Deck 13: Benefits

Question 1

The problem with a Cash Balance or Hybrid pension plan is:

A) that the employee bears the risk of loss of the investment
B) that because of the way benefits are calculated, older employees receive less than younger employees
C) that they are not covered by ERISA
D) none of these

Answer 1

B

Question 2

Which of the following is a fiduciary duty under ERISA?

A) ensuring that plans operate in accordance with plan documents and ERISA
B) diversifying pension fund assets to minimize the risk of large losses
C) managing benefit plans and funds solely in the interest of plan beneficiaries
D) all of the above
E) none of the above

Answer 2

D

Question 3

In McDowell vs. Krawchison , an employee whose wife suffered from breast cancer was terminated after a change of ownership of the company. He asked whether their health insurance would continue, and was told verbally that it would. Nine months later when his wife sought treatment, she was advised the policy had been terminated. He and his wife sued for a violation of COBRA. The court ruled:

A) for the employer, since it was a new owner, and not the employer of the employee.
B) for the employer, since the employee never requested in writing that their insurance be continued
C) for the employee, since he was not given notice of his COBRA rights in writing
D) for the employee s wife, because she was also an insured, but was given no notice of her COBRA rights

Answer 3

D

Question 4

About ERISA, the Employee Retirement Income Security Act, it is correct to say that:

A) the law governs only pension plans
B) the law governs benefit plans broadly, not just pension plans
C) the law only applies to welfare plans
D) none of these

Question 5

Which of the following is one of HIPAA s requirements regarding pre-existing condition exclusions in group health plans?

A) exclusionary periods can last no longer than 6 months
B) exclusionary periods must be reduced by any periods of prior coverage under a group health plan, as long as the break in coverage was no more than 63 days.
C) certificates of creditable coverage are used to document that employees have pre-existing conditions to which exclusionary periods would apply
D) prior coverage under a group health plan does not include any period of continuation coverage under COBRA
E) none of the above

Question 6

An employee is terminated for poor attendance. The employer sends a letter on May 1 notifying him of his right to receive continuation health insurance coverage. The letter states that the former employee must respond by May 30 to be eligible for up to 6 months of continuation coverage. The employer s letter:

A) accurately states the former employee s rights under COBRA
B) should state that the employee has 45 days to decide on coverage that would last up to 3 years
C) should state that the employee has 60 days to decide on coverage that would last up to 3 years
D) should state that the employee has 60 days to decide on coverage that would last up to 18 months
E) should not have been sent since a termination for poor attendance is not a qualifying event under COBRA

Question 7

HIPAA, the Health Insurance Portability and Accountability Act provides all of these EXCEPT:

A) it greatly restricts the use of the pre-existing exclusion
B) it provides that exclusionary periods can be no longer than 30 days
C) it provides that pregnancy cannot be deemed a pre-existing condition
D) it provides that a certificate of creditable coverage reduces the exclusionary time period for a pre-existing condition

Question 8

Which of the following is true regarding vesting requirements under ERISA?

A) once pension rights vest, employees are entitled to receive full pensions upon leaving employment
B) once pension rights vest, employees pension plans cannot be discontinued or changed
C) vesting usually occurs after five or seven years of service
D) vesting is never required but is purely a contractual provision negotiated between the employer and employee

Question 9

Defined contribution pension plans:

A) are insured by the Pension Benefit Guaranty Corporation (PBGC)
B) are prone to under-diversification of investments
C) are not subject to ERISA vesting requirements
D) guarantee specific pension benefits to the employee when the plan is entered into

Question 10

The Pregnancy Discrimination Act provides for each of the following EXCEPT:

A) health plans must cover expenses for pregnancy-related medical care on the same basis as for other medical conditions
B) because of the extreme costs and because men do not avail themselves of pregnancy benefits, larger deductibles or co-pays may be charged
C) both married and unmarried employees must be covered
D) the same level of coverage must be provided for the spouses of male employees as is provided for the spouses of female employees

Question 11

In Fought v. UNUM Life Insurance Company of America, Fought underwent surgery for coronary artery disease, a pre-existing condition at the time she qualified for her employer s disability policy. Weeks after the surgery, she developed a staph infection, became disabled, and applied for coverage under her company s disability insurance. The insurer denied coverage on the basis of a pre-existing condition, her coronary artery disease, and Fought sued. As to the issue of causation, the court ruled:

A) for the insurer, since Fought would not have had surgery which resulted in the infection but for the pre-existing coronary artery disease
B) for the insurer, since the staph infection was a previously undiscovered pre-existing condition
C) for Fought, since the staph infection was not a pre-existing condition, and was not a necessary consequence of her coronary artery disease
D) for Fought, because the insurer had a conflict of interest

Question 12

Defined benefit pension plans:

A) promise a specific pension benefit upon retirement
B) are insured through the Pension Benefit Guaranty Corporation (PBGC)
C) all of the above
D) none of the above

Question 13

Regarding employment benefits, the general rule is that:

A) employers are legally required to provide employment benefits in the form of basic health care, vacation pay, and pension or profit sharing plans
B) employers are legally required to provide basic health care, but no other benefits, although they may do so voluntarily
C) only employers with 50 or more employees are legally required to provide basic health care, but no other benefits, although they may do so voluntarily
D) none of these

Question 14

Which of the following is a qualifying event necessitating an offer of COBRA continuation coverage?

A) an employee quits his job
B) an employee s hours are cut
C) a spouse and an employee get divorced
D) all of the above
E) none of the above

Question 15

Regarding the Pension Benefit Guarantee Corporation (PBGC), which of the following statements is true?

A) The PBGC is an agency that insures defined benefit pension plans.
B) The PBGC is an agency that insures defined contribution pension plans.
C) The PBGC s fund is running out of money, due to the increase in the failure of the pension plans it insures.
D) a and c only
E) b and c only

Question 16

Summary plan descriptions (SPDs):

A) must be provided to new employees before they begin their employment
B) provide a brief overview of the terms of employee benefit plans
C) can be the basis for claims that employees did not receive promised benefits
D) all of the above
E) none of the above

Question 17

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

A) it requires employers to provide pensions for most of their employees
B) it is superseded by state laws that relate to employee benefit plans
C) it does not apply to benefit plans administered by public employers
D) it requires that once a plan is in place, it can not be changed or modified without the employees consent
E) all of the above

Question 18

You have just been hired as the new Human Resources Manager for your firm. On your second day, an employee filed for disability benefits due to a recent injury. Not knowing about a disability policy through this firm, you search the files and discover that the firm cancelled a long term disability on the employee without notifying him. What should you do?

A) nothing; maybe the employee will withdraw his claim for disability benefits
B) send official notice that the disability policy had previously been cancelled
C) call the employee to tell him that the disability policy had previously been cancelled
D) b and c
E) none of these

Question 19

Regarding the topic of employment benefits, it is correct to say that:

A) both employment and tax laws affect employment benefits
B) the law on this topic has been very much in flux
C) the law on this topic has largely been settled
D) public policy debates concerning this topic have occurred in recent years
E) a, b and d
F) a, c and d

Question 20

Which of the following is NOT a part of the Patient Protection Affordable Care Act?

A) a temporary insurance program for high-risk individuals with pre-existing conditions and no health insurance
B) a prohibition against denying coverage to children based on pre-existing conditions
C) a requirement that plans cover all immunizations and routine health care
D) a prohibition against requiring pre-authorization for emergency care