apply) I. The participant has a right to enroll in an employer’s group health plan under HIPAA. II. The participant wants to change their benefit election because they are not satisfied with their current plan. III. The participant can add coverage for a family member under HIPAA. IV. HSA contributions are made through salary reduction under a cafeteria plan. | I, III, IV | |
| Which of the following is NOT an exception to the general rule that a cafeteria plan participant may not revoke a benefit election during the period of coverage? 1. The participant has a right to enroll in an employer’s group health plan under HIPAA. 2. The participant can add coverage for a family member under HIPAA. 3. HSA contributions are made through salary reduction under a cafeteria plan. 4. The participant wants to change their benefit election because they are not satisfied with their current plan. | 4. The participant wants to change their benefit election because they are not satisfied with their current plan. | |
| Which of the following is NOT a permissible change-in-status event under Section 125 regulations that allows a participant to revoke a cafeteria plan benefit election and make a new election? 1. Change in legal marital status 2. Change in number of dependents 3. Change in employment status 4. Change in favorite sports team | 4. Change in favorite sports team | |
| Under Section 125 regulations, which of the following are permissible change-in-status events that allow a participant to revoke a cafeteria plan benefit election and make a new election? (Select all that apply) I. Change in legal marital status II. Change in favorite sports team III. Change in employment status IV. Commencement or termination of an adoption proceeding for purposes of adoption assistance. | I, III, IV | |
| All of the following are permissible change-in-status events under Section 125 regulations that allow a participant to revoke a cafeteria plan benefit election and make a new election, EXCEPT: 1. Change in legal marital status 2. Change in number of dependents 3. Change in employment status 4. Change in favorite sports team | 4. Change in favorite sports team | |
| Which of the following situations allows participants to revoke their cafeteria plan elections under the new post–Affordable Care Act special events? 1. Participants may revoke their elections because of a reduction in hours even if the reduction does not result in the employee becoming ineligible for benefits under the cafeteria group health plan. 2. If an employee qualifies for enrollment in the ACA Exchange under the Special Enrollment Period. 3. If an employee is terminated from their job. 4. If an employee decides to switch to a different health plan. | 1, 2 | |
| Under the new post–Affordable Care Act special events, participants may revoke their cafeteria plan elections in midyear under which of the following situations? (Select all that apply) I. Participants may revoke their elections because of a reduction in hours even if the reduction does not result in the employee becoming ineligible for benefits under the cafeteria group health plan. II. If an employee qualifies for enrollment in the ACA Exchange under the Special Enrollment Period. III. If an employee is terminated from their job. IV. If an employee decides to switch to a different health plan. | I, II | |
| Under the new post–Affordable Care Act special events, all of the following are situations that do NOT allow participants to revoke their cafeteria plan elections in midyear, EXCEPT? 1. Participants may revoke their elections because of a reduction in hours even if the reduction does not result in the employee becoming ineligible for benefits under the cafeteria group health plan. 2. If an employee qualifies for enrollment in the ACA Exchange under the Special Enrollment Period. 3. If an employee is terminated from their job. 4. If an employee decides to switch to a different health plan. | 1, 2 | |
| What does a “consistent” benefit election change mean according to IRC Section 125 regulations? 1. It means that the change is on account of and corresponds with a change-in-status event that affects eligibility for coverage. 2. It means that the change is on account of and corresponds with a change-in-status event that does not affect eligibility for coverage. 3. It means that the change is not on account of and does not correspond with a change-in-status event that affects eligibility for coverage. 4. It means that the change is not on account of and does not correspond with a change-in-status event that does not affect eligibility for coverage. | 1 | |
| Which of the following statements are true regarding a “consistent” benefit election change according to IRC Section 125 regulations? I. The change must be on account of and correspond with a change-in-status event that affects eligibility for coverage. II. If a change in status results in an increase or decrease in the number of an employee’s family members or dependents who may benefit from coverage under the plan, the eligibility requirement is satisfied. III. Election changes must be made on a retrospective basis. IV. No retrospective changes generally are permissible. | I, II, IV | |
