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Under the Affordable Care Act, an Applicable Large Employer (ALE) is generally defined as one that employed how many full-time employees (including full-time equivalents) on average during the prior calendar year?

20 or more

50 or more

100 or more

250 or more

to track

2026 Statistics

Key Facts: PEBC Exam

100 questions

Practice Bank Size

OpenExamPrep PEBC bank

70%

Passing Score

The Institutes / CIAB

~$415

Cost per PEBC Course

The Institutes published pricing

50+ FTEs

ACA Applicable Large Employer Threshold

IRC 4980H

18 / 29 / 36 mo

COBRA Continuation Windows

DOL EBSA

Age 73

SECURE Act 2.0 RMD Age (rising to 75)

SECURE 2.0, 2022

PEBC is a 2026 Institutes/CIAB designation built for early-career employee benefits brokers. Each course exam runs about 2 hours, requires 70% to pass, and costs roughly $415 per course (~$1,500 total). Topics span group health funding, voluntary benefits, retirement plans, ACA/ERISA/COBRA/HIPAA compliance, consultative selling, cost containment, and ethics. PEBC pairs naturally with the Professional Risk Consultant (PRC) program for broker development.

Sample PEBC Practice Questions

Try these sample questions to test your PEBC exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the Affordable Care Act, an Applicable Large Employer (ALE) is generally defined as one that employed how many full-time employees (including full-time equivalents) on average during the prior calendar year?

A.20 or more

B.50 or more

C.100 or more

D.250 or more

Explanation: An employer is an ALE for a calendar year if it employed an average of at least 50 full-time employees (including full-time equivalents) on business days during the preceding calendar year. ALEs are subject to the employer shared responsibility provisions under IRC 4980H.

2An ALE that fails to offer minimum essential coverage to at least 95% of its full-time employees and any one of those employees receives a premium tax credit on the Marketplace is subject to which ACA penalty?

A.IRC 4980H(a) — the 'no-offer' (sledgehammer) penalty

B.IRC 4980H(b) — the 'inadequate coverage' (tackhammer) penalty

C.IRC 4980D — group health plan failure penalty

D.PCORI fee assessment

Explanation: The 4980H(a) penalty (the 'A' or 'sledgehammer' penalty) applies when an ALE fails to offer MEC to substantially all (at least 95%) of its full-time employees and at least one full-time employee receives a premium tax credit. It is calculated on all full-time employees (minus 30), regardless of coverage offers to most.

3Under the ACA Medical Loss Ratio (MLR) rule, what is the minimum percentage of premium that a large group health insurer must spend on claims and quality improvement activities, with the remainder potentially refunded as a rebate?

A.70%

B.75%

C.80%

D.85%

Explanation: Large group insurers must meet an 85% MLR (claims + quality improvement / premium net of taxes and fees). Individual and small group insurers must meet 80%. Insurers that fall short owe rebates to policyholders.

4Which of the following best describes a 'level-funded' group health plan?

A.A fully-insured plan in which premiums never change at renewal

B.A self-funded plan in which the employer pays a fixed monthly amount that bundles claims funding, stop-loss, and admin, with potential year-end surplus refunds

C.A multiple employer welfare arrangement (MEWA) regulated only at the federal level

D.A health reimbursement arrangement integrated with individual market coverage

Explanation: A level-funded plan is technically self-funded but structured to feel like a fully-insured arrangement: the employer pays a level monthly amount that funds expected claims, specific and aggregate stop-loss, and TPA administration. If claims come in under the maximum, the employer may receive a surplus refund (subject to carrier terms).

5In a self-funded medical plan, which type of stop-loss insurance protects the employer against a single catastrophic claim from one covered individual?

A.Aggregate stop-loss

B.Specific stop-loss

C.Reinsurance treaty

D.Excess catastrophic medical (ECM)

Explanation: Specific (individual) stop-loss caps the plan's liability per covered person at a chosen attachment point (e.g., $50,000). Aggregate stop-loss caps total plan liability across the entire population (typically 125% of expected).

