Deck 12: Managing Employee Benefits

Question 1

A situation in which only higher-risk employees select and use certain benefits under a flexible benefits plan provided by employers is referred to as _____.

A) risk dispersion
B) benefits concentration
C) adverse selection
D) open enrollment

Answer 1

C

Question 2

Which of the following statements is true of part-time employees?

A) Anti-discrimination laws enable part-time employees in the United States to receive the same benefits as those received by full-time employees.
B) Many employers in the United States do not provide any part-time employee benefits, except some paid time off.
C) Over 90 percent of the part-time employees in the United States have access to health care benefits.
D) Less than 5 percent of the part-time employees in the United States have access to retirement benefits.

Answer 2

B

Question 3

Claudia, a Legal Assistant, worked with Malag Inc. for 10 years after which she became fully vested. This implies that she _____.

A) will receive the amounts contributed by both the employer and herself when she retires
B) can transfer her entire pension fund balances to a new employer's plan if she moves to a new company
C) will receive the maximum amount of pension available under her company's retirement plan when she retires
D) can no longer move her retirement benefits to another employer

Answer 3

A

Question 4

Every company is required to pay an unemployment tax that is based on the _____.

A) actuarial calculations of the benefits to be paid to employees
B) the total number of employees covered under workers' compensation
C) employees' lengths of service
D) the number of claims filed by workers who leave employment

Question 5

Which of the following best describes workers' compensation?

A) Compensation provided to workers after retirement
B) A benefit program provided to workers injured on the job
C) A benefit program provided to workers who survive terminal diseases
D) Total pay package that includes both basic wages and benefits

Question 6

In the context of the types of benefits offered by employers, which of the following is a voluntary benefit?

A) Social Security
B) Wellness programs
C) Medical plans
D) Workers' compensation

Question 7

Which of the following is true of employee benefits?

A) Workers in the United States are entitled to greater employee benefits than workers in many other nations.
B) Employers who are seen as skimping on employee benefits are often viewed positively within a community.
C) Surveys show that a majority of individuals regard employee benefits as unimportant in their decision to join or remain with an organization.
D) Employee benefits are used to create and maintain a competitive advantage for organizations.

Question 8

Which of the following is a benefit that employers must provide?

A) Wellness programs
B) Unemployment compensation
C) Education assistance
D) Public-service leave

Question 9

A problem with providing flexibility in benefit choice is that it _____.

A) does not cover higher-risk employees
B) increases the risk of adverse selection by employees
C) is typically discriminatory in nature
D) increases attrition rate

Question 10

In the context of benefits administration, which of the following statements is true of information technology?

A) It makes it possible for companies to offer self-service to employees.
B) It increases the costs associated with benefits administration.
C) It necessitates the involvement of a third-party administrator to manage employee benefits.
D) It prevents companies from providing employees access to HR experts.

Question 11

Which of the following is a voluntary employee benefit that employers may provide in addition to legally required benefits?

A) Medical plans
B) Workers' compensation
C) Education assistance
D) Social Security

Question 12

Medicare is the health insurance program that was implemented by the U.S. government in 1965 to provide medical care primarily for _____.

A) disabled workers
B) government employees
C) people over the age of 65
D) cancer patients

Question 13

Workers' compensation programs are typically funded _____.

A) at the expense of the employer
B) at the expense of all the stakeholders
C) by the value-added taxes levied by the federal government on specific goods
D) by the contributions made to state governments by both employees and employers

Question 14

Which of the following is a disadvantage of providing flexible benefits plans?

A) These plans do not cover higher-risk employees.
B) There is a risk that employees will choose an inappropriate benefits package.
C) These plans are typically discriminatory in nature.
D) There is a risk that these plans will increase the attrition rate.

Question 15

A flexible benefits plan typically _____.

A) allows only higher-risk employees to select and use certain benefits
B) continuously updates the benefit options provided by an employer according to the demands and requirements of employees
C) provides flexibility in choosing the time of the year when employees would like to make use of the benefits provided to them
D) allows employees to select the benefits they prefer from options established by the employer

Question 16

Jim, a 23-year-old factory worker, was seriously injured when a hammer fell on his head while he was at his workstation. Jim did not have his safety helmet on at the time of the accident even though the factory's safety rules mandate the use of safety helmets at all times. In this scenario, which of the following is most likely to be true of Jim?

A) Jim will be able to claim additional Social Security benefits.
B) Jim will be able to claim additional wages if he files a lawsuit against the company.
C) Jim will receive a severance payment when he returns to work after he recovers from his injuries.
D) Jim will receive workers' compensation even though he is responsible for the injury.

Question 17

Sylvia and Co. provides enrollment and recordkeeping services to Widgeton Inc. In this scenario, Sylvia and Co. is most likely _____.

