CSFS Course 6
State Regulations and Federally Mandated Benefits
Where ERISA preemption ends and state authority begins, what states may regulate for a self-funded plan, and the federal benefit mandates that apply regardless.
225 practice questions · page 4 of 5, questions 151–200 · answers and explanations included · updated September 2026
50 questions on this page 4 of 5, each with the answer and the reasoning behind it. Read straight through, or quiz yourself on them and the ones you miss stay in rotation until you get them right.
- 151
Under the MHPAEA, which of the following statements is correct regarding what the act does and does not require?
- •Annual limitations for mental care are permitted so long as they do not exceed twice the annual limitation for medical/surgical benefits
- •Both lifetime limitations and higher deductibles for mental care are prohibited, and plans must offer identical cost-sharing for mental and medical/surgical benefits
- •Lifetime and annual limitations used exclusively for mental care are not allowed, but higher deductibles and lower copays for mental care compared to non-mental care are permitted
- •Plans must cover mental health benefits at the same level as medical/surgical benefits and may not exclude mental health coverage entirely
Show answer
Lifetime and annual limitations used exclusively for mental care are not allowed, but higher deductibles and lower copays for mental care compared to non-mental care are permitted
The course specifies that under MHPAEA: (1) lifetime and annual limitations used exclusively for mental care are not allowed; (2) higher deductibles and/or lower copays are permitted for mental care compared with non-mental care; and (3) special inside limits applicable to outpatient psychiatric visits and inpatient care are permitted. Mental care may be excluded entirely.
- 152
Under the Medicare Secondary Payer rules, for purposes of size-of-plan tests, how is an employer treated if it participates in a multiemployer plan or MEWA?
- •The employer is exempt from the size-of-plan test entirely if it participates in a multiemployer plan or MEWA
- •The employer is treated as freestanding for the size-of-plan test, unless it is part of a controlled group of employers
- •The employer is treated as freestanding only if it contributes more than 50% of total plan contributions
- •The employer's employees are combined with all other employers in the multiemployer plan or MEWA for the size-of-plan test
Show answer
The employer is treated as freestanding for the size-of-plan test, unless it is part of a controlled group of employers
The course states that for size-of-plan tests, an employer shall be treated as freestanding if it is a joint venture in a larger plan such as a multiemployer plan or MEWA. Such employer shall not be treated as freestanding if it is part of a controlled group of employers.
- 153
Under HIPAA's preexisting condition rules (prior to the ACA), what was the maximum exclusion period for a late enrollee in a self-funded health plan?
- •12 months
- •18 months
- •24 months
- •6 months
Show answer
18 months
The course states that the maximum preexisting condition exclusion for self-funded health plans was 12 months, except in the case of a late enrollment, where the maximum was 18 months. This applied to private sector plans as well as government and church plans.
- 154
Under HIPAA's portability provisions (prior to the ACA), which of the following statements correctly describes how creditable coverage interacted with breaks in coverage?
- •If a break in coverage of more than 63 days occurred, only half of the creditable coverage could be applied toward the preexisting condition exclusion
- •If a break in coverage of more than 63 days occurred, portability of health coverage was lost, but waiting periods were not considered a break in coverage
- •If a break in coverage of more than 90 days occurred, portability was lost, and waiting periods counted toward the break
- •Portability was preserved regardless of breaks in coverage, provided the individual could document prior creditable coverage within 12 months
Show answer
If a break in coverage of more than 63 days occurred, portability of health coverage was lost, but waiting periods were not considered a break in coverage
The course specifies that to avoid a preexisting condition exclusion, an individual must not have experienced a break in coverage for more than 63 days, and waiting periods were explicitly not considered a break in coverage. If a break of more than 63 days occurred, portability of health coverage was entirely lost.
- 155
Under HIPAA, genetic information could not be treated as a preexisting condition. Which of the following correctly states the exception to this rule?
- •Genetic information could be used as a preexisting condition only if the individual had undergone genetic counseling and was informed of the risk
- •Genetic information could never be used in any way to impose a preexisting condition exclusion, even after a formal diagnosis was made
- •Genetic information could serve as a basis for preexisting condition exclusion only for conditions with a penetrance rate above 50%
- •Genetic information was not treated as a condition in the absence of a diagnosis of a specific condition, meaning it could be treated as preexisting only if a specific condition had actually been diagnosed
Show answer
Genetic information was not treated as a condition in the absence of a diagnosis of a specific condition, meaning it could be treated as preexisting only if a specific condition had actually been diagnosed
The course states that genetic information was not treated as a condition in the absence of a diagnosis of a specific condition. This means genetic predisposition alone could not trigger a preexisting condition exclusion, but once a specific condition was actually diagnosed, the general preexisting condition rules could apply.
- 156
Under HIPAA, preexisting condition exclusions did not apply to newborns or adopted children enrolled in a plan within a specified number of days. What was that timeframe, and what limitation applied to adopted children?
- •30 days, and the exception for adopted children applied equally to all coverage from the date of birth
- •30 days, and the exception for adopted children did not apply to coverage provided before the date of adoption or placement for adoption
- •60 days, and the exception for adopted children applied retroactively to the date the adoption petition was filed
- •90 days, and the exception for adopted children did not apply if the child had a preexisting condition diagnosed before age one
Show answer
30 days, and the exception for adopted children did not apply to coverage provided before the date of adoption or placement for adoption
The course states that preexisting condition exclusions did not apply to newborns or adopted children enrolled in a plan within 30 days. However, the exception for adopted children did not apply to coverage provided before the date of adoption or placement for adoption.
