Deck 14: Providing Employee Benefits

Question 1

The addition of creative benefits packages for employees provides employers a competitive edge in acquiring and retaining talented employees in their organization.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Employees who are parents always need child care and family leave.

Question 5

According to the Financial Accounting Standards Board, employers fund retirement benefits on a pay-as-you-go basis.

Question 6

Cafeteria-style plans increase benefits costs for employers.

Question 7

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

Question 8

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

Question 9

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

Question 10

Under the workers' compensation laws, employees are eligible to receive their regular paychecks in the event of a disability.

Question 11

According to Employee Retirement Income Security Act (ERISA), employees whose contributions are vested meet the requirements to receive a pension at retirement age.

Question 12

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

Question 13

Tax laws generally make benefits unfavorable to employees.

Question 14

To increase the likelihood of employees understanding messages about benefits, employers must limit communications.

Question 15

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

Question 16

Social security benefits increase if a worker earns wages above the exempt amount.

Question 17

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 18

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

Question 19

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

Question 20

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 21

What is characteristic of benefits required by the Social Security Act?

A) Workers receive no benefits until they reach the full retirement age.
B) Workers are compensated according to their past earnings and retirement age.
C) Workers receive increased benefits when they earn more than the exempt amount.
D) The cost of the program is borne entirely by the employers, who pay a payroll tax.
E) The program benefits persons who are financially dependent on current workers.

Question 22

Which benefits provided by the employer is required by law in the United States?

A) paid vacation
B) personal leave
C) flextime
D) Social Security contributions
E) retirement savings plan

Question 23

As Monty Corp., a shoe manufacturer, grows more profitable, it wants to become more competitive as an employer in the labor market. Juliet, the human resource manager, urges the company to develop a more attractive package of benefits, rather than simply raising salaries. Which statement best supports Juliet's argument?

A) Employees do not pay income taxes on most benefits they receive.
B) Benefits are harder for employees to understand than pay structures.
C) Employees could get a better deal if they bought their own insurance policies.
D) Higher cash compensation gives employees more purchasing power.
E) Different employees look for different types of benefits.

Question 24

In the United States, what is the legal requirement for giving employees paid vacation?

A) Paid vacation must take place on specified days in addition to holidays.
B) Employers must give the amount of paid vacation that makes economic sense.
C) Employers must give employees 10 paid vacation days each year.
D) New employees must receive 25 or 30 days off.
E) Employers decide on paid time off; there is no minimum.

Question 25

Eleanor, who is pregnant, works for an organization with more than 100 employees. She lives 20 miles away from work. By federal law, she is entitled to ________ of unpaid leave after her child is born.

A) 12 days
B) 56 days
C) 12 weeks
D) 30 weeks
E) 11 months

Question 26

Under the Family and Medical Leave Act, which criteria makes employees eligible to take unpaid family leave?

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

Question 27

Sick leave programs

A) must be provided by all employers according to the law.
B) are based solely on the age of employees.
C) pay employees for days not worked due to illness.
D) are mandatory forms of unpaid leave.
E) are forms of floating holidays.

Question 28

What is a similarity between unemployment insurance benefits and workers' compensation benefits?

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

Question 29

Chad finds that he meets the eligibility requirements for Social Security. He elects to receive retirement benefits at 62. Which statement is true?

A) He will receive full retirement benefits.
B) He will receive retirement benefits only according to his earnings history.
C) He will not be eligible for worker's compensation.
D) He will receive benefits at a permanently reduced level.
E) His exempt amount limits will be lifted.

Question 30

In which situation do workers become eligible for unemployment benefits?

A) when they have worked only for a few days
B) when they are out of work because they are sick
C) when they are discharged because of willful misconduct
D) when they are actively seeking work
E) when they are out of work because of a labor dispute

Question 31

Chandler is the owner of a restaurant called KC Kitchen. He decides to increase employee motivation by introducing benefit packages. However, Alivia, the manager, suggests that employees will be more motivated if Chandler increases their actual wages. Which statement, if true, strengthens Alivia's argument?

A) Chandler's competitor, Henry, gives many benefits to his employees.
B) The state has introduced mandatory requirements for employee benefits.
C) Benefit packages are more difficult to understand by employees than pay structures.
D) Most of the employees at KC Kitchen belong to the age group that looks forward to pensions.
E) Employees do not prefer cash compensation due to higher tax rates.

Question 32

On average, out of every dollar spent by a company on employee compensation, more than ________ cents goes to employee benefits.

