1
Q
Taxation of taking qualified company stock into income at age 65
A
Income tax on the cost basis only (no penalty)
2
Q
Medigap rating does not include / consider:
A
Gender
3
Q
In the year of death, an RMD for the descendent:
A
Is required; even for spouse (becomes participant in qual. plan)
4
Q
CCRC - prescreen for health? How many contracts?
FDIC insured? What type of housing?
A
Yes they prescreen for health
There are generally 4 types of contracts
NOT FDIC insured
Can be single-fam. homes, nursing homes, etc.
5
Q
Are post-conversion Roth IRA funds taxable?
A
No - Early penalty can still apply though
6
Q
Minimax philosophy
A
focuses on improving the worst-case-scenario
7
Q
T/F - Over half of states have filial laws
A
True!
8
Q
Does the safe withdrawal rate consider all sources of income?
A
No - Does not consider assets like SS
9
Q
Part D Medicare late enrollment penalty
A
1% of nat. base premium x full number of uncovered months (applies to the entire time enrolled moving forward)
10
Q
Does Medicare cover post-acute recovery in a nursing home?
A
It may, but only for a short period of time
11
Q
QLACs can be (type of contract):
A
Only deferred income annuities
12
Q
RMD calculation for a 72 year-old:
A
(2021 acct. balance (71yo) / (72yo divisor)
13
Q
T/F - Bond funds can lock in / target specific future income needs
A
False
14
Q
Why is the prob. of success imperfect?
A
Does not consider the magnitude of failure
15
Q
Joint married couple MAGI level needed to pay the highest Medicare Pt. B premium =
A
$750k
16
Q
T/F - Hospitals cannot be penalized if someone is discharged & then readmitted within 30 days
A
False - They can be penalized for this
17
Q
Most extensive CCRC contract
A
Type A / extensive contract - prepaying medical expenses up front
18
Q
Type B CCRC contract
A
certain amount of time in nursing care, then client pays market rate for care as needed
19
Q
Reason for LTC increases in the 2000s
A
persistency rates were much higher than anticipated
20
Q
IADL(s) =
A
managing $, using the phone, meal prep, medication, shopping
21
Q
SEPP exception:
A
have to take withdrawals for 5 years or to age 59 1/2… can make a 1-time change to RMD approach if using the amortization method (to lower the amount generally)
22
Q
Does a HECM reverse mortgage FHA fee / premium ever change?
A
No
23
Q
Does a HECM reverse mortgage origination fee ever change?
A
Yes - They can vary widely
24
Q
Do Active adult communities have health care?
A
NO health care like assisted living, nursing home
25
Adult active communities models
two models: age 55 & age 62
55 = 80% over age 55
62 = everyone must be over age 62
26
Disability exception requirements
requires NO gainful activity at all
27
Medical expense exception
Must be deductible & in excess of 10% threshold
28
DB exception
all $ must be paid to adult child beneficiary
29
Family sale leaseback
turns a non-depreciable asset into a depreciable asset
family relationships can impact / hurt the strategy
transaction costs are usually LESS than a reverse mortgage
30
Can you 1035 annuity funds to trad. LTC?
YES
31
Relocation rates in retirement
slight increase at age 85 for health reasons
32
Impact of higher bond yield allocations in retirement
likely to increase volatility (not credit risk)
33
Critical path investment goals tied to benchmarks?
No - Tied to the clients' specific needs / income
34
Can anyone join Medicare Advantage? What does it provide?
Yes - Can join, switch, or drop at any time...provides extra services like vision / hearing exams
35
What is the advantage of income generation design vs. total returns?
The simplicity
36
Should advisors use a neutral prompt to initiate conversations around aging / diminished capacity?
YES
37
Kitces:
found decreasing equity exposure when market values rise significantly can increase the safe withdrawal rate
38
Shiller
found price / avg real returns over the previous 120 months can give reasonable predictive power for real / expected long-term market returns
39
Does the Older American Act Program address respite care?
Yes - provides respite care for family caregivers
40
Adult Day Care & LTC:
Intended to keep participants OUT of a LTC facility
41
Does Medicare cover respite care?
Can cover 5 days... but respite care is weeks at a time typically
42
What is the gateway to actuarial science?
Permanent life insurance (CVLI); NOT a deferred annuity
43
Is there health care at an adult active community?
NO
44
Why is the probability of success imperfect?
It does not consider the magnitude of failure
45
QCD age =
70 1/2
46
RMD age =
73
47
DRA (deficit reduction act) restricted what?
Medicaid (NOT Medicare eligibility); also lengthened the lookback period
48
Can you 1035 an annuity into traditional LTC?
YES
49
What is elder abuse?
failing to do something or doing something that results in harm or puts a helpless older person at risk of harm
50
Do any states have a state-imposed estate tax / inheritance tax?
NO
51
What is custodial care?
unlicensed personnel (primarily family); assistance with ADL(s)
52
HECM reverse mortgage calculated how:
Can be any residence
Age of YOUNGEST owner used to calculate
Can only have 1 loan on 1 primary residence
Loan must be repaid when spouse permanently leaves the home
53
IRA RMD after death:
New RMD can be calculated off the inheriting spouse's life expectancy (if not rolled over into their own IRA); Distributions must be completed within 10 years for an adult 40-year old child inheriting
54
Does the 4% rule consider expenses for INV. MGMT?
NO - Does NOT assume fees or expenses
55
T/F - A conservative retiree seeks a higher success rate with more equities
False - Yes, but less equities if conservative
56
T/ F - Pfao's efficient frontier... Withdrawals from a trad. stock/bond portfolio outperformed other strategies
False - The trad. allocation performed much WORSE
57
T/F - A reverse mortgage cannot be a sufficient buffer in bear market years
False - It certainly can
58
T/F - The older American act program does NOT provide respite care for family caregivers
False - It does
59
What is autonomous choice?
Being free from unwanted interference (But this does not mean receiving no guidance at all)
60
Does a qualified profit-sharing plan rollover allow for a rollover of substitute property?
NO
61
Should advisors use a neutral prompt to discuss aging with clients that are older?
Yes
62
What is respite care? Does Medicare cover it?
Provided for weeks at home or in an institution by skilled or informal caregivers. Medicare will cover up to 5 days
63
Medicaid LTC
Annuity can be used providing payments for a relatively short period of time (Deficit Reduction Act)
64
Moral relativism
The theory that there is NO absolute standard concerning what is moral or immoral
65
Advantages of the total returns approach:
tax-efficiency, longevity, & diversification
66
Advantages of income generation focus
The simplicity of this approach
67
DRA (Deficit Reduction Act)
RESTRICTED Medicaid eligibility requirements; lengthened the lookback period
68
Can moral perception be improved / trained / learned?
