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CEBS practice questions

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Question 1GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

In a total rewards framework, which element is typically classified as a benefits component rather than a compensation component?

  1. Annual bonus
  2. Base salary
  3. Employer-paid group life insurance Correct answer.
  4. Overtime premium

Explanation

Total rewards include compensation, benefits, work-life programs, recognition, and development opportunities. Group life insurance is an employer-provided benefit, while salary, bonuses, and overtime premiums are direct cash compensation.

Question 2GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A committee administering an ERISA-covered health plan is selecting a service provider. Under ERISA's fiduciary duties, the committee must act:

  1. Primarily to maximize the employer's share price
  2. To minimize the number of covered claims
  3. In accordance with the union's bargaining priorities
  4. Solely in the interest of participants and beneficiaries Correct answer.

Explanation

ERISA imposes duties of loyalty and prudence. Fiduciaries must act solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and defraying reasonable plan expenses.

Question 3GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which event would generally give a covered spouse COBRA continuation rights under a group health plan?

  1. The spouse's own employer begins offering coverage
  2. The employee transfers to a different department
  3. The covered spouse divorces the employee Correct answer.
  4. The employee receives a promotion

Explanation

Divorce or legal separation from the covered employee is a COBRA qualifying event that allows the spouse to elect continuation coverage. Promotions, transfers, and a spouse's new coverage are not qualifying events.

Question 4GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under HIPAA, which event creates a special enrollment opportunity to add a dependent to a group health plan outside open enrollment?

  1. A change of primary care physician
  2. The birth or adoption of a child Correct answer.
  3. The dependent's annual physical examination
  4. The dependent's birthday

Explanation

HIPAA special enrollment rights include birth, adoption or placement for adoption, marriage, and certain loss of other coverage. Enrollment must be requested within the required period after the event.

Question 5GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

In Canada, which service is generally covered by provincial or territorial health insurance plans rather than by employer-sponsored extended health plans?

  1. Prescription drugs purchased at a retail pharmacy
  2. Medically necessary physician and hospital services Correct answer.
  3. Private hospital room accommodation
  4. Routine dental cleanings

Explanation

Canada's provincial and territorial health plans cover medically necessary hospital and physician services. Employer extended health plans typically add prescription drugs, dental, vision, and private or semi-private hospital accommodations.

Question 6GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which document must an ERISA welfare benefit plan furnish to participants to describe plan benefits, eligibility, and participant rights?

  1. Form 5500 annual report
  2. Summary plan description Correct answer.
  3. Actuarial valuation report
  4. Trust agreement

Explanation

ERISA requires welfare plans to furnish a summary plan description describing benefits, eligibility, claims procedures, and participant rights. Form 5500 is an annual filing, not a participant disclosure document.

Question 7GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under the Affordable Care Act, the maximum waiting period for group health plan eligibility is:

  1. 180 days
  2. 30 days
  3. 60 days
  4. 90 days Correct answer.

Explanation

ACA rules limit group health plan waiting periods to no more than 90 days after an employee meets eligibility conditions other than the waiting period.

Question 8GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

In a fully insured group health plan, who bears the financial risk for covered claims?

  1. The plan participants
  2. The insurance carrier Correct answer.
  3. The employer
  4. The benefits administrator

Explanation

In a fully insured arrangement, the insurer assumes the financial risk for covered claims in exchange for premiums. The employer's cost is primarily the premium.

Question 9GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

An employer's board decides to amend its health plan by increasing employee copays for the next plan year. In ERISA terms, this decision is best described as:

  1. A reportable event under ERISA
  2. A prohibited transaction requiring an exemption
  3. A fiduciary act subject to the duty of loyalty
  4. A settlor decision not governed by ERISA fiduciary duties Correct answer.

Explanation

Decisions about whether to establish, amend, or terminate a plan are settlor functions, not fiduciary acts. Fiduciary duties apply to plan administration and management of plan assets.

Question 10GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A self-funded plan buys specific stop-loss coverage with a $250,000 attachment point. A participant incurs $400,000 in covered claims. Assuming no other limits, how much does the stop-loss carrier reimburse?

