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A series of practice exam questions related to certified employee benefit specialist (cebs) gba 1, focusing on group benefits associate concepts. The questions cover topics such as the patient protection and affordable care act (ppaca), pharmacy benefits, managed care models, and legislation affecting health benefits. Each question is followed by the correct answer and a brief explanation, providing a valuable resource for exam preparation and understanding key concepts in employee benefits. Designed to test and reinforce knowledge of benefit plan design, compliance, and cost management strategies.
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Which of the following are ways the PPACA impacted employer-sponsored health plans? I. It established as list of essential health benefits that need to be provided. II. It eliminated lifetime maximums. III. It required certain preventative services to be covered without having to pay a copay. A. I and II only B. II only C. III only D. II and III only E. I, II, and III - Correct Answer ✔️ ✔️ E. I, II, and III
The PPACA established penalties for failing to comply, eliminated lifetime maximums, capped of out-of-pocket maximums, provided temporary tax subsidies, and added new reporting and administrative requirements. Disadvantages of scheduled dental plans include: I. If the plan covers a geographically diverse population, costs of services may vary, creating inequity if there is a fixed payment schedule II. Uniform payments III. It's challenging to communicate this type of plan to an employee group. A. None B. I only C. III only D. I and II only E. II and III only - Correct Answer ✔️ ✔️ B. I only
Which of the following are cost factors of pharmacy benefits that should be considered? I. Drug cost and mix of branded products covered II. Utilization of prescriptions
A. None B. I only C. III only D. I and II only E. II and III only - Correct Answer ✔️ ✔️ C. III only Which of the following describe a pharmacy benefits administrator (PBA)? I. The focus is on prescription administration. II. It eases the burden of time and input of the payer (employer). III. It does not provide transparency in the adjudication process, resulting in not knowing the amount of rebates applied. A. None B. I only C. III only D. I and II only E. II and III only - Correct Answer ✔️ ✔️ B. I only
All of the following are characteristics of the group technique of benefits design, EXCEPT: A. A minimum portion of the group must participate. B. There are no eligibility requirements due to risk spread across the group. C. Maximum limits on the amount of life or health benefits may be imposed. D. There is an automatic determination of benefits. E. There is a steady flow of lives through the group. - Correct Answer ✔️ ✔️ B is the correct answer. Eligibility requirements are imposed to prevent adverse selection. For example, an employee must be actively at work on the first day of eligibility. There may be an eligibility period, waiting period, or elimination period. All of the following are examples of speculative risk, EXCEPT: A. An automobile accident B. Purchasing company stock C. Acquiring a new business unit D. Purchasing a lottery ticket E. 401(k) investing - Correct Answer ✔️ ✔️ A. An automobile accident
E. The gave insurance providers a more significant role in routing health care services. - Correct Answer ✔️ ✔️ C. The focus on covering catastrophic losses was a key characteristic of traditional or fee-for-service plans. With respect to hearing benefits, all of the following are true, EXCEPT: A. Many hearing-impaired people would rather deal with the impairment than deal with the stigma of wearing a hearing aid. B. Surgical procedures affecting the ear are normally covered in standard medical policies. C. Hearing care benefits generally include audiometric examinations. D. Due to the increased number of hearing-impaired people, the majority of benefits packages carry coverage for hearing care. E. The frequency of a hearing benefit is generally every 36 months. - Correct Answer ✔️ ✔️ D. While some plans do offer hearing benefits, most plans still do not include the coverage. All of the following are true of the Medicare Prescription Drug Improvement and Modernization Act (MMA), EXCEPT: A. It established health savings accounts (HSAs).
B. It allowed people to contribute to an HSA when covered by a high-deductible health plan. C. It defined the minimum deductible and maximum annual out-of-pocket expense for "qualified plans". D. It established set copays and coinsurance rates. E. It created a preventative care safe harbor allowing high-deductible health plans to exempt preventative services from the deductible. - Correct Answer ✔️ ✔️ D. Copays and coinsurance are set by the plan sponsor, not stipulated by the MMA. All of the following are elements of an orthodontic benefit, EXCEPT: A. Orthodontic plans are offered in conjunction with other types of dental coverage. B. Maximums are set on a lifetime basis. C. Coinsurance is generally set at 50%. D. Orthodontic benefits are often paid in installments.