A) Widgeton's parent organization
B) Widgeton's subsidiary
C) an in-house claims processor
D) a third-party administrator

Question 18

Which of the following statements is true in the context of part-time employee benefits and status?

A) Part-time employees are more likely to receive life insurance benefits than paid holidays.
B) Part-time employees are more likely to receive retirement benefits than health care benefits.
C) Part-time employees are less likely to receive short-term disability benefits than long-term disability benefits.
D) Part-time employees are less likely to receive paid disability leave benefits than health care benefits.

Question 19

What is the normal retirement age for employees in the United States to receive maximum Social Security benefits?

A) 50
B) 57
C) 70
D) 67

Question 20

Cost sharing _____.

A) involves employers sharing the costs of government-mandated health insurance plans with the government
B) requires employees to pay for more of their benefit costs
C) requires insurance firms to share profits with employers who purchase insurance plans
D) allows employees to track their fund balances

Question 21

Meredith, the General Manager at Gladfle Inc., is planning to use certain new strategies to control and reduce the health care benefit costs to her company. Which of the following should she include in her list of strategies?

A) Decreasing copayments
B) Eliminating high-deductible plans
C) Switching to consumer-driven health plans
D) Avoiding managed care

Question 22

Which of the following is true of the Older Workers Benefit Protection Act (OWBPA)?

A) It has set the maximum retirement age for employees to be eligible for retirement benefits at 60 years.
B) It was enacted in 1990 as an amendment to the Age Discrimination in Employment Act (ADEA).
C) It extends dependent coverage up to age 60.
D) It exclusively covers employees in the government sector.

Question 23

In defined contribution plans, _____.

A) investment risks are borne by employees
B) the amount of benefit paid at retirement is predetermined
C) benefits are guaranteed by the Pension Benefit Guaranty Corporation (PBGC)
D) the amount of contribution changes on the basis of actuarial assumption

Question 24

A _____ is a retirement program in which employees are promised a pension amount based on age and years of service.

A) stock purchase plan
B) defined contribution plan
C) defined benefit plan
D) cash balance pension plan

Question 25

Which of the following is true of defined benefit retirement plans?

A) In these plans, the investment risk is borne by the employee.
B) In these plans, the amount of benefit paid at retirement is predetermined.
C) They are most common in private sector and nonunion workforces.
D) They typically do not guarantee benefits.

Question 26

Glen, a line manager, is informed that his company will be introducing a stock purchase plan for employees. This implies that _____.

A) Glen will receive monthly dividends from his employer
B) Glen will be able to sell his share of the company stocks at the market rate
C) Glen will be able to buy shares in the company at a discount
D) Glen will be provided financial counseling on the purchase and sale of stocks

Question 27

_____ typically consists of approaches that monitor and reduce medical costs through restrictions and market system alternatives.

A) Utilization review
B) Managed care
C) A medical review program
D) A medical option plan

Question 28

The Health Insurance Portability and Accountability Act (HIPAA) _____.

A) requires employers with more than 50 employees to provide medical insurance for all full-time employees
B) encourages insurance companies to set rates based on an individual's health status
C) allows group insurance plans to drop coverage for a sick employee
D) allows employees to switch their health insurance plans when they change jobs

Question 29

Samuel works for a company that provides health care benefits to all its insured employees. However, every time Samuel visits a physician, he is required to pay a fixed amount of $20 from his own pocket, whereas the rest of the amount is covered by the medical insurance. The $20 that Samuel has to pay is an example of a(n) _____.

A) insurance premium
B) end-user cost
C) copayment
D) deductible

Question 30

Long-term disability insurance _____.

A) applies exclusively to nongovernmental employers with over 50 employees
B) pays for temporary living expenses and moving expenses incurred by disabled employees
C) pays a flat fee for a fixed number of hours of legal assistance each month for disabled employees
D) provides continuing income protection for employees who become disabled and are unable to work

Question 31

How do insurance plans offered by employers benefit employees even when the employers do not pay any of the costs?

A) If the employers do not contribute to insurance costs, they are required to offer special benefits to their employees.
B) The employees are offered insurance plans at lower rates through group programs.
C) The employers pay all of the costs of formal education courses taken up by the employees' dependents.
D) The amount paid by the employees is tax-free only when the employers make no contribution.

Question 32

According to the Consolidated Omnibus Budget Reconciliation Act (COBRA), _____.

A) employers with more than 50 employees must provide medical insurance for all full-time employees
B) most employers with 20 or more employees must offer extended health care coverage to certain groups of plan participants
C) widowed or divorced spouses and dependent children of former or current employees need not be offered health care coverage
D) employees who are terminated need not be offered health care coverage

Question 33

According to a 1986 amendment to the Age Discrimination in Employment Act (ADEA), _____.