  1. $0
  2. $400,000
  3. $150,000 Correct answer.
  4. $250,000

Explanation

Specific stop-loss reimburses claims above the attachment point for an individual. The reimbursement is $400,000 minus $250,000, or $150,000, subject to the policy's terms.

Question 11GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

An employer has 25 employees. A 68-year-old active employee is covered by the employer's group health plan. Under Medicare Secondary Payer rules, Medicare generally pays:

  1. Secondary to the employer's group health plan Correct answer.
  2. Only for prescription drugs
  3. Nothing until the employee retires
  4. Primary, with the group plan paying secondary

Explanation

Medicare Secondary Payer rules make the employer group health plan primary for active employees age 65 or older when the employer has 20 or more employees. Medicare then pays secondary.

Question 12GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

For ACA employer shared responsibility, a full-time employee is one who averages at least:

  1. 25 hours per week or 110 hours per month
  2. 35 hours per week or 140 hours per month
  3. 30 hours per week or 130 hours per month Correct answer.
  4. 20 hours per week or 100 hours per month

Explanation

The ACA defines full-time employment for employer shared responsibility as averaging at least 30 hours per week or 130 hours per month.

Question 13GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which employee is eligible for FMLA leave?

  1. An employee who worked 12 months and 1,000 hours at a site with 25 employees
  2. An employee who worked 12 months and 1,250 hours at a site with 50 or more employees within 75 miles Correct answer.
  3. An employee who worked 24 months and 2,000 hours at a site with 100 employees
  4. An employee who worked 6 months and 500 hours at any worksite

Explanation

FMLA eligibility requires 12 months of employment, 1,250 hours worked in the prior 12 months, and employment at a worksite with 50 or more employees within 75 miles.

Question 14GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under HIPAA, which disclosure of protected health information is generally permitted without employee authorization?

  1. Disclosing PHI to a claims processor to pay a claim Correct answer.
  2. Disclosing PHI to a marketing vendor for a wellness campaign
  3. Disclosing PHI to the employee's manager for a performance review
  4. Disclosing PHI to a coworker who asks about the employee

Explanation

HIPAA permits disclosures for payment, treatment, and health care operations, subject to the minimum necessary standard. Disclosures to a claims processor for payment are permitted; disclosures to managers, marketers, or coworkers generally are not.

Question 15GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

In Canada, Employment Insurance sickness benefits provide up to how many weeks of benefits?

  1. 26 weeks
  2. 8 weeks
  3. 52 weeks
  4. 15 weeks Correct answer.

Explanation

EI sickness benefits are payable for up to 15 weeks to eligible claimants who cannot work because of illness, injury, or quarantine.

Question 16GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

At what earliest age can a contributor generally begin receiving a reduced Canada Pension Plan retirement pension?

  1. 62
  2. 55
  3. 70
  4. 60 Correct answer.

Explanation

CPP retirement pensions can begin as early as age 60 with a reduction, at the standard age of 65, or as late as 70 with an increase.

Question 17GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which change in actuarial assumptions would increase a defined benefit pension plan's reported benefit obligation?

  1. An increase in the discount rate
  2. A decrease in the discount rate Correct answer.
  3. A decrease in the assumed salary growth rate
  4. A decrease in the expected return on plan assets

Explanation

A lower discount rate increases the present value of future benefit payments, raising the reported benefit obligation. The other listed changes would not increase the obligation.

Question 18GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which data source is most appropriate for benchmarking benefit costs against similar employers?

  1. The S&P 500 total return
  2. A benefits survey of similar employers in the same industry and region Correct answer.
  3. The Consumer Price Index
  4. A national salary survey

Explanation

Valid benchmarking compares like with like: similar employer size, industry, and geography. General economic indices and salary-only surveys do not provide comparable benefit cost data.

Question 19GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

When selecting a group disability carrier, which criterion is typically most important for protecting the employer's long-term claims commitment?

  1. The number of local sales representatives
  2. The carrier's advertising budget
  3. The carrier's financial strength and claims-paying ability Correct answer.
  4. The location of the carrier's headquarters

Explanation

Financial strength and claims-paying ability are central to a carrier's ability to meet promised disability benefits over many years. Advertising, sales staffing, and headquarters location are not substantive selection criteria.

