1. Juanita is covered under her employer's group long-term disability income plan. Juanita pays 40 percent of the premium cost, and her employer pays 60 percent. Which of the following statements concerning the federal income tax treatment of this arrangement is correct?

A. The employer's premium contributions are taxable income for Juanita.

B. The employer's premium contributions are deductible as a business expense.

C. Juanita's contributions are tax deductible.

D. Sixty percent of any disability income benefits Juanita might receive are tax free, and 40 percent must be included in her gross income.

3. Which of the following statements concerning prescription drug carve-outs is correct?

A Coverage is provided for charges to administer drugs and the cost of therapeutic devices or appliances.

B. Most plans cover only the cost of drugs dispensed in a hospital or in an extended care facility.

C. Contraceptive drugs are usually excluded.

D. It is common to exclude benefits for a quantity of drugs in excess of a specified maximum amount each time a prescription is filled.

4. Which of the following statements concerning the federal income tax treatment of property and liability insurance is correct?

A Benefits paid on behalf of the insured under a liability policy result in taxable income to the policyowner.

B. All benefits received from a property insurance policy must be reported as taxable income by the policyowner.

c. Premiums paid by a property owner for homeowners coverage are fully deductible as long as the homeowner itemizes deductions.

D. Premiums paid by a self-employed individual for business coverage are a deductible business expense.