Yes
69
General moral obligations are
shared by all people
70
role-specific moral obligations are
voluntarily assumed by those in specific roles
71
Cash balance plan features
Must offer annuity; market performance is irrelevant to these plans; change in comp. only affects the current year, not all previous years / vesting; the annuity option is the actuarial equivalent of the lump sum
72
Can a HECM reverse mortgage be frozen, cancelled, reduced like a HELOC can?
NO - but borrower has built in ability to borrow more over time as unused line of credit grows
73
Can you take RMD for both IRAs from 1 IRA?
Yes
74
Can you aggregate RMD for an inherited IRA & a 403b?
NO
75
Can a QLAC be a VA? Indexed?
NO & NO
76
Can you aggregate two 401K plans for RMD?
NO!
77
Birth & adoption exception for withdrawals
$5k for each child (aggregate)
78
Are IRAs aggregated for the SEPP?
NO!
79
Can two inherited IRAs from the same descendent be aggregated for RMD?
YES; but use extreme caution with these
80
QLAC bene. / payout arrangements permitted are:
ONLY single-life or joint-life annuity arrangements are allowed
81
Roth IRA withdrawals:
subject to special rule on conversions; 10% penalty tax if withdrawn within 5 years prior to age 59 1/2
82
Do Roth Account NQ distributions follow the pro-rata rule?
YES
83
Do Roth IRA NQ distributions follow the pro-rata rule?
NO!
84
Is an employer always required to continue DC plan contributions for those working past full retirement age?
Yes
85
Does a DC plan have a service cap?
NO! DB plans ONLY have this
86
Compliance =
min. level of accepted behavior... ethical obligations requires more
87
Intra-fam. sale lease-back:
client receives payment for home to supplement income & improve their cash flow... transaction costs are LOWER than a reverse mortgage
88
Medicare SELECT requires:
hospitals & doctors within the specific network
89
What is the most comprehensive coverage possible for Medicare (new enrollees after 1/1/20)?
Medicare Plan G
90
Does Medicare Part B cover custodial care?
NO
91
What is a Medicare Gap policy?
A supplement to Medicare
92
Medicare cost-sharing structure:
has premiums, co-pays, & co-insurance... BUT, there is NO limit on out-of-pocket expenses
93
Does Medicare Part A cover a skilled nursing facility?
It can... But to qualify, it must follow a 3-day, medically necessary, inpatient hospital stay
94
Medicare Enrollment:
3 months prior to the month they turn 65, it opens (that month, and the 3 months following), for 7 months total... To begin coverage on day 1 of the month they turn 65, they must enroll in the 3 months prior to their birthday month
95
Concerning a HECM reverse mortgage - Does the FHA premium change from on loan program to another?
NO!
96
NUA (net-unrealized appreciation):
NO 10% penalty over 59 1/2; beneficial for those planning to sell / spend employer stock (LT cap. gains rate is lower than their income tax rate)
97
Do Medigap policies have a gender rating?
What ratings do they have?
NO
They do have community ratings, issue-age ratings, & attained-age ratings
98
Is the minimax theory an approach to dynamic reallocation?
NO! Just a philosophy for selecting investments that tries to minimize the worst case scenario...
99
Dynamic asset allocation:
life-cycle asset allocation theory; valuation-based asset allocation; adaptive asset allocation (in which stock allocation relates to funding status) > all approaches.
100
What is exempt from Medicare resource availability tests?
irrevocable burial reserve
personal belongings / furnishings
101
Can you contribute more after you opt in for the SEPP?
NO! Cannot increase either. Can only switch to RMD method if using amortization from the initial selection
102
What ret. income strategy has the greatest risk of failure?
constant inflation-adjusted withdrawals based on the initial account value
103
Can you take the exempt distr. from a qualified plan for higher education expenses?
NO! only from an IRA
104
1st home buyer exempt distribution:
$10k; ONLY IRAs
105
Which is the riskiest asset a client can own?
House
S&P 500
bond fund
REIT
Home due to lack of diversification
106
Home sales tax exclusion can be used by qualifying taxpayer every how many years
2 (Since the ownership and use tests are two years)
107
A qualifying married taxpayer may exclude up to $ (how much) of the sale of their principal residence
years of their spouse's death.
$500k
108
A type B CCRC contract ***does or does not*** pre-pay for skilled nursing care but instead provides a discount on the services for the individual when they are needed.
Does not; still has an upfront fee, so don't let that catch you on the test (tricky)
109
A place where people raised their family but over time the inhabitants have gotten older and the community has adjusted to serve the needs of these individuals.
NORC (naturally occurring retirement community)
110
In which living situation are people the most likely to experience loneliness in retirement?
Independent living
111
What is the largest factor for why people move in retirement?
Health
112
When viewed from the perspective of aging in place, which of the following is a reason to remain at home in retirement?
Accessibility (The home is situated in an urban area with many services available in the surrounding neighborhoods)
113
Which of the following statements about inheritance and estate taxes is correct?
I. Most states do not have a state-imposed inheritance tax.
II. Some states do not have state-imposed inheritance taxes if the assets are given to a direct relative.
Both - 33 states do not have state-imposed estate taxes as of 2021, and some states do not have taxes if the assets pass directly to a relative.
114
T/F: A qualifying taxpayer may receive a partial tax exclusion for the sale of a home if a physician recommends a relocation for particular health reasons.
True
115
T/F: The initial FHA HECM (reverse mortgage) insurance premium and the ongoing premium are both tied to creditworthiness
NO! False... No credit on this
116
Which of the following statements about nursing homes is correct?
I. A nursing home functions as the last stop or a place for those recovering from a surgery or other medical issue that temporarily requires them to need assistance.
II. Typically a nursing home is a place for people who are struggling with two or more of the activities of daily living.
Both
117
Which of the following accurately describes the typical characteristics of an active adult community?
They discriminate against younger people and provide social events that cater to an older population. (weird answer... remember this one)
118
This retirement housing model allows residents in a neighborhood to set up an organization to provide home care services
Beacon Place model for retirement housing
119
This retirement housing model allows residents to have pets and plants.
Eden
120
When determining whether a tax deduction can be taken for voluntary HECM loan repayments, assuming that the indebtedness reflects a use eligible for a deduction, which of the following ordering applies to paying down the components for debt?
A) First FHA insurance, then interest, then principal.
B) First interest, then FHA insurance, then principal.
C) First principal, then interest, then FHA insurance.
D) First FHA insurance, then principal, then interest.
A (intuitive)
121
A distribution is NQ, if one has not maintained the Roth IRA for how many years?
5 years
122
T/F: The first-time homebuyer exception allows a $10,000 withdrawal for each eligible family member, such as children and grandchildren.