Question 20GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under the DOL safe harbor, a large ERISA welfare plan with 100 or more participants generally must deposit participant contributions no later than:

  1. 7 business days after withholding
  2. 10 business days after withholding
  3. 3 business days after withholding Correct answer.
  4. 30 calendar days after withholding

Explanation

DOL safe harbor timing depends on plan size; large plans generally must deposit participant contributions as soon as reasonably possible but no later than 3 business days after withholding from pay.

Question 21GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which practice most improves employees' understanding of their benefit choices during open enrollment?

  1. Requiring employees to attend a mandatory unpaid seminar
  2. Distributing a generic brochure to all employees
  3. Providing personalized cost examples for common medical scenarios Correct answer.
  4. Shortening the enrollment window to one day

Explanation

Personalized examples translate plan design into likely out-of-pocket costs, which improves comprehension. Generic brochures and very short enrollment windows tend to reduce understanding.

Question 22GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A plan pays 80% of covered expenses after a $500 deductible. An employee incurs a $2,000 covered claim. How much does the employee pay, assuming no other limits?

  1. $400
  2. $800 Correct answer.
  3. $500
  4. $1,000

Explanation

After the $500 deductible, $1,500 remains. The employee pays 20% of $1,500, or $300, plus the $500 deductible, for $800 total.

Question 23GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A federally regulated employer in Canada sponsors a group benefits plan. Which law primarily governs its handling of employee personal information?

  1. The Employment Insurance Act
  2. PIPEDA, the federal private-sector privacy law Correct answer.
  3. The Canada Pension Plan
  4. The Ontario Securities Act

Explanation

PIPEDA governs private-sector organizations under federal jurisdiction, including banks, telecommunications, and interprovincial transportation. Provincial privacy laws may apply to provincially regulated employers.

Question 24GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which expense is eligible for reimbursement from a dependent care flexible spending account?

  1. A dependent's orthodontic treatment
  2. Child care for a qualifying child under age 13 Correct answer.
  3. College tuition for a 20-year-old dependent
  4. A spouse's cosmetic surgery

Explanation

Dependent care FSAs reimburse care for qualifying children under age 13 or a dependent unable to care for themselves, enabling the employee to work. College tuition, cosmetic surgery, and orthodontia are not dependent care.

Question 25GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

In a typical Canadian group long-term disability plan, the 'own occupation' test usually applies for the first:

  1. 6 months
  2. 60 months
  3. 24 months Correct answer.
  4. 120 months

Explanation

Canadian group LTD plans commonly define disability as inability to perform one's own occupation for the first 24 months, then any occupation thereafter.

Question 26GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

An employee's 12-year-old child is covered under the employer's group health plan. After the employee and spouse divorce, a court order requires the child's coverage to continue. Under COBRA, what is the maximum period of continuation coverage available to the child?

  1. 36 months Correct answer.
  2. 18 months
  3. 24 months
  4. 29 months

Explanation

Divorce or legal separation is a COBRA qualifying event that entitles the covered spouse and dependent children to up to 36 months of continuation coverage. The 36-month maximum reflects the longer period allowed for events that do not involve termination of employment.

Question 27GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under HIPAA's special enrollment rules, a group health plan must allow an employee at least how many days after a marriage, birth, or adoption to request enrollment for a newly eligible dependent?

  1. 90 days
  2. 30 days Correct answer.
  3. 31 days
  4. 60 days

Explanation

HIPAA requires group health plans to provide a special enrollment opportunity of at least 30 days following a marriage, birth, adoption, or placement for adoption. A longer 60-day window applies only to special enrollment triggered by eligibility for Medicaid or a state child health program.

Question 28GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A Quebec employer wants to confirm which program pays parental benefits to its employees who reside in Quebec.

  1. The Quebec Parental Insurance Plan Correct answer.
  2. The Canada Pension Plan
  3. The provincial health insurance plan
  4. The federal Employment Insurance program

Explanation

Quebec administers its own parental insurance program, the Quebec Parental Insurance Plan (QPIP), which replaced federal Employment Insurance maternity and parental benefits for Quebec residents. It is funded through premiums paid by Quebec employers and workers.

