17 Free Maryland Life & Health Practice Questions: Senior Citizens, Special Needs and Health Tax (2026)
How to Use This Senior Citizens, Special Needs and Health Tax Set
This set covers Insurance for Senior Citizens and Special Needs Individuals (section 9.0 of the Maryland Accident & Health outline, 9% of that exam, 7 items) and Federal Tax Considerations for Health Insurance (10.0, 5%, 4 items). On the Combo they are sections 15.0 (5%, 7 items) and 16.0 (2%, 3 items). The outline also names the Maryland state-income-tax treatment of long-term care premiums, Tax-General Article §§10-710 through 10-718.
The 17 questions cover Medicare eligibility, Medigap rating, Medicare Advantage financing, Part B exclusions, skilled nursing facility coverage, Medicare and Medicaid together, long-term care riders and exclusions, and the tax treatment of long-term care, disability income and group medical premiums and benefits. Each has an answer and an explanation.
Practice Questions 1-6: Medicare Eligibility, Accounts, Taxation and LTC Riders
These questions start with Medicare eligibility and employer health accounts, then move to the tax treatment of long-term care and disability income premiums, Medigap rating and the return of premium rider.
Question 1 (Chapter 7)
A Maryland resident who is 66 years old and receiving Social Security Disability Insurance (SSDI) benefits has been eligible for Medicare for 24 months due to a qualifying disability. Which of the following statements about her Medicare eligibility is correct?
- A) She is eligible for premium-free Part A only if she has paid Medicare taxes for at least 10 years.
- B) She must pay a premium for Part A because she is under 65.
- C) She is not eligible for Part B until she reaches age 65.
- D) She is automatically enrolled in both Part A and Part B after receiving SSDI for 24 months.
Show answer & explanation
Answer: D
Individuals under 65 who receive SSDI benefits are automatically enrolled in both Medicare Part A and Part B after 24 months of receiving disability benefits. Part A is premium-free if the individual or their spouse paid Medicare taxes for at least 10 years (40 quarters), which is possible even under 65. Option A is incomplete because it does not address automatic enrollment. Option B is incorrect because Part A premium status depends on work history, not age alone. Option C is false because Part B eligibility begins with automatic enrollment after 24 months of SSDI, not at age 65.
Question 2 (Chapter 7)
A 55-year-old Maryland business owner wants to offer a health benefit to employees that allows them to pay for qualified medical expenses on a pre-tax basis. The employer will fund the account, and any unused funds at year-end revert to the employer. This describes which type of account?
- A) Health Reimbursement Account (HRA)
- B) Health Savings Account (HSA)
- C) Flexible Spending Account (FSA)
- D) Health Reimbursement Arrangement (HRA) with a grace period
Show answer & explanation
Answer: A
A Health Reimbursement Account (HRA) is employer-funded, allows reimbursement for qualified medical expenses, and any unused funds typically revert to the employer at year-end unless the plan allows a carryover or grace period. The question specifies unused funds revert to the employer, which is standard for HRAs. HSAs are individually owned (though employers can contribute), require a High Deductible Health Plan, and funds roll over year to year. FSAs are employee-funded (via salary reduction), and while employers may contribute, the use-it-or-lose-it rule applies unless a grace period or carryover is offered—but the question states the employer funds the account, which points to an HRA. Option D is incorrect because even with a grace period, the question does not mention it, and the core feature described (employer-funded, revert to employer) is fundamental to HRAs.
Question 3 (Chapter 7)
An employer in Maryland offers a Long-Term Care (LTC) insurance plan to employees as a voluntary benefit, paid entirely by employee payroll deductions. Regarding federal income tax treatment of the premiums paid by employees, which statement is correct?
- A) The premiums are paid with after-tax dollars and are not deductible by the employee.
- B) The premiums are deductible as a business expense for the employer.
- C) The premiums are deductible by the employee as an adjustment to income on Form 1040.
- D) The premiums are excluded from the employee's taxable income under Section 105 of the Internal Revenue Code.