- 157
Under HIPAA's health status provisions, wellness regulations issued by the IRS, DOL, and HHS generally allow discounts or penalties of up to what percentage of the total cost of coverage?
- •20% of the total cost of coverage, increasing to 30% if nicotine use is targeted
- •25% of the employee-only share of coverage, increasing to 40% if nicotine use is targeted
- •30% of the total cost of coverage, increasing to 50% if nicotine use is targeted
- •50% of the total cost of coverage, with no additional increase for nicotine use
Show answer
30% of the total cost of coverage, increasing to 50% if nicotine use is targeted
The course states that wellness regulations generally allow discounts (or penalties) of up to 30% of the total cost of coverage (employer plus employee share). If nicotine use is targeted, the discount (or penalty) can increase to 50% of the cost of coverage.
- 158
Under HIPAA wellness regulations, when a wellness reward is conditioned on improving health (such as decreasing cholesterol levels), what additional requirement applies beyond those for participation-based rewards?
- •A notice and an opportunity for an individual to obtain the reward through a reasonable alternative standard must be provided
- •The plan must cap the reward at 20% of the total cost of coverage regardless of whether nicotine use is involved
- •The plan must obtain a physician's certification that the health improvement goal is medically achievable for each participant
- •The reward must be structured as a premium reduction rather than a surcharge to avoid EEOC violations
Show answer
A notice and an opportunity for an individual to obtain the reward through a reasonable alternative standard must be provided
The course distinguishes between participation-based wellness rewards (e.g., attending a health fair), which are relatively easy to comply with, and health-contingent rewards (e.g., decreasing cholesterol or body-mass index). For health-contingent rewards, additional requirements apply, including a notice and an opportunity for an individual to obtain the reward through a 'reasonable alternative standard.'
- 159
The EEOC released regulations relating to wellness plans to ensure compliance with the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. What was the status of these regulations as described in the course?
- •A federal appellate court struck down the regulations entirely, leaving no EEOC wellness plan regulations in force
- •A federal judge agreed with AARP's challenge that the regulations were too lenient toward employers and ordered EEOC to issue new regulations, but new regulations had not been released as of June 2024
- •The EEOC voluntarily withdrew the regulations after AARP's challenge and no replacement regulations were issued
- •The regulations were upheld by a federal court and remain fully in effect without any pending challenges
Show answer
A federal judge agreed with AARP's challenge that the regulations were too lenient toward employers and ordered EEOC to issue new regulations, but new regulations had not been released as of June 2024
The course states that the EEOC regulations were challenged by AARP for being too lenient in favor of employers and for not following the proper process. A federal judge agreed and ordered EEOC to issue new regulations. Until those new regulations are issued, the prior regulations remain in place. New regulations had not been released as of June 2024.
- 160
Under HIPAA's health status provisions, which of the following is NOT listed as a health status-related factor that group health plans may not use to establish eligibility rules?
- •Age or geographic location
- •Claims experience and receipt of healthcare
- •Evidence of insurability, including conditions arising out of acts of domestic violence
- •Genetic information and medical history
Show answer
Age or geographic location
The course lists the following health status-related factors that cannot be used: medical condition (physical and mental), claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability (including conditions arising out of domestic violence), or disability. Age and geographic location are not among the prohibited health status factors.
- 161
Under HIPAA's special enrollment provisions, if a person becomes a dependent through marriage, what is the required effective date of coverage when the individual seeks to enroll during the special enrollment period?
- •No later than the first day of the first month beginning after the date the request was completed
- •The date of the marriage ceremony itself
- •The first day of the month in which the marriage occurred
- •Within 30 days of the marriage, with retroactive coverage to the wedding date
Show answer
No later than the first day of the first month beginning after the date the request was completed
The course states that in the case of marriage, coverage must become effective no later than the first day of the first month beginning after the date the request was completed. This differs from birth (effective on date of birth) and adoption (effective on date of adoption or placement for adoption).
- 162
Under HIPAA's special enrollment provisions, an individual who did not enroll in the plan at the first opportunity may enroll without evidence of insurability under which conditions?
- •The individual can demonstrate any change in financial circumstances that makes coverage necessary, regardless of prior coverage status
- •The individual lost coverage involuntarily and applies within 90 days, with the plan permitted to impose a new waiting period
- •The individual was covered under another plan when first offered coverage, or other coverage was the written reason for not being accepted, and such coverage was subsequently lost due to loss of eligibility
- •The individual was offered coverage and declined it in writing, and subsequently experienced any qualifying life event recognized by the IRS
Show answer
The individual was covered under another plan when first offered coverage, or other coverage was the written reason for not being accepted, and such coverage was subsequently lost due to loss of eligibility
The course states that special enrollment applies if the person was otherwise covered when coverage was initially offered (or such other coverage was the written reason for not being accepted), and the person lost that other coverage due to loss of eligibility. The plan must permit enrollment without evidence of insurability, though eligibility waiting periods and preexisting condition provisions are not affected.
- 163
Under HIPAA, a plan electing the alternate method to credit periods of prior coverage is required to take what specific disclosure action?
- •File a notice with the DOL within 60 days of electing the alternate method and include the method in the annual Form 5500 filing
- •Include a description of the alternate method only in the certificate of creditable coverage issued to departing participants
- •Notify each participant individually by certified mail within 30 days of the election and obtain written acknowledgment
- •State prominently in any plan disclosure statements, including plan documents and summary plan descriptions, that such a method is being used and include a description of the method
Show answer
State prominently in any plan disclosure statements, including plan documents and summary plan descriptions, that such a method is being used and include a description of the method
The course specifies that a group health plan electing the alternate method to credit periods of prior coverage is required to state prominently in any plan disclosure statements (plan documents and summary plan descriptions) that such a method is being used and include a description of such method.