Question 29GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under a Section 125 cafeteria plan, an employee's election generally stays in effect for the entire plan year. Which event permits a mid-year election change?

  1. A discretionary change the employee decides to make at any point in the year
  2. An increase in the employee's annual performance rating
  3. A change in family status such as marriage, birth, or divorce Correct answer.
  4. A change in the employee's job title with no change in pay or benefit eligibility

Explanation

Cafeteria plan elections are irrevocable for the plan year unless a permitted change in status or other consistency event occurs. Marriage, divorce, birth, death, and similar family status changes allow an election change that is consistent with the event.

Question 30GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

An employee elects $2,400 for a health care flexible spending account for the plan year. In February, after only $200 has been withheld, she submits $1,500 of eligible claims. How must the plan respond under the uniform coverage rule?

  1. Reimburse $600, representing one quarter of the annual election
  2. Hold the claim until the employee has contributed the full $2,400
  3. Reimburse only the $200 that has been withheld from pay to date
  4. Reimburse the full $1,500 of eligible expenses Correct answer.

Explanation

The uniform coverage rule requires a health care FSA to make the full annual election available for reimbursement at all times during the coverage period. Contributions are spread evenly across the year, so the employee's maximum reimbursement is not limited by the amount withheld to date.

Question 31GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which circumstance makes an employee ineligible to contribute to a health savings account?

  1. Being covered by a high-deductible health plan with a $1,600 self-only deductible
  2. Being enrolled in Medicare Part A Correct answer.
  3. Working for an employer with 40 employees
  4. Paying dental expenses out of pocket rather than through insurance

Explanation

HSA contributions require that the individual have no disqualifying coverage other than a qualifying high-deductible health plan. Enrollment in Medicare, including retroactive Part A entitlement, is disqualifying coverage.

Question 32GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A group health plan requires prior authorization for mental health and substance use disorder services but imposes no prior authorization on medical and surgical services. To comply with the Mental Health Parity and Addiction Equity Act, the plan must:

  1. Eliminate the prior authorization requirement for all services, including medical and surgical
  2. Apply the prior authorization requirement to medical and surgical services as well
  3. Restrict the prior authorization requirement to inpatient mental health services only
  4. Demonstrate that the limitation is applied no more stringently to mental health benefits than to medical and surgical benefits Correct answer.

Explanation

Nonquantitative treatment limitations such as prior authorization must be applied in a manner comparable to and no more stringently than the processes applied to medical and surgical benefits. Plans document this through a comparative analysis of the processes, strategies, and evidentiary standards used.

Question 33GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A welfare benefit plan is funded through group insurance contracts with three separate carriers. Which Form 5500 schedule reports information about those insurance contracts?

  1. Schedule F
  2. Schedule A Correct answer.
  3. Schedule C
  4. Schedule H

Explanation

Schedule A reports information about each insurance contract, including the carrier, contract number, coverage type, and commissions or fees paid. Schedule C covers service provider compensation and Schedule H reports the financial statements of large plans.

Question 34GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A participant tells the plan administrator that she is scheduled for surgery on Friday and needs a coverage determination before then; the request qualifies as an urgent care claim. The plan must notify her of its determination:

  1. Within 5 business days of receiving the request
  2. Within 24 hours of receiving the request
  3. Within 30 calendar days of receiving the request
  4. As soon as possible but no later than 72 hours after receiving the request Correct answer.

Explanation

Under the ERISA group health plan claims procedures, an urgent care claim must be decided as soon as possible, taking into account the exigencies, but no later than 72 hours after the plan receives the request. If the participant has not provided enough information, the plan must notify her within 24 hours of the specific information needed.

Question 35GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under provincial pension benefits standards legislation, employer contributions to a defined benefit pension plan generally vest for a plan member after:

  1. Two years of continuous membership in the plan Correct answer.
  2. One year of continuous membership in the plan
  3. Immediately upon the member's date of hire
  4. Five years of continuous employment with the employer

Explanation

Provincial pension standards legislation typically provides that employer contributions vest after two years of continuous employment or plan membership, at which point the member's entitlement to the benefit cannot be forfeited. Immediate vesting may apply to employee contributions and to certain plan designs, but the statutory norm for employer contributions is two years.