| Which of the following is not true about a “consistent” benefit election change according to IRC Section 125 regulations? 1. The change must be on account of and correspond with a change-in-status event that affects eligibility for coverage. 2. If a change in status results in an increase or decrease in the number of an employee’s family members or dependents who may benefit from coverage under the plan, the eligibility requirement is satisfied. 3. Election changes must be made on a retrospective basis. 4. No retrospective changes generally are permissible. | 3 | |
| What action can a participant who takes unpaid Family and Medical Leave Act (FMLA) leave take regarding their cafeteria plan elections? 1. They must be allowed by the cafeteria plan sponsor to revoke an existing election for all health plan coverage for the remainder of the coverage period. 2. They can revoke elections for nonhealth benefits only under the same rules that apply to participants taking non-FMLA leave. 3. They can choose to be reinstated in the plan upon return from FMLA leave on the same terms and conditions as were in force prior to the taking of FMLA leave. 4. They can continue participation in the plan during the period of leave. | 1 | |
| Which of the following changes to cafeteria plan elections may be made by a participant under the Uniformed Services Employment and Reemployment Rights Act (USERRA) and the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act)? I. A participant who takes a leave of absence under USERRA may elect to continue participation in the plan during the period of leave. II. Amounts previously deferred that would otherwise continue to be deferred under this section, if the participant were still employed, may be paid to the plan as a single lump sum at the beginning of each year or at the beginning of the expected leave-of-absence period or in the form of monthly payments. III. The HEART Act permits plan sponsors to allow an employee called to active duty for a certain duration to receive a distribution of the unused balance of their health care FSA. | I, II, III | |
| Which of the following is NOT a change to cafeteria plan elections that may be made by a participant who takes unpaid Family and Medical Leave Act (FMLA) leave, under the Uniformed Services Employment and Reemployment Rights Act (USERRA), or according to the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act)? 1. A participant who takes unpaid FMLA leave must be allowed by the cafeteria plan sponsor to revoke an existing election for all health plan coverage for the remainder of the coverage period. 2. A participant who takes a leave of absence under USERRA may elect to continue participation in the plan during the period of leave. 3. The HEART Act permits plan sponsors to allow an employee called to active duty for a certain duration to receive a distribution of the unused balance of their health care FSA. 4. A participant who takes FMLA leave may revoke elections for nonhealth benefits under any circumstances. | 4 | |
| What is a health care FSA and what are the requirements for it to qualify for special tax treatment under a cafeteria plan? 1. A health care FSA is a plan that meets the qualification requirements under IRC Section 105 and must be maintained as part of a cafeteria plan. 2. A health care FSA must meet all of the requirements of IRC Sections 105 and 106 that apply to accident and health plans as well as the requirements of IRC Section 125. 3. A health care FSA must exhibit the risk shifting and risk distribution characteristics of medical insurance and must be reimbursed specifically for medical expenses they have already incurred during the coverage period. 4. All of the above. | 4. All of the above. | |
| Which of the following are requirements for a health care FSA to qualify for special tax treatment under a cafeteria plan? I. The plan document must set forth the maximum contribution established by the employer. II. An independent third party must substantiate the claim before a plan reimburses an expense under a health care FSA. III. Unused funds in excess of $570 (in 2022), left by participants in their accounts at the end of the plan year, may be refunded to plan participants by the plan sponsor. | I, II | |
| Which of the following is NOT a requirement for a health care FSA to qualify for special tax treatment under a cafeteria plan? 1. The coverage period cannot be less than a year unless the plan is new or terminating on a short plan year because of an administrative change in the plan year. 2. The FSA cannot eliminate all or substantially all risk of loss to the employer maintaining the plan. 3. The plan document must set forth the maximum contribution established by the employer, which may be lower than the statutory maximum contribution limit implemented by the Affordable Care Act ($2,850 in 2022). 4. Unused funds in excess of $570 (in 2022), left by participants in their accounts at the end of the plan year, may be refunded to plan participants by the plan sponsor. | 4. Unused funds in excess of $570 (in 2022), left by participants in their accounts at the end of the plan year, may be refunded to plan participants by the plan sponsor. | |