A) 75
B) 30
C) 50
D) 15
E) 20

Question 33

Which act requires companies with more 50 full-time employees to provide health insurance or face a penalty?

A) Social Security Act.
B) Employee Retirement Income Security Act.
C) Family and Medical Leave Act.
D) Patient Protection and Affordable Care Act.
E) Consolidated Omnibus Budget Reconciliation Act.

Question 34

What is a true of unemployment insurance?

A) It provides payments to offset lost income during voluntary unemployment.
B) Most funding for unemployment insurance is provided by employees.
C) Unfavorable experience ratings of employers lead to higher premiums.
D) Costs for unemployment insurance are standard across the country.
E) It is a voluntary program based on number of employers in a specific state.

Question 35

In the U.S., the amount of sick leave given to employees is often based on

A) length of service.
B) position within the company.
C) age.
D) educational background.
E) prior job experience.

Question 36

What is an advantage of providing benefits instead of cash compensation?

A) It is simpler to pay compensation in benefits than in cash.
B) Benefits give greater control to employees over cash compensation.
C) All companies that provide benefits become eligible for tax breaks by state and federal agencies.
D) Younger employees place more importance on benefits than cash compensation.
E) Employers can assemble creative benefits packages that give them a competitive advantage.

Question 37

Fred, the vice president of Gallway Co., plans to introduce a retirement plan for all employees. Ron, the operations director, disagrees because the proposed plan would increase the company's costs. Which statement, if true, strengthens Fred's argument?

A) Some benefits have become so common that today's employees expect them.
B) Benefits packages are more complex than pay structures.
C) The employees at Gallway Co. are young adults who prefer cash compensation to benefits.
D) Benefits packages do not affect the competitive nature of the labor market.
E) The federal government does not have mandatory requirements for specific retirement plans.

Question 38

Two management students, Gunther and Jake, discuss the pros and cons of employee benefits. Gunther states that unemployment insurance is more advantageous to employees than it is to employers, while Jake argues that employers receive more rewards from it. Which statement weakens Jake's argument?

A) Unemployment insurance provides employers a competitive advantage in the talent market.
B) The amount of an employer's unemployment insurance tax depends on the number of employees.
C) Federal and state taxes paid by employers fund most of unemployment insurance.
D) Unemployment insurance does not provide assistance to unemployed workers looking for new jobs.
E) Unemployment insurance does not include payments to offset lost income during voluntary unemployment.

Question 39

Toby is an engineer at a paint manufacturing company. However, a chemical spill at the factory caused an accident that left him permanently disabled. Which program is specifically designed to help employees like Toby?

A) unqualified retirement plan
B) vested-benefit plan
C) Social Security
D) defined-benefit plan
E) work-sharing plan

Question 40

Yang, the HR manager at a start-up company, helped the founder plan a benefits package that includes paid vacations, holidays, and sick leave. Now an employee approaches Yang to say she has been called up for jury duty and needs to be away next week. What should Yang do?

A) He should direct the employee to use the Family and Medical Leave Act.
B) He should forbid the employee from taking time off for jury duty.
C) He should ask the employee to use her sick leave for jury duty.
D) He should ask the employee to use her vacation time for jury duty.
E) He should establish, and then apply, policies for other situations requiring time off.

Question 41

Riley works at Kupton Co., which provides her with a health care plan that contracts with health care professionals to provide services at a reduced fee. Which type of health care plan is Kupton Co. providing to its employees?

A) flexible spending account
B) preferred provider organization
C) health maintenance organization
D) consumer-driven health plan
E) managed care plan

Question 42

Evan is the human resource manager of a one-year-old technology company. The founder wants him to set up a retirement plan. Evan thinks the best approach during the company's early years would be a defined-contribution plan funded with profit-sharing dollars. Which statement best supports Evan's idea?

A) The plan makes employees part-owners of the company.
B) The Pension Benefit Guarantee Corporation will guarantee a basic benefit.
C) Employees can buy an annuity with the contributions when they retire.
D) The amount employees contribute is not taxed when they contribute it.
E) Contributing a share of profits gives the company more flexibility as it establishes itself.

Question 43

Park Production offered employees a defined-benefit retirement plan, in which retirees received benefits calculated on the basis of their age, earnings, and years of service. But the company didn't keep up with technology, and its earnings fell. When the stock market dipped, the company could no longer afford to keep paying for its retirement benefits. What protection will the retirees have in this situation?

A) Park Production must give the employees the option to sell their stock in the company.
B) The employees will receive payouts from their 401(k) plans.
C) The employees will receive a share of profits as part of the company's ESOP.
D) Because the plan was underfunded, the retirees will no longer receive benefits.
E) The Pension Benefit Guarantee Corporation will provide them with a basic benefit.

