17 Free California Life & Health Practice Questions: Group Health, PPACA & Senior Health Products (2026)
How to Use This Set
This is the heaviest block on the health side. On the California Accident and Health objectives, medical expense is 45 of 75 questions (60%): individual 14, group 8, PPACA 8 and senior health products 15.
These questions cover self-funded and fully insured plans, COBRA and state continuation, Covered California, Medicare and Medicare Supplement, HSAs and FSAs, and the California rules that apply to every L&H agent: fiduciary duty, twisting, the 12-hour ethics course and continuing education exemptions.
Work through the questions, open each answer only after you have committed to one, and read the explanation even when you were right. Part of the learning is seeing why the wrong options are wrong.
Practice Questions 1-6: Self-Funded Plans, Continuation, Subsidies and Agent Duties
How plans are funded, what rights follow a job loss, what financial help exists, and the first California rules about premiums and twisting.
Question 1 (Chapter 7)
A large manufacturing company in California decides to manage its employee health benefits directly, paying for claims out of its own funds rather than purchasing a traditional insurance policy. What type of plan has the company implemented?
- A) A fully insured plan
- B) An association health plan
- C) A PPO plan
- D) A self-funded/self-insured plan
Show answer & explanation
Answer: D
When an employer directly pays for employees' healthcare costs from its own funds, it is implementing a self-funded or self-insured plan. A fully insured plan involves paying premiums to an insurance company that bears the risk. Self-insured association health plans are prohibited by regulation in California. A PPO is a type of managed care plan, not a funding mechanism.
Question 2 (Chapter 7)
Emily works for a small marketing firm in California with 18 employees. She recently left her job and wants to continue her health coverage. Which law would primarily govern Emily's right to continue her health coverage, and for how long might she be eligible for continued coverage beyond federal COBRA limits?
- A) Cal-COBRA, potentially up to 36 months total.
- B) Federal COBRA, up to 18 months.
- C) HIPAA, for an unlimited duration.
- D) PPACA, guaranteeing her a new individual policy.
Show answer & explanation
Answer: A
Federal COBRA applies to employers with 20 or more employees. Since Emily's firm has 18 employees, her continuation rights would fall under Cal-COBRA, which extends COBRA-like benefits to employees of smaller employers (2-19 employees) and can provide for a longer period of coverage, potentially up to 36 months in total when combined with federal COBRA (if applicable) or as a standalone right for smaller employers.
Question 3 (Chapter 7)
A single individual in California earns 180% of the Federal Poverty Level (FPL) and is shopping for health insurance through Covered California. Which type of financial assistance might this individual be eligible for, in addition to Advance Premium Tax Credits, to help reduce their out-of-pocket healthcare costs?
- A) Medicare Part D subsidies
- B) Medicaid (Medi-Cal) full benefits
- C) Employer-sponsored health reimbursement arrangement (HRA)
- D) Cost Sharing Reductions (CSRs)
Show answer & explanation
Answer: D
Individuals with incomes between 138% and 250% of the Federal Poverty Level (FPL) may be eligible for Cost Sharing Reductions (CSRs) when they enroll in a Silver plan through Covered California. CSRs reduce deductibles, copayments, and out-of-pocket maximums. Advance Premium Tax Credits help lower monthly premiums for those up to 400% FPL. Medi-Cal (Medicaid) eligibility for adults (19-64) is generally up to 138% FPL. Medicare Part D subsidies and HRAs are separate programs.
Question 4 (Chapter 7)
A life agent is accused of 'twisting' a life insurance policy. Which of the following actions constitutes the unfair practice of twisting?
- A) Collecting a premium for a policy without having been appointed by the insurer.
- B) Failing to disclose the name of the insurer on the application.
- C) Representing the terms of a policy in a way that is misleading to induce a lapse or surrender.
- D) Charging a fee for policy analysis that was not disclosed in writing.
Show answer & explanation
Answer: C
Twisting is a form of misrepresentation where an agent makes unfair or deceptive comparisons of policies to induce a policyholder to lapse, forfeit, or surrender an existing policy to purchase a new one.
Question 5 (Chapter 7)
An insurance agent is collecting the first premium payment from a client for a new health policy. How must the agent handle these funds according to their fiduciary duty under §1733–1735?
- A) The agent must hold the funds in a fiduciary capacity and may not divert them for personal use.
- B) The agent may deposit the funds into their personal business account as long as they pay the insurer within 30 days.
- C) The agent is required to invest the funds in a high-yield account to earn interest for the client.
- D) The agent must send the funds directly to the Department of Insurance for processing.
