Deck 13: Providing Employee Benefits

Question 1

According to ERISA,employees whose contributions are vested have met the requirements to receive a pension at retirement age.

Answer 1

True
Explanation: Employees whose contributions are vested have met the requirements (enrolling and length of service) to receive a pension at retirement age, regardless of whether they remained with the employer until that time.

Question 2

Employers in the U.S.are legally required to provide 30 days of paid vacation to both new and existing employees every year.

Answer 2

False
Explanation: Western European countries require a minimum number of paid vacation days, with new employees receiving 30 days off in many countries. The United States, in contrast, has no such legal requirement.

Question 3

For the average employee,the most common type of insurance offered as benefits is the pension program.

Answer 3

False
Explanation: The most common types of insurance offered as employee benefits are medical, life, and disability insurance. The U.S. government will require medium-sized and large businesses to offer health insurance or pay a penalty beginning in 2014.

Question 4

The Family and Medical Leave Act of 1993 requires organizations with 50 or more employees within a 75-mile radius to provide as much as 12 weeks of unpaid leave to qualifying employees.

Question 5

Tax laws generally make benefits unfavorable to employees.

Question 6

Social Security benefits are free from federal income taxes and state taxes in all U.S.states.

Question 7

A defined contribution plan guarantees a specified or fixed level of retirement income.

Question 8

Tax-favored 529 savings plans allow employees to set aside a portion of their pretax earnings to purchase long-term care insurance.

Question 9

The funding for unemployment insurance comes from federal and state taxes on employees.

Question 10

All U.S.employees,including federal,state,and local government employees,are covered under the Old Age,Survivors,Disability,and Health Insurance program.

Question 11

Benefits provided to domestic partners of employees have the same tax advantages as benefits provided to their spouses.

Question 12

Employees are most likely to benefit from a flexible spending account if they have predictable health care expenses,such as insurance premiums.

Question 13

The use of wellness programs and consumer-directed health plans in an organization reflect its objective of controlling the cost of healthcare benefits.

Question 14

Since benefits packages are more complex than pay structures,they are harder for employees to understand and appreciate.

Question 15

The addition of creative benefits packages in the worker's compensation portfolio provides employers a competitive edge in acquiring and retaining talented employees in their organization.

Question 16

Health maintenance organizations charge patients half the fee for each visit and service.

Question 17

As an employee benefit,personal days are scheduled so that they extend a Tuesday or Thursday holiday into a long weekend.

Question 18

Under the workers' compensation laws,employees are eligible to receive compensation even if their injuries are self-inflicted.

Question 19

Tuition reimbursement programs offered by certain organizations cover the tuition and other education related expenses of their workers' children.

Question 20

Disability insurance payments are usually less than 25 percent of the employee's salary.

Question 21

Employees and job applicants often have a poor idea of what benefits they have and what the market value of their benefits is.

Question 22

Cafeteria-style plans permit employees to choose the types and amounts of benefits they want for themselves from a given set of alternatives.

Question 23

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

A) both employees and employers.
B) employers only.
C) employees only.
D) retirees.
E) only high income group of citizens.

Question 24

In which of the following areas are unemployment insurance benefits and workers' compensation benefits similar?

A) Both these programs are funded by the federal taxes on employees.
B) Both these costs depend on the organization's experience ratings.
C) The funding costs of both these programs are same across the states.
D) Both the programs replace the same percentage of an individual's previous earnings.
E) The amount of compensation provided to the employees is fixed under both the programs.

Question 25

In general,Social Security provides support for _____.

A) laid-off workers
B) workers injured on the job
C) retired workers
D) self-injured workers
E) sick workers

Question 26

Which one of the following is an objective of the unemployment insurance program?

A) To improve the productivity and skill set of workers
B) To protect the employer from lawsuits
C) To provide an incentive for employers to stabilize employment
D) To offset lost income during voluntary unemployment
E) To help workers with the expenses resulting from job-related accidents and illnesses

Question 27

Under FASB standards,employers fund retirement benefits on a pay-as-you-go basis.