Question 44

Tiffany, the engineering manager at Cardinal Tech, takes an eight-week unpaid leave to go on a tour to promote a book she wrote. She does so in accordance with Cardinal Tech's policy for leaves without pay. In what sense could this unpaid leave be an employee benefit for Tiffany?

A) Her leave is based on length of service, so it accumulates over time.
B) Her time off is an example of personal days.
C) The Family and Medical Leave Act requires the employer to grant unpaid time off.
D) She uses her paid time off for the leave.
E) She retains her seniority and benefits during the leave.

Question 45

Connor, the manager of a shipping company, introduces a set of communications, activities, and facilities designed to change health-related behaviors in ways that reduce health risks and subsequent medical costs. The program aims at specific health risks, such as high blood pressure, high cholesterol levels, smoking, and obesity. Based on these offerings, Connor has introduced a(n)

A) employee wellness program.
B) health maintenance organization plan.
C) preferred provider program.
D) managed care program.
E) consumer-driven health program.

Question 46

Phono Inc. has a benefits package that includes paid vacations and sick leave. The human resource manager proposes shifting this time into a bank of paid time off. What would be an advantage of this change?

A) Vacation and sick leave do not make economic sense.
B) Most companies offer this arrangement.
C) The company won't have to set a schedule for holidays.
D) The company won't have to pay for the time the employees take off.
E) Employees have more flexibility and privacy for their personal matters.

Question 47

Meghan, who recently moved to a new city, evaluates several insurance options from her new employer. Owing to her recent medical issues, she wants to choose her health care providers, even if seeing them costs more than seeing the providers in a specific insurance network. Which health care plan is Meghan most likely to find suitable for her needs?

A) a managed care plan
B) a health maintenance organization
C) a preferred provider organization
D) an employee wellness program
E) a flexible spending account

Question 48

What is true about disability insurance?

A) It benefits the disabled employee only for the first year of disability.
B) Payments under short-term plans are less than that of long-term plans.
C) It pays about 50 to 70 percent of the employee's salary in case of disability.
D) Most employers offer long-term disability plans.
E) It offers coverage when the employee's dependent is disabled.

Question 49

Frankie is deciding between two jobs that provide equal pay. He compares the health care benefits provided by both jobs to help him make a decision. One job offers a flexible spending account, while the other job offers him managed care. Which statement will help Frankie make a decision?

A) With managed care, the insurer makes all decisions about health care so Frankie has no control.
B) Money in flexible spending accounts is not taxed, so employees get more take-home pay.
C) The money in the flexible spending accounts must meet IRS requirements.
D) At the end of each year, money remaining in a flexible spending account reverts to the employer.
E) Contributions to a flexible spending account may not exceed $5,000 per year.

Question 50

Which organizations benefit when switching from a defined-benefit plan to cash balance plans?

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

Question 51

What is true of short-term disability insurance?

A) It pays the full amount of a disabled employee's salary for a minimum period of one year.
B) It pays double the full salary of a disabled employee for a period of two months.
C) Only employees who have been with an organization for less than two years are eligible for short-term disability insurance.
D) It pays a portion of a disabled employee's salary as benefits for up to six months.
E) It is only provided to those individuals who work part time.

Question 52

Jerry loses his job during a layoff at his company. He's worried about not having access to his health insurance benefits anymore. However, his company is required to offer him the same health insurance coverage for up to 36 months following the layoff. Which federal law applies in this scenario?

A) Social Security Act
B) Employee Retirement Income Security Act
C) Family and Medical Leave Act
D) Consolidated Omnibus Budget Reconciliation Act
E) Affordable Care Act

Question 53

Courtney's employer provides her with an insurance plan that requires her to obtain approval before being admitted to the hospital for surgical procedures. Which variation of health coverage does this illustrate?

A) managed care
B) health maintenance organization
C) employee wellness
D) flexible spending account
E) consumer-driven health plan

Question 54

Under a 401(k) plan, the ________ is responsible for choosing specific investments.

A) employee
B) PBGC
C) ERISA fiduciary advisor
D) financial institution handling the account
E) employer

Question 55

During a meeting to discuss ways to cut costs on benefits packages, the vice president of the company, Ian, suggests getting long-term disability insurance for all employees. Patty, the HR manager, disagrees with him, stating that short-term disability coverage is more advantageous for the company. Which of the following supports Patty's statement?