A) most employees cannot be forced to retire at a specific age
B) workers should contribute to defined benefit plans
C) older workers should be discouraged from retiring before the normal retirement age
D) employees above age 50 are ineligible for full pension benefits

Question 34

Which of the following is true of the Patient Protection and Affordable Care Act?

A) It requires firms with 30 or more employees to provide health care coverage.
B) It encourages insurance companies to set rates based on an individual's health status.
C) It extends dependent coverage up to age 26.
D) It eliminates coverage for preventive services.

Question 35

The _____ ensures the privacy of employee medical records.

A) Health Insurance Portability and Accountability Act (HIPAA)
B) Age Discrimination in Employment Act (ADEA)
C) Employee Retirement Income Security Act (ERISA)
D) Family and Medical Leave Act (FMLA)

Question 36

A company that has been providing generous defined benefit pension plans to all its retirees for the past 50 years is now facing bankruptcy and is unable to pay the pension amount. Which of the following statements is true in the given scenario?

A) The Pension Benefit Guaranty Corporation will pay the company's retiree benefits from its solvency fund.
B) The Pension Benefit Guaranty Corporation will reduce the pension amount based on the available amount of money in the pension fund.
C) The retirees will have to forfeit their pension benefits.
D) The company can suspend pension payments until the pension fund is fully recovered.

Question 37

Karen, a diabetic, has quit her job as an Internal Auditor with a bank and has joined another company as the Assistant Chief Financial Officer. Which of the following acts will enable Karen to switch her health insurance plan from her former employer to her new employer?

A) Employee Retirement Income Security Act (ERISA)
B) Family and Medical Leave Act (FMLA)
C) Age Discrimination in Employment Act (ADEA)
D) Health Insurance Portability and Accountability Act (HIPAA)

Question 38

In a _____, an employer makes financial contributions to help employees cover their health-related expenses.

A) consumer-driven health plan
B) cash balance plan
C) self-directed health plan
D) managed care plan

Question 39

Which of the following is a strategy that is most frequently used by employers offering health care benefits to control and reduce their costs?

A) Decreasing deductibles and copayments
B) Instituting low-deductible plans
C) Increasing employee contributions
D) Expanding family coverage

Question 40

Preferred provider organizations (PPOs) and health maintenance organizations (HMOs) _____.

A) primarily aim at reducing health care costs paid by employees
B) do not provide health care services to private-sector organizations
C) separate their prescription drug coverage from the general health care plan
D) are the most common forms of managed care

Question 41

Which of the following statements is true of the Family and Medical Leave Act?

A) It requires employers to allow eligible employees to take a maximum of 12 weeks of paid leave during any 12-month period to care for a spouse, child, or parent with a serious health condition.
B) It requires employers to allow eligible employees to take a maximum of 12 weeks of unpaid, job-protected leave during any 12-month period for foster care placement of a child.
C) It requires employers to allow eligible employees to take a maximum of 12 weeks of unpaid leave during the birth of a child but not for the adoption of a child.
D) It requires employers to allow eligible employees to take a maximum of 8 weeks of paid, job-protected leave to care for a military servicemember injured while on active duty.

Question 42

In the United States, benefit costs have significantly reduced between 2001 and 2015.

Question 43

Individuals who rely solely on Social Security retirement benefits may have difficulty living at the level of comfort they envision as those benefits typically are not adequate.

Question 44

The costs associated with legally required benefits are typically more than half of the total benefit costs.

Question 45

Most benefits, except for paid time off, are taxed as income to employees.

Question 46

Individuals who work for federal contractors are entitled to 56 hours of paid sick leave per year as a result of Executive Order 13706.

Question 47

Employers rarely use benefits as tools for attracting and retaining employees because employees generally lack a complete understanding of the benefits provided by their employers.

Question 48

Which of the following is a typical abuse-control measure used by employers to keep employees from taking excessive time off around holidays?

A) Employees are required to work the last scheduled day before a holiday and the first scheduled workday after a holiday to be eligible for holiday pay.
B) Employees are mandated to take a leave on the last scheduled day before a holiday and the first scheduled workday after a holiday to be eligible for holiday pay.
C) Employees are paid extra to work the days immediately following and preceding a holiday.
D) Employees are required to work on the weekend before and after a holiday to be eligible for holiday pay.

Question 49

Kenneth is a Programmer in the customer service department in Kynol Inc. When his father dies, he applies for a leave. In this scenario, Kenneth is most likely to have applied for a _____.

A) paternity leave
B) sick leave
C) bereavement leave
D) jury leave

Question 50

The Family and Medical Leave Act (FMLA) defines a _____ as an illness or injury that requires inpatient care or continuing treatment by a health care provider for medical problems that exist beyond three days.

A) mental disorder
B) serious health condition
C) life-threatening illness
D) chronic disease

Question 51

In the context of legally required benefits, which of the following is true of unemployment compensation?