FALSE!
The first-time homebuyer exception only allows a $10,000 withdrawal in total (designed to trick you using language from the higher education exception)
123
T/F: For QLAC qualification, the annuity can provide a guarantee for life and for a 10-year certain period.
FALSE / incorrect...
Only income annuities can be used NO VA or FIA, and they must be single life or joint life...
124
Richard, age 57, has one Roth IRA that he created two years ago by converting a traditional IRA. The value at the time of the conversion was $50,000—and all $50,000 was subject to income tax. He now needs to withdraw $5,000 as a down payment on a car. Assuming his tax rate is 25%, how much tax will Richard pay on the distribution?
A) $0
B) $500
C) $1,250
D) $1,750
The answer is B.
Since this is Richard's only Roth IRA, the withdrawal is not subject to ordinary income tax as he is withdrawing part of his $50,000 cost basis. However, the withdrawal is subject to the special rule on conversions that requires that withdrawals made within 5 years of the conversion to an individual who is still under 59½ will be subject to the 10% penalty tax.
125
All of the following statements about using the actual joint life-expectancy for couples in required minimum distribution calculations are true EXCEPT:
A) The spouse must be more than 10 years younger than the participant for the actual joint life-expectancy method to be used.
B) When conditions are satisfied, taxpayers are not required to specifically elect the use of actual joint life-expectancy method (it is automatic).
C) As long as the couple remains married, they automatically remain eligible to use the actual joint life-expectancy method after obtaining initial eligibility.
D) To qualify, the participant must have chosen the spouse as the sole primary beneficiary on January 1st and generally cannot change the beneficiary election during the year.
The answer is C.
The determination of whether this method can be used is made on a year-to-year basis.
A couple could become ineligible if they change beneficiary designations, for example.
126
T/F: The best way to increase benefits in a defined-contribution plan is to increase wages in the final year of participation.
The correct answer is False. Since this only affects the current year’s contribution, it will not have that much impact on the final benefit. In an account plan, investment experience is the most important factor in the value of a late-career participant.
127
T/F: Even though a cash balance plan is technically a defined-benefit plan, the benefit structure of a cash balance plan looks more like a defined-contribution plan.
The correct answer is True
128
T/F: As long as the participant’s accrued benefit does not change, the value of the lump sum equivalent will not change over time.
The correct answer is False. To satisfy Code Sec. 417, when market interest rates change, the lump sum value will generally change as well.
129
T/F: A married participant in a defined-benefit plan that elects a lump sum distribution instead of a joint-and-survivor annuity will need a plan to ensure that a surviving spouse has sufficient income.
The correct answer is True
130
T/F: Benefits accrue more evenly over time in a defined-benefit plan than in a defined-contribution plan.
The correct answer is False. In a defined-benefit plan, the benefit grows more rapidly at the end of the career because of increases to both salary and service. A defined-contribution plan has a more even accrual as contributions are tied to that year’s salary only.
131
In most defined-benefit plans, the amount paid in the form of a qualified joint-and-survivor annuity is actuarially equivalent to the standard form of payment, which is a life annuity.
True
132
T/F: Because of perceived abuses, the IRS and Department of Labor are looking for ways to eliminate annuity options in defined-contribution plans.
The correct answer is False. Both the IRS and the DOL have been studying lifetime income options, and regulatory changes have made it easier to offer annuity options in defined-contribution plans.
133
T/F: To qualify as a qualified longevity annuity contract (QLAC), the benefit must begin by age 85 and benefits can only be paid as a single life annuity with no refund feature.
The correct answer is False. A QLAC can pay out benefits as a joint-and-survivor benefit as well. The other allowable death benefit is a return-of-premium benefit.
134
T/F: An advantage of a QLAC is that the value of the QLAC does not need to be considered for determining required minimum distributions.
True.
The value of the QLAC contract does not need to be taken into account when calculating the RMDs for the remaining assets. But starting in 2023, SECURE Act 2.0 allows the option of electing to include any QLAC payouts as satisfying the overall RMD requirement.
135
T / F: The IRS has finalized regulations that make it simpler for defined-benefit pension plans to offer partial annuitization -- that is a combination of a lifetime annuity and a single-sum cash payment.
True
136
T / F: A death beneficiary who takes a withdrawal from an inherited IRA receives a tax credit for any estate taxes that were paid by the participant’s estate because of the IRA.
The correct answer is False. The death beneficiary receives a deduction for estate taxes paid, not a tax credit. (tricky!)
137
T/F: $5,000 of qualified birth and adoption distributions can only be made for one birth or adoption.
The correct answer is False. This exception can be used multiple times, so $5,000 of qualified distributions could be made each time a taxpayer has another child or adopts another child.
138
T/F: The 10% early withdrawal penalty is never assessed on withdrawals from Roth IRAs.
The correct answer is False. The 10% penalty can apply to pre-59½ distributions if earnings are distributed as part of a nonqualified distribution or distributions occur within five years of a conversion.
139
T/F: To qualify for the first time home buying exception to the 10% early withdrawal penalty, funds have to be withdrawn within 30 days of the purchase of the home.
The correct answer is False. There is a time limit, but it is 120 days.
140
T/F: A 30-year-old taking a distribution of employer stock who plans to sell the stock immediately then reinvest the proceeds in other retirement assets is an excellent candidate to elect NUA tax treatment.
The correct answer is False. It may be better to roll the benefit into an IRA, avoiding the 10% penalty on the ordinary income portion and deferring taxes on the entire benefit until distributions are taken from the plan.
141
T/F: An IRA participant cannot invest directly in a life insurance policy, but a life insurance policy distributed from a qualified plan can be rolled into an IRA.
False. IRAs cannot hold life insurance under any circumstances.
142
T/F: A nonspousal beneficiary that receives a death benefit from a qualified plan has 60 days to roll it into an inherited IRA.
False. A payment directly to the participant results in taxing the entire distribution. A rollover from the qualified plan directly to the inherited IRA’s trustee is required to avoid serious tax obligations.
143
T/F: Nondeductible contributions in an IRA can be rolled over into a qualified plan.
False. This is one of the few limits on rollovers. Nontaxable amounts cannot be rolled from an IRA to a qualified plan, 403(b) plan, or 457(b) plan.
144
T/F: A 50-year-old converts a traditional IRA into a Roth IRA. In all cases afterwards, withdrawals of those converted funds will avoid the 10% early withdrawal penalty.
False. Withdrawals from the converted Roth IRA made within 5 years will generally be subject to the 10% penalty.
145
T/F: When determining the tax treatment of a nonqualified withdrawal from a Roth IRA, all of the taxpayer’s Roth IRAs are aggregated (except for inherited Roth IRAs).