6ERISA Title I imposes fiduciary, disclosure, and reporting duties on which type of employer-sponsored arrangements?

A.Only retirement plans

B.Welfare benefit plans (group health, life, disability) and pension plans

C.Only fully-insured plans

D.Only self-funded medical plans

Explanation: ERISA Title I covers both 'welfare benefit plans' (e.g., group health, group life, disability, severance) and 'pension benefit plans.' Funding mechanism (insured vs self-insured) does not determine ERISA applicability — being an employer-sponsored plan does.

7Generally, which ERISA welfare plans must file a Form 5500?

A.All welfare plans, regardless of size

B.Welfare plans with 100 or more participants at the beginning of the plan year

C.Only fully-insured welfare plans

D.Only self-funded welfare plans with stop-loss

Explanation: An ERISA welfare benefit plan generally must file Form 5500 if it had 100 or more participants at the beginning of the plan year. Smaller fully-insured or unfunded plans typically qualify for an exemption.

8What is the standard COBRA continuation period for a qualified beneficiary whose qualifying event is termination of employment or reduction in hours?

A.12 months

B.18 months

C.29 months

D.36 months

Explanation: Termination of employment (other than for gross misconduct) and reduction in hours each provide an 18-month COBRA continuation period. Coverage can be extended to 29 months for SSA-determined disability or 36 months for second qualifying events.

9Under COBRA, what is the maximum continuation period available to a covered spouse and dependent children when the qualifying event is the employee's death, divorce or legal separation, or the loss of dependent child status?

A.18 months

B.24 months

C.29 months

D.36 months

Explanation: For the 'second tier' qualifying events — employee death, divorce or legal separation, the employee's Medicare entitlement, or a child's loss of dependent status — qualified beneficiaries (spouse, dependents) are entitled to up to 36 months of COBRA coverage.

10HIPAA's Privacy Rule generally applies to which of the following?

A.Any employer that stores employee data

B.Covered entities (health plans, providers, clearinghouses) and their business associates

C.Only fully-insured medical plans

D.Only large self-funded plans with 500 or more participants

Explanation: The HIPAA Privacy Rule applies to covered entities (health plans, healthcare providers that transmit covered transactions, and healthcare clearinghouses) and to business associates that handle PHI on their behalf. Employers in their employer capacity are not covered entities, but their group health plans typically are.

About the PEBC Exam

The Professional Employee Benefits Consultant (PEBC) is a designation jointly developed by The Institutes and the Council of Insurance Agents & Brokers (CIAB) to build the next generation of brokerage employee benefits talent. The curriculum covers group health funding (fully-insured, self-funded, level-funded), voluntary and worksite benefits, retirement plans, ACA/ERISA/COBRA/HIPAA compliance, consultative selling, cost-containment strategies, and producer ethics. Online courses such as PEBC 112: Becoming an Effective Employee Benefits Consultant lead to virtual exams.

Questions

100 scored questions

Time Limit

2 hours

Passing Score

70%

Exam Fee

$415 per course (~$1,500 total) (The Institutes / CIAB)

PEBC Exam Content Outline

25%

Group Health Insurance Funding

Self-funded, fully-insured, and level-funded medical plans, stop-loss insurance, captive arrangements, narrow networks, reference-based pricing, telehealth, and PBM/Rx strategy.

20%

ACA, ERISA, COBRA & HIPAA Compliance

Applicable Large Employer rules, ESRP penalties under 4980H(a)/(b), MLR rebates, ERISA Title I welfare plan duties, Form 5500, COBRA 18/29/36-month windows, HIPAA portability/privacy/security, MHPAEA, transparency in coverage, gag clause attestation, and RxDC reporting.

15%

Voluntary & Worksite Benefits

Dental, vision, short- and long-term disability, group life, critical illness, accident, and hospital indemnity products, plus enrollment platforms and Section 125 cafeteria plan integration.

15%

Retirement Plans

401(k), Roth, Traditional/Roth IRAs, defined benefit pensions, cash balance plans, vesting schedules, fiduciary duties, and SECURE Act 2.0 provisions including auto-enrollment, age 73 RMD, and student loan match.