- 164
Under HIPAA, which of the following is a permissible reason for a MEWA to deny an employer continued access to coverage?
- •The employer failed to provide annual census data within the required 90-day reporting window
- •The employer has fewer than five eligible employees enrolled in the plan
- •The employer's claims experience has exceeded 150% of expected levels for two consecutive years
- •There is no longer any individual enrolled through the employer who lives, resides, or works in the service area of the network plan
Show answer
There is no longer any individual enrolled through the employer who lives, resides, or works in the service area of the network plan
The course lists six permissible reasons for a MEWA to deny continued access: (1) nonpayment of contributions, (2) fraud or intentional misrepresentations, (3) ceasing to offer coverage in a geographic area, (4) noncompliance with plan provisions, (5) no longer any enrollee through the employer in the network service area, and (6) failure to meet terms of a collective bargaining agreement.
- 165
Under HIPAA, self-funded health plans must provide a summary description of any reduction in covered services or benefits to participants within what timeframe?
- •No later than 120 days after the date of the adoption of the modification or change
- •No later than 30 days before the effective date of the modification or change
- •No later than 60 days after the date of the adoption of the modification or change
- •No later than 90 days after the end of the plan year in which the modification occurred
Show answer
No later than 60 days after the date of the adoption of the modification or change
The course states that self-funded health plans are required to provide a summary description of any reduction in covered services or benefits to participants no later than 60 days after the date of the adoption of the modification or change. The act also provides an alternative description of changes at regular intervals of not more than 90 days.
- 166
HIPAA amended the COBRA disability rules in two ways. Which of the following correctly describes both changes?
- •The 29-month maximum was applied only to those with Social Security disability determinations within 180 days, and newborns during COBRA were excluded from dependent coverage
- •The 29-month maximum was extended to those who become disabled within the first 60 days of COBRA coverage, and the premium surcharge for the disability extension was reduced from 150% to 102%
- •The 29-month maximum was extended to those who become disabled within the first 90 days of COBRA coverage, and the rules were clarified to ensure disabled qualified beneficiaries receive the full 29-month period available to those disabled at the time of the qualifying event
- •The 36-month maximum was extended to disabled individuals, and COBRA coverage could no longer be terminated when the beneficiary became covered under another plan
Show answer
The 29-month maximum was extended to those who become disabled within the first 90 days of COBRA coverage, and the rules were clarified to ensure disabled qualified beneficiaries receive the full 29-month period available to those disabled at the time of the qualifying event
The course states that HIPAA amended the COBRA rules to provide the maximum 29 months' coverage in cases of disability to those who become disabled within the first 90 days of COBRA coverage, and clarified that disabled qualified beneficiaries receive the full 29-month period available to those who suffer a disability at the time of the qualifying event.
- 167
Under HIPAA, the portability and access requirements were incorporated into the IRC with an enforcement provision. What is the penalty structure described in the course?
- •A penalty of $100,000 or 10% of the employer's payments during the tax year, whichever is less, with no tax if the violation was not intentional and is remedied within 30 days
- •A penalty of $100,000 or 10% of the employer's payments, whichever is greater, with a mandatory 90-day remediation period
- •A penalty of $250,000 or 15% of the employer's payments during the tax year, whichever is less, with no tax if remedied within 60 days
- •A penalty of $50,000 per violation with no percentage-based cap, and the Secretary of HHS has no authority to waive the penalty
Show answer
A penalty of $100,000 or 10% of the employer's payments during the tax year, whichever is less, with no tax if the violation was not intentional and is remedied within 30 days
The course states that the enforcement provision mandates a penalty of $100,000 or 10% of the employer's payments during the tax year, whichever is less. No tax will be imposed if the violation was not intentional and is remedied within 30 days. The Secretary of HHS can waive all or part of the tax if it proves to be excessive.
- 168
Which of the following is NOT listed in the course as one of HIPAA's standard transactions for administrative simplification?
- •Coordination of benefits
- •Enrollment and disenrollment
- •Payment and remittance advice
- •Provider credentialing and network admission
Show answer
Provider credentialing and network admission
The course lists the following standard transactions: payment and remittance advice, claims status, eligibility, coordination of benefits, claims and encounter information, enrollment and disenrollment, referrals and authorizations, and premium payments. Provider credentialing and network admission are not among those listed.
- 169
Under the ERISA claims procedure regulations as modified by HIPAA, what is the maximum time a plan has to respond to an urgent care claim?
- •24 hours with no extension
- •48 hours with a possible 24-hour extension
- •72 hours with a possible 15-day extension for reasons beyond the plan's control
- •72 hours with no extension
Show answer
72 hours with no extension
The course states that for urgent claims, the claim response must be as soon as possible but not beyond 72 hours with no extension. This is the most time-sensitive category among the four claim types (urgent, pre-service, post-service, and disability).
- 170
Under the ERISA claims procedure regulations, the time frames for initial claim response differ by claim type. Which of the following correctly pairs the claim type with its initial response time and extension allowance?
- •Disability claim: 30 days initial response with a possible 45-day extension for reasons beyond the plan's control
- •Disability claim: 45 days initial response with a possible 30-day extension for reasons beyond the plan's control
- •Post-service claim: 45 days initial response with a possible 30-day extension for reasons beyond the plan's control
- •Pre-service claim: 30 days initial response with a possible 30-day extension for reasons beyond the plan's control
Show answer
Disability claim: 45 days initial response with a possible 30-day extension for reasons beyond the plan's control
The course specifies four claim types: urgent (72 hours, no extension), pre-service (15 days, possible 15-day extension), post-service (30 days, possible 15-day extension), and disability (45 days, possible 30-day extension). The disability claim has the longest initial response time and the largest extension allowance among the non-urgent categories.