True
146
T/F: If earnings are distributed from a Roth IRA as part of a nonqualified distribution, the earnings are taxed in the same manner as a withdrawal from a traditional IRA.
True. Nonqualified distributions of earnings from a Roth IRA are taxed as ordinary income and may be subject to the early withdrawal penalty.
147
T/F: In January 2010, Joe established his first Roth IRA, making a contribution for 2009. He converted a traditional IRA into a second Roth IRA in February 2018 when he was age 60. Distributions from the second Roth IRA in March 2018 are qualified tax-free distributions.
True. Joe has satisfied the 5-year rule because of the rule that measures 5 years from the first day of the year for which the first Roth IRA was established. He is 60, so he has satisfied a trigger event as well.
148
T/F: A nonqualified withdrawal taken directly from a Roth account in a 401(k) plan that does not exceed total contributions will be tax-free.
False. Nonqualified distributions from Roth accounts are taxed differently than Roth IRAs. They are subject to a pro rata recovery rule.
149
T/F: Unfortunately, any distributions during the distribution year that are not taxable cannot count toward satisfying the required minimum distribution rules.
False. Both taxable and nontaxable distributions during the specified distribution year count toward satisfying the rules.
150
T/F: An IRA participant dies in March, just before the April 1 that would have been their required beginning date. In this case, there is no required distribution for the previous year.
True
151
T/F: If a participant continues to work past the required beginning date, required minimum distributions can be deferred until retirement for all employer-provided qualified plans and IRAs that the individual owns.
The correct answer is False. The exception that allows deferrals only applies to the qualified plan of the current employer. The exception does not apply to IRAs.
152
T/F: A participant who has failed to satisfy the required minimum distribution rules must pay an excise tax along with Form 5329, but can ask for a refund of the tax if the participant has a good reason for failing to satisfy the rules.
The correct answer is False. A request for a waiver can be made on Form 5329, but the request can be made without paying the tax. Through 2022, the excise tax was 50% of the RMD not taken. But starting in 2023, SECURE Act 2.0 reduces this tax to 25%, and down to 10% if the RMD shortfall is corrected in a timely manner.
153
T/F: If a 75-year-old IRA participant dies leaving his 62-year-old spouse as the beneficiary, by rolling the benefit into her own IRA there is no required minimum distribution in the year of the participant’s death.
The correct answer is False. There is always a required distribution in the year of death. There will not be one in the following year as the spouse has not yet attained the required beginning date.
154
T/F: If the primary beneficiary dies after beginning to receive IRA benefits, the contingent beneficiary is entitled to any remaining benefit.
The correct answer is False. The contingent beneficiary is only entitled to benefits if the primary beneficiary dies prior to the death of the participant or the primary beneficiary waives his or her right to the benefit.
155
T/F: People who are impoverished are more likely to stay put because they cannot afford to move.
False. People who are classified as impoverished are the most likely to move.
156
T/F: According to the U.S. Census Bureau, older people move more than younger people.
False. Younger people move a lot more than older individuals. In fact, less than 5% of people over the age of 65 move every year.
157
T/F: Activities of Daily Living (ADLs) are used in determining if a person qualifies for benefits from the government assistance program.
The correct answer is True. ADLs are used for determining government assistance and long-term care policy payouts. (LO 16-1-3)
158
T/F: The five basic ADL functions are eating, bathing, dressing, sitting, and using the restroom.
The correct answer is False. The six basic functions are eating, bathing, dressing, using the restroom, transferring from a bed or chair, and remaining continent. (LO 16-1-3)
159
T/F: Independent living in retirement is when individuals who require no medical assistance live on their own in the same home as the one where they raised their family.
The correct answer is False. Independent living in retirement is not necessarily in the same home as the one where they raised their family. It could be at another residence. (LO 16-2-1)
160
T/F: Co-housing is a cluster of privately owned homes that have some shared spaces such as a walking path, library, and pools.
The correct answer is True. Co-housing is a group of houses or condos that have amenities that are shared among all the residents. (LO 16-2-1)
161
T/F: CCRC contracts can be bought and sold on the open market.
The correct answer is True. CCRC contracts can be bought and sold on the secondary market. (LO 16-2-4)
162
T/F: The ownership test requires that the client lives in the home for a consecutive 24-month period prior to the date of the sale.
The correct answer is False. The individual can live in the home a non-consecutive 24-month period out of the last 5 years prior to the date of the sale. (LO 16-3-2)
163
T/F: There are three tests that a client must meet to qualify for the Section 121 exclusion: automatic disqualification test, ownership test, and use test.
The correct answer is False. There are four tests. The three listed above and the eligibility test. (LO 16-3-2)
164
T/F: Section 149 exemption is the exemption of appreciation of the primary residence.
The correct answer is False. Section 121 exclusion is a capital gains exemption on the appreciation of one’s primary residence. (LO 16-3-2)
165
T/F: The vast majority of people leave their homes when they retire because they want to enjoy their golden years somewhere else.
The correct answer is False. Most people stay put in retirement. However, those that do move tend to move to warmer and lower-tax states. (LO 16-3-3)
166
T/F: The Fair Housing Act requires the landlord to pay for and install modifications such as bathroom grab bars or wheelchair ramps to outside doors for any rental house, coop, or condominium occupied by a disabled older person.
The correct answer is False. The Fair Housing Act requires housing providers to allow your clients to make reasonable modifications to their dwelling. The expenses are paid for by the client, not the landlord. (LO 16-4-3)
167
T/F: An Occupational Therapy Assessment is a generic assessment regarding how to adapt the home to live with a physical limitation provided by the National Association of Home Builders.
The correct answer is False. An Occupational Therapy Assessment is a client-specific recommendation provided by an occupational therapy practitioner who assesses the client’s condition and recommends how the individual can modify their home. (LO 16-4-3)
168
T/F: Payments for home modifications are always deductible in the year they are made.
The correct answer is False. Some home modification expenses may be deductible as a medical expense, but they are typically capitalized over several years. Other expenditures may not be deductible because it is a personal and not a medical expense. (LO 16-4-3)
169
T/F: If the living situation changes so that the principal residence shifts to a different property, the original reverse mortgage can be honored until the borrower no longer owns that original property.
The correct answer is False. If the living situation changes such that the principal residence changes, the reverse mortgage on the original principal residence must be paid off. It may be possible to take out another reverse mortgage on the new principal residence. (LO 16-5-1)
170
T/F: Upon the death of a borrowing spouse, an eligible non-borrowing spouse is entitled to a loan deferral period, can continue to live in the home, and can continue borrowing from the reverse mortgage line of credit until he or she leaves the home.
