Deck 13: Employee Benefits

Question 1

ERISA specifies a number of reporting and disclosure requirements involving the IRS, the Department of Labor, and employees.

Answer 1

True
Explanation: ERISA does not require organizations to have pension plans, but those that are set up must meet certain requirements. ERISA also specifies a number of reporting and disclosure requirements involving the IRS, the Department of Labor, and employees.

Question 2

The two types of disability insurance are short-term disability plans and long-term disability plans.

Answer 2

True
Explanation: Two basic types of disability coverage exist. Short-term plans typically provide benefits for six months or less, at which point long-term plans take over, potentially covering the person for life.

Question 3

Unlike a cash balance plan, with a 401(k), all the contributions come from the employer.

Answer 3

False
Explanation: One way to combine the advantages of defined benefit plans and defined contribution plans is to use a cash balance plan. But in contrast to a 401(k), all the contributions come from the employer.

Question 4

To control health-care costs, employers have been increasingly shifting costs to employees through the use of deductibles, coinsurance, exclusions and limitations, and maximum benefits.

Question 5

In terms of cost control, the larger the cost of a benefit category, the greater the opportunity for savings.

Question 6

Beneficiaries (whether the employee, spouse, or dependent)are entitled to free medical insurance coverage.

Question 7

Private pension income represents the largest single component of an elderly person's overall retirement income.

Question 8

The unemployment insurance program is financed through federal and state taxes on both employees and employers.

Question 9

Insurance risks can be more easily pooled in smaller groups.

Question 10

Part-time employees receive about the same benefits as full-time employees when adjusted for hours worked.

Question 11

Contributions to a cash balance plan come from the employee and the employer.

Question 12

Fitness facility programs have two central goals: raising awareness levels of health-related issues and informing people on health-related topics.

Question 13

Increased employee mobility will reinforce the continued trend toward defined contribution plans like 401(k)s.

Question 14

Employers who do not meet their employees' expectations run the risk of violating an "implicit contract".

Question 15

Defined contribution retirement plans insulate employees from investment risks, which are instead borne by the company.

Question 16

Unemployment benefits are typically about 50 percent of an eligible individual's previous earnings and last for 52 weeks.

Question 17

One of the reasons for giving more responsibility to employees for retirement planning and other benefit decisions is to increase their understanding of such benefits.

Question 18

Despite passage of the Family and Medical Leave Act, the United States still offers significantly less unpaid leave than most western European countries.

Question 19

Surveys indicate that pension programs are the most important benefit to the average person.

Question 20

Social Security retirement benefits are no longer subject to an earnings test once retirement age is reached.

Question 21

Which of the following is true about the coverage of OASDHI program?

A)Only about fifty percent U.S. employees are covered by the program.
B)Federal, state, and local government employees account for a high percentage of employees covered under this program.
C)There are no eligibility requirements to be met by an individual to receive benefits.
D)Old-age insurance benefits for fully insured workers begin at the age of 50.
E)High earners help subsidize benefit payments to low earners.

Question 22

Which one of the following is true about workers' compensation?

A)Employees are covered under the "no-fault" provision regardless of their behavior.
B)Only about 50 percent of all U.S. workers are covered by the system.
C)Benefits fall into four major categories: inability income, housing care, death of spouse benefits, and pension services.
D)Self-funding by employers is restricted in most states.
E)The system allowing employers to purchase coverage from private insurance companies.

Question 23

Which of the following is a major category of workers' compensation?

A)Inability income
B)Death of spouse benefits
C)Rehabilitative services
D)Housing care
E)Pension services

Question 24

The _____ tax rate is the percentage of additional earnings that goes to taxes.

A)marginal
B)net
C)gross
D)incremental
E)resulting

Question 25

The unemployment insurance program is financed largely through federal and state taxes on _____.

A)employees
B)employers
C)retired personnel
D)all taxpayers
E)employment agencies

Question 26

Flexible benefit plans (also known as cafeteria-style plans)permit employees to choose the types and amounts of benefits they want for themselves.

Question 27

Which one of the following is a major objective of the unemployment insurance program?

A)To offset lost income during voluntary unemployment
B)To motivate workers by providing income during long work hours
C)To provide an incentive for employees to stabilize employment
D)To make up for the lost income during a labor dispute
E)To enable contracting of existing labors to outside firms

Question 28

Which of the following is true about benefits programs?

A)Public group insurance is one of the categories of benefits programs.
B)The percentage of employees covered by benefits programs falls with increase in establishment size.
C)The prevalence of benefits programs in establishments is not very high.
D)The number of employees covered by benefits programs account for a low percentage amongst the largest employers.
E)Total compensation costs increase with establishments.