A) Short-term disability coverage is offered by few employers, which leads to a competitive advantage.
B) Long-term disability coverage does not have any limits on the amount to be paid each month to employees.
C) Short-term disability plans limit maximum coverage in a month, which makes them more affordable for the company.
D) The nature of work is such that the level of risk involved is high and injuries could be permanent.
E) The majority of the workforce is middle-aged and prefers long-term coverage.

Question 56

Jesse has a health care plan that provides him with coverage that allows him to be involved in making decisions to help lower costs. This plan typically includes insurance with a high deductible, a medical savings account, and ongoing health education. Which type of health care plan is Jesse using?

A) managed care
B) health maintenance organization
C) preferred provider organization
D) flexible health plan
E) consumer-driven health plan

Question 57

Rose, a new employee, learns her company provides a group insurance plan that she can enroll in. Her friend, Gary, suggests that Rose would save money if she chooses to purchase an individual insurance plan over the company's group insurance plan. Which statement weakens Gary's argument?

A) Individual plans are typically offered only to senior executives.
B) Rates for group insurance are typically lower than those of individual policies.
C) Rose will not be eligible for other benefits if she does not enroll in a group insurance plan.
D) Employees get more for their money when they receive insurance as a group benefit.
E) Rose will get more take-home pay if she opts for a group insurance plan.

Question 58

What 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 59

What is an example of a defined-contribution pension plan?

A) consumer-driven pension plan
B) money purchase plan
C) cost-sharing plan
D) flexible spending account plan
E) unfunded PBGC plan

Question 60

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

A) the Consolidated Omnibus Budget Reconciliation Act (COBRA)
B) the Age Discrimination in Employment Act (ADEA)
C) the Americans with Disabilities Act (ADA)
D) the Fair Labor Standards Act (FLSA)
E) the Employee Retirement Income Security Act (ERISA)

Question 61

What is a function of elder care benefits offered by organizations?

A) providing direct financial assistance
B) providing tax exemptions on medical bills of the dependent elders
C) setting up elderly care facilities close to the workplace
D) providing information, referrals, and support
E) providing vouchers and discounts to help employees access the existing elderly care facilities

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

Most organizations offer ________ to encourage learning and attract the kinds of employees who wish to develop their knowledge and skills.

A) tuition reimbursement programs
B) paid vacations
C) pension plans
D) quarterly promotions
E) medical insurance plans

Question 64

Dino Corp. is a start-up located in Orlando. It offers highly beneficial pension plans to its employees. Which category of employees is the company most likely to attract through its pension benefits?

A) women of childbearing age
B) disabled workers
C) older people
D) young people
E) unmarried people

Question 65

What is true of child care benefits?

A) At the highest level of involvement, organizations provide vouchers or discounts for employees to use at existing child care facilities.
B) Companies that provide child care facilities face liability concerns.
C) Provision of child care is mandatory under the Family and Medical Leave Act.
D) Child care benefits should be limited to provision of leaves to employees.
E) Child care benefits must include death benefits for it to be considered as a qualified plan.

Question 66

DJ is a new father. His company helps DJ by collecting information about the cost and quality of available child care. What is true of the child care benefits provided by DJ's company?

A) The child care benefits provided by the company is at the lowest level of involvement.
B) The child care benefits provided by the company is at the highest level of involvement.
C) According to the Family and Medical Leave Act, the company has not provided DJ with adequate child care benefits.
D) According to the Patient Protection and Affordable Care Act, the company has exceeded the level of involvement that is permissible.
E) The child care benefits provided by the company is a form of a dependent care assistance plan.

Question 67

Erika is a marketing manager at a local equipment manufacturer. She knows that saving for college for her 5-year-old twin boys is a challenge. Her employer recently implemented a college tuition plan that lets parents and other family members defer taxes on their contributions to the plan. What is the type of plan being implemented?

A) 529 savings plan
B) 401(k) savings plan
C) 207 college tuition plan
D) U.S. saving bonds plan
E) TD Ameritrade college tuition plan

Question 68

Weg Tech depends heavily on its workforce of software engineers, systems analysts, and coders. Which statement best explains why Weg Tech would offer its employees paid maternity and paternity leave?

A) Only 13 percent of workers currently have paid family leave.
B) Most industrialized nations don't provide this type of employee benefit.
C) Management doesn't want exhausted workers in the office.
D) These benefits are required by the Family and Medical Leave Act.
E) It makes the company more attractive to workers who are in high demand.