The correct answer is False. If a spouse is not on the title of the home and meets the qualifications as a “non-borrowing spouse,” the loan payments can be deferred. However, he or she can no longer borrow against the reverse mortgage line of credit. (LO 16-5-1)
171
T/F: It is encouraged, but not required, for those taking a HECM loan to attend an independent counseling session to ensure that they understand the terms of the loan.
The correct answer is False. The independent counseling session is mandatory in order to apply for a HECM loan. (LO 16-5-2)
172
T/F: If a couple shares home ownership with one being 65 and the other being 75, a lender would use the average age of the couple, which is 70, to calculate the maximum available loan.
The correct answer is False. In the case of couples, the younger age is used to calculate the maximum available loan. (LO 16-5-2)
173
T/F: Outstanding mortgages or home equity loans must be paid off at the time an individual takes a HECM loan.
The correct answer is True. A home with a mortgage cannot also have a reverse mortgage. (LO 16-5-2)
174
T/F: The percentage of the value of the home that can be borrowed through a HECM loan is based on the full value of the home, regardless of whether the home is above or below the maximum lending limit.
The correct answer is False. If a home is worth more than the lending limit, then the amount that can be borrowed will be based on a percentage of the maximum lending limit rather than the full value of the house. (LO 16-5-2)
175
T / F: A HECM for purchase allows an eligible borrower age 62 or older to take out a HECM loan to finance part of the purchase of a new home.
The correct answer is True. A borrower can finance part of a new home with a HECM loan. (LO 16-5-3)
176
T/F: With a HECM loan that is under water (loan balance exceeds value of the home) at the borrower's death, the heirs will have to pay back the entire value of the loan if they want to keep the house.
The correct answer is False. The heirs can buy the home for 95% of the home's value, and the FHA makes the lender whole on the shortfall. (LO 16-5-4)
177
T/F: Reverse mortgage interest payments are not deductible if the loan is used to provide cash flow to meet retirement income needs.
The correct answer is True. Reverse mortgage interest payments must not be used to provide cash flow for retirement income needs if it is to be tax deductible. (LO 16-5-4)
178
T/F: Research has found that an effective way to use a reverse mortgage is as part of a coordinated strategy where income needs are met from portfolio withdrawals when the market is up, and borrowing from the mortgage occurs in years when the market is down.
The correct answer is True. Implementing a reverse mortgage into a retirement income plan can add a tremendous amount of value to a client. (LO 16-5-5)
179
T/F: Research has shown that the best way to improve the probability of success of a retirement spending plan is to use a reverse mortgage as a last resort after other resources have been depleted.
The correct answer is False. Research has shown that this is not the best use of a reverse mortgage as borrowing earlier in retirement provides some protection from sequence of return risk, as there is less strain on the retirement portfolio. (LO 16-5-5)
180
T/F: A HECM for purchase borrower is only eligible for an adjustable-rate loan.
The correct answer is False. Since a HECM for purchase is a lump sum payment, there is an option to elect either a fixed interest rate loan or an adjustable-rate loan. Lump sums are the only instance in which fixed-rate loans are available. (LO 16-5-6)
181
T/F: Research suggests that the worst way to use housing wealth is as a last resort.
The correct answer is True. Waiting to use housing wealth as a last resort is not a good idea. It is much better to implement it into an effective retirement plan. (LO 16-5-6)
182
T/F: Alzheimer’s and dementia are the number one reason for long-term care needs.
The correct answer is True. Alzheimer’s and dementia cause over 20% of all long-term care needs. (LO 15-1-1)
183
T/F: Custodial care expenditures are typically covered by Medicare.
The correct answer is False. Medicare does not typically cover custodial care services. (LO 15-1-1)
184
T/F: Private spending on long-term care, which does not include unpaid family assistance, represents about 70% of long-term care expenditures.
The correct answer is False. Private spending equates to about 30% of long-term care expenditures. (LO 15-1-2)
185
T/F: Family members deliver roughly 70% of all long-term care services.
The correct answer is True. Family members provide the majority of long-term care services. (LO 15-1-2)
186
T / F: Medicaid is the largest government financing source for long-term health care expenditures.
The correct answer is True. (LO 15-1-2)
187
T/F: Nursing homes are state licensed facilities that specialize in providing 24-hour long-term care services.
The correct answer is True. (LO 15-1-3)
188
T/F: Medicare might cover hospice care if a doctor certifies that a patient has less than twelve months to live if the health condition runs its normal course.
The correct answer is False. The correct time frame is 6 months. (LO 15-1-3)
189
T/F: The majority of long-term family caregivers are men.
The correct answer is False. 66% of family caregivers are women. (LO 15-1-3)
190
T/F: HSA accounts cannot be used to pay long-term care premiums but can be used to pay out-of-pocket long-term care expenditures without negative tax implications.
The correct answer is False. HSA accounts can be used to pay certain long-term care premiums up to a specified age based amount tax free. (LO 15-2-3)
191
t/f: Medicare eligible post-acute skilled nursing care services include housing in a private room and care from private duty nurses for up to 100 days.
The correct answer is False. Medicare qualified and covered post-acute skilled nursing care includes stay in a semi-private room and nursing services. However, Medicare does not cover private duty nurses. (LO 15-3-1)
192
t/f: Rules for Medicare and Medicaid vary based on state of residence.
The correct answer is False. While true for Medicaid, Medicare has a single set of rules for the whole country. (LO 15-3-2)
193
t/f: The IRAs of community spouses are always exempted assets for Medicaid planning.
The correct answer is False. These rules vary from state to state. (LO 15-3-2)
194
t/f: A primary residence, automobile, and personal belongings are considered exempt assets and not countable for purposes of Medicaid’s asset resource eligibility requirements.
True
195
t/f: State partnership long-term care insurance programs offer government-funded long-term care insurance policies.
The correct answer is False. The program was designed to incentivize the purchase of policies but not to provide the funding for them. (LO 15-3-4)
196
t/f: Long-term care benefits paid out of qualified life-insurance/LTC hybrid products are paid tax free.
The correct answer is True. (LO 15-4-1)
197
t/f: Most hybrid long-term care insurance policies have lifetime pay premiums.
The correct answer is False. Most hybrid long-term care insurance policies have single pay premiums or premiums paid for short periods. (LO 15-4-1)
198
t/f: An indemnity policy may be more useful for someone planning to receive informal care.
The correct answer is True. (LO 15-5-1)
199
t/f: Care coordination is a rare benefit offered with long-term care insurance, but it is worth looking for.
The correct answer is False. It is a common benefit. (LO 15-5-2)
200
t/f: Nursing homes might prefer having long-term care expenses reimbursed through filial laws because private pay is often more than Medicaid.