Question 28

Which of the following is true of benefits?

A) They allow employees to buy their own insurance.
B) They let employees to contribute to their own savings plans.
C) Employees do not pay income taxes on most benefits they receive.
D) They give employees greater control over what their compensation buys.
E) Laws usually do not require employers to provide benefits.

Question 29

Which of the following legally required employer-provided benefits help workers injured on the job?

A) Social Security
B) Unemployment insurance
C) Group insurance
D) Workers' compensation
E) Family and medical leave

Question 30

Workers are eligible for unemployment benefits if they:

A) voluntarily quit a job.
B) are out of work due to health reasons.
C) were discharged for cause.
D) are actively seeking work.
E) are out of work because of a labor dispute.

Question 31

According to the Americans with Disabilities Act (ADA),employers are required to take care not to discriminate against workers over age 40 in providing pay or benefits.

Question 32

Which one of the following employer-provided benefits is required by law in the U.S.?

A) Floating holidays
B) Paid vacation leave
C) Unpaid family and medical leave
D) Long-term disability insurance
E) Long-term care insurance

Question 33

Which legal benefit requires employers to pay payroll tax depending on state requirements?

A) Long-term disability insurance
B) Unemployment insurance
C) Workers' compensation
D) Unpaid family medical leave
E) Health care benefits

Question 34

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

A) Employees are covered under the "no-fault" provision even if the injury is self-inflicted.
B) Disability income is not covered under this benefit.
C) It provides payments to offset lost income during involuntary unemployment.
D) Funding for the program comes from the state taxes on employees.
E) The benefits provided to the workers are not taxable.

Question 35

Which of the following benefits is required by law in the United States?

A) Sick leave
B) Personal leave
C) Medical care
D) Social Security
E) Paid leave

Question 36

To take unpaid family leave under the Family and Medical Leave Act,employees must meet which of the following criteria?

A) Should be working for an employer with 50 or more employees within a 75-mile radius
B) Should have worked at least 15 hours per week
C) Should have worked for the employer for more than 5 years
D) Should belong to the top 10 percent of highest paid executives
E) Should be working for an employer with at least 100 employees

Question 37

The cost of a worker's compensation insurance depends on:

A) the profit earned by the organization during the concerned fiscal.
B) the number of years the concerned worker has been working in the organization.
C) the total strength of the organization's workforce.
D) the number of years for which the organization has been in business.
E) the state where the company is located.

Question 38

The employer's _____ refers to the number of employees the company laid off in the past and the cost of providing them with unemployment benefits.

A) attrition
B) scalability
C) experience rating
D) Six Sigma score
E) wage drift

Question 39

Social Security is formally known as the _____.

A) paid leave program
B) New Deal program
C) Old Age, Survivors, Disability, and Health Insurance program
D) employee wellness program
E) noncontributory plan

Question 40

Which one of the following is true of Social Security benefits?

A) Benefits are taxed as ordinary income at both the federal and state level.
B) Workers who meet requirements receive retirement benefits according to age and earnings history.
C) Workers are not required to meet any eligibility rules to receive benefits.
D) The cost of the program is borne entirely by the employees who pay a payroll tax.
E) The program covers railroad and federal, state, and local government employees.

Question 41

While the number of mandatory days of paid vacation in Western Europe is about 30 days,the U.S.companies typically offer:

A) five paid holidays each year.
B) 10 paid holidays each year.
C) 20 paid holidays each year.
D) more than 40 paid holidays each year.
E) more than two weeks of paid holidays each year.

Question 42

The purpose of floating holidays is to allow employees to:

A) extend a Tuesday or Thursday holiday into a long weekend.
B) decide which national holidays they wish to observe with pay.
C) take time off for personal reasons on any day of the week.
D) allow international employees to observe legal holidays within their country of assignment.
E) pool in the different types of leaves and enjoy long paid vacations.