Question 29

Which of the following is a major reason for giving more responsibility to employees for retirement planning?

A)To increase the return on the employers' investments
B)To discourage potential applicants
C)To retain existing talent
D)To achieve favorable tax treatment
E)To increase the employees' understanding of the value of such benefits

Question 30

Research clearly shows that current employees, unlike job applicants, have a good idea of what benefits are in place and the cost or market value of these benefits.

Question 31

Which of the following is true about the aspects of benefits?

A)There is no question of legal compliance.
B)They have become institutionalized.
C)They are less liquid than wages and salaries.
D)They are less complex than other forms of compensation.
E)It is very common to find employers not offering medical benefits.

Question 32

Investment returns on qualified retirement funds are taxed.

Question 33

Which of the following was an amendment to the Social Security Act of 1935?

A)Descendant's insurance
B)Inability insurance
C)Estate insurance
D)Hospital insurance
E)Posterity insurance

Question 34

Which one of the following has been an underlying reason for the growth in benefits over time?

A)The tax treatment of benefits programs is favorable for employers than the tax treatment of wages and salaries.
B)The similarity in benefits provided to all employees to avoid differentiation.
C)The fall of organized labor from the 1930s through the 1950s.
D)The range of benefits change in correspondence to change in wage and price controls.
E)The cost advantage that groups typically receive over individuals.

Question 35

The federal tax code requires flexible spending account funds to be earmarked in advance and spent during the plan year, with any remaining funds reverting to the employee.

Question 36

Surveys indicate that some companies are ending retiree health care benefits altogether.

Question 37

Workers are eligible for unemployment benefits if they:

A)voluntarily quit a job.
B)are out of work due to labor dispute.
C)were discharged for cause.
D)have been working for at least one year.
E)have not registered at the unemployment office.

Question 38

_____ increases are provided as a part of social security benefits for each year that the consumer price index increases.

A)Real estate
B)Cost-of-living
C)Healthcare
D)Cost of education
E)Accidental

Question 39

Which of the following is true about Social Security retirement benefits?

A)Benefits are subject to federal income tax.
B)An earnings test exists for those beneficiaries aged 50 and under.
C)Eligibility rules do not exist to receive benefits.
D)Benefits are entirely free from state income tax.
E)The earnings test increases a person's incentive to retire.

Question 40

The workers' compensation cost to an employer is based on:

A)the type of competition faced.
B)the employer's profitability.
C)the industry in which the establishment functions.
D)the employer's experience rating.
E)the employee's experience rating.

Question 41

Which of the following is the largest single component of the elderly's overall retirement income?

A)Social Security
B)Private pensions
C)Earnings from assets
D)Disability insurance
E)Medical insurance

Question 42

Which one of the following is a characteristic of sick leave programs?

A)They are based on a no-accumulation policy.
B)They provide fractional salary replacement.
C)The amount of leave is often based on the pay of the employee.
D)They extend for a limited period of time, usually not exceeding 26 weeks.
E)Sick leave programs followed across countries are similar.

Question 43

The right of an employee to a pension upon retirement is known as ______.

A)vesting right
B)portability fund
C)transfer of fund
D)fiduciary responsibility
E)funding right

Question 44

The _____ requires employers to permit employees to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff.

A)SEC
B)ADA
C)ERISA
D)COBRA
E)EEOC

Question 45

Which of the following is true about pay for time not worked?

A)Although the employee is paid for time not spent working, the employer receives a tangible production value in return.
B)The advantages from paying employees for time not spent working are direct.
C)There is a legal minimum of 18 days of vacation in the United States.
D)Leave programs provide only partial salary replacement.
E)Differences in paid leave programs across countries contribute to differences in labor costs.

Question 46

Under 401(k)plans, who is responsible to invest wisely?

A)The employee
B)The SEC
C)ERISA rules specify how investments must be made
D)The U.S. Department of Labor
E)The employer

Question 47

Which of the following affects the amount of income that will be available to an employee upon retirement?

A)The number of times jobs changed
B)The need for power
C)The need for motivation
D)The level of job performance
E)The age at which investments are made

Question 48

Which of the following is a defined contribution pension plan?

A)Supplemental benefit scheme
B)Profit sharing plan
C)Gainsharing plan
D)State-sponsored retirement plan
E)State second pension scheme

Question 49

_____ plans do not promise a specific benefit level for employees upon retirement. Rather, an individual account is set up for each employee with a guaranteed size of contribution.