The correct answer is True. (LO 15-5-3)
201
Which of the following statements about Older Americans Act programs are correct?
I. The Long-Term Care Planning Program provides discounted long-term care services to eligible individuals.
II. The Lifespan Respite Care Program provides planned or emergency care to a child or adult with special needs in order to provide temporary relief to family caregivers who are caring for the care recipient.
A)
I only
B)
II only
C)
Both I & II
D)
Neither I nor II
The answer is B. I is incorrect because the Long-Term Planning Program is focused on an educational campaign about the importance of long-term care planning rather than providing direct services.
202
The following statements correctly convey characteristics of various long-term care settings EXCEPT
A)
Home health care services account for the majority of all long-term care costs.
B)
The national average cost of a semiprivate room in a nursing home was $92,710 in 2019.
C)
Assisted living facilities provide a living arrangement for older residents who still maintain a significant degree of independence.
D)
Medicare may cover the costs of hospice care if a doctor certifies a patient will likely pass within one year due to their disease or condition.
The answer is D. Medicare may cover the costs of a hospice care stay if a doctor certifies that the patient has less than 6 months to live if the disease or condition runs its normal course. (LO 15-1-3)
203
The following statements concerning characteristics of Medicaid are correct EXCEPT
A)
Each state can impose its own requirements for Medicaid coverage eligibility.
B)
Medicaid programs are primarily state funded but receive a small amount of federal funding.
C)
Medicaid funds between 40-65% of all institutional long-term care expenditures.
D)
Medicaid does not require a demonstrated need for skilled care services to cover long-term custodial care.
The answer is B. Medicaid programs are actually primarily funded by the federal government, which covers anywhere between 50-76% of a given state's costs towards Medicaid. (LO 15-3-1)
204
Which of the following statements concerning long-term care insurance issues is correct?
I. The cost of long-term care insurance premiums has more than doubled in cost from the early 2000s.
II. The annual premiums for long-term care policies will continue to increase and at a much faster rate than they did in the past.
A)
I only
B)
II only
C)
Both I & II
D)
Neither I nor II
The answer is A. A study conducted by the Society of Actuaries found long-term care insurance cost more than doubled driven because of higher persistency rates and lower interest rates. The cost of long term care insurance will continue to increase, however, it will not increase as quickly because higher persistency rates and lower interest rates are already factored in.
205
Which of the following statements concerning the State Partnership Program for long-term care insurance tax benefits is (are) true?
I. Most states offering partnership plans do not limit the amount of purchased long-term care benefits that can be protected.
II. All of the over 40 states with partnership programs provide maintain reciprocity with each other.
A)
I only
B)
II only
C)
Both I & II
D)
Neither I nor II
The answer is A. States prefer that people protect more money from taxes because it consequently reduces their payments towards Medicaid by allowing people to pay more of their healthcare costs without Medicaid's assistance. While over 40 states now offer programs, four states – California, New York, Connecticut, and Indiana – do not offer reciprocity with any other states as they have different partnership rules and programs in place.
206
T/F: A common reason not to choose Original Medicare is the requirement to select a primary care physician.
The correct answer is False. There is no requirement to choose a primary care physician for Original Medicare, which can be an advantage over choosing a Medicare Advantage plan which may have this requirement. (LO 14-1-2)
207
T/F: A “benefit period” under Part A starts on the first day of an inpatient hospital stay and ends after 60 consecutive days in which the participant has not received inpatient care at a hospital or skilled nursing facility.
The correct answer is True. (LO 14-1-2)
208
T/F: Medicare Part B covers routine dental, hearing, and vision care.
The correct answer is False. These services are not covered by Medicare Parts A or B. (LO 14-1-2)
209
T/F: The Medicare Part A and B general enrollment period is January 1 - March 31 each year, and coverage begins on the first day of the month following enrollment.
The correct answer is True. (LO 14-2-1)
210
T/F: In general, Medicare Advantage plans will have lower premiums than a combination of Original Medicare, Medicare Part D, and a comprehensive Medicare Supplement plan.
The correct answer is True. (LO 14-2-1)
211
T/F: Today, 48% of Medicare beneficiaries are in Medicare Advantage plans.
The correct answer is True. (LO 14-2-1)
212
T/F: An individual who is a snowbird and winters in Arizona and summers in Minnesota is much more likely to get better coverage from Medicare Advantage than in Original Medicare.
The correct answer is False. It is unlikely that a Medicare Advantage plan would have sufficient coverage networks in two different locations. This individual is generally better off in Original Medicare. (LO 14-2-1)
213
T/F: An individual will have Medicare Part A and Part B coverage as of the first day of the month of attaining age 65 as long as he or she enrolls sometime during the initial enrollment period.
The correct answer is False. To obtain coverage as of the first day of the month of attaining age 65, enrollment must be in the three-month period prior to attaining age 65. (LO 14-2-1)
214
T/F: Under the standard Medicare Part D Prescription Drug Plan, after paying a deductible for the year, the enrollee pays a coinsurance amount of 5% for all drug costs.
The correct answer is False. Under the standard plan, after paying the deductible the coinsurance amount is 25%. Only catastrophic costs are subject to a 5% coinsurance amount. (LO 14-2-2)
215
T/F: The Part D penalty is 10% for each full 12-month period of noncoverage.
The correct answer is False. The Part D penalty is 1% times the number of months of noncoverage times the national base beneficiary premium. (LO 14-2-2)
216
T/F: As long as a Medigap Plan A covers the basic required expenses, an insurance company can include additional benefits in order to better compete with other companies.
The correct answer is False. Medigap plans are required to be standardized, so all Medigap policies identified as “Plan A” must have the same benefits. (LO 14-2-3)
217
T/F: With attained age pricing, the premium is based on the enrollee’s current age so the premium increases with age.
The correct answer is True. (LO 14-2-3)
218
T/F: Workers with a high deductible health plan who continue to work past age 65 may not want to enroll in any portion of Medicare as it will prevent them from contributing further to their health savings account.
The correct answer is True. (LO 14-2-4)
219
T/F: An individual who continues to work past age 65 and who has a health care plan at work should never consider switching to Medicare until he or she retires.
The correct answer is False. The employer’s current coverage may be adequate but it is always a good idea to comparison shop. Medicare in some cases may provide more comprehensive coverage at a better price. (LO 14-2-4)
220
T/F: An employee working for a company with 10 employees who works past age 65 and has good employer-provided health care coverage can effectively defer Medicare until they retire.
The correct answer is False. Workers who work for an employer with fewer than 20 employees will need to enroll in Medicare Part A and B, as under law Medicare becomes the primary plan upon attainment of age 65. (LO 14-2-4)
221
T/F: The Medicare Advantage open enrollment period is January 1 - March 31, and it allows an individual who is in a Medicare Advantage plan to choose a different Medicare Advantage plan or go back to Original Medicare.