Question 36GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Under U.S. GAAP, an employer must recognize the funded status of its retiree health and other postretirement benefit obligations on its balance sheet. Which standard governs this accounting?

  1. ASC 360, which governs accounting for property, plant, and equipment
  2. ASC 606, which governs revenue from contracts with customers
  3. ASC 740, which governs accounting for income taxes
  4. ASC 715, which governs accounting for retirement and postretirement benefits Correct answer.

Explanation

ASC 715 (which includes the guidance formerly in FASB Statement No. 106) governs employers' accounting for pensions and other postretirement benefits such as retiree medical coverage. It requires measurement of the benefit obligation and recognition of the plan's funded status on the balance sheet.

Question 37GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

Which approach most effectively demonstrates the full value of the employer's benefit program to an individual employee?

  1. Distributing the summary plan description at the time of hire
  2. Posting a general summary of benefits in the employee break room
  3. Providing a personalized total compensation statement showing pay plus employer-paid benefit contributions Correct answer.
  4. Publishing carrier contact information on the company intranet

Explanation

A personalized total compensation statement quantifies salary and the employer's contributions toward health, retirement, and other benefits, making the value concrete for each employee. Generic materials describe benefits but do not translate them into individual dollar value.

Question 38GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

An employer sponsors a participant-directed 401(k) plan and wants to rely on ERISA section 404(c) to reduce fiduciary liability for investment results. Which condition must the plan satisfy?

  1. The plan must guarantee each participant a stated minimum annual return on contributions, adjusted for inflation
  2. The plan must limit participants to a menu of no more than ten designated investment alternatives approved by the committee
  3. The plan must obtain an annual independent audit of every participant's account balance
  4. Participants must be given a broad range of alternatives, direction rights, and required disclosures Correct answer.

Explanation

Section 404(c) relief applies when participants exercise control over plan assets through a broad range of investment alternatives, meaningful opportunities to give investment instructions, and the disclosures required by regulation. When those conditions are met, plan fiduciaries are not liable for losses that result from participants' investment directions.

Question 39GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A group health plan offers a reward to employees who complete a health risk assessment and meet a specified biometric target. An employee completes the assessment but cannot meet the target. What must the plan do to comply with HIPAA's wellness program nondiscrimination rules?

  1. Require the employee to obtain a physician's certification before any reward is considered
  2. Terminate the employee's coverage under the health-contingent program
  3. Offer a reasonable alternative standard by which the employee can qualify for the reward Correct answer.
  4. Charge the employee the full premium rate for the coming plan year

Explanation

Health-contingent wellness programs, whether activity-only or outcome-based, must provide a reasonable alternative standard (or waiver of the standard) for individuals who cannot meet the requirement. The program must disclose the availability of the alternative standard in all plan materials describing the program.

Question 40GBA 1 - Directing Benefits Programs Part 1 (U.S.) / Managing Benefit Plans Part 1 (Canada)

A plan projects next year's health cost from a current cost of $5,000,000, using a 7% medical trend assumption and a plan design change expected to reduce cost by 3%. What is the projected cost?

  1. $5,189,500 Correct answer.
  2. $5,150,000
  3. $5,350,000
  4. $5,000,000

Explanation

The projection applies trend first and then the plan design change: $5,000,000 × 1.07 = $5,350,000, and $5,350,000 × 0.97 = $5,189,500. Applying the reduction before trend would produce a different and less accurate result.

Question 41GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

Under ERISA, which fiduciary standard requires a plan fiduciary to act with the care, skill, prudence, and diligence that a knowledgeable person would use in similar circumstances?

  1. Duty to diversify
  2. Duty of exclusive purpose
  3. Duty of prudence Correct answer.
  4. Duty of loyalty

Explanation

ERISA imposes several fiduciary duties, including loyalty, prudence, diversification, and adherence to plan documents. The prudence standard focuses on the care, skill, and diligence used in managing the plan.

