Deck 12: The Benefit Determination Process

Question 1

The most widely used benefit survey is conducted by:

A)the U.S.Chamber of Commerce.
B)Watson-Wyatt.
C)the Society for Human Resource Management.
D)the American Compensation Association.

Answer 1

A

Question 2

Which of the following is an advantage of flexible benefit plans?

A)They require no expenditure from the employers.
B)They decrease the administrative burdens for employers.
C)They decrease the costs as employees pick only those benefits they will use resulting in the subsequent high benefit utilization.
D)They increase the involvement of employees in choosing benefit plans.

Answer 2

D

Question 3

The first issue in setting up a benefits package is:

A)finding out who should be protected or benefited.
B)figuring out how much choice should employees have among benefits.
C)determining how benefits should be financed.
D)choosing legally defensible benefits.

Answer 3

A

Question 4

A benefit plan that allocates a set dollar amount to employees and allows them to select benefits is called _____ plan.

A)a select choice
B)a no-deductible
C)a flexible benefit
D)a flat dollar benefit

Question 5

If a benefit forecast suggests future cost containment may be difficult, the benefit should:

A)be completely paid for by employees.
B)be used on a noncontributory basis.
C)not be used.
D)be offered to employees only on a cost-sharing basis.

Question 6

Which of the following is NOT a disadvantage of flexible benefit programs?

A)Administrative burdens and expenses increase.
B)Adverse selection of benefits by employees results in increase in costs.
C)New benefits are more difficult to introduce.
D)Flexible benefits are subject to nondiscrimination requirements in Section 125 of Internal Revenue Code.

Question 7

Various studies have found that only two specific benefits curtailed employee turnover: _____ and _____.

A)vacation days; dental plans
B)profit-sharing plans; life insurance
C)retirement benefits; paid vacations
D)pensions; medical coverage

Question 8

Surveys show that the most highly valued benefit is:

A)dental coverage.
B)life insurance.
C)paid vacation and holidays.
D)medical insurance.

Question 9

A recent survey shows employees ranking employee benefits _____ in explaining job satisfaction.

A)first
B)second
C)third
D)last

Question 10

In 1959, benefits were approximately _____ percent of payroll and in 2010 it was approximately _____ percent of payroll.

A)30; 50
B)20; 38
C)25; 30
D)30; 60

Question 11

The typical employee can recall _____ percent of the benefits he or she receives.

A)almost 50
B)less than 15
C)over 30
D)40

Question 12

All of the following are advantages of flexible benefits EXCEPT:

A)containment of costs of benefits.
B)increased understanding of benefits by employees.
C)reduced expense of introducing new benefits.
D)decreased administrative expenses.

Question 13

Which of the following benefits is NOT mandated by state or federal legislation?

A)Workers' compensation
B)Work/life balance
C)Social security
D)Unemployment insurance

Question 14

_____ allows employees who have resigned or have been laid off through no fault of their own to continue receiving health coverage under their employer's plan at a cost borne by the employee.

A)Health Maintenance Act (1973)
B)FLSA (1938)
C)The tax reform of 1982
D)COBRA (1984)

Question 15

DrenchFort Corp.is a small company that pays high wages.As its wages are high, it does not provide any benefits.Recently, it has noticed that its employee turnover has increased, so it decides to provide benefits to retain employees.Which of the following benefits is most likely to reduce turnover?

A)Counseling service
B)Early retirement plan
C)Medical coverage
D)Profit-sharing plan

Question 16

Which of the following statements is true of employee benefits?

A)Employers can substitute insurance benefits for job security.
B)Group insurance benefits has relatively easy qualification standards.
C)Most employee benefits are taxable.
D)Many group-based benefits are obtained at a higher rate than could be obtained by employees acting on their own.

Question 17

Which of the following is NOT part of the cost-centered approach for deciding to provide a benefit?

A)Checking compliance
B)Evaluating competitiveness of current benefits
C)Examining employee preferences
D)Basing benefits on historical costs

Question 18

How many weeks of leave does Family Medical Leave Act (1993) mandate for all workers at companies that employ 50 or more people?

A)4 weeks
B)8 weeks
C)12 weeks
D)16 weeks

Question 19

A survey shows that the majority of employers are responding to increased benefit costs by _____.

A)requiring employees to pay higher deductibles and copays
B)laying off employees
C)dropping health care plans
D)relying on the Patient Protection and Affordable Care Act

Question 20

All of the following factors are reasons for the growth of benefits EXCEPT:

A)foreign lawsuits.
B)unions.
C)cost effectiveness of benefits.
D)government impetus.

