CPS CPS Benefits & Deductions Management 2 — Questions and Answers
Question 1: What is the maximum annual employee contribution limit for a Health Savings Account (HSA) for self-only coverage in 2025?
- $3,850
- $4,300 (Correct answer)
- $7,500
- $2,750
Correct answer: $4,300
For 2025, the IRS set the HSA contribution limit at $4,300 for self-only HDHP coverage and $8,550 for family coverage.
Question 2: When processing a garnishment order, which federal law limits the amount that can be deducted from an employee's disposable earnings for a single creditor?
- Fair Debt Collection Practices Act
- Consumer Credit Protection Act (CCPA) Title III (Correct answer)
- Truth in Lending Act
- Uniform Commercial Code
Correct answer: Consumer Credit Protection Act (CCPA) Title III
Title III of the CCPA limits garnishment to the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage.
Question 3: Which of the following is NOT a qualifying event that triggers COBRA continuation rights under federal law?
- Voluntary resignation by the employee
- Reduction in hours below the minimum for plan eligibility
- Employee's death (for covered dependents)
- Employee reaching age 65 and enrolling in Medicare (Correct answer)
Correct answer: Employee reaching age 65 and enrolling in Medicare
While Medicare entitlement can be a qualifying event for dependents, an employee's own enrollment in Medicare is specifically excluded as a COBRA qualifying event for the employee.
Question 4: A Health Flexible Spending Account (HFSA) is subject to which IRS rule that limits the carryover of unused funds?
- The 'use-it-or-lose-it' rule, with limited employer-allowed carryover options (Correct answer)
- The 10% early withdrawal penalty rule
- The 5-year cliff vesting rule
- The required minimum distribution rule
Correct answer: The 'use-it-or-lose-it' rule, with limited employer-allowed carryover options
FSAs are governed by the 'use-it-or-lose-it' rule, though employers may offer a grace period or allow a limited carryover amount as permitted by the IRS.
Question 5: Under the ACA's employer shared responsibility (pay-or-play) provisions, which employers are considered 'applicable large employers' (ALEs)?
- Employers with 25 or more full-time equivalent employees
- Employers with 50 or more full-time equivalent employees (Correct answer)
- Employers with 100 or more full-time equivalent employees
- Employers with 75 or more full-time equivalent employees
Correct answer: Employers with 50 or more full-time equivalent employees
Under the ACA, employers with 50 or more full-time equivalent (FTE) employees are classified as ALEs and must offer minimum essential coverage or face potential penalties.
Question 6: Which payroll document must an employer provide to employees annually to report wages, tips, and withheld taxes?
- Form 1099-NEC
- Form W-2 (Wage and Tax Statement) (Correct answer)
- Form 1095-C
- Form W-4
Correct answer: Form W-2 (Wage and Tax Statement)
Employers must furnish Form W-2 to each employee by January 31 of the following year, reporting annual wages, tips, and all tax withholdings.
CPS CPS Benefits & Deductions Management 2
What is the maximum annual employee contribution limit for a Health Savings Account (HSA) for self-only coverage in 2025?