- 171
Under the ERISA appeals procedure, what is the maximum time allowed to respond to an appeal of a post-service health claim when the plan has two appeal levels?
- •30 days with a 15-day extension if two appeal levels exist
- •45 days with a 45-day extension if two appeal levels exist
- •60 days with a 30-day extension if two appeal levels exist
- •90 days with no extension regardless of the number of appeal levels
Show answer
60 days with a 30-day extension if two appeal levels exist
The course specifies the following appeal time frames: urgent (72 hours), pre-service (30 days, no extension, with 15-day extension if two appeal levels), post-service health (60 days, no extension, with 30-day extension if two appeal levels), and disability (45 days with an additional 45-day extension if needed).
- 172
Under the ERISA appeals procedure, the review process may not exceed two levels. Which of the following correctly describes the allowance for mandatory arbitration?
- •Mandatory arbitration is prohibited at any level of the appeals process under the ERISA claims regulations
- •Mandatory arbitration may be required for a second level as long as this does not prevent further legal action
- •Mandatory arbitration may be required only if both the claimant and the plan administrator consent in writing
- •Mandatory arbitration may replace both levels of appeal if the plan document expressly provides for it
Show answer
Mandatory arbitration may be required for a second level as long as this does not prevent further legal action
The course states that the review process may not exceed two levels. Mandatory arbitration may be required for a second level as long as this does not prevent further legal action. This preserves the claimant's right to pursue judicial remedies while allowing the plan to use arbitration as a second-level review mechanism.
- 173
Under the ERISA claims procedure regulations, appeals must follow several requirements. Which of the following correctly describes the standard for review on appeal?
- •Abuse of discretion standard, where the reviewer may overturn the initial determination only if it was clearly unreasonable
- •De novo review of the entire file with a new determination; the new material alone must not be considered
- •Review limited to the initial determination record, with new evidence permitted only if the claimant demonstrates good cause for not presenting it earlier
- •Review of only the new evidence submitted with the appeal, with deference given to the original claims decision
Show answer
De novo review of the entire file with a new determination; the new material alone must not be considered
The course states that ERISA requires a de novo review on appeal. The review must be of the entire file with a new determination; the new material alone must not be considered. This ensures a comprehensive, fresh evaluation of the claim rather than a narrow review of supplemental information.
- 174
Under the ERISA claims disclosure requirements, which of the following is true about pre-certification?
- •Pre-certification decisions may only be appealed if the plan expressly incorporates them into the claims procedure document
- •Pre-certification is a utilization management tool that falls outside the scope of the ERISA claims process
- •Pre-certification is part of the claims process and, as such, may be appealed
- •Pre-certification is part of the claims process but may not be appealed because it is a prospective decision
Show answer
Pre-certification is part of the claims process and, as such, may be appealed
The course explicitly states that ERISA requires pre-certification to be considered part of the claims process. Because it is part of the claims process, pre-certification decisions may be appealed, and the internal rules, protocol, and guidelines used are also part of the claims process and may be appealed.
- 175
Under HIPAA's anti-kickback provisions, which of the following correctly describes who may be found guilty of a kickback violation?
- •Both parties may be found guilty, but penalties are limited to civil fines with no criminal liability
- •Both the giver and the taker may be found guilty, and the penalties are both civil and criminal
- •Only the person offering the inducement may be found guilty, and penalties are exclusively criminal
- •Only the person receiving the kickback may be found guilty, and penalties are limited to civil sanctions
Show answer
Both the giver and the taker may be found guilty, and the penalties are both civil and criminal
The course states that any person involved in an inducement for the referral of items or services is guilty of a kickback. The penalties are both civil and criminal, and both the giver and the taker may be found guilty. Inducements include waivers, free service, discounts, and money.
- 176
Under HIPAA's fraud and abuse rules, waivers of coinsurance and deductible amounts may be considered permissible inducements to beneficiaries only if certain conditions are met. Which of the following correctly states all three conditions?
- •The waiver is disclosed to the plan administrator, the waiver does not exceed 50% of the coinsurance amount, and the beneficiary provides a written request
- •The waiver is limited to preventive care services, the person making the waiver obtains approval from the plan, and the waiver is reported on the provider's annual tax filing
- •The waiver is not offered as part of any advertisement or solicitation, the person does not waive routinely, and the person either determines in good faith that the individual is in financial need or fails to collect after making reasonable efforts
- •The waiver is not offered to Medicare beneficiaries, the waiver is documented in writing, and the provider notifies the plan within 30 days
Show answer
The waiver is not offered as part of any advertisement or solicitation, the person does not waive routinely, and the person either determines in good faith that the individual is in financial need or fails to collect after making reasonable efforts
The course states that waivers of coinsurance and deductible amounts are permissible if: (a) the waiver is not offered as part of any advertisement and solicitation, (b) the person making the waiver does not do so routinely, and (c) the person either waives after determining in good faith that the individual is in financial need or fails to collect coinsurance after making reasonable efforts.
- 177
Under HIPAA's fraud and abuse provisions, differentials in coinsurance and deductible amounts as part of a benefit plan design are permissible inducements to beneficiaries if which conditions are met?