Question 69

Kevin is the founder of a new start-up company. He hires mostly young employees who are fresh out of college. He finds that most of his employees are willing to develop their knowledge and skills and would like to take courses to improve themselves. This additional knowledge would benefit Kevin's company, so he decides to encourage this behavior. Which program is Kevin most likely to use in order to do so?

A) tuition reimbursement program
B) employee wellness program
C) worker's compensation program
D) short-term vesting program
E) mature education program

Question 70

Vince, an HR manager, conducts a survey to learn which benefits employees value the most. However, he finds that the survey results are difficult to apply. What is the most likely reason?

A) Employees expect to receive benefits that are legally required and widely available.
B) Software is the only method employees will accept to help them choose their benefits.
C) The costs of turnover at Vince's company are high.
D) The employees only value medical insurance.
E) Employees have very different opinions about what they value.

Question 71

What are vesting rights?

A) the ability of retired employees to retain their seniority if they return to work at their former employer
B) a government commitment to provide retirement benefits to all U.S. workers
C) the designation that retired workers will receive cost-of-living increases as part of their monthly pension checks
D) the guarantee that employees in a pension plan will receive a pension at retirement age, regardless of whether they stay with the employer
E) the ability of younger workers to move their retirement savings to another account after leaving a specific employer

Question 72

What is an advantage of cafeteria-style plans?

A) Employees do not have to select their individual plans.
B) Employees can get a better understanding of the value of benefits provided.
C) These types of plans have lower administrative costs.
D) Since employees will select the benefits that they need the most, it reduces the overall costs.
E) When companies provide cafeteria-style plans, they do not have to pay unemployment insurance tax.

Question 73

Justin is a human resource manager at an advertising firm. Justin proposes that the company adopt defined-benefit plans to attract and retain employees. In which situation will this benefit be most valuable to the firm's employees?

A) if all the employees are under the age of 30
B) if the nature of work demands college graduates
C) if the firm employs experienced, older people
D) if the firm employs young and creative minds
E) if the firm mainly employs freelancers

Question 74

Allen, the CEO of a company, considers dropping medical insurance from the list of benefits provided to its employees. Monique, the operations director, disagrees with Allen by stating that medical insurance is a high-value benefit. Which of the following supports Monique's statement?

A) Companies that do not provide medical insurance cannot have their retirement plans considered as qualified plans.
B) Most employees do not appreciate what health insurance costs the employer.
C) Medical insurance plans do not cover mental illness.
D) A health insurance rate is higher than a general insurance rate.
E) Employees usually realize that surgery or a major illness can be financially devastating.

Question 75

A logical place to begin selecting employee benefits is to establish ________ for the benefits package.

A) a basic hierarchy
B) limits
C) costs
D) goals
E) objectives

Question 76

The employee benefits at Arvin Shine, a high tech firm, includes a basketball team, a gym, and an on-site massage therapist. In what way are these benefits most likely to support the company's business goals?

A) by meeting the standards of most U.S. businesses
B) by making the workplace more family-friendly
C) by protecting the company against charges of employment discrimination
D) by complying with legal requirements for benefits
E) by helping employees cope with demanding, high-stress jobs

Question 77

Michael is the CEO of a company that is expanding overseas. He considers introducing a cafeteria-style benefits plan to cater to the company's diverse workforce. However, the HR team brings up the concern of higher expenses involved in this type of benefits. What is Michael likely to do to lower costs at the initial stage?

A) opt for communication methods that do not stress the value of each benefit
B) avoid standardized plans available for employers opting for cafeteria-style benefits
C) use software packages to design the plan
D) discourage employees from choosing lower-cost options
E) encourage employees to choose benefits they need the most

Question 78

Jerome is the CEO of a magazine publishing company. He wants to provide benefits for his employees but would still like to control his company's costs. Ashley, the head of the HR department, suggests implementing a cafeteria-style plan. What would be the most likely benefit of Jerome doing so?

A) He will save time by using software packages to offer benefits packages.
B) He will avoid the cost of providing employees with benefits they don't value.
C) Having a non-standardized plan will make Jerome's company seem cutting-edge.
D) Employees of the company, including Jerome, will be given more vacation days.
E) Costs will be easy to estimate since all benefits options will be taken into consideration.

Question 79

What does a summary plan description describe?

A) the details of a company's health insurance coverage
B) a pension plan's funding, eligibility requirements, and risks
C) the amount of Social Security benefits employees are allotted
D) the type and duration of disability insurance
E) a set of communications, activities, and facilities designed to change health-related behaviors to reduce health risks

Question 80

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) defined-benefit plans.
D) flexible spending accounts.
E) cash balance plans.