Show answer & explanation
Answer: A
For personally-owned Long-Term Care insurance, including policies purchased through an employer on a voluntary basis (even if payroll deducted), premiums are paid with after-tax dollars and are not deductible as a personal expense on the employee's federal income tax return. While such premiums may be deductible for Maryland state income tax purposes if the policy is Partnership-qualified, they are not deductible on the federal return. The employer cannot deduct the premiums as a business expense because they are not paying them—the employee is. Option B is incorrect because the employer is not paying the premiums. Option C is wrong because personally-owned LTC premiums are not an above-the-line deduction. Option D is incorrect because LTC insurance premiums are not excluded from income under Section 105 (which applies to employer-provided accident and health plans).
Question 4 (Chapter 7)
A Maryland insurance producer is explaining different Medigap policy rating methods to a 65-year-old client. The client is concerned about premiums increasing significantly as they age. Which Medigap rating method would result in premiums that are generally lower at younger ages but increase as the policyholder gets older?
- A) Attained-age-rated
- B) Community-rated
- C) Issue-age-rated
- D) Standardized-rated
Show answer & explanation
Answer: A
Attained-age-rated Medigap policies base premiums on the policyholder's current age, meaning premiums increase as the policyholder gets older. Issue-age-rated policies base premiums on the age at which the policy was purchased, so premiums do not increase due to age. Community-rated policies charge the same premium to all policyholders regardless of age. Standardized-rated (Option D) is not a rating method but refers to the standardized benefits of Medigap plans.
Question 5 (Chapter 7)
A self-employed Maryland resident purchases a personally-owned disability income insurance policy. She pays the premiums with after-tax dollars. If she becomes disabled and receives benefits from this policy, how are the premiums and benefits treated for federal income tax purposes?
- A) Premiums are tax-deductible, and benefits are taxable.
- B) Premiums are not tax-deductible, and benefits are taxable.
- C) Premiums are tax-deductible, and benefits are tax-free.
- D) Premiums are not tax-deductible, and benefits are tax-free.
Show answer & explanation
Answer: D
For personally-owned disability income insurance where the premiums are paid by the individual with after-tax dollars, the premiums are not tax-deductible. However, the benefits received if the individual becomes disabled are generally tax-free. This is a common tax treatment for individual disability policies.
Question 6 (Chapter 7)
A Maryland resident is considering a Long-Term Care (LTC) insurance policy that offers a return of premium (ROP) rider. Which statement accurately describes how this rider typically functions?
- A) The return of premium benefit is paid out annually as long as the policy remains in force, regardless of claims experience.
- B) The rider guarantees that the policyholder will receive at least 50% of premiums paid back as a cash surrender value after 10 years.
- C) If the insured dies before receiving benefits equal to the total premiums paid, the beneficiary receives a lump sum equal to all premiums paid, without interest.
- D) Return of premium is only available if the insured never files a claim and cancels the policy after the first year.
Show answer & explanation
Answer: C
A return of premium (ROP) rider on an LTC policy typically provides a death benefit equal to the total premiums paid (sometimes with interest) if the insured dies before receiving LTC benefits equal to or exceeding the premiums paid. Option A is incorrect because ROP is not an annual payout; it's usually a death benefit. Option B misstates the guarantee and timing; ROP is not a fixed 50% cash surrender value after 10 years. Option D is too restrictive; ROP is primarily a death benefit feature, not contingent on never filing a claim or canceling after year one.
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Practice Questions 7-12: Part C, Part B Exclusions, Group Taxation and LTC Exclusions
The next six cover how Medicare Advantage is financed, what Part B leaves out, employer-paid group premiums, skilled nursing facility days, routine eye care and common long-term care exclusions.
Question 7 (Chapter 7)
A 68-year-old Maryland resident is enrolled in Original Medicare Part A and Part B. She is considering a Medicare Advantage (Part C) plan that includes prescription drug coverage and offers a $0 monthly premium. Which statement accurately describes how this plan is financed?
- A) Medicare pays the private insurer a fixed monthly amount per enrollee to cover Part A and Part B services, and the plan may charge additional premiums for extra benefits.
