Which of the following statements regarding forms of health insurance is incorrect?

A. In a PPO, plan participants may or may not use the PPO physician; the choice is up to the participant.

B. In an HMO, plan participants must use the primary care physician.

C. An HMO plan has a fixed monthly fee.

D. A PPO plan provides medical care on a prepaid basis.

Which of the following are correct regarding an HRA?

I. Distributions are tax-deductible to the employer.

II. The plan is funded by elective employee deferrals.

III. The plan is funded by employer contributions.

IV. Reimbursed medical expenses are included in the employee’s gross income.

A. I, II.

B. II, IV.

C. I, III.

D. III, IV.