Deck 15: Employee Benefits

Question 1

The most popular type of defined-contribution plan is the 401(k)plan.

Answer 1

True

Question 2

Employee benefits are those rewards given to employees retiring from the organization.

Answer 2

False

Question 3

Certain employee benefits can be reserved for company executives only.

Answer 3

True

Question 4

Under Section 125 and/or DEFRA,an employer requires an employee to complete more than three years of service before becoming eligible under the plan.

Question 5

Disability insurance protects employees who experience long-term or permanent disability.

Question 6

Unemployment compensation is designed to provide funds to employees who have lost their jobs through no fault of their own and are seeking other jobs.

Question 7

An employer that establishes a SIMPLE IRA plan must make either matching contributions or elective contributions.

Question 8

The Health Maintenance Organization Act of 1973 ushered in the concept of one-stop,prepaid medical services as an alternative to traditional insurance programs.

Question 9

With a group life insurance,physical examination is usually required for coverage.

Question 10

Prior to the passage of the Social Security Act of 1935,employee benefits were not widespread.

Question 11

Flexible plans can be positive for unions because they have total control over the program detail.

Question 12

Private pension plans can be funded solely by the organization or jointly by the organization and the employee.

Question 13

Even though not vested,an employee can still receive funds paid by the employer upon leaving the company.

Question 14

The latest method for communicating a benefit package is to use extranet technology.

Question 15

Social Security is a federally administered insurance system that provides funds to employees upon joining an organization.

Question 16

Early retirement incentives are an alternative to mandatory retirement.

Question 17

In an effort to ensure the fair treatment of employees under pension plans,Congress passed the Employee Retirement Income Security Act (ERISA)in 1974.

Question 18

Workers' compensation is a form of insurance that protects employees from loss of income associated with job-related injuries or illnesses.

Question 19

In a Roth IRA,the employer contributes up to 25 percent of an employee's total salary,with a maximum of $49,000.

Question 20

All employee benefits are legally required benefits.

Question 21

Vesting in a pension or retirement plan means that the employee upon departure from the company would:

A)have the accumulated contributions disbursed among remaining employees.
B)require legal action to secure the monetary contributions.
C)deposit all net earnings of the most recent quarterly period into the fund.
D)be eligible to receive money paid into the fund.

Question 22

Figures compiled by the U.S.Chamber of Commerce show that the single most expensive benefit was ____.

A)retirement-related
B)medical-related payments
C)payments for time not worked
D)social security payments

Question 23

Although it is sometimes extended,unemployment compensation usually expires after:

A)12 months.
B)12 weeks.
C)26 weeks.
D)30 days.

Question 24

The rights of an employee to receive money paid into a pension or retirement fund on their behalf by their employer if they leave the organization prior to retirement is called:

A)a defined-contribution plan.
B)vesting.
C)confirmation.
D)nonforfeiture.

Question 25

Which of the following is true about workers' compensation?

A)The laws generally do not provide for replacement of lost income.
B)The employee normally has to sue the employer to get compensation.
C)Workers' compensation coverage is compulsory in all states.
D)In workers' compensation coverage,there is coinsurance in that the workers' loss is usually not fully covered by the insurance program.

Question 26

Major categories of benefits include all of the following EXCEPT:

A)retirement-related.
B)insurance-related.
C)legally required.
D)payment for time worked.

Question 27

The financial crisis facing social security stems from:

A)unwillingness of employers to help fund the system.
B)demographic changes in our society.
C)unwillingness of employees to contribute funds.
D)lower levels of unemployment.

Question 28

Which of the following is true about the employer-sponsored SIMPLE IRA plan?

A)An employer that establishes a SIMPLE IRA plan must make either matching contributions or elective contributions.
B)Employers making matching contributions must match employee contributions up to 7 percent of the employee's compensation for the calendar year.
C)If an employer establishes a SIMPLE IRA plan,employees who received at least $2,000 in compensation during any prior tax years are eligible to participate for the current year.
D)SIMPLE IRA plans do not have to meet the nondiscrimination requirements,minimum participation/minimum coverage rules,and vesting rules applicable to other types of plans.

Question 29

To receive unemployment compensation,one must meet all of the following requirements EXCEPT:

A)employee must have been covered by Social Security for a minimum number of weeks.
B)employee must have voluntarily quit the former job.
C)employee must be willing to accept any suitable employment offered through the state's unemployment compensation commission.
D)employee's separation from work must be due to a layoff.

Question 30

Generally,unemployment compensation:

A)is limited to a maximum of 36 weeks.
B)is calculated on the basis of the employee's wages received in previous period of employment.
C)is usually funded through taxes paid by employees.
D)can be awarded,in most cases,to employees fired for misconduct.

Question 31

A less costly,lower-maintenance hybrid of the traditional defined-benefit plan is termed a:

A)joint contribution plan.
B)cash-balance plan.
C)recycling plan.
D)streamlined-benefit plan.

Question 32

Which of the following employee benefits are (is)legally required?