Show answer & explanation
Answer: A
Premiums received by an agent are held in a fiduciary capacity. Diversion of these funds for personal use is considered theft/embezzlement.
Question 6 (Chapter 7)
Which entity is responsible for providing free, unbiased counseling to California seniors regarding Medicare, Medicare Supplement, and Long-Term Care insurance?
- A) The California Department of Insurance (CDI).
- B) The Centers for Medicare & Medicaid Services (CMS).
- C) The Health Insurance Counseling and Advocacy Program (HICAP).
- D) The Social Security Administration (SSA).
Show answer & explanation
Answer: C
HICAP is a federally mandated, state-funded program that provides free, objective information and counseling to seniors about Medicare and related health insurance products.
Get the 25-question sample set by email
Want a full-exam practice set to study offline? Drop your email — we'll send 25 questions across every content area, each with the answer and explanation.
No spam. Just the questions and one optional follow-up.
Practice Questions 7-12: Dependent Coverage, Medicare Sales and Tax-Advantaged Accounts
The age limit for dependents, the sales rules for Medicare products, and the accounts that pay for care.
Question 7 (Chapter 7)
Under the PPACA, what is the maximum age for a child to remain on their parent's health insurance policy?
- A) 19th birthday
- B) 21st birthday
- C) 26th birthday
- D) 29th birthday
Show answer & explanation
Answer: C
The PPACA allows children to remain on their parent's health insurance plan until they reach the age of 26, regardless of student or marital status.
Question 8 (Chapter 7)
What is the primary purpose of the 'Scope of Appointment' (SOA) form when dealing with Medicare products?
- A) To document the commission structure for the agent.
- B) To confirm the client's income for tax credit eligibility.
- C) To authorize the agent to access the client's medical records.
- D) To ensure the client agrees to discuss specific types of products during the appointment.
Show answer & explanation
Answer: D
The Scope of Appointment (SOA) is a CMS-required form used to document the products the client has agreed to discuss during a sales appointment, preventing unauthorized cross-selling.
Question 9 (Chapter 7)
A small business owner with 30 employees wants to provide health insurance. They are considering a plan that allows employees to set aside pre-tax income to reimburse themselves for qualified medical expenses, but the employer does not own the account. What type of arrangement is this?
- A) Health Reimbursement Arrangement (HRA)
- B) Health Savings Account (HSA)
- C) Flexible Spending Account (FSA)
- D) Self-insured Association Plan
Show answer & explanation
Answer: C
An FSA is an account funded by employee pre-tax contributions that can be used for medical expenses. HSAs are tied to High Deductible Health Plans (HDHPs) and are owned by the individual. HRAs are employer-funded.
Question 10 (Chapter 7)
An insurance agent is acting in a fiduciary capacity when handling premiums. If the agent deposits client premiums into their personal business operating account to pay for office rent, what has the agent committed?
- A) A minor administrative error.
- B) An acceptable practice as long as the money is repaid within 30 days.
- C) A breach of contract, but not a criminal act.
- D) Theft and a violation of fiduciary duty under §1733–1735.
Show answer & explanation
Answer: D
Premiums are held in a fiduciary capacity. Using them for personal or business expenses is considered diversion of funds, which is theft under the California Insurance Code.
Question 11 (Chapter 7)
An agent is marketing a Medicare Advantage plan. During the appointment, the agent asks the client to sign a document that outlines what products will be discussed. What is this document called?
- A) Statement of Understanding
- B) Permission to Contact (PTC)
- C) Scope of Appointment (SOA)
- D) Marketing Compliance Disclosure
Show answer & explanation
Answer: C
The Scope of Appointment (SOA) form is required by CMS to ensure the client agrees to the specific types of products the agent will discuss during the appointment.
Question 12 (Chapter 7)
A small business owner with 10 employees wants to apply for health insurance through Covered California for Small Business (CCSB). What is the maximum number of employees a business can have to utilize this exchange?
- A) 25
- B) 50
- C) 100
- D) 150
Show answer & explanation
Answer: C
Covered California for Small Business (CCSB) serves employers with 1 to 100 full-time-equivalent employees, matching California's small-group market, which since 2016 extends to 100 employees. Employers with more than 100 FTE employees are not eligible.
Practice Questions 13-17: Medigap, HSAs and Medicare, Licensing and Part B Penalties
Medicare Supplement free look, HSA eligibility, the ethics certificate, CE exemptions and late enrollment.
Question 13 (Chapter 7)
Under California law, what is the 'free look' period for a Medicare Supplement policy?
- A) 10 days
- B) 20 days
- C) 30 days
- D) 45 days
Show answer & explanation
Answer: C
Medicare Supplement policies in California must provide a 30-day free look period, allowing the policyholder to return the policy for a full refund of premiums paid.
