Table of Contents

Course Learning Objectives v

Introduction. v

Chapter 1 - Health Insurance 8

Chapter Learning Objectives 8

Overview of the Development of U.S. Health Insurance 8

Health Insurance Coverage 9

Personally-owned Health Insurance 9

Personally-owned Health Insurance Benefits Generally Tax-Exempt 9

Personally-owned Health Insurance Premiums may be Deductible subject to AGI Limitation. 9

Health Insurance Premiums for Partners and Self-employed not subject to AGI Limitation. 10

Certain Premiums Non-Deductible 10

Employer-Paid Health Insurance 10

Employer-Paid Health Insurance Benefits Generally Tax-Exempt 10

Certain Benefits under Employer-provided Health Insurance Includible in Income 10

Employer Health Insurance Premiums for Employee Coverage Generally Deductible 11

Employer-Paid Health Insurance Premiums not Includible in Employees’ Income 11

Patient Protection and Affordable Care Act 11

Individual Requirement to Maintain Health Coverage 12

Penalty for Failure to Maintain Health Coverage 12

Refundable Tax Credits to Assist in Purchase of Qualified Health Plan. 12

Eligibility for Credit 12

Small Employer Health Insurance Premium Credit 13

Large Employer Shared Responsibility. 13

Penalty for Non-Compliance 13

Employers Not Offering Coverage 14

Employers Offering Coverage 14

Summary. 15

Chapter 1 Review Questions 16

Chapter 2 - Tax-Favored Health Plans 17

Chapter Learning Objectives 17

Introduction. 17

Medical Savings Accounts 17

Archer MSA Benefits 18

Archer MSA Eligibility. 18

Archer MSA Pilot Program Ended. 19

High Deductible Health Plan Requirement 19

Archer MSA Contributions 19

Penalty for Excess Contributions 21

Special Rules for Employer-Installed MSAs 21

Archer MSA Distributions 22

Archer MSA Rollovers 22

Account Transfer Incident to Divorce 23

Account Transfer at Death. 23

Archer MSA Tax Treatment 23

Contribution Tax Treatment 24

Distribution Tax Treatment 24

Tax-Free Archer MSA Distributions 24

Taxable Archer MSA Distributions 25

Deemed Archer MSA Taxable Distributions 25

Archer MSA Distribution Tax Penalty. 25

Health Savings Accounts 26

HSA Benefits 26

HSA Eligibility. 26

HSA High Deductible Health Plan Requirement 27

HSA Contributions 27

HSA Contributions from Multiple Sources 28

Additional Contributions for Age 55 and Older Account Holders 28

First-Year Contributions for New Account Holders 28

Maximum HSA Contributions may be Reduced. 28

Qualified HSA Funding Distributions Reduce Contribution Limits 29

Qualified HSA Funding Distribution Testing Period. 29

Penalty for Excess Contributions 29

Employer HSA Participation. 29

HSA Distributions 30

HSA Rollovers 31

Account Transfer Incident to Divorce 31

Account Transfer at Death. 31

HSA Tax Treatment 31

Contribution Tax Treatment 32

Distribution Tax Treatment 32

Tax-Free HSA Distributions 32

Deemed HSA Taxable Distributions 32

Taxable HSA Distributions 33

HSA Distribution Tax Penalty. 33

Health Reimbursement Arrangements 33

HRA Distributions for other than Qualified Medical Expenses 34

HRA Distributions Paid to a Highly Compensated Individual 35

Non-discriminatory Eligibility. 35

Non-discriminatory Benefits 35

Qualified HSA Distribution. 36

Summary. 36

Chapter 2 Review Questions 38

Chapter 3 - Disability and Long Term Care Insurance Coverage 39

Chapter Learning Objectives 39

Introduction. 39

Disability Income Policies 39

Individually-Paid Policies 39

Employer-Paid Policies 40

Business-Related Disability Coverage 40

Overhead Expense Policies 41

Disability Buyout & Keyperson Policies 41

Qualified Long Term Care Insurance Policies 41

Favorable Tax Treatment only for Chronically-Ill 42

Qualified Long Term Care Premiums Deductible within Limits 42

Qualified Long Term Care Benefits Tax-Free within Limits 43

Tax Treatment of Nonqualified Long Term Care Insurance Policies 43

Summary. 43

Chapter 3 Review Questions 45

Answers to Chapter Quizzes 47

Glossary. 56

Index. 58

CPE Exam Answer Sheet 59

Final Examination. 60

CPASelfstudy.com Course Evaluation. 65