- B) The plan is financed solely by the enrollee's Medicare Part B premium, which is paid directly to the private insurer.
- C) The plan is funded entirely by enrollee premiums, with no federal subsidies involved.
- D) Financing comes from state Medicaid funds, as Medicare Advantage plans are administered at the state level.
Show answer & explanation
Answer: A
Medicare Advantage plans are financed through payments from Medicare (CMS) to the private insurer, based on a fixed monthly amount per enrollee to cover Part A and Part B benefits. While some plans may have a $0 premium, this does not mean they are unfunded; Medicare pays the insurer. Plans may charge additional premiums for extra benefits beyond Original Medicare, but the core financing comes from Medicare payments. Option B is incorrect because the Part B premium is not the sole financing mechanism. Option C is incorrect because federal subsidies via Medicare payments are central to the model. Option D is incorrect because Medicare Advantage is a federal program administered by CMS, not state Medicaid funds.
Question 8 (Chapter 7)
A 70-year-old Maryland resident with Original Medicare Part B needs a new pair of hearing aids and routine foot care for corns. Which of the following services would generally NOT be covered by her Medicare Part B?
- A) Diagnostic hearing and balance exams if ordered by a doctor.
- B) Medically necessary foot care for conditions like diabetes that affect the feet.
- C) Outpatient physical therapy prescribed by a doctor.
- D) Routine hearing aids and exams for fitting them.
Show answer & explanation
Answer: D
Medicare Part B generally excludes coverage for routine hearing aids and exams for fitting them, as well as routine dental care, routine eye exams, and long-term care. While diagnostic hearing exams ordered by a doctor (Option A) and medically necessary foot care (Option B) are covered, routine foot care and hearing aids are not. Outpatient physical therapy (Option C) is also typically covered by Part B.
Question 9 (Chapter 7)
A small business in Maryland provides a group medical expense insurance plan for its employees, paying 100% of the premiums. For federal income tax purposes, which statement accurately describes the tax treatment of these premiums and the benefits received by employees?
- A) Premiums paid by the employer are tax-deductible for the employer, and benefits received by employees are considered taxable income.
- B) Premiums paid by the employer are not tax-deductible, but benefits received by employees are tax-free.
- C) Premiums paid by the employer are tax-deductible for the employer, and benefits received by employees are generally tax-free.
- D) Premiums paid by the employer are taxable income to the employees, and benefits received are tax-free.
Show answer & explanation
Answer: C
For federal income tax purposes, premiums paid by an employer for a group medical expense insurance plan are generally tax-deductible as a business expense. The benefits received by employees from such a plan for qualified medical expenses are generally tax-free. Option A is incorrect because benefits are typically tax-free. Options B and D misstate the deductibility of premiums or the taxability of benefits.
Question 10 (Chapter 7)
A 75-year-old Maryland resident with Original Medicare Part A is admitted to a skilled nursing facility (SNF) for rehabilitation after a qualifying hospital stay. Assuming she meets all criteria, how many days of SNF care does Medicare Part A typically cover at 100% in a benefit period?
- A) 60 days.
- B) 100 days.
- C) 20 days.
- D) Unlimited days.
Show answer & explanation
Answer: C
Medicare Part A covers 100% of the costs for the first 20 days of skilled nursing facility (SNF) care in a benefit period, provided certain conditions are met (e.g., a prior qualifying hospital stay). For days 21-100, a daily coinsurance amount is required. After day 100, Medicare Part A generally provides no further SNF coverage in that benefit period. Therefore, Option C is correct.
Question 11 (Chapter 7)
A 68-year-old Maryland resident is enrolled in Original Medicare Part B. She visits her ophthalmologist for a routine eye exam to get new glasses, and also for a follow-up on a medical condition affecting her retina. Which statement accurately describes Medicare Part B coverage for these services?
- A) Medicare Part B will cover both the routine eye exam for glasses and the follow-up for her retinal condition.
- B) Medicare Part B will cover the follow-up for her retinal condition, but generally not the routine eye exam for glasses.
- C) Medicare Part B will cover the routine eye exam for glasses, but not the follow-up for her retinal condition.