Question 43

Which of the following benefits required by law provides coverage according to state requirements?

A) Paid leave
B) Medical care
C) Sick leave
D) Workers' compensation insurance
E) Social Security

Question 44

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

A) The state where the person was employed during the retirement year
B) Number of dependents
C) Age
D) Average earning during the last 20 years of employment
E) Number of unused leaves at the end of the retirement year

Question 45

The Family and Medical Leave Act of 1993 requires employers to provide:

A) up to 8 weeks of unpaid leave after childbirth or adoption.
B) reinstatement to the same (or a comparable) job upon the employee's return to work.
C) paid leave to any employee who has one or more years of full-time service.
D) up to 18 weeks of unpaid leave to care of a seriously ill parent, spouse, or child.
E) up to one month of paid leave to take care of a seriously ill spouse, child, or parent.

Question 46

Which of the following is true of flexible spending accounts?

A) They may be used to cover only employees' and not dependents' health-care expenses.
B) They do not permit pretax employee contributions.
C) Contributions to the accounts may exceed $5,000 per year but must be designated in advance.
D) Funds must be used by the plan's year end or they revert to the employer.
E) The money in the flexible spending account is taxed and it reduces an employee's take home pay.

Question 47

Which of the following is true of the Pension Benefit Guarantee Corporation?

A) It was created by the Employee Retirement Income Security Act (ERISA) of 1974.
B) It provides a supplemental income if the employee is temporarily unemployed.
C) It provides employee protection for only defined-benefit pension plans.
D) It is funded by a payroll tax imposed on each plan participant.
E) It guarantees retirees a basic benefit only if the employer is in a sound financial position.

Question 48

The _____ is a federal law that requires employers to permit employees or their dependents to extend their health insurance coverage at group rates for up to 36 months following a qualifying event,such as a layoff,reduction in hours,or the employee's death.

A) Family and Medical Leave Act (FMLA)
B) Employee Retirement Income Security Act (ERISA)
C) Social Security Act
D) Consolidated Omnibus Budget Reconciliation Act (COBRA)
E) Sarbanes-Oxley Act

Question 49

Which of the following sources do most retirees (65 and older)receive most of their income?

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

Question 50

Which of the following is true of the Employee Retirement Income Security Act of 1974?

A) The act established certain rights related to vesting.
B) The act required employers to offer supplemental retirement plans.
C) The act barred portability of retirement savings.
D) The act reduced the responsibility of pension plan trustees.
E) The act guaranteed retirees a pension equivalent to their last drawn salary.

Question 51

Which of the following is true of an employee's domestic partner under the health insurance benefits?

A) They are not considered as dependents of the employee.
B) They are not covered under the employee's health insurance benefits.
C) They get the same tax benefits as those received by spouses.
D) They receive benefits only if they work in the same firm as the employee.
E) They get benefits that are taxed as wages of the employee receiving the benefits.

Question 52

Which of the following federal laws increased the responsibility of pension plan trustees to protect retirees?

A) The COBRA
B) The ADEA
C) The ADA
D) The FLSA
E) The ERISA

Question 53

The Mental Health Parity and Addiction Equity Act of 2008 exempts which of the following companies?

A) Companies with less than 50 employees
B) Companies with less than 100 but more than 50 employees
C) Companies with more than 50 employees
D) Companies with more than 100 employees
E) Companies with more than 1000 employees

Question 54

Which one of the following is true of health maintenance organizations?

A) It's costs tend to be more than the cost for traditional health insurance.
B) It's services are provided on a postpaid basis.
C) It's patients are allowed to select physicians of their choice.
D) It pays physicians on a flat salary basis.
E) It pays physicians a fee-per-service rather than a flat salary.