A) Each U.S. state operates its own unemployment compensation system.
B) Benefit levels under unemployment compensation are the same across all U.S. states.
C) The unemployment compensation system is controlled by organizations with more than 500 employees.
D) The job-search provisions in the unemployment compensation system are drafted and implemented by preferred provider organizations (PPOs).

Question 52

The Worker Adjustment and Retraining Notification Act (WARN) of 1988 _____.

A) does not require employers to give prior notice of mass layoff or plant closings
B) requires employers to give six months' notice of mass layoff or plant closings
C) mandates the payment of severance pay to employees in the case of mass layoff or plant closings
D) does not mandate severance pay in case of mass layoffs or plant closings

Question 53

Public-sector workers (police, firefighters, teachers, and other government workers) belong to labor unions at a much higher rate than do nongovernment workers.

Question 54

The Family and Medical Leave Act of 1993 requires that employers allow eligible employees to take a maximum of _____ during any 12-month period.

A) 12 weeks of paid leave
B) 24 weeks of paid leave
C) 12 weeks of unpaid leave
D) 24 weeks of unpaid leave

Question 55

No-fault insurance means that an injured worker does not receive benefits if the accident was the employee's fault.

Question 56

A program that combines sick leave, vacations, and holidays into a total number of hours or days that employees can take off with pay is called a(n) _____ plan.

A) consolidated-time-off
B) flexible benefits
C) accumulated leave
D) paid-time-off

Question 57

In the context of health care legislations, which of the following is true of the Health Insurance Portability and Accountability Act (HIPAA)?

A) It mandates employees to switch their health insurance plans when they change jobs.
B) It prohibits group insurance plans from dropping coverage for a sick employee.
C) It does not regulate the disclosure of protected health information.
D) It exclusively applies to employers with 100 or more full-time and/or part-time employees.

Question 58

Employees' satisfaction with benefits is most definitely linked to benefit communications.

Question 59

Why do a relatively low percentage of men take paternity leave?

A) Men who are not single parents are not covered in the Family and Medical Leave Act.
B) Employers typically reject paternity leave applications because employees are likely to obtain such leaves under fraudulent conditions.
C) Men have a perception that it is not considered socially acceptable for them to stay home for child-related reasons.
D) A provision in the Family and Medical Leave Act mandates that only one parent per family can take leaves, which are usually taken by the mother.

Question 60

In the United States, part-time employees are most likely to receive health and life insurance benefits and paid time off and least likely to receive retirement benefits.

Question 61

Union contracts have an impact on the number of paid holidays offered by organizations.

Question 62

Defined contribution pension plans offer greater security to employees because these benefits are guaranteed by the Pension Benefit Guaranty Corporation (PBGC).

Question 63

The federal government mandates a minimum of two weeks of severance pay for older employees who are asked to retire early.

Question 64

In companies that provide defined benefit plans, if the funding is inadequate to pay the benefits promised, the employees must make up the shortfall.

Question 65

Both short-term and long-term disability insurance provide continuing income protection for employees who become disabled and are unable to work.

Question 66

401(k) plans are unattractive to employees because these plans require them to pay higher income taxes during working years.

Question 67

The Patient Protection and Affordable Care Act requires companies with 50 or more employees (who work 30 hours a week or more) to provide health care coverage or pay a penalty.

Question 68

An employee who is out of work and actively looking for employment can receive up to 26 weeks of pay through unemployment compensation.

Question 69

Workers cannot be required to make financial contributions for coverage under workers' compensation programs.

Question 70

Employers are mandated to pay time-and-a-half to hourly employees who must work on holidays.

Question 71

Copayments are the portion of medical expenses paid by an insured individual for medical treatment.

Question 72

Only employees who have worked at least 12 months and 1,250 hours in the previous year are eligible for leave under the Family and Medical Leave Act (FMLA).

Question 73

Paid-time-off (PTO) plans combine all sick leave, vacation time, and holidays into a total number of hours or days that employees can take off with pay.

Question 74

Workers in the private sector are far more likely to have a defined benefit plan than are workers in the public sector.

Question 75

The Employee Retirement Income Security Act (ERISA) requires pension plans to periodically provide participants with information about plan features (such as vesting), funding, and benefit accrual amounts.

Question 76

Employees are more likely to stay with employers who provide child-care and elder-care benefits.

Question 77

As per the provisions of the Affordable Care Act, companies in the United States are prohibited from increasing the fixed copay amount, decreasing the percentage, or decreasing the dollar amount that employees share for costs.

Question 78

Divorced spouses and dependent children of former or current employees are offered extended health care coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Question 79

Family and Medical Leave Act (FMLA) leaves are typically paid.

Question 80

Spousal exclusion provisions limit access to a company's health plan when an employee's spouse works for another company that offers health insurance.