Deck 14: Providing Employee Benefits

Question 1

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

Answer 1

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 2

Employers in the United States 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

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

Answer 3

False
Explanation: A health maintenance organization (HMO) is a health care plan that requires patients to receive their medical care from the HMO's health care professionals, who are often paid a flat salary, and provides all services on a prepaid basis.

Question 4

Tax laws generally make benefits unfavorable to employees.

Question 5

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

Question 6

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

Question 7

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

Question 8

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 9

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

Question 10

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

Question 11

Floating holidays are standardized on an annual basis in the United States.

Question 12

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

Question 13

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

Question 14

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

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

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

A) Paid vacation
B) Personal leave
C) Flextime
D) Social Security
E) Retirement savings plan

Question 22

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 23

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

Question 24

Two management students,Frank and Neil,discuss the pros and cons of employee benefits.Frank states that unemployment insurance is more advantageous to employees than it is to employers,while Neil argues that employers receive more rewards from it.Which of the following weakens Neil'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 payment to offset lost income during voluntary unemployment.

Question 25

John is the owner of The Round,a restaurant.He decides to increase employee motivation by introducing benefit packages.However,Nina,the manager,suggests that employees will be more motivated if John increases their actual wages.Which of the following statements,if true,strengthens Nina's argument?

A) John's competitor, Mark, 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 The Round belong to the age group that looks forward to pensions.
E) Employees do not prefer cash compensation due to higher tax rates in the state.

Question 26

Which of the following 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 is standard across the country.
E) It is a voluntary program based on number of employers in a specific state.

Question 27

Ray Inc.,a shoe manufacturer in Virginia,opens a new facility in Texas.Shelly,the operations manager,prefers to give the new employees better wages than benefit packages.Tanya,the HR manager,disagrees with her.Which of the following,if true,will strengthen Tanya's argument?

A) The income tax rate is higher in Texas than it is in Virginia.
B) Benefits are more complex to understand by employees than pay structures.
C) Benefits give lesser control over the advantages they receive from them than wages.
D) Higher cash compensation gives employees more purchasing power in Texas.
E) Different employees look for different types of benefits, which makes HR's tasks complicated.

Question 28

Marshall finds that he meets the eligibility requirements for Social Security.He elects to receive retirement benefits at 62.In this case,which of the following 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 29

Which of the following is a similarity between unemployment insurance benefits and workers' compensation benefits?

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

Question 30

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 31

Linda,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 32

In which of the following situations will 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 33

Steve,the vice president of Ocher Inc.,plans to introduce a retirement plan for all employees.George,the operations director,disagrees because the proposed plan would increase the company's costs.Which of the following,if true,strengthens Steve's argument?

A) Some benefits have become so common that today's employees expect them.
B) Benefit packages are more complex than pay structures.
C) The employees at Ocher are young adults who prefer cash compensation to benefits.
D) Benefit 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 34

Which of the following 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 35

Ryan was working as an engineer at a paint manufacturing company.A chemical spill at the factory caused an accident that left him permanently disabled.Which of the following programs is specifically designed to help employees like Ryan?

A) Unqualified retirement plan
B) Vested-benefit plan
C) Social Security
D) Defined-benefit plan
E) Work-sharing plan

Question 36

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

Question 37

Under the Family and Medical Leave Act,which of the following 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 have worked 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 38

Which of the following 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 39

Cafeteria-style plans increase benefits costs for employers.

Question 40

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

Question 41

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 42

Which of the following factors is considered while calculating the 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) Employees' years of service, age, and earnings level
D) Average earning during the last 20 years of employment
E) Number of unused leaves at the end of the retirement year

Question 43

During a meeting to discuss ways to cut costs on benefit packages,the vice president of the company,Harold,suggests getting long-term disability insurance for all employees.Alexis,HR manager,disagrees with him stating that short-term disability coverage is more advantageous.Which of the following supports Alexis' 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 44

Which of the following organizations benefits 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 45

Which of the following 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 lesser than that of long-term plans.
C) It pays about 50% to 70% percentage 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 46

Sarah's employer provides her with an insurance plan that requires her to obtain approval before being admitted to the hospital for surgical procedures.Which type of health care plan is her company using?