Question 55

Active employee wellness programs:

A) rely on employees to identify and obtain the services they need.
B) are health education programs that provide information and services, but no formal support or motivation to use the program
C) have not been successful in reducing risk factors associated with cardiovascular disease.
D) assume that behavior change requires not only awareness and opportunity, but support and reinforcement.
E) cost less than passive wellness programs.

Question 56

Employers that offer medical insurance must meet the requirements of the _____.

A) Employee Retirement Income Security Act
B) Consolidated Omnibus Budget Reconciliation Act
C) Glass-Steagall Act
D) Patient Protection and Affordable Care Act
E) Sarbanes-Oxley Act

Question 57

Which of the following is a difference between PPOs and HMOs?

A) PPOs provide benefits at a reduced fee rather than on a prepaid basis as in HMOs.
B) HMO employees are not required to use only preselected plan service providers, as in PPOs.
C) PPOs are less expensive plans than HMOs if the employee goes out of the PPO network.
D) HMOs have more in common with traditional fee-for-service plans than do PPOs.
E) Unlike HMOs, payments to PPO physicians are made on a flat salary basis.

Question 58

The Pregnancy Discrimination Act of 1978 requires employers:

A) to offer disability plans with pregnancy-related coverage.
B) offer disability plans to treat pregnancy as they would any other disability.
C) to provide up to six weeks of paid leave to either parent upon the birth of a child.
D) to provide up to six weeks of unpaid leave to either parent upon the birth of a child.
E) to offer disability leave up to one month to either parent before the birth of a child.

Question 59

Which type of retirement plan guarantees a specified level of retirement income?

A) 401(k) plan
B) Profit sharing plan
C) Money purchase plan
D) Defined benefit plan
E) Employee stock ownership plan

Question 60

Employers that offer medical insurance must meet the requirements of the _____.

A) Employee Retirement Income Security Act of 1974
B) Family and Medical Leave Act of 1993
C) Social Security Act of 1935
D) Sarbanes-Oxley Act of 2002
E) Consolidated Omnibus Budget Reconciliation Act of 1985

Question 61

For an organization with _____,switching from a defined-benefit plan can produce great savings in pension benefits.

A) many experienced employees
B) a few skilled employees
C) many young employees
D) many retired employees
E) highly skilled employees

Question 62

A _____ pension plan allows pension benefits for key employees,such as highly paid managers,to exceed a government-specified share of total pension benefits.

A) top-heavy
B) multiemployer
C) special draw rights
D) deferred
E) defined-contribution

Question 63

Which of the following actions help organizations reduce the cost of health care benefits offered to employees?

A) By increasing the amount employers pay for deductibles and coinsurance
B) By selecting traditional health insurance over HMO and PPO as a preferred option
C) By expanding the coverage for different types of claims
D) By paying some or all of the difference in cost between an HMO or PPO plan
E) By shifting from traditional health insurance plans to PPOs and CDHPs

Question 64

Defined-benefit plans must meet the funding requirements of the _____.

A) Employee Retirement Income Security Act
B) Consolidated Omnibus Budget Reconciliation Act
C) Social Security Act
D) Patient Protection and Affordable Care Act
E) Sarbanes-Oxley Act

Question 65

Within a 401(k)plan,who has the responsibility for investing?

A) The employee
B) The PGBC
C) The ERISA Fiduciary Advisor
D) The financial institution handling the account
E) The employer

Question 66

Which of the following is true of 529 savings plans?

A) They are mandated by the federal government.
B) They are designed to support the primary education expenses of workers' children.
C) They provide education to employees' children at a subsidized rate.
D) They provide information about the education standards in different colleges to employees to help them enroll their children in better institutions.
E) They allow parents and other family members to defer taxes on the earnings of their deposits.

Question 67

Which one of the following is an example of a defined-contribution pension plan?

A) Consumer-driven pension plan
B) Money purchase plan
C) Gainsharing plan
D) Flexible spending account plan
E) Unfunded PBGC plan

Question 68

Which one of the following is true of 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 guarantee a basic benefit to the employee if the employer experiences financial difficulties.
E) They are easier to administer as compared to other plans.