- •The differentials apply uniformly to all participants regardless of provider choice and are reported annually to the DOL
- •The differentials are approved in advance by the plan's independent fiduciary and do not exceed the cost savings achieved through the network arrangement
- •The differentials are limited to a maximum of 20% of the standard coinsurance rate and are documented in the plan's summary plan description
- •The differentials have been disclosed in writing to all beneficiaries, third-party payers, and providers to whom claims are presented, and the differentials meet the standards in the safe harbor regulations
Show answer
The differentials have been disclosed in writing to all beneficiaries, third-party payers, and providers to whom claims are presented, and the differentials meet the standards in the safe harbor regulations
The course states that differentials in coinsurance and deductible amounts as part of a benefit plan design are permissible so long as the differentials have been disclosed in writing to all beneficiaries, third-party payers, and providers to whom claims are presented, and so long as the differentials meet the standards provided in the safe harbor regulations.
- 178
Which of the following is listed in the course as a healthcare offense under HIPAA's fraud and abuse rules?
- •Failure to file Form 5500 within the required deadline
- •Imposing a preexisting condition exclusion in violation of HIPAA portability rules
- •Obstruction of a criminal investigation
- •Offering coverage below the minimum essential benefits standard
Show answer
Obstruction of a criminal investigation
The course lists four healthcare offenses: (1) healthcare fraud committed either knowingly or unknowingly, (2) theft or embezzlement, (3) false statements relative to healthcare matters, and (4) obstruction of a criminal investigation. The other options relate to ERISA filing or ACA compliance, not HIPAA healthcare offenses.
- 179
The course identifies a specific applicability of HIPAA antifraud provisions to insurers. What practice does it call out?
- •Insurers that have delayed claims processing beyond statutory timeframes to earn additional investment income on reserves
- •Insurers that have in the past pocketed provider discounts in lieu of reprocessing the discounted claims at the reduced amounts
- •Insurers that have retroactively denied claims after the appeal period expired to reduce their medical loss ratios
- •Insurers that have used proprietary fee schedules to systematically underpay provider claims without disclosure
Show answer
Insurers that have in the past pocketed provider discounts in lieu of reprocessing the discounted claims at the reduced amounts
The course specifically notes that HIPAA antifraud provisions have specific applicability to those insurers that have in the past pocketed provider discounts in lieu of reprocessing the discounted claims at the reduced amounts. This practice is singled out as a particular target of the antifraud rules.
- 180
HIPAA created the Health Care Integrity and Protection Data Bank. Which of the following is NOT listed in the course as an item to be collected by this data bank?
- •Actions by federal or state agencies responsible for the licensing and certification of healthcare providers
- •Civil judgments against a healthcare provider, supplier, or practitioner related to the delivery of a healthcare item or service
- •Employer complaints against TPAs for delayed claims processing or administrative errors
- •Exclusion of a healthcare provider, supplier, or practitioner from participation in federal or state healthcare programs
Show answer
Employer complaints against TPAs for delayed claims processing or administrative errors
The course lists items collected by the data bank: civil judgments, federal or state criminal convictions, actions by licensing/certification agencies, exclusions from healthcare programs, and other adjudicated actions established by DOL regulations. Employer complaints about TPA administration are not listed.
- 181
Under HIPAA's fraud and abuse provisions, provider practices that are inconsistent with sound fiscal, business, or medical practices must be reported to the data bank. Which of the following is listed as a reportable result of such practices?
- •Excessive administrative overhead exceeding 25% of total provider revenue
- •Failure to maintain electronic health records in a CMS-approved format
- •Medically unnecessary care or services
- •Refusal to participate in a health plan's preferred provider network
Show answer
Medically unnecessary care or services
The course lists five reportable results of practices inconsistent with sound fiscal, business, or medical practices: unnecessary costs, improper payment of benefits, medically unnecessary care/services, failure to meet recognized standards of care, and adverse patient outcomes, delays in diagnoses or treatment, or violation of contractual agreement.
- 182
Under HIPAA, self-funded group health plans failing to meet the portability and access requirements are subject to what daily penalty per individual?
- •$100 per day for each individual to whom the failure relates
- •$100 per day for the plan as a whole, regardless of the number of affected individuals
- •$250 per day for each individual to whom the failure relates
- •$50 per day for each individual to whom the failure relates
Show answer
$100 per day for each individual to whom the failure relates
The course states that self-funded group health plans failing to meet the portability and access requirements will be subject to a tax of $100 for each day in the noncompliance period with respect to each individual to whom such failure relates.
- 183
Under HIPAA's penalty provisions, what are the minimum and escalated penalty amounts for uncorrected failures, and what exception applies to church plans?
- •The minimum is $2,500 per violation; for more than de minimis violations, this increases to $25,000, and church plans are fully exempt from all penalties
- •The minimum is $5,000 per individual; for willful violations, this increases to $15,000, and church plans receive a 50% reduction
- •The minimum is the lesser of $2,500 or the tax due; for more than de minimis violations, this increases to $10,000, and the increase does not apply to small employers
- •The minimum is the lesser of $2,500 or the tax due; for more than de minimis violations, this increases to $15,000, but the $15,000 increase does not apply to church plans
Show answer
The minimum is the lesser of $2,500 or the tax due; for more than de minimis violations, this increases to $15,000, but the $15,000 increase does not apply to church plans
The course states that for uncorrected failures, the tax shall not be less than the lesser of $2,500 or the amount of tax due. If violations are more than de minimis, the $2,500 amount increases to $15,000. However, this increase in penalty does not apply to church plans.
- 184
Under the MSA provisions of HIPAA, what is the maximum annual contribution allowed for an individual MSA account?