Question 14 (Chapter 7)
An agent is assisting a client who is turning 65. The client is currently enrolled in a high-deductible health plan (HDHP) with a Health Savings Account (HSA). The client is enrolling in Medicare Part A. What should the agent advise regarding the HSA?
- A) The client can continue making contributions to the HSA as long as they have Part A.
- B) The client must close the HSA immediately upon turning 65.
- C) The client must stop making contributions to the HSA once they are enrolled in any part of Medicare, as Medicare enrollment is considered 'other coverage'.
- D) The client can continue contributions if they are also enrolled in a Medicare Advantage plan.
Show answer & explanation
Answer: C
Once an individual is enrolled in Medicare (even just Part A), they are no longer eligible to contribute to an HSA because Medicare is considered 'other coverage' that is not an HDHP. They can keep the funds already in the account, but cannot add more. Options A, B, and D are incorrect interpretations of IRS/Medicare coordination rules.
Question 15 (Chapter 7)
An agent is required to complete 12 hours of ethics and Insurance Code training before receiving their license. How long is the certificate of completion valid?
- A) 1 year.
- B) 2 years.
- C) 3 years.
- D) 5 years.
Show answer & explanation
Answer: C
Per California Insurance Code §1749(c), the certificate for the 12-hour ethics and Insurance Code course is valid for 3 years from the date of completion for licensing purposes.
Question 16 (Chapter 7)
A 70-year-old agent who has been licensed for 35 years applies for a CE exemption. What is the requirement for this exemption?
- A) They must be at least 70 years old and have been licensed for at least 30 continuous years.
- B) They must have been licensed for 20 years and be over 65.
- C) There are no CE exemptions for agents over 70.
- D) They must pass a 'senior competency' exam instead of CE.
Show answer & explanation
Answer: A
Under §1749.3(c), an agent who is at least 70 years old and has been licensed for 30 continuous years is exempt from the CE requirement. Options B, C, and D are incorrect.
Question 17 (Chapter 7)
A client is 65 years old and has never had health insurance. They enroll in Medicare Part B during the General Enrollment Period. What is the penalty?
- A) 10% of the premium for every 12-month period they could have been enrolled but were not.
- B) A flat fee of $500.
- C) A 5% penalty for each year they were uninsured.
- D) No penalty, as they are over 65.
Show answer & explanation
Answer: A
The Part B late enrollment penalty is 10% of the premium for each 12-month period the individual was eligible but not enrolled. Option C and D are incorrect.
The Mistakes That Cost Marks
Missing the age 26 rule. Under PPACA, a child may stay on a parent's health plan until age 26, whatever the child's student or marital status.
Treating premiums as the agent's money. Premiums are held in a fiduciary capacity (§1733-1735). Using them for rent or personal costs is diversion, which is theft.
Skipping the Scope of Appointment. Before a Medicare sales appointment, the client agrees in advance to the products that will be discussed.
Not knowing HSA and Medicare interact. Once you enroll in Medicare, even Part A only, you can no longer contribute to an HSA, though you can keep the funds already in it.
Mixing up the ethics certificate and CE exemption rules. The 12-hour ethics certificate is valid for three years (§1749(c)). The CE exemption requires 30 continuous years of licensing and age 70 (§1749.3(c)).
Forgetting twisting. Twisting is misrepresentation or misleading comparison to induce a policyholder to lapse, forfeit or surrender a policy for another.
Your Next Step
Score yourself honestly: how many of the 17 did you get right before opening the answer? Re-do any you missed tomorrow, not today. A question you can answer cold after a day is one you can answer in the exam.
For the other topic sets, see the California Life & Health practice question hub. To hear this material as audio and keep going with the rest of the course, start the free preview.
Free: 25 California L&H practice questions
Liked this article? Get 25 exam-style questions emailed to you — with full answer explanations, no credit card. Closest thing to studying offline.
No spam. Just the questions and one optional follow-up.
Study this topic with LanePrep
Listen to these audio chapters on your commute — no screen required.
Related Articles
How to Pass the California Life & Health Exam on Your First Try (2026)
8 min read
25 Free California Life & Health Exam Practice Questions (2026)
18 min read
Is the California Life & Health Exam Hard? Pass Rates and Difficulty (2026)
8 min read
17 Free California Life & Health Practice Questions: Types of Life Insurance Policies (2026)
12 min read
17 Free California Life & Health Practice Questions: Life Insurance Policy Provisions, Riders & Options (2026)
12 min read
17 Free California Life & Health Practice Questions: Annuities (2026)
12 min read