C. Mental Health Parity Act of 1996 D. Mental Health Parity and Addiction Equity Act of 2008 E. Retirement and Welfare Benefits Act - Correct Answer ✔️ ✔️ C. Mental Health Parity Act of 1996
This could be confused with the Mental Health Parity and Addiction Equity Act of
Utilization review is a procedure contained in the managed care model. The criteria include whether the treatment is medically necessary, how appropriate it is, and efficiency of mental health and chemical dependency services. Which of the following is a tax principle that allows cafeteria plans to give the choice of cash or the purchase of a benefit on a pre-tax basis? A. Distribution of pay B. Equity in receipt C. Benefit-received principle D. Constructive receipt E. Tax transferal principle - Correct Answer ✔️ ✔️ D. Constructive receipt
Constructive receipt is a principle that states that income must be reported the year it could have been received. Thus, monies received are taxed when the person has control over how their money is spent. Cafeteria plans are an exception to this, allowing for the pre-tax purchase of medical and dental benefits, provided they reside within a qualified plan.
A. Final regulation B. Legislative clarification C. Administrative law interpretation D. Private letter ruling E. Proposed guidelines - Correct Answer ✔️ ✔️ D. Private letter ruling
A private letter ruling may be provided to a requesting employer on a matter that is not already published. While the requesting employer must pay a fee for such a ruling, it is often times published so other employers experiencing the issue can benefit from the ruling. To be considered a key employee, a 1% owner's pay must exceed: A. $175, B. $150, C. 5% of business profits D. 15% of business profits
E. $125,000 - Correct Answer ✔️ ✔️ B. $150,
Which calculation places a ceiling on the reimbursement amount for generic medications? A. Average wholesale price B. Average manufacturer price C. Maximum allowable cost D. Average sales price E. Widely available market price - Correct Answer ✔️ ✔️ C. Maximum allowable cost Behavioral health care includes mental health and substance abuse services that have which of the following characteristics? I. They present unique challenges and issues when compared to health care II. They are subject to the general forces of managed care III. They put an emphasis on isolating those with mental health issues from the mainstream
C. I and II only D. I and III only - Correct Answer ✔️ ✔️ D. I & III only.
Rewards must be made available at least annually. Plans may provide rewards more often, but annually is the minimum requirement. According to research, workplace well-being encompasses which of the following: I. Spending within one's means II. Being financially prepared for the future III. Having access to tools and information to help with financial decision making A. None B. I and II only C. I and III only D. II and III only E. All of the above - Correct Answer ✔️ ✔️ E. All of the above
Which of the following are factors that define a Code Section 125 cafeteria plan? I. All participants are employees.
II. Participants may choose among two or more benefits consisting of a combination of qualified benefits and cash. III. All related benefits may be covered by Section 125 plans, including medical, dental, and long-term care A. I only B. II only C. I and II only D. I and III only E. I, II, and III - Correct Answer ✔️ ✔️ C is the correct answer. Section 125 does not allow for such benefits as long-term care, whole life insurance, transportation benefits, and tuition reimbursement. Sponsors of a cafeteria plan may cover the following participants under a cafeteria plan: I. Former employees of a plan that solely covers them II. Leased employees III. Full-time life insurance salesmen
II. Receive a distribution of flex monies for dependent care for the months left in the plan year while on deployment III. Receive tax-free distributions of any flex monies. A. None B. I only C. III only D. I and II only E. II and III only - Correct Answer ✔️ ✔️ I. Receive a distribution of their health flex monies by the deadline for making reimbursements under a health care FSA.
Dependent care and other plan accounts other than medical flexible spending accounts are not eligible for reimbursement. Any distributions made will be subject to employment taxes as they will be included in the employee's gross income.
A safe harbor is a provision under regulations that stipulates that if a company makes certain contributions to a cafeteria plan, the non-discrimination testing limitations can be reduced under the following stipulations:
I. If an employer requires 3 years of tenure to participate, only those with three or more years are considered for a contribution. II. If the employer allows participation with less than 3 years of tenure, then all employees under 3 years must be included in applying the safe harbor test and the unsafe harbor percentage component of the facts and circumstances determination. III. The employer can exclude employees covered by a collective bargaining unit or covered by COBRA.
A. None B. I only C. III only