- •100% of the deductible for an individual
- •50% of the deductible for an individual
- •65% of the deductible for an individual
- •75% of the deductible for an individual
Show answer
65% of the deductible for an individual
The course states that the maximum annual contribution made to an MSA in one year cannot exceed 65% of the deductible for an individual and 75% of the deductible for a family. Note the distinction: the 75% figure applies to family accounts, not individual accounts.
- 185
Under HIPAA's MSA provisions, distributions from an MSA for medical expenses are generally excluded from income. However, what limitation applies regarding the eligibility of the person whose expenses were paid?
- •The expenses are excludable for any family member, but only up to the amount of the individual deductible, with amounts above that subject to a 10% additional tax
- •The expenses are excludable only if the person whose expenses were paid has maintained continuous MSA contributions for at least 12 months
- •The expenses are excludable only if the person whose expenses were paid was eligible to make MSA contributions when the expenses were incurred, meaning a spouse with other coverage could not use family MSA funds without paying an additional 15% tax
- •The expenses are excludable regardless of the person's MSA eligibility, provided the expenses are for services covered by the high-deductible health plan
Show answer
The expenses are excludable only if the person whose expenses were paid was eligible to make MSA contributions when the expenses were incurred, meaning a spouse with other coverage could not use family MSA funds without paying an additional 15% tax
The course states that MSA distributions for medical expenses are excludable only if the person whose expenses were paid was eligible to make MSA contributions when the expenses were incurred. A spouse having other coverage could not use MSA contributions to a family account and could not use MSA funds to pay for medical expenses without paying an additional 15% tax, including the amount withdrawn in income.
- 186
Under HIPAA's MSA provisions, what happens to the MSA upon the death of the account holder when the surviving spouse is the named beneficiary versus when someone other than the surviving spouse is the beneficiary?
- •If the surviving spouse is the beneficiary, the account continues in the spouse's name and is deducted from the taxable estate via marital deduction; if anyone else is the beneficiary, the MSA ceases as of the date of death and the assets must be declared as income minus amounts used for the decedent's medical bills within one year
- •If the surviving spouse is the beneficiary, the account is liquidated and distributed as a lump sum exempt from income tax; if anyone else is the beneficiary, the account is forfeited to the plan
- •If the surviving spouse is the beneficiary, the account may continue but contributions are capped at 50% of the prior year; if anyone else is the beneficiary, the assets are included in income with no offset for medical bills
- •Regardless of the beneficiary, the MSA balance is included in the decedent's gross estate and subject to full income taxation upon distribution
Show answer
If the surviving spouse is the beneficiary, the account continues in the spouse's name and is deducted from the taxable estate via marital deduction; if anyone else is the beneficiary, the MSA ceases as of the date of death and the assets must be declared as income minus amounts used for the decedent's medical bills within one year
The course states that upon death, the MSA balance is included in the decedent's gross estate. If the surviving spouse is the named beneficiary, the spouse continues the account in his/her own name and the amount is deducted from the taxable estate via marital deductions. If the MSA passes to anyone other than the surviving spouse, it ceases to be an MSA as of the date of death and the beneficiary must declare the assets as income, minus the amount used to pay the decedent's medical bills within one year of death.
- 187
Under the Women's Health and Cancer Rights Act of 1998, which of the following is NOT required to be covered when mastectomy is a covered procedure?
- •Genetic testing for hereditary breast cancer risk factors prior to mastectomy
- •Prostheses and treatment of physical complications for all stages of mastectomy, including lymphedemas
- •Reconstruction of the breast on which the mastectomy was performed
- •Surgery on the other breast to produce symmetry
Show answer
Genetic testing for hereditary breast cancer risk factors prior to mastectomy
The course states that the act requires coverage of: (1) reconstruction of the breast on which the mastectomy was performed, (2) surgery on the other breast to produce symmetry, and (3) prostheses and treatment of physical complications for all stages of mastectomy, including lymphedemas. Genetic testing is not among the required coverages.
- 188
The Women's Health and Cancer Rights Act of 1998 exempts certain plans. Which of the following correctly identifies all three exempt plan types, and what does the act prohibit plans from doing to subvert its purpose?
- •Church plans, governmental (state and local) plans, and self-funded retiree-only plans are exempt; plans may not subvert the law's purpose by denying eligibility, reducing benefits, lowering limits, or offering inducements
- •Church plans, governmental plans, and HRA-only plans are exempt; plans may not subvert the law's purpose by applying separate deductibles to mastectomy-related services
- •Church plans, small employer plans (under 50 employees), and self-funded retiree-only plans are exempt; plans may not subvert the law's purpose by imposing preexisting condition exclusions on mastectomy-related claims
- •Governmental plans, MEWA plans, and grandfathered plans are exempt; plans may not subvert the law's purpose by requiring prior authorization for reconstruction surgery
Show answer
Church plans, governmental (state and local) plans, and self-funded retiree-only plans are exempt; plans may not subvert the law's purpose by denying eligibility, reducing benefits, lowering limits, or offering inducements
The course states that church plans, governmental (state and local) plans, and self-funded retiree-only plans are exempt. It further states that the purpose of the law must not be subverted by denying eligibility, reducing benefits, lowering limits, or offering inducements to covered persons.
- 189
Under the Trade Act of 2002, COBRA beneficiaries may claim a tax credit for what percentage of COBRA costs?