- D) Neither the routine eye exam nor the follow-up for her retinal condition will be covered by Medicare Part B.
Show answer & explanation
Answer: B
Medicare Part B generally covers medically necessary services and supplies, including doctor visits for medical conditions like a retinal issue. However, routine eye exams for glasses, routine dental care, and hearing aids are typically excluded from Medicare Part B coverage. Option A is incorrect because routine eye exams are excluded. Option C is incorrect because medically necessary services are covered. Option D is incorrect because the retinal follow-up is medically necessary.
Question 12 (Chapter 7)
A Maryland resident is reviewing a Long-Term Care (LTC) insurance policy and notices a section on 'Exclusions.' Which of the following is a common exclusion found in most LTC policies?
- A) Care for Alzheimer's disease or other forms of dementia.
- B) Care received in a licensed nursing home or assisted living facility.
- C) Care resulting from self-inflicted injuries or acts of war.
- D) Home health care services provided by a certified agency.
Show answer & explanation
Answer: C
Most Long-Term Care (LTC) insurance policies contain standard exclusions, such as care for self-inflicted injuries, acts of war, or services for which no charge is normally made. Care for Alzheimer's and other dementias (Option A), care in licensed facilities (Option B), and home health care (Option D) are typically covered benefits, not exclusions, in a comprehensive LTC policy.
Practice Questions 13-17: Medicaid, Guaranteed Insurability, Working Seniors and Group Tax
The last five cover long-term care Medicaid pays for, Medicaid with Medicare, the guarantee of insurability rider, a working senior with employer coverage, and employee-paid group premiums.
Question 13 (Chapter 7)
A low-income Maryland resident, age 80, is dual-eligible for both Medicare and full Medicaid benefits. Which type of long-term care service might Medicaid cover that Original Medicare typically does not, allowing her to remain in her home?
- A) Inpatient hospital care for an acute illness.
- B) Skilled nursing facility care for short-term rehabilitation after a hospital stay.
- C) Ongoing personal care assistance with activities of daily living (ADLs) in her home.
- D) Physician services for routine check-ups.
Show answer & explanation
Answer: C
Original Medicare generally does not cover long-term custodial care, including ongoing personal care assistance with activities of daily living (ADLs) like bathing, dressing, and eating, especially when provided in the home. Medicaid, however, is a primary payer for long-term care services, including extensive home and community-based services (HCBS) that provide personal care and support to allow individuals to remain in their homes. Options A, B, and D are typically covered by Original Medicare (Part A or Part B), although Medicaid might cover cost-sharing for dual-eligibles.
Question 14 (Chapter 7)
A 72-year-old Maryland resident is comparing Medicare Advantage (Part C) plans. One plan offers a $0 monthly premium, includes prescription drug coverage, and provides routine vision and dental benefits. Which statement best describes this plan?
- A) This is a Medicare Supplement (Medigap) plan because it includes extra benefits.
- B) This plan is not allowed because Medicare Advantage plans cannot include prescription drug coverage.
- C) The $0 premium means the plan is subsidized by Medicaid and is only available to dual-eligible beneficiaries.
- D) This is a Medicare Advantage plan that likely operates as an HMO or PPO and includes Part D coverage.
Show answer & explanation
Answer: D
Medicare Advantage (Part C) plans are offered by private companies approved by Medicare and must provide all Part A and Part B benefits. Many include Part D prescription drug coverage and may offer extra benefits like vision, dental, or hearing. These plans often operate as HMOs or PPOs. A $0 premium is possible if the plan receives sufficient government payments. Option A is incorrect because Medigap plans do not include prescription drug coverage or extra benefits like vision/dental—they only supplement Original Medicare. Option B is false because Medicare Advantage plans can and often do include Part D coverage. Option C is incorrect because a $0 premium does not require Medicaid eligibility; it is based on the plan's bid and government reimbursement.
Question 15 (Chapter 7)
A Maryland resident purchases a Long-Term Care (LTC) insurance policy that includes a guarantee of insurability rider. Which statement accurately describes how this rider typically functions?