The correct answer is True. (LO 14-2-5)
222
T/F: Those enrolled in a Medicare Advantage plan can change to another Medicare Advantage plan during the open enrollment period each fall.
The correct answer is True. (LO 14-2-5)
223
T/F: Once an individual under age 65 has been determined eligible to receive Social Security disability benefits, they are automatically enrolled in Medicare Part A and Part B.
The correct answer is False. An individual receiving Social Security disability benefits only is enrolled in Medicare after 24 months. (LO 14-3-1)
224
T/F: Services not covered by Medicare Parts A and B include all of the following: dental coverage, eyewear, and outpatient hospital stays.`
The correct answer is False. Outpatient hospital stays are covered under Medicare Part B. The other services are not covered. (LO 14-4-2)
225
T/F: In 2023, out-of-pocket costs for a Part D plan cannot exceed $2,500 a year.
The correct answer is False. Out-of-pocket costs can be much higher than that for someone taking expensive drugs since catastrophic coverage (which covers 95% of expenses) does not begin until $7,400 has been spent by the patient out-of-pocket. (LO 14-4-2)
226
T/F: The Medicare call center is only available from 9-5 on weekdays.
The correct answer is False. The Medicare call center is available 24 hours a day 365 days a year. (LO 14-4-3)
227
Which of the statements concerning the choice between original Medicare and Medicare Advantage plans are true?
I. Medicare Advantage plans generally have lower premiums than comprehensive Medicare Supplement plans.
II. Original Medicare is often a better choice than Medicare Advantage for an individual who has two residences in different parts of the country.
A)
I only
B)
II only
C)
Both I & II
D)
Neither I nor II
The answer is C. Both statements are correct. (LO 14-2-1)
228
Which of the following statements concerning employer-sponsored retiree medical plans as a supplement to Medicare Part A and B are true?
I. An individual who stays with the employer plan and does not enroll in Part D must make sure that drug coverage qualifies as "creditable coverage" in order to avoid any Part D premium penalties.
II. A retiree can always change back and forth each year from the employer plan to a Medicare Part D plan during the open enrollment period.
A)
I only
B)
II only
C)
Both I & II
D)
Neither I nor II
The answer is A. II is incorrect, as employer plans are not required to allow participants change plans during the Part D open enrollment period. In fact, in some cases a retiree who turns down employer coverage may not be able to attain it later. (LO 14-2-4)
229
Which of the following statements is true regarding planning for Medicaid eligibility to fund long-term care expenses?
A)
A prenuptial agreement is an effective way to protect the assets of the community spouse.
B)
The community spousal resource allowance will protect up to 90% of the countable assets for the community spouse.
C)
A Medicaid annuity can be used to pay for the costs of care during the penalty period for a gift made during the lookback period.
D)
Retirement plans for the community spouse are always exempted assets.
The answer is C. A Medicaid annuity, which is a Deficit Reduction Act compliant immediate annuity providing payments for a relatively short fixed period, can be used for this purpose. (LO 15-3-2)
230
Arthur, age 50, needs to take a withdrawal from his IRA and would like to avoid the 10% early withdrawal penalty tax using the substantially equal periodic payment exception. Which of the following statements concerning this exception as it applies to Arthur is correct?
A)
Arthur will have to take withdrawals for at least 5 years but can make changes after that.
B)
If Arthur elects the amortization method, he can make a one-time change to the required minimum distribution approach.
C)
Once the distribution amount is calculated, Arthur will be able to increase but not decrease withdrawals each year.
D)
Arthur can continue to make contributions to the same IRA after withdrawals have begun.
The answer is B. A is incorrect as Arthur will have to take withdrawals for 9½ years until he attains age 59½. C is incorrect since Arthur can neither increase nor decrease the required amount. D is incorrect since the rules require that there are no additional contributions, transfers or other changes to the account once the substantially equal periodic payments have begun. (LO 13-2-2)
231
Which of the following statements accurately describes Medicare’s role in long-term care financing?
A)
Medicare is the largest government financing option for long-term care expenditures.
B)
Medicare often covers custodial care for ADLs.
C)
Medicare does not cover any post-acute care services in the home.
D)
Medicare may cover some nursing home care costs for a short period of time.
The answer is D. Medicare does cover some post-acute care recovery in a nursing home. (LO 15-1-2)
232
Which of the following statements concerning Roth conversions is (are) correct?
I. If an IRA is converted to a Roth IRA prior to attaining age 59½, both income taxes and the 10% early withdrawal penalty will have to be paid.
II. A participant can convert a 401(k) plan benefit into a Roth IRA.
A)
I only
B)
II only
C)
Both I and II
D)
Neither I nor II
The answer is B. Statement I is incorrect. There is no 10% early withdrawal penalty at the time of the conversion. Note that if there is a withdrawal of the converted amount from the Roth IRA within 5 years of the conversion and prior to age 59½, then the penalty would apply. (LO 13-2-4)
233
Junior, age 40, has two Roth IRAs. One is valued at $20,000 and has $10,000 of contributions. The other was converted last year and income taxes were paid on the entire $100,000 converted. Today, the account is worth $110,000. Considering federal income taxes and penalty taxes and a 25% tax rate, how much in taxes will be paid if Junior withdraws $30,000 from the converted Roth IRA?
A)
$0
B)
$2,000
C)
$5,000
D)
$7,000
The answer is B.
The first $10,000 is considered a return of contributions. The next $20,000 represents converted amounts that have been taxed. These are not subject to income taxes but will be subject to the 10% early withdrawal penalty tax. (LO 13-2-5)
234
Which of the following statements is true regarding filial laws?
A)
Filial laws are frequently invoked to make family members pay long-term care expenditures of a family member in a long-term care facility.
B)
Half of states have filial laws.
C)
Filial laws were initiated by the Deficit Reduction Act of 2005.
D)
Filial laws are designed to incentivize people to forgo long-term care insurance.
The answer is B. Over half the states have filial laws. (LO 15-5-4)
235
Which of the following statements about research results of the valuation based asset allocation approach is (are) correct?
I. A Kitces study showed that increasing equity exposure by 20 percent whenever market valuations rise sufficiently will increase the SAFEMAX (safe withdrawal rate).
II. Robert Shiller demonstrated that the price divided by average real earnings over the previous 120 months (PE10) can provide reasonable predictive power for long-term real stock market returns.
A)
I only
B)
II only
C)
Both I and II
D)
Neither I nor II
The answer is B. Statement I is incorrect. Kitces found that decreasing equity exposure when market values rise will increase the safe withdrawal rate. (LO 18-1-3)
236
Which of the following statements regarding custodial care services is correct?