A)Defined benefit
B)Term benefit
C)Defined contribution
D)Unspecified contribution
E)Cash balance

Question 50

The _____ requires defined contribution plans holding publicly traded securities to provide employees with at least three investment options other than employer securities.

A)Pensions Act of 2008
B)Health Insurance Portability and Accountability Act of 1996
C)Consolidated Omnibus Budget Reconciliation Act of 1985
D)Employee Retirement Income Security Act of 1974
E)Pension Protection Act of 2006

Question 51

Which of the following is a factor used to determine retirement benefit levels of employees under a defined benefit retirement plan?

A)Income level
B)Number of dependents
C)Marital status
D)Number of promotions during the service
E)Age

Question 52

Which of the following is true about vesting rights?

A)The right to a pension prior to retirement age
B)Vesting taking place under one of the two minimum vesting schedules
C)The right to a pension only if the vested employee remains with the employer until retirement
D)The guarantee that the employer will not terminate the pension plan
E)Employee contributions being only partly vested

Question 53

Which of the following is true about defined contribution plans?

A)They shift the investment risk to the employer.
B)They present greater administrative challenges to employers.
C)They require annual premium payments to the PBGC.
D)They are more prevalent in smaller than larger companies.
E)They are becoming less common.

Question 54

A cash balance plan:

A)requires contributions from the employer and the employee.
B)does not permit rolling over of balance into an individual retirement account in case an employee changes jobs.
C)earns interest according to a predetermined rate.
D)is most generous to older employees.
E)does not guarantee the rate of interest.

Question 55

Which of the following statements is true about the Pension Benefit Guaranty Corporation (PBGC)?

A)It was created by the Consolidated Omnibus Budget Reconciliation Act (COBRA)of 1985.
B)It provides a complete benefit replacement.
C)It guarantees healthcare benefits.
D)It is funded by a monthly contribution from each plan participant.
E)It does not allow payouts to be adjusted for cost-of-living changes.

Question 56

Which of the following acts increased the fiduciary responsibilities of pension plan trustees, established vesting rights and portability provisions?

A)ERISA
B)ADA
C)COBRA
D)FAS 106
E)EEOC

Question 57

According to ERISA, a summary plan description (SPD)must provide descriptions of the plan's:

A)budget.
B)nominations.
C)risks.
D)benefit levels.
E)tenure.

Question 58

Which of the following is true about mobility across employers?

A)The pension system's incentives should not be modified regardless of the mobility.
B)Reduced mobility reinforces the trend toward defined contribution plans.
C)Ease of transfer of funds will tighten with increase in mobility.
D)Increased mobility will bring down portability across the employees.
E)Penalties for mobility may require modification with mobility across employers becoming desirable.

Question 59

Which of the following is true about private group insurance?

A)Individuals spread fixed costs over more people.
B)Insurance risks are pooled in small groups.
C)ERISA rules provide favorable tax treatment for large groups.
D)Individuals have more bargaining power when negotiating over prices.
E)Concern for employee security helps explain the prevalence of employer-sponsored insurance plans.

Question 60

A _____ plan permits employees to defer compensation on a pretax basis.

A)supplemental benefit
B)section 401(k)
C)money purchase
D)specified retirement benefit
E)profit sharing

Question 61

Active employee wellness programs:

A)concentrate on physical exercise rather than awareness issues.
B)are health education programs designed to raise awareness levels of health-related issues and to inform employees on health-related topics.
C)are the most common form of employee wellness program.
D)assume that behavior change requires not only awareness and opportunity, but support and reinforcement.
E)include a center for physical fitness equipped with aerobic and muscle-building exercise machines.

Question 62

The highest level of child care provision is:

A)providing vouchers or discounts for employees to use at existing child care facilities.
B)providing child care at or near the worksite.
C)supplying information about the cost of available child care.
D)referring employees to websites and phone numbers of child care facilities in the area.
E)helping employees collect information about quality of available child care.

Question 63

In which of the following ways may staffing practices change in response to benefit cost controls?

A)Benefits cost per hour increased by having employees work more hours with fixed benefits costs.
B)Organizations having their employees classified as exempt whenever possible.
C)Growth in the number of full-time workers.
D)Rehiring previously laid off employees.
E)Giving temporary workers pay for time not spent working.

Question 64

A company would like to provide benefit-related compliance information to all of its employees. Which of the following media should it use?

A)Meetings
B)Webcasts
C)Teleconference messaging
D)Summary plan descriptions
E)Paycheck attachments

Question 65

Which of the following media would be used in order to provide information on benefits and related changes to remote employees?