A)Company-provided housing
B)State disability insurance
C)Interest-free loans
D)Stock bonus plan

Question 33

As a federally administered insurance system,social security is,for the most part:

A)mandatory.
B)exclusively designed for U.S.government-attached employees.
C)subject to the defined requirements of local municipalities.
D)optional.

Question 34

Health insurance under social security,commonly known as Medicare,provides:

A)free medical treatment to children under 14 and individuals over 65 years of age.
B)free prescription drug coverage for all citizens over 60.
C)universal coverage to all individuals who make social security payments.
D)partial hospital and medical reimbursement for persons over 65.

Question 35

Common insurance-related employee benefits include:

A)social security.
B)retirement gratuity.
C)survivor benefits.
D)annuity plans.

Question 36

Generally,workers' compensation is:

A)prohibited where health benefits are also provided.
B)available only in highly-unionized states.
C)compulsory in most states.
D)optional in most states.

Question 37

ERISA is designed to:

A)provide unemployment insurance to retirees.
B)ensure the solvency of pension plans.
C)allow for tax-deductible pension plan contributions.
D)provide funds for a limited period of time,usually up to 16 weeks.

Question 38

The word "fringe" was dropped from the term "fringe benefits":

A)in an attempt to have workers pay less attention to benefits in general.
B)because of the shift toward linking most benefits to performance.
C)for fear of minimizing the significance of benefits to total compensation.
D)in recognition of the declining importance of benefits to employees.

Question 39

Workers' compensation is most frequently associated with:

A)vacation expense when combining business and personal travel.
B)job-related illness or injury.
C)severance pay upon termination.
D)"office pools" maintained by employees for special occasions.

Question 40

The 401(k)is the most popular type of a:

A)defined-contribution plan.
B)defined-benefit plan.
C)sole proprietor plan.
D)maximum-rollover plan.

Question 41

Which of the following is a requirement resulting from Section 125 and/or DEFRA?

A)No carryover of individual balances is allowed if the selected benefits are not fully used.
B)Taxable benefits allowed include dependent care assistance.
C)Employee benefits elections must be revocable.
D)An employer requires an employee to complete more than three years of service before becoming eligible under the plan.

Question 42

Describe insurance-related benefits.

Question 43

Discuss the concept of early retirement as a benefit.

Question 44

Flexible-benefits are also called _____ plans.

A)standard
B)HMO
C)PPO
D)cafeteria

Question 45

Under cliff vesting:

A)no vesting is provided during the first five years of service.
B)the participant becomes 20 percent vested after three years of service.
C)after an initial period of service,the participant becomes vested in an additional 25 percent in each subsequent year.
D)the participant is 100 percent vested after seven years of service.

Question 46

Which of the following is true about group life insurance?

A)Generally,the employer provides a minimum coverage,usually $5,000 to $10,000.
B)A physical examination is usually required for coverage.
C)Employees do not have the option to purchase more insurance.
D)Presently,employers can provide a maximum of $50,000 worth of life insurance for an employee without the cost of the policy being considered as income to the individual.

Question 47

Why is it important for organizations to communicate the benefit package to their employees?

Question 48

Holidays that are observed at the discretion of the employee or employer are termed _____ holidays.

A)floating
B)fixed
C)unpaid
D)unofficial

Question 49

Managed care programs include:

A)employee benefit packages.
B)pension plans.
C)PPOs and HMOs.
D)group life insurance.

Question 50

Flexible benefit plans are attractive because:

A)unions often oppose them as they are required to give up control.
B)employees are given some control over the distribution of benefits.
C)they require less effort to administer.
D)they are a negligible component of overall compensation.

Question 51

Why are employees often unaware of the benefits their organizations offer?

A)Employees generally do not take much interest in the benefits being offered.
B)Descriptive material,which is always provided,is very difficult for employees to understand.
C)Organizations often make little effort to communicate their employee benefits.
D)Usually,there is significant skepticism about the benefits offered to the employees.

Question 52

Distinguish among contributory,noncontributory,funded,and nonfunded pension plans.

Question 53

Describe those benefits that are legally required.

Question 54

Describe unemployment compensation.

Question 55

Flexible-benefit plans may be of interest to organizations for all of the following reasons EXCEPT:

A)employee benefits become a negligible component of overall compensation.
B)employees gain more familiarity with the various benefits' costs.
C)there can be positive tax ramifications for employees.
D)employment recruitment and retention can be enhanced.

Question 56

Describe workers' compensation.

Question 57

The Roth IRA:

A)is offered by small businesses or even sole proprietors,which usually do not have any other retirement program.
B)was created by the Income Tax Assessment Act 1997.
C)requires that the employer contribute up to 25 percent of an employee's total salary,with a maximum of $49,000.
D)allows for nondeductible contributions and tax-free withdrawals with certain restrictions.

Question 58

Discuss the concept of flexible benefit plans.

Question 59

Define the following: defined-benefit plans,defined-contribution plans,cash-balance plans,401(k)plans,and 403(b)plans.

Question 60

Explain the purposes of the Employee Retirement Income Security Act (ERISA)and the Retirement Equity Act.