6. To which of the following do employers make no contribullölS a. Flexible spen
ID: 2782518 • Letter: 6
Question
6. To which of the following do employers make no contribullölS a. Flexible spending accounts b. Health reimbursement arrangements c. Health savings accounts d. Accountable Care Organization Health plans Assume that an employee, Mr. Jeremiah, elected to reduce his salary by $2,500 plac S2500 in his UMN flexible spending account (FSA. At the end of the year, $550 ren his FSA. Mr. Jeremiah: 7. a. may carry over only a maximum of $500 in his account the next year b. may receive the $550 in cash but must include the full amount in income for current year c. will forfeit the full $550 if he has not used it by March 15 of the following y d. may carry over the full $550 in his account to the following year e. two of the above are correct Which of the following statements concerning the income tax consequences of a flexib spending account is accurate? 8. a. The flexible spending account may not offer group term life insurance coverag b. An Employee's annual bonus arrangement must be eliminated if the employee c. The flexible spending account may offer any plan of deferred compensation oth that insures the life of the participating employee. wished to participate in the flexible spending account. than a Section 401(k) plan The amount of the employer's payroll that is subject to income tax and various pa yroll taxes (FICA). will be reduced by the amount an employee elects to funda flexible spending account. Two of the above are correct e. 9. Cafeteria or flexible benefit plans: a. Require employers to pay for all benefits that the employee selects b. Cannot require employees to choose minimum levels of certain benefits c. Have not been effective in controlling group medical benefit costs d. Tend to minimize adverse selection e. Tend to increase adverse selectionExplanation / Answer
6) B) Health reimbursement Arrangement
This Accounts are solely funded by employer, they cannot be funded through employee salary deduction. It normally reimburses the medical expenses incur by the employer
7) A) May carry over only a maximum of $500 in his account next year
Earlier there was a rule "use it or lose it" means one has to use amount in FSA. However with implementation of patient protection and affordable care act one can carry forward maximum of $500 into following year
8) D)The amount of employer payroll that is suject to income tax will be reduce by the amount the employee elect to fund the account
9) B) cannot require employees to choose minimum level of certain benefirs
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