Question 21

Cost pressure related to increasing diversity of the workforce is one of the reasons companies are offering flexible benefit plans.

Question 22

The _____ requires individuals to maintain minimal essential health insurance coverage or pay a penalty unless exempted for religious beliefs or financial hardship.

A)Patient Protection and Affordable Care Act
B)Family and Medical Leave Act
C)Health Maintenance Organization Act
D)Consolidated Omnibus Budget Reconciliation Act

Question 23

The favorable tax status granted to many benefits is safe from the threat of recurrent tax reform proposals.

Question 24

Which of the following companies uses probationary periods as a cost-containment measure?

A)Alpha Corp.combines the benefits offered for couples who work within the organization
B)DLG Corp.excludes its new recruits from benefit coverage until they complete a year
C)Kimberly Corp.requires employees in the lowest salary quartile to pay for 20 percent of benefits
D)Amethyst Corp.limits its employees to avail coverage for only two dentist visits every six months

Question 25

Employers prefer the noncontributory approach to financing benefits because this allows greater control of costs.

Question 26

By limiting liability for an employee's hospital stay costs to $200,000, an employer is using a cost-containment measure known as:

A)dual coverage.
B)benefit ceiling.
C)coinsurance.
D)deductible.

Question 27

Today, benefits make up about 25 percent of payroll costs.

Question 28

All employee benefits provided by employers are taxable.

Question 29

A disadvantage of flexible benefit programs is that they increase administrative burdens.

Question 30

Trumbrella Corp.is a pharmaceuticals company.One of its employees reports that he had an on-the-job injury caused by slippery factory floor that broke his back.When Trumbrella initiates its claims processing, it should first:

A)determine whether the accident happened.
B)determine if the employee is eligible for any benefit.
C)calculate the payment required to be paid to the employee.
D)contact the insurance companies to enquire about the possibility of a joint payment.

Question 31

Benefits can be an effective tool to attract and retain employees when the benefits address the needs of a target group.

Question 32

One of the most preferred benefits is _____.

A)stock plans
B)profit sharing
C)shorter working hours
D)early retirement

Question 33

All of the following are cost-containment practices designed to reduce benefit costs EXCEPT:

A)probationary periods.
B)provision of skills development training.
C)copay.
D)seeking competitive bids for benefit delivery.

Question 34

_____ is the most frequently used medium for communicating employee benefits.

A)A notice board
B)A seminar
C)An employee benefit handbook
D)A meeting with the chief executive officer

Question 35

The biggest cost-containment strategy in recent years is the movement to:

A)benefit limitations.
B)HMOs.
C)outsourcing.
D)higher deductibles.

Question 36

A job ad stating generous benefits leads applicants to place higher value on benefits in choosing among jobs.

Question 37

As part of the efforts to bring down the employee benefits cost to the company, GrindStop Corp.restricts the number of visits to the dentists covered in the dental plan to two per year.Which of the following cost-containment strategies is used by GrindStop?

A)Copay
B)Benefit limitation
C)Administrative cost containment
D)Wellness program

Question 38

Pension costs are of no concern to employers as the government handles the pension costs.

Question 39

_____ are NOT used for determining employee benefit preferences.

A)Demographic data
B)Product market share data
C)Employee surveys
D)Cafeteria-style plans

Question 40

Flexible benefit plans eliminate the involvement of employees.

Question 41

If the future cost containment of a benefit may be a problem, the benefit should be offered on a noncontributory basis.

Question 42

What are the four major administration issues that arise in setting up a benefit package?

Question 43

What is the role of government impetus in the development of employee benefits?

Question 44

Employees' preferences of various benefits can be predicted accurately from demographic data.

Question 45

A major reason for the proliferating cost of benefit programs is the narrow focus of benefit administrators.

Question 46

One of the best strategies for determining external equity is to conduct a benefit survey.

Question 47

What are the major disadvantages of a flexible benefits package?

Question 48

Employees prefer using their company's intranet for accessing their benefits information as they do not need to complete lengthy paperwork.

Question 49

The Employment Retirement Income Security Act (1974) requires employers to offer some form of pension.

Question 50

The only two benefits shown to reduce turnover are pensions and medical coverage.

Question 51

The Family Medical Leave Act of 1993 mandates 20 weeks of leave for all workers at companies that employ 10 or more people.

Question 52

What can administrators do to control the increasing benefits costs?

Question 53

According to available evidence, companies can successfully remain nonunion by offering the same benefits as those provided by unionized firms.

Question 54

What are some of the common cost-containment practices with regard to benefits administration?

Question 55

No strong data exist linking benefits level and employee productivity.