LLQP Accident & Sickness · Component 1.2 · 35% of the exam
A client's group plan includes a health care spending account and a wellness account. The review should note that:
- ABoth accounts are tax-free to the employee, since both reimburse costs of maintaining health
- Health account reimbursements are generally tax-free, while wellness account amounts are taxable
- CBoth accounts are insured benefits with defined co-insurance and annual maximums
- DNeither account can be used for expenses the provincial plan does not cover
Correct answer: B) Health account reimbursements are generally tax-free, while wellness account amounts are taxable
A health account reimburses eligible medical expenses and follows the medical expense rules, while a wellness account reimburses lifestyle costs and is a taxable benefit to the employee.
Why the other options are wrong
- AWellness reimbursements are a taxable benefit because the expenses are not medical.
- CNeither is an insured benefit; both are employer-funded allocations.
- DThe accounts exist precisely to cover what the provincial plan does not.
Exam tip
Health account is tax-free; wellness account is taxable.
Common mistake
Presenting a wellness account as a tax-free benefit.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Accident & Sickness module. Written against the published curriculum.
More from component 1
- The single most important fact for sizing a client's disability income need is:
- A client's beneficiaries for assets are listed in the fact-finding. Why does this matter for A&S planning?
- A client asks why the agent wants to know how assets are owned (jointly or individually). In the A&S context the answer is:
- A client mentions a back injury five years ago that fully resolved. The agent should:
- Which element of a client's situation most affects the definition of disability that should be recommended?
- Which of the following health facts is most relevant to a client's disability insurance situation?
Practice the whole Accident & Sickness module
Timed sets weighted like the exam, and review of every question you miss. Free to start.