- A) It allows the policyholder to increase coverage amounts periodically without providing evidence of insurability.
- B) It returns a portion of the premiums paid if the policy is surrendered or lapses.
- C) It waives the elimination period if the policyholder develops a cognitive impairment.
- D) It covers the cost of informal care provided by family members.
Show answer & explanation
Answer: A
A guarantee of insurability rider (also called a future purchase option) allows the policyholder to increase their LTC insurance coverage amounts at specified intervals (e.g., every 3 years) or after certain life events without having to undergo additional medical underwriting or provide evidence of insurability. This helps protect against inflation in care needs. Option B describes a return of premium rider. Option C is not a standard function of this rider; some policies may have cognitive impairment benefits, but they do not typically waive the elimination period via this rider. Option D describes informal care coverage, which is a separate optional benefit, not the guarantee of insurability rider.
Question 16 (Chapter 7)
A 67-year-old Maryland resident is still actively working and covered by his employer's group health plan, which has more than 20 employees. He is also enrolled in Medicare Part A and Part B. In this scenario, which statement accurately describes the coordination of benefits between his employer's plan and Medicare?
- A) Medicare is always the primary payer for individuals age 65 and older, regardless of employer coverage.
- B) His employer's group health plan is the primary payer, and Medicare is the secondary payer.
- C) Medicare Part A is primary, and his employer's plan is primary for Part B services.
- D) The employer's plan and Medicare split the costs equally as co-primary payers.
Show answer & explanation
Answer: B
For individuals age 65 or older who are still actively working and covered by an employer group health plan with 20 or more employees, the employer's plan is typically the primary payer, and Medicare is the secondary payer. This rule is in place to ensure that employer plans bear the initial cost of care for their working employees. Option A is incorrect because Medicare is not always primary. Options C and D describe incorrect coordination rules.
Question 17 (Chapter 7)
A Maryland employer offers a group medical and dental expense insurance plan. Employees contribute a portion of the premiums through pre-tax payroll deductions. Regarding federal income tax treatment, how are the premiums paid by employees and the benefits received from this plan typically treated?
- A) Employee-paid premiums are tax-deductible, and benefits received are taxable income.
- B) Employee-paid premiums are not tax-deductible, but benefits received are tax-free.
- C) Employee-paid premiums are excluded from taxable income, and benefits received for qualified medical expenses are tax-free.
- D) Employee-paid premiums are taxable income, and benefits received are also taxable income.
Show answer & explanation
Answer: C
When employees pay premiums for group medical and dental expense insurance through pre-tax payroll deductions, these premiums are excluded from their taxable income. This means they effectively receive a tax benefit on the premiums. Furthermore, benefits received from such plans for qualified medical and dental expenses are generally tax-free to the employee. Options A, B, and D misrepresent the tax treatment of either premiums or benefits in this context.
The Mistakes That Cost Marks
Mixing up the Medicare parts. Part A is hospital, Part B is medical, Part C is the Advantage option and Part D is prescription drugs. Original Medicare does not cover routine hearing aids, routine eye exams for glasses or long-term custodial care.
Reading Medicare Advantage as unfunded. A $0 premium plan is still paid by Medicare, which pays the private insurer a fixed monthly amount per enrollee.
Getting the tax rules backwards. Premiums paid with after-tax dollars by an individual buy tax-free disability benefits. Employer-paid group medical premiums are deductible to the employer and the benefits are generally tax-free to the employee.
Picking Medigap rating by price. Issue-age rating does not rise because the policyholder ages. Attained-age rating does.
Confusing the long-term care riders. The guarantee of insurability rider lets you buy more coverage without new underwriting. Return of premium is a death benefit feature.
Overlooking who pays first. For a working senior with employer coverage, the employer plan is typically primary. Dual-eligible beneficiaries can have Medicaid pay premiums and cost-sharing, depending on category.
Your Next Step
Missed questions point to the outline section to revisit. When you are ready, preview the Maryland Life & Health course for the audio lessons and the full question bank, or go back to the free Maryland practice question hub for the other topic sets.
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