Question 69

To encourage learning and attract the kinds of employees who wish to develop their knowledge and skills,many organizations offer:

A) tuition reimbursement programs.
B) flexible schedules.
C) paid leaves for more than 2 weeks.
D) quarterly promotions.
E) college savings plans.

Question 70

A popular defined-contribution plan whereby employees contribute pretax dollars which are then matched by the employer is known as:

A) money purchase plans.
B) Section 401(k) plans.
C) profit-sharing plans.
D) ERISA benefit plans.
E) employee stock ownership plans (ESOPs).

Question 71

Elder care benefits typically give emphasis to:

A) providing a direct financial assistance.
B) providing tax exemptions on medical bills of the dependent elders.
C) setting up an elderly care facility close to the work place.
D) providing information and support.
E) providing vouchers and discounts to help employees access the existing elderly care facilities.

Question 72

Which of the following is true of a cash balance plan?

A) All contributions to the plan come from the employee.
B) The money earns interest at a predetermined rate, such as the rate paid on U.S. Treasury bills.
C) Older employees with many years of service benefit to a greater degree than do younger workers just starting their careers.
D) It penalizes employees for changing jobs.
E) Employees cannot predict retirement benefits under cash balance plans.

Question 73

Benefit plans that permit employees to choose the types and amounts of benefits they want from a set of alternatives are called:

A) preferred provider plans.
B) cafeteria-style plans.
C) pay-or-play plans.
D) flexible spending accounts.
E) cash balance plans.

Question 74

Which of the following was created by the Employee Retirement Income Security Act (ERISA)of 1974?

A) Employee Benefit Security Administration
B) Federal Trade Commission
C) Merit Systems Protection Board
D) Federal Retirement Thrift Investment Board
E) Pension Benefit Guarantee Corporation

Question 75

Which of the following is true of the cost of benefits?

A) Data about costs help employers to select the kinds of benefits to offer.
B) The lowest-cost items tend to offer the most room for savings.
C) Non-negotiable benefits tend to help the employer save more.
D) Cost control is easier when economic growth slows.
E) Concern over costs has prompted many employers to shift from PPOs to traditional health insurance.

Question 76

The _____ is a report that describes a pension plan's funding,eligibility requirements,risks,and other details.

A) mission statement
B) balanced scorecard
C) labor law posting
D) "top-heavy" plan
E) summary plan description

Question 77

The guarantee that when employees become participants in a pension plan and work a specified number of years,they will receive a pension at retirement age,regardless of whether they remained with the employer is referred to as _____.

A) special drawing rights
B) quid pro quo
C) laissez-faire
D) benchmarking
E) vesting rights

Question 78

How do cafeteria-style plans increase costs for employers?

A) Employers pay much higher premium on HMO than a preferred health care plan.
B) Employers are required to pay higher insurance premium for laid-off workers.
C) Contribution to PGBC to fund the retirement plan increases under this plan.
D) Employees select the kind of benefits they expect to need the most.
E) The employers bear the cost of providing employees with benefits they do not value.

Question 79

Which of the following is true of the Employee Retirement Income Security Act (ERISA)of 1974?

A) It was introduced as a bill by the Pension Benefit Guarantee Corporation.
B) It established vesting rights related to pensions.
C) It prohibits the movement of retirement savings when changing employers.
D) It makes it mandatory to operate a day-care center at or near the workplace.
E) It establishes the setting up flexible spending accounts for dependent care.

Question 80

Which of the following is true of defined-contribution plans?

A) Defined-contribution plans are required by ERISA.
B) Employers are free from the risk of poor performance of the plans.
C) The PGBC makes annual contribution of $33 per participant.
D) They guarantee a specified level of retirement income.
E) They guarantee higher returns to the employees compared to the defined benefit plans.