A)
A license is required to provide custodial care services.
B)
Medicare typically covers some of the costs of custodial care.
C)
Custodial care includes assistance with ADLs as well as IADLs.
D)
Medicaid will not pay for custodial care if there is no need for skilled care services.
The answer is C. A is incorrect because there is no licensure requirement to provide custodial care. B is incorrect because Medicare generally does not cover the costs of custodial care. D is incorrect because Medicaid can pay for long-term custodial care without the need for skilled care services. (LO 15-1-1)
237
Which of the following statements concerning Medicare's skilled nursing home benefit is (are) true?
I. Medicare requires a hospital stay of at least 3 days (not including day of discharge) and a transfer to a qualified facility within 30 days.
II. Medicare may potentially pay for at least a portion of skilled nursing care costs for up to 100 days.
A)
I only
B)
II only
C)
Both I & II
D)
Neither I nor II
The answer is C. I accurately describes one of Medicare's requirements prior to providing benefits for skilled nursing home services. Medicare covers 100 percent of the first 20 days of long-term care service, requires a copay for the next 80 days, then makes no payments for additional service. (LO 15-3-1)
238
The following are permitted 1035 exchanges to fund a hybrid policy EXCEPT
A)
Life insurance exchanged for a life insurance/LTC hybrid policy.
B)
Life insurance exchanged for an annuity/LTC hybrid policy.
C)
Annuity exchanged for a life insurance/LTC hybrid policy.
D)
Annuity exchanged for an annuity/LTC hybrid policy.
The answer is C. The only transaction listed that does not qualify for a 1035 exchange is the annuity for a life insurance/LTC hybrid policy. (LO 15-4-1)
239
T/F: You can 1035 exchange an annuity to a life insurance / LTC Hybrid policy
FALSE!
240
T/F: When a life insurance policy is part of a participant’s 401(k) plan benefit, the Table 2001 amounts that have already been taxed can only be recovered if the policy is distributed to the participant as part of the benefit.
The correct answer is True. (LO 13-2-1) (Distribute the policy as a benefit...does not mean the insured died = tricky!)
241
T/F: If an individual fails to complete an IRA rollover within 60 days, an automatic extension is granted if the taxpayer transmitted the funds to a financial institution within 60 days and, due to the error of the financial institution, the transaction was not completed until 6 months later.
The correct answer is True. If an individual takes all appropriate steps to complete a rollover, an institution must rectify its own error within one year. (LO 13-2-4)
242
T/F: Joe retires at age 53 from his company that maintains a 401(k) plan. If Joe waits until age 56 to take withdrawals, any withdrawal from the 401(k) will be exempt from the 10% early withdrawal penalty tax.
The correct answer is False. Joe has to wait to retire until the calendar year that he attains age 55 to be eligible for the age 55 exception. (LO 13-2-2)
243
T/F: If earnings are distributed from a Roth IRA as part of a nonqualified distribution, the ***earnings*** are taxed in the same manner as a withdrawal from a traditional IRA.
The correct answer is True. Nonqualified distributions of earnings from a Roth IRA are taxed as ordinary income and may be subject to the early withdrawal penalty. (LO 13-2-5)
244
T/F: In January 2010, Joe established his first Roth IRA, making a contribution for 2009. He converted a traditional IRA into a second Roth IRA in February 2018 when he was age 60. Distributions from the second Roth IRA in March 2018 are qualified tax-free distributions.
The correct answer is True. Joe has satisfied the 5-year rule because of the rule that measures 5 years from the first day of the year for which the first Roth IRA was established. He is 60, so he has satisfied a trigger event as well. (LO 13-2-5)
245
t/f: If the IRA beneficiary is not the spouse, when the participant is alive you only need to know the age of the participant at the end of the distribution year and the account value at of the end of the prior year to calculate the required minimum distribution.
The correct answer is True. (LO 13-3-1)
246
t/f: Long-term care Medicare coverage extends to custodial care services required to assist a long-term care recipient ***with his or her ADLs*** .
The correct answer is False. Medicare does cover some long-term care services but ***is not designed to specifically provide care services to assist with ADLs*** (LO 15-1-2)
247
t/f: Medicare may cover some long-term care costs in a nursing home if the skilled care is ordered by a doctor and lasts for over 100 days.
The correct answer is False. Under some circumstances, Medicare will cover some long-term health care costs up to 100 days in a nursing home. (LO 15-1-2)
248
t/f: Medicare can cover up to five continuous days of respite care services.
The correct answer is True. (LO 15-1-3)
249
t/f: Assisted living facilities specialize in ***scheduled*** long-term care services for their long-term care recipients.
The correct answer is False. Assisted living facilities provide ***non-scheduled care*** (LO 15-1-3)
250
t/f: A $5,000 monthly limit indemnity policy and a $5,000 monthly limit cash policy will always pay out $5,000 a month in benefits to an insured.
The correct answer is False. An indemnity policy only pays out if the person is receiving care. (LO 15-2-2)
251
t/f: The main benefit of a tax-qualified long-term care policy over a non-tax-qualified policy is that the benefits paid under the tax-qualified policy are received tax-free by the collecting insured.
The correct answer is False. The main benefit of a tax qualified plan is that the premiums may be deductible in certain instances. (LO 15-2-3)
252
t/f: A Medicaid applicant can transfer his or her assets into exempt assets for the purposes of qualifying for Medicaid without violating the look-back provisions.
The correct answer is True. (LO 15-3-2)
253
t/f: Rules for ***both*** Medicare and Medicaid vary based on state of residence.
The correct answer is False. While true for Medicaid, Medicare has a single set of rules for the whole country. (LO 15-3-2)
254
t/f: While the Deficit Reduction Act of 2006’s “look-back” period changes made it easier to qualify for Medicaid, the partnership program made it more difficult to spend down assets to qualify for Medicaid.
The correct answer is False. The Deficit Reduction Act of 2006 extended the “look-back” period, making it harder to qualify for Medicaid. Partnership programs make it easier to spend down assets to qualify for Medicaid by exempting more of the applicant’s assets from the limits. (LO 15-3-4)
255
The following statements regarding the payout of long-term care insurance (LTCI) benefits are correct EXCEPT
A)
The most common form of distribution for LTCI benefits is the reimbursement method.
B)
Cash policies pay out the maximum benefit regardless of the cost of care received.
C)
LTCI policies provide for a maximum benefit amount.
D)
Indemnity policies are commonly sold today, but they cost more than reimbursement policies.
That is incorrect. The answer is D. Indemnity policies are not commonly available today. (LO 15-2-2)
256
HS-355 Final
flashcards
Decks in class (1)
# Cards
