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Health Savings Account Exam Questions with solutions 2024
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Health Savings Account Exam
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Health Savings Account ExamTypes of Health Care Savings Program - answer 1. Flexible spending account
2. Health reimbursement arrangements
3. Archer medical savings account
FSA - answer - frequently offered with Section 125 plans
- 2 types: Health Care Account & Dependent Care Account
Advantages of FSA - answer - simplicity
- tax benefits that are connected with contributions (which are made on pre-tax basis)
- no reporting requirements on fed. income tax return
Disadvantages of FSAs - answer - use-it-or-lose-it
- can use both grace period and carryover
- Amount cant be increased or decreased during the year (unless qualifying event
occurs)
HRAs - answer "patient directed health plan or defined contribution plan"
How HRAs work - answer Employer determines the amount they are willing to pay
for medical benefits.
Shifts the allocated $ to the control of its employees
Employee then decides on the timing of when the funds are spent
4 basic requirements for HRA to meet preferred tax-qualified status - answer 1. Must
be paid for solely by employer & cant be funded through salary reduction
2. Must reimburse the employee for qualified medical expenses incurred
3. Must provide a maximum dollar amount for specific coverage period
4. Must allow any unused portion of the maximum dollar amount contributed to be
carried over to new year
Advantages of HRA - answer - tax-advantaged benefits for contributions &
distributions
-Contributions made to employee accounts are exempt from federal income and payroll
taxes
- Contributions are tax-deductible by the employer
-100% of unused funds may be carried over to the next year
One of the main reasons HSAs got off to a slow start after their intoduction was that -
answer few HSA products were immediately available in the marketplace
, T or F: A financial company must use either Form 5305-C or Form 5305-B to establish
HSAs - answer False. These forms can either be used actually or just used as a
model
Which of the following does NOT represent a potential market for HSAs? - answer
The Retired Alliance, an association of 65-year-old individuals enrolled in Medicare
For the comprehensive and latest guidance issued by the IRS and HSAs, you would
consult - answer Publication 969
Which of the following statements about the current state of health care in the U.S
revealed in a recent survey is TRUE? - answer Health care and the national deficit
ranked just below the high unemployment problem as the most pressing concerns for
the country
T or F: There is an IRC limit on annual contributions to a health care FSA - answer
True. Healthcare Reform imposed a $2500 limit on annual salary reduction contribution
to health FSAs offered under 125 cafeteria plans (this amount is indexed to cost of living
adjustments)
At the end of the calendar year or grace period in the new year, if allowed by the plan,
the unused funds in an FSA are - answer forfeited by the participant
The HRA is sometimes referred to as - answer A patient-directed health plan
What is the result if an HRA is used in conjunction with an FSA? - answer Because
any unused FSA funds would be forfeited
An Archer MSA must be used in conjunction with - answer a high-deductible health
insurance plan
T or F: Archer MSAs are only available to self-employed individuals and employees if
qualified small employees who either maintain or can participate in a self-only or family
coverage HDHP. - answer True
Which of the following statements about Archer MSAs is NOT true? - answer If a
participating employer exceeds the 50-employee limit for Archer MSAs, the plan is
terminated
Which of the following statements about Health Savings Accounts is FALSE? - answer
HSAs can invest in life insurance
T or F: The Medicare Act of 2003 completely eliminated Archer MSAs and replaced
them with HSAs - answer False
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