10%

Consultative Selling & Client Needs Analysis

Discovery, benchmarking, claims data review, employee demographics, plan strategy roadmaps, RFP execution, and broker compensation models (commission, fee-for-service, hybrid).

10%

Cost-Containment Strategies & Plan Design

Plan design levers, HSA/HRA/FSA pairing, GLP-1 management, specialty Rx carve-outs, value-based networks, direct primary care, and wellness/incentive program ROI.

Ethics & Producer Conduct

Fiduciary obligations, disclosure of compensation under CAA 2021 Section 202, conflicts of interest, replacement standards, and CIAB/Institutes professional conduct expectations.

How to Pass the PEBC Exam

What You Need to Know

Passing score: 70%
Exam length: 100 questions
Time limit: 2 hours
Exam fee: $415 per course (~$1,500 total)

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

PEBC Study Tips from Top Performers

1Memorize the ACA ALE math: 50+ FTEs triggers employer mandate; 4980H(a) penalty applies if no offer to 95%+ of full-timers, 4980H(b) applies when coverage is unaffordable or not minimum value.

2Build a one-page funding cheat sheet contrasting fully-insured, level-funded, and self-funded plans on risk, cash flow, stop-loss, MLR rebate eligibility, and ERISA preemption.

3Drill COBRA durations cold: 18 months (termination/reduction in hours), 29 months (disability extension), and 36 months (death, divorce, dependent status loss, Medicare entitlement).

4For retirement questions, anchor on SECURE Act 2.0: mandatory auto-enrollment for new 401(k)/403(b) plans, age 73 RMDs (rising to 75), and the student loan match — these are high-frequency exam triggers.

5Practice consultative-selling vignettes by reading a fact pattern (employee count, claims trend, demographics) and choosing the right funding/plan-design recommendation before peeking at the answer.

Frequently Asked Questions

What is the PEBC designation and who administers it?

PEBC stands for Professional Employee Benefits Consultant. It is a designation jointly developed by The Institutes (the AICPCU/IIA family) and the Council of Insurance Agents & Brokers (CIAB) to train brokers in group health, retirement, voluntary benefits, and ERISA/ACA compliance. Coursework is delivered online and exams are administered virtually.

How many courses make up PEBC and what does it cost?

The PEBC track is built around online courses including PEBC 112: Becoming an Effective Employee Benefits Consultant plus additional product, compliance, and consultative-selling modules. Each course runs about $415 with a virtual exam, putting the full sequence near $1,500 depending on package selection. Many brokerages cover the cost as part of producer development.

Should I pair PEBC with PRC (Professional Risk Consultant)?

Yes — The Institutes and CIAB designed PEBC and PRC as complementary early-career broker programs. PEBC builds employee benefits depth (group health, retirement, ERISA/ACA), while PRC builds property-casualty and risk-consulting depth. Pairing them gives a producer credible footing in both major brokerage practice areas and is a common path inside CIAB member firms.

What passing score and exam format should I expect?

PEBC course exams require 70% to pass, run roughly 2 hours, and are delivered as virtual, proctored Institutes exams. Questions are multiple choice and emphasize applied scenarios (funding choices, plan design, compliance triggers) rather than rote memorization, similar to other Institutes designations.

Do I need an active health insurance license to take PEBC?

PEBC has no formal license prerequisite, but candidates typically hold or are pursuing a state Accident & Health (Life & Health) line of authority because most PEBC concepts presume the candidate is selling regulated insurance products. The designation complements, not replaces, state licensing.

How current are the ACA, ERISA, and SECURE Act 2.0 topics on PEBC?

PEBC content is updated to reflect current federal guidance. Expect questions referencing the ACA Applicable Large Employer threshold of 50+ FTEs, ESRP penalties under IRC 4980H(a) and (b), MLR 80%/85% caps, COBRA 18/29/36-month windows, HIPAA privacy/security, transparency in coverage, gag clause attestation, RxDC reporting, and SECURE Act 2.0 features such as auto-enrollment for new plans, age 73 RMDs, and the student loan match.