A)Meetings
B)Intranet
C)Enrollment packages
D)Teleconference messaging
E)E-mail alerts

Question 66

The Pregnancy Discrimination Act of 1978 requires employers:

A)to offer disability plans with pregnancy-related coverage.
B)that offer disability plans to treat pregnancy as they would any other disability.
C)to provide up to eight weeks of paid leave to the parent upon the birth of a child.
D)to provide up to six weeks of unpaid leave to the parent upon the birth of a child.
E)to bear all the medical expenses related to the birth of their employee's child.

Question 67

Which of the following benefits is most likely to attract a workforce with a high percentage of women of childbearing age?

A)Pensions
B)Life insurance
C)Medical coverage
D)Disability leave
E)Private group insurance

Question 68

To take unpaid family leave under the provisions of the Family and Medical Leave Act, employees must:

A)have worked for an employer with 150 or more employees within a 25-mile radius.
B)have worked at least 15 hours per week.
C)have worked for the employer for one year or more.
D)be among the top 10 percent of highest paid executives.
E)apply for at least 15 weeks of unpaid leave.

Question 69

Which of the following managed-care efforts includes employer use of increased deductibles, coinsurance payments, policy exclusions and limitations, and establishment of maximum benefits?

A)Alternative funding methods
B)Plan design
C)Claims review
D)External cost control systems
E)Alternative providers

Question 70

Which of the following is better in reducing the risk factors associated with cardiovascular disease?

A)Counselors providing tailored programs to obtain baseline measures
B)Raising awareness levels of cardiovascular disease
C)A physical fitness facility in the company
D)Lunchtime lecturer conducting class on preventing cardiovascular disease
E)Presence of athletic trainers in the company gym

Question 71

In which of the following ways do PPOs differ from HMOs?

A)PPOs provide benefits on a prepaid basis.
B)Employees are required to use preselected plan service providers.
C)PPOs are generally less expensive plans.
D)PPOs have less in common with traditional fee-for-service plans.
E)Physicians are paid on a salary basis.

Question 72

Survey information on competitors' benefits packages and information on benefits costs are available through _____.

A)public consultants
B)PBGC
C)BLS
D)EEOC
E)unemployment offices

Question 73

Which of the following is an obstruction in cost control efforts?

A)Implementing piecemeal programs not working well
B)A large percentage of employees being responsible for generating the majority of health care costs
C)Employees sticking on to specific programs in spite of cost control efforts on account of the administrative issues
D)Employees willing to aid in cost cutting efforts by not making unnecessary claims
E)Laying excess emphasis on cost control than monitoring health care quality

Question 74

Which of the following is true about family-friendly policies?

A)Organizations implement the policies to ease conflicts amongst the employees.
B)Defined benefit plan is a classic example of this policy.
C)Increased organizational performance resulting from loyalty may be expected from implementing these policies.
D)These policies have no spillover effects on other employees.
E)These policies cause a fall in quality management practices.

Question 75

Which of the following benefits is the most likely target for cost control by employees?

A)Life insurance benefits
B)Medical benefits
C)Unemployment insurance benefits
D)Social Security benefits
E)Private group insurance benefits

Question 76

Which of the following is a characteristic of employee wellness programs?

A)The programs aim in providing ailment to needy employees.
B)The programs manage health-care costs by helping employees in need.
C)The programs are relatively less expensive.
D)The programs target every health risks.
E)The programs focus on changing behaviors both on and off work time.

Question 77

The Family and Medical Leave Act of 1993 provides for:

A)up to 18 weeks of paid leave after childbirth or adoption.
B)the same or a comparable job to the individual upon his return.
C)up to 18 weeks of paid leave to care for a seriously ill parent, spouse, or child.
D)maintenance of all benefits, including vacations and pensions.
E)covering employees with less than one year of service.

Question 78

Which one of the following is an active wellness program?

A)Raising awareness of health-related issues.
B)Counselors providing tailored programs.
C)Center for physical fitness.
D)Athletic trainers present in company gyms.
E)Informing people on health-related topics.

Question 79

Which of the following statements is true with regard to communicating the nature and value of benefits to employees?

A)Current employees and job applicants often have a clear idea of the benefits provisions already in place.
B)Employees often overestimate both the cost and market value of their medical benefits.
C)Use of traditional approaches can have a large effect on employee awareness.
D)Most organizations spend large sums of money in order to communicate information about benefits.
E)Increased employee knowledge of benefits will always have a positive effect.

Question 80

Which of the following is a characteristic of a health maintenance organization (HMO)?

A)A focus on curable medicine
B)Provision of benefits on a reimbursement basis
C)Employee selection of preferred physicians
D)Payment of physicians on a fee-for-service basis
E)Physicians paid depending on the number of patients seen