Practice Test Geeks(CPM) Certified Payroll Manager Practice Test
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Benefits Enrollment & Deductions Flashcards

7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Under the Affordable Care Act, applicable large employers (ALEs) must offer affordable minimum essential coverage to full-time employees or risk which penalty?

    Answer: Section 4980H penalty

    Section 4980H of the IRC imposes the employer shared responsibility payment (employer mandate penalty) on ALEs that fail to offer affordable minimum essential coverage.

  2. A payroll manager notices that an employee's voluntary life insurance deduction has not been updated after the employee increased coverage during open enrollment. The best immediate action is to:

    Answer: Process a retroactive adjustment to collect missed premiums

    Missed deductions due to enrollment processing errors should be corrected with retroactive adjustments to collect the unpaid premiums owed since the coverage effective date.

  3. Which IRS notice must employers provide to employees about Health FSA carryover or grace period provisions?

    Answer: Notice 2013-71 disclosures in the plan document and SPD

    IRS Notice 2013-71 permits Health FSA carryovers up to a specified limit, and plan documents and SPDs must be amended to reflect any carryover or grace period offered.

  4. When an employee is on unpaid FMLA leave, the employer may require the employee to continue paying their share of health insurance premiums. If the employee fails to pay, the employer must:

    Answer: Provide written notice of at least 15 days before terminating coverage

    FMLA regulations require employers to provide at least 15 days' advance written notice before terminating group health coverage due to non-payment of premiums during leave.

  5. Imputed income for group-term life insurance coverage exceeding $50,000 is calculated using:

    Answer: IRS Table I uniform premium rates based on age brackets

    Employers must use IRS Table I rates, which are based on the employee's age, to calculate the imputed income for group-term life coverage above $50,000.

  6. When an employer offers a domestic partner benefit, the fair market value of the coverage for a non-tax-dependent domestic partner is treated as:

    Answer: Imputed income subject to federal income tax and FICA

    Unless the domestic partner qualifies as a tax dependent, the employer-paid value of their health coverage is imputed income subject to federal income tax, Social Security, and Medicare taxes.

  7. An employee's weekly earnings are $800. They have a pre-tax medical deduction of $100 and a 401(k) contribution of $50. What is their federal income tax withholding base?

    Answer: $650

    Both the pre-tax medical deduction ($100) and the 401(k) contribution ($50) reduce the federal income tax withholding base: $800 − $100 − $50 = $650.