Angie Starts a New Job and Becomes Covered Under the Employer's

question 132

Multiple Choice

Angie starts a new job and becomes covered under the employer's health insurance plan which has an annual deductible of $2,400.Angie contributes the maximum amount into a Health Savings Account.Which of the following statements regarding Angie's Health Savings Account is correct?

• A)Angie can contribute and deduct $1,200 for AGI.
• B)Angie's contribution will be deductible if she itemizes,and the contribution along with her out-of-pocket medical expenses exceed 10% of AGI.
• C)If Angie withdraws $500 to pay for X-rays,the $500 is taxable.
• D)Interest income earned on the HCA is taxable.

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Definitions:

Amortized

Refers to the process of paying off debt over time in equal installments of principal and interest.

Compounded Monthly

A method of interest calculation where the interest earned each month is added to the principal, thus earning more interest in the following month.

Compounded Monthly

The process of calculating interest on the initial principal and the accumulated interest from previous periods monthly.

Amortized

The steady decrease of an owed sum through consistent payments towards both the interest and the principal over a set duration.