| What can an employer do with the funds forfeited in a health care FSA? 1. Keep the money 2. Use it to pay plan expenses 3. Give it to a charity 4. Refund it solely to the employees who incurred the forfeitures | 1, 2, 3 | |
| Which of the following are possible uses for the funds forfeited in a health care FSA? (Select all that apply) I. Retained by the employer II. Used to reduce administrative expenses of the cafeteria plan III. Returned to employees (subject to certain stipulations) IV. Used to reduce employees’ required salary reduction amounts V. Refunded solely to the employees who incurred the forfeitures | I, II, III, IV | |
| Which of the following is NOT a possible use for the funds forfeited in a health care FSA? 1. Retained by the employer 2. Used to reduce administrative expenses of the cafeteria plan 3. Returned to employees (subject to certain stipulations) 4. Used to reduce employees’ required salary reduction amounts 5. Refunded solely to the employees who incurred the forfeitures | 5 | |
| What is a dependent-care assistance plan according to IRC Section 129? 1. A plan that provides employment-related expenses for the participant's spouse 2. A plan that offers participants the ability to pay for the first $5,000 of dependent-care assistance on a tax-free basis 3. A plan that provides on-site day care offered at a reduced rate or subsidized by the employer 4. A plan that provides babysitting for social events | 2 | |
| Which of the following are stipulations for dependent-care expenses to qualify for reimbursement under a dependent-care assistance plan? (Choose all that apply) I. The expenses must enable the participant and the participant’s spouse to work or look for work II. The caregiver can be a person for whom a personal tax exemption is taken on the participant’s tax return III. The participant must provide a written statement signed by an independent third party confirming that the dependent-care expense has been incurred IV. Reimbursement can be made in advance of the expense being incurred | I, III | |
| Which of the following is NOT a requirement for dependent-care expenses to qualify for reimbursement under a dependent-care assistance plan? 1. The participant’s spouse must also be employed, a full-time student, or physically or mentally incapable of self-care 2. The participant must report to the plan administrator the name, address and taxpayer identification number of the dependent-care provider 3. The expenses incurred by the employee for dependent-care assistance benefits in the preceding calendar year must be reported on the employee’s Form W-2 4. The participant can submit expenses for baby-sitting for social events | 4 | |
| What is the distinction between an elective and a nonelective paid-time-off option in a cafeteria plan? 1. Elective paid time off is for those days that are not subject to an election by the employee. 2. Nonelective paid time off is for those days that are not subject to an election by the employee. 3. Elective paid time off is for those days that are subject to an election by the employee. 4. Nonelective paid time off is for those days that are subject to an election by the employee. | 2 | |
| Which of the following statements are true regarding the distinction between an elective and a nonelective paid-time-off option in a cafeteria plan? I. Nonelective paid time is for those days that are not subject to an election by the employee. II. Elective paid time off is for those days that are subject to an election by the employee. III. Prohibiting paid-time-off days from being carried over from one year to the next is an impermissible deferral of compensation. | I, II, III | |
| Which of the following is NOT true regarding the distinction between an elective and a nonelective paid-time-off option in a cafeteria plan? 1. Nonelective paid time is for those days that are not subject to an election by the employee. 2. Elective paid time off is for those days that are subject to an election by the employee. 3. Prohibiting paid-time-off days from being carried over from one year to the next is an impermissible deferral of compensation. 4. Elective paid time off is for those days that are not subject to an election by the employee. | 4 | |
| Which of the following is considered a qualifying adoption expense under a cafeteria plan adoption assistance program? 1. Attorney fees 2. Travel expenses 3. Personal grooming expenses 4. Expenses related to a pet adoption | 1, 2 | |
| Which of the following requirements must an adoption assistance program meet? (Choose all that apply) I. The program must be set forth in writing II. The plan must be discriminatory III. The employees must be given reasonable notice of the plan’s existence IV. The benefits are subject to an income limit | I, III, IV | |
| All of the following are requirements that an adoption assistance program must meet, EXCEPT: 1. The program must be set forth in writing 2. The plan must be discriminatory 3. The employees must be given reasonable notice of the plan’s existence 4. There exists a maximum reimbursement with respect to adoption expenses | 2 | |