Question 42GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

An employer adopts an administrative-services-only (ASO) arrangement for its group health plan. In this arrangement, which party bears the financial risk for paid claims?

  1. The employer Correct answer.
  2. The employees through payroll
  3. The stop-loss carrier
  4. The third-party administrator

Explanation

In an ASO arrangement, the employer self-funds the plan and pays a vendor a fee to administer claims. Stop-loss insurance may transfer excess risk, but the base claims risk remains with the employer.

Question 43GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

In a typical three-tier pharmacy benefit, where are generic drugs placed and how is member cost sharing set?

  1. Tier 3, with no member cost sharing
  2. Tier 1, with the lowest member copayment Correct answer.
  3. Tier 3, with the highest member copayment
  4. Tier 2, with a moderate copayment

Explanation

Three-tier designs generally place generics on tier 1 with the lowest cost sharing, preferred brands on tier 2, and nonpreferred brands on tier 3. Tier placement is used to steer members toward lower-cost drugs.

Question 44GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

A dependent child covered under a group health plan reaches the plan's limiting age and loses eligibility. Under COBRA, this event is best described as:

  1. A qualifying event for continuation coverage Correct answer.
  2. An automatic extension of coverage at no cost to the child
  3. A plan amendment that requires employer consent
  4. A HIPAA special enrollment right limited to the child

Explanation

Loss of dependent status because a child reaches the plan's limiting age is a COBRA qualifying event. The child may elect continuation coverage for up to 36 months if other requirements are met.

Question 45GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

Canada's Employment Insurance (EI) sickness benefits are payable for a maximum of how many weeks?

  1. 52 weeks
  2. 15 weeks
  3. 26 weeks Correct answer.
  4. 39 weeks

Explanation

EI sickness benefits provide up to 26 weeks of income replacement for eligible claimants unable to work because of illness, injury, or quarantine. Other EI benefit types have different maximum durations.

Question 46GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

The primary purpose of a coordination-of-benefits (COB) provision in group health plans is to:

  1. Coordinate unpaid leave under the FMLA
  2. Guarantee that every eligible claim is paid in full
  3. Require employees to use only network providers
  4. Prevent duplicate payment of the same expense Correct answer.

Explanation

COB establishes the order in which plans pay when a person is covered by more than one plan. It prevents total payments from exceeding the covered expense.

Question 47GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

The central objective of a disability return-to-work program is to:

  1. Restore productive work when medically appropriate Correct answer.
  2. Delay any work attempt until full medical recovery
  3. Eliminate all job accommodations and modified duties
  4. Transfer all disabled employees to workers' compensation

Explanation

Return-to-work programs use transitional duties, accommodations, and medical guidance to help employees resume productive work safely. Early, appropriate return reduces disability duration and cost.

Question 48GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

Which wellness program feature is most likely to increase employee participation and engagement?

  1. A one-time health risk assessment with no follow-up
  2. A program limited to senior executives
  3. A penalty-only design with no communication
  4. Incentives with leadership support and tailored activities Correct answer.

Explanation

Engagement is stronger when programs use incentives, visible leadership, clear communication, and activities matched to employee needs. One-time or punitive designs tend to reduce participation.

Question 49GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

When selecting a new benefits administration vendor, what should an employer do first?

  1. Negotiate the final fee with the selected vendor
  2. Sign the service agreement with the vendor
  3. Review references from the finalist vendors
  4. Define plan requirements and evaluation criteria Correct answer.

Explanation

A clear scope of requirements and objective evaluation criteria are needed before issuing an RFP and comparing vendors. Fee negotiation and reference checks occur later in the selection process.

Question 50GBA 2 - Directing Benefits Programs Part 2 (U.S.) / Managing Benefit Plans Part 2 (Canada)

Under ERISA, a summary plan description (SPD) must generally be furnished to a new participant within how many days after the participant enters the plan?

  1. 180 days
  2. 120 days
  3. 30 days
  4. 90 days Correct answer.

Explanation

ERISA generally requires an SPD within 90 days after a participant becomes covered by the plan. A newly established plan has 120 days after establishment to furnish the SPD.