- •Up to 50% of the COBRA cost as a deduction from adjusted gross income
- •Up to 65% of the COBRA cost as a direct credit to income tax
- •Up to 65% of the COBRA cost, but only as a deduction, not a credit
- •Up to 75% of the COBRA cost as a direct credit to income tax
Show answer
Up to 65% of the COBRA cost as a direct credit to income tax
The course states that COBRA beneficiaries may claim up to 65% of the COBRA cost as a direct credit to their income tax. State continuation coverage, state high-risk pools, and individual coverage (in some circumstances) also qualify for the tax credit.
- 190
The Trade Act of 2002 amended COBRA to provide a second election period. Which of the following correctly describes the eligibility criteria and purpose of this second election period?
- •All involuntarily terminated workers receive a second 30-day election period intended to give them time to compare COBRA with exchange coverage options
- •Workers ages 55-64 who declined COBRA initially receive a second election period equal to the original 60-day period, but only if they enroll in a state high-risk pool first
- •Workers receiving Trade Adjustment Assistance receive a second 90-day election period that runs concurrently with the standard COBRA election period
- •Workers who lost jobs due to trade competition, or those ages 55-64 receiving PBGC benefits, receive a second 60-day election period intended for those who became eligible after their initial COBRA election period had expired
Show answer
Workers who lost jobs due to trade competition, or those ages 55-64 receiving PBGC benefits, receive a second 60-day election period intended for those who became eligible after their initial COBRA election period had expired
The course states that the Trade Act amended COBRA to provide workers who lost jobs due to trade competition, or those ages 55-64 receiving PBGC monthly benefits, with a second opportunity to elect COBRA coverage. The intent of this second 60-day election period is to extend benefits to workers who became eligible after their initial COBRA election period had expired.
- 191
What is the basic goal of the stimulus package laws such as the American Recovery and Reinvestment Act of 2009 (ARRA) and the similar COVID-era law, as described in the course?
- •To eliminate COBRA premiums entirely for involuntarily terminated workers for the first 12 months of coverage
- •To permanently expand COBRA eligibility to include part-time workers and independent contractors
- •To provide a subsidy to help pay for the cost of COBRA through a temporary reduction of COBRA premiums
- •To require employers to extend COBRA coverage from 18 months to 36 months for all qualifying events
Show answer
To provide a subsidy to help pay for the cost of COBRA through a temporary reduction of COBRA premiums
The course states that ARRA provides for a temporary reduction of COBRA premiums for eligible individuals, and a similar law existed during the COVID pandemic era. The basic goal of these laws is to provide a subsidy to help pay for the cost of COBRA.
- 192
Under the Child Support Performance and Incentive Act, within how many business days of receiving a national medical support notice must an employer transfer Part B of the notice to the plan administrator?
- •10 business days
- •15 business days
- •20 business days
- •30 business days
Show answer
20 business days
The course states that the instruction to the employer informs the employer to transfer Part B of the notice to the administrator of each group health plan within 20 business days of the date of the notice.
- 193
Under the Child Support Performance and Incentive Act, the national medical support notice has two parts. Which of the following correctly describes the relationship between Parts A and B and how receipt of Part B satisfies QMCSO requirements?
- •Part A is the court order itself sent directly to the plan administrator; Part B is the employer's certification that withholding has been implemented, and QMCSO conditions are met only when both parts are filed with the DOL
- •Part A notifies the employer of the withholding obligation for healthcare coverage; the employer forwards Part B to the plan administrator, who treats it as an application for health coverage, and an administrator who receives and appropriately completes the notice satisfies QMCSO conditions
- •Part A notifies the plan administrator of the employee's enrollment status; Part B directs the employer to begin payroll deductions, and QMCSO conditions are satisfied only after the first premium deduction is processed
- •Part A requires the employer to determine coverage eligibility; Part B is an actuarial certification of coverage adequacy sent to the state agency, and QMCSO conditions are met upon the state's approval of Part B
Show answer
Part A notifies the employer of the withholding obligation for healthcare coverage; the employer forwards Part B to the plan administrator, who treats it as an application for health coverage, and an administrator who receives and appropriately completes the notice satisfies QMCSO conditions
The course states that Part A is directed to the employer regarding withholding for healthcare coverage. The employer must transfer Part B to the plan administrator within 20 business days. Upon receipt of Part B, the administrator treats the notice as an application for health coverage. An administrator who receives and appropriately completes the notice satisfies the conditions of QMCSO.
- 194
According to the course, Medicare Part D coverage is delivered in which of the following ways?
- •CMS directly administers and pays prescription drug claims through its own claims processing systems nationwide
- •HHS designates regions across the country and accepts bids from private insurers to provide Medicare prescription drug coverage within each region
- •State Medicaid agencies contract with local pharmacies to deliver the prescription drug benefit on behalf of Medicare
- •The federal government operates a single national pharmacy benefit manager that processes all Part D claims centrally
Show answer
HHS designates regions across the country and accepts bids from private insurers to provide Medicare prescription drug coverage within each region
The course states that Medicare Part D coverage will not be provided directly by an agency of the federal government. Instead, HHS designates different regions across the country and accepts bids from private insurers to provide Medicare prescription drug coverage within each region.
- 195
Under Medicare Part D, what is the readmission penalty for a covered person who opts out and later wishes to reenter, and under what condition can this penalty be avoided?
- •A 1% per month readmission penalty, which can be avoided if the covered person's employer plan provides prescription drug coverage that is creditable (actuarially equivalent to Medicare Part D)
- •A 1% per month readmission penalty, which can be avoided only if the covered person was enrolled in a Medicare Advantage plan during the gap period
- •A 2% per month readmission penalty, which can be avoided if the covered person maintained continuous coverage under any insurance during the gap period
- •A flat 10% surcharge on the Part D premium for life, which cannot be avoided under any circumstances
Show answer
A 1% per month readmission penalty, which can be avoided if the covered person's employer plan provides prescription drug coverage that is creditable (actuarially equivalent to Medicare Part D)
The course states that a covered person may opt out of Medicare Part D with the assurance that at a later date, such person may reenter without the onerous 1% per month readmission penalty, provided the plan's prescription drug benefit is creditable (actuarially equivalent to Medicare Part D). Each plan must tag any covered person with a Medicare card and send a notice of creditable service.