| What is the definition of health savings accounts (HSAs)? 1. Employee-owned trusts or custodial accounts for reimbursement of medical expenses 2. A type of health insurance plan 3. A type of retirement savings account 4. A type of investment account | 1 | |
| Which of the following statements about health savings accounts (HSAs) are true? (Choose two) I. HSAs may be funded with employee salary deferrals or employer contributions through a cafeteria plan II. Employers cannot contribute to HSAs III. Contributions to an HSA are only permitted in months that the participant has, as their only health coverage, a qualified high-deductible health insurance plan IV. The overall limits on contributions to an HSA are different whether or not the HSA is funded inside or outside a cafeteria plan | I, III | |
| Which of the following is NOT true about health savings accounts (HSAs)? 1. HSAs may be funded with employee salary deferrals or employer contributions through a cafeteria plan 2. Employers may contribute to HSAs but may be limited by the cafeteria plan nondiscrimination rules 3. Contributions to an HSA are only permitted in months that the participant has, as their only health coverage, a qualified high-deductible health insurance plan 4. The overall limits on contributions to an HSA are different whether or not the HSA is funded inside or outside a cafeteria plan | 4 | |
| What does the term 'cash' mean in the context of an IRC Section 125 plan? 1. The actual receipt of dollars 2. A benefit that is not specifically prohibited by IRC Section 125 and is provided on a taxable basis 3. A benefit that is specifically prohibited by IRC Section 125 and is provided on a non-taxable basis 4. The actual receipt of dollars and a benefit that is not specifically prohibited by IRC Section 125 | 2. A benefit that is not specifically prohibited by IRC Section 125 and is provided on a taxable basis | |
| Which of the following conditions must be met for a payment to be considered 'cash' within a cafeteria plan according to IRC Section 125? (Choose two) I. The benefit must be one that is not specifically prohibited by IRC Section 125 II. The benefit must be provided on a non-taxable basis III. The participant can pay for the benefit on an after-tax basis IV. The employer can pay for the benefit and report the cost of the benefit as taxable income to the employee | I, III, IV | |
| Which of the following is NOT a condition that must be met for a payment to be considered 'cash' within a cafeteria plan according to IRC Section 125? 1. The benefit must be one that is not specifically prohibited by IRC Section 125 2. The benefit must be provided on a taxable basis 3. The participant can pay for the benefit on an after-tax basis 4. The benefit must be provided on a non-taxable basis | 4. The benefit must be provided on a non-taxable basis | |
| What is the term used under the Employee Retirement Income Security Act (ERISA) to refer to 'other employee benefit plans'? 1. Welfare plans 2. Retirement plans 3. Health plans 4. Training plans | 1 | |
| Under ERISA, 'other employee benefit plans' are called welfare plans. Which of the following benefits are provided by these plans? (Select all that apply) I. Health benefits II. Retirement benefits III. Prepaid legal services IV. Vacation benefits | I, III, IV | |
| Under ERISA, 'other employee benefit plans' are called welfare plans. Which of the following is NOT a benefit provided by these plans? 1. Health benefits 2. Disability benefits 3. Retirement benefits 4. Prepaid legal services | 3 | |
| Which of the following is a way ERISA regulates health plans? 1. Providing participants with plan information, including material about plan features and funding 2. Establishing a grievance and appeal process for participants to get benefits from their plans 3. Allowing participants the right to sue for benefits and breaches of fiduciary duty 4. None of the above | 4. None of the above | |
| Which of the following are ways ERISA regulates health plans? (Choose all that apply) I. Providing participants with plan information, including material about plan features and funding II. Exercising fiduciary responsibilities while administering a plan and managing its plan assets III. Establishing a grievance and appeal process for participants to get benefits from their plans IV. Allowing participants the right to sue for benefits and breaches of fiduciary duty | I, II, III, IV | |
| Which of the following is not a way ERISA regulates health plans? 1. Providing participants with plan information, including material about plan features and funding 2. Exercising fiduciary responsibilities while administering a plan and managing its plan assets 3. Establishing a grievance and appeal process for participants to get benefits from their plans 4. Allowing participants the right to sue for benefits and breaches of fiduciary duty 5. None of the above | 5. None of the above |
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