- 196
Under Medicare Part D's safe harbor rule for creditable coverage, which of the following correctly lists all requirements for a plan with integrated health plan coverage?
- •Deductibles no greater than $250 per year (indexed), a maximum annual benefit of at least $10,000 (indexed), and a lifetime combined maximum of no less than $500,000
- •Deductibles no greater than $250 per year (indexed), a maximum annual benefit of at least $25,000 (indexed) or no maximum, and a lifetime combined maximum benefit of no less than $1,000,000
- •Deductibles no greater than $500 per year (indexed), a maximum annual benefit of at least $50,000 (indexed), and no lifetime maximum benefit
- •No deductible requirement, a maximum annual benefit of at least $25,000 (indexed), and a lifetime combined maximum of no less than $2,000,000
Show answer
Deductibles no greater than $250 per year (indexed), a maximum annual benefit of at least $25,000 (indexed) or no maximum, and a lifetime combined maximum benefit of no less than $1,000,000
The course states that plans with integrated health plan coverage must have deductibles no greater than $250 (an indexed amount) per year, a maximum annual benefit of at least $25,000 indexed amount (or no maximum annual benefit), and a lifetime combined maximum benefit of no less than $1,000,000. The course notes that the $250 deductible requirement is probably unusual since most health plans have deductibles in excess of $250.
- 197
To qualify for the retiree drug subsidy under Medicare Part D, an employer plan must demonstrate actuarial equivalence by meeting which two tests?
- •A cost-sharing test (plan deductibles and copays no higher than standard Part D) and a formulary test (plan covers at least 80% of the drugs on the Part D formulary)
- •A gross value test (total plan value at least equal to the total value of standard Part D) and a net value test (employer's share at least equal to the net value of standard Medicare benefit less the retiree's Part D premium)
- •A participation test (at least 60% of eligible retirees enrolled) and a contribution test (employer pays at least 50% of the premium)
- •An actuarial soundness test (plan funded at least at 90% of projected costs) and a benefit adequacy test (plan covers all essential health benefits)
Show answer
A gross value test (total plan value at least equal to the total value of standard Part D) and a net value test (employer's share at least equal to the net value of standard Medicare benefit less the retiree's Part D premium)
The course states that for an employer's plan to be actuarially equivalent, it must meet both (1) the gross value test, where the total value of the employer plan must be at least equal to the total plan value of the standard Part D Medicare benefit, and (2) the net value test, where the net value of the employer plan must be at least equal to the net value of the standard Medicare benefit less the retiree's Part D premium.
- 198
Under Medicare Part D, the course notes that the safe harbor provision for creditable coverage requires the plan to be designed to pay on average at least what percentage of participants' prescription drug expenses?
- •At least 50% of participants' prescription drug expenses
- •At least 60% of participants' prescription drug expenses
- •At least 75% of participants' prescription drug expenses
- •At least 80% of participants' prescription drug expenses
Show answer
At least 60% of participants' prescription drug expenses
The course states that the safe harbor plan design will satisfy the creditable coverage rule if, among other requirements, the plan is designed to pay on average at least 60% of participants' prescription drug expenses.
- 199
Under the ACA's 2010 plan changes, coverage of older children must be allowed until what age, and does the plan have to cover the grandchild of the employee?
- •Until age 26 (through age 25), and plans must also cover the grandchild if the grandchild qualifies as a tax dependent
- •Until age 26 (through age 25), including any child of the dependent child (the grandchild) if under age 5
- •Until age 26 (through age 25), with no requirement to cover a child of such a dependent child (the grandchild)
- •Until age 30 (through age 29), with no requirement to cover the grandchild
Show answer
Until age 26 (through age 25), with no requirement to cover a child of such a dependent child (the grandchild)
The course states that if a plan covers dependents, adult children must be allowed coverage until age 26 (through age 25). There is no requirement to cover the child of such a dependent child (the grandchild). Coverage of an adult child is generally not taxable until the year in which the child will attain age 27.
- 200
Under the ACA's 2010 changes, grandfathered plans had a limited exemption regarding coverage of older children. What was that exemption?
- •Grandfathered plans could charge a higher premium for older children between ages 22 and 25 if they had access to other employer coverage
- •Grandfathered plans could limit older-child coverage to age 23 instead of age 26 if the child was not a full-time student
- •Grandfathered plans could, prior to 2014, refuse to provide coverage to an older child if the child was eligible to enroll in an eligible employer-sponsored health plan
- •Grandfathered plans were completely exempt from the older-child coverage requirement until 2014, regardless of the child's other coverage options
Show answer
Grandfathered plans could, prior to 2014, refuse to provide coverage to an older child if the child was eligible to enroll in an eligible employer-sponsored health plan
The course states that grandfathered plans had a limited exemption: prior to 2014, they could refuse to provide coverage to an older child if the child was eligible to enroll in an eligible employer-sponsored health plan. This exemption ended in 2014.
CSFS is the Certified Self-Funding Specialist designation. These are my own practice questions, written while studying for the exam. This site is not affiliated with, endorsed by, or connected to the organisation that administers the CSFS designation, and nothing here is official exam content or a substitute for the course material.
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