A) Managed care
B) Health maintenance organization
C) Preferred provider organization
D) Flexible spending account
E) Consumer-driven health plan

Question 47

Nina works at Gia Inc.,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 Gia 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 48

Which of the following 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 the 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 49

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) union contracts
D) educational background
E) prior job experience

Question 50

Which of the following 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 51

Matt has a health care plan that provides him coverage in such a way 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 Matt using?

A) Managed care
B) Health maintenance organization
C) Preferred provider organization
D) Flexible health plan
E) Consumer-driven health plan

Question 52

Kelly is a new employee of a company,and her company provides a group insurance plan that she can enroll in.Her friend,Michael,suggests that Kelly would be able to save money if she chooses to purchase an individual insurance plan over the company's group insurance plan.Which of the following weakens Michael's argument?

A) Individual plans are typically offered only to senior executives.
B) Rates for group insurance are typically lower than that of individual policies.
C) Kelly 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) Kelly will get more take-home pay if she opts for a group insurance plan.

Question 53

Rita,who recently moved to a new city,evaluates several job offers.Owing to her recent medical issues,she wants to choose a health care provider and not rely on the providers in a specific insurance network.Which of the following health care plans is Rita 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 54

Steve and Cathy are managers at an advertising firm.Steve proposes that the company adopt defined-benefit plans to attract and retain its employees,and Cathy opposes his view.Which of the following statements will strengthen Steve's argument?

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

Question 55

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

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

Question 56

Which of the following federal laws 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 American Disabilities Act (ADA)
D) The Fair Labor Standards Act (FLSA)
E) The Employee Retirement Income Security Act (ERISA)

Question 57

Jack has to decide between two jobs that provide equal pay.He decides to compare the healthcare benefits provided by both jobs to arrive at a decision.He wants to choose the job that offers him a flexible spending account over the job that offers him managed care.Which of the following,if true,strengthens his decision?

A) With managed care, the insurer makes decisions about health care, which helps avoid unnecessary procedures.
B) Money in flexible spending accounts is not taxed, so employees get more take-home pay.
C) In flexible spending accounts, employees will get back the money they do not spend.
D) Flexible spending account is not helpful if employees have unpredictable health care expenses.
E) To avoid taxation of the money in a flexible spending account, the money must meet IRS requirements.

Question 58

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 59

Contrary to Western European countries,the United States has no legal requirements regarding employee _______.

A) paid vacation time
B) Social Security benefits
C) unemployment insurance
D) pension plans
E) 401k contributions

Question 60

Ron,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,He 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 61

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

A) Increasing the amount employers pay for deductibles and coinsurance
B) Selecting traditional health insurance over HMOs and PPOs as a preferred option
C) Expanding the coverage for different types of claims
D) Paying some or all of the difference in cost between an HMO or PPO plan
E) Shifting from traditional health insurance plans to PPOs and CDHPs

Question 62

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.

Question 63

What are vesting rights?

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

Question 64

Which of the following is an advantage of a qualified plan in retirement benefits?

A) Immediate tax deductions for the funds employees contribute to the plan
B) Taxable earnings on the money in the retirement fund
C) Tax-free withdrawals for highly compensated employees
D) Exemption of contribution from employees
E) A retirement plan that provides benefits exclusively to its owners and top managers

Question 65

Helen is a marketing manager at a local equipment manufacturer.She and her husband know that saving for college for their 4-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 recently implemented?

A) 529 savings plan
B) 401k savings plan
C) 2015 college tuition plan
D) U.S. saving bonds plan
E) TD Ameritrade college tuition plan

Question 66

Ravi is the CEO of a magazine publishing company.He wants to diversify his workforce and bring in more ethnically diverse employees into his company as he believes that exposure to people from different cultures is likely to increase the creativity of his workforce.Which of the following types of plans should Ravi adopt to allow flexibility?

A) Defined-benefit plan
B) Cafeteria-style plan
C) Vested-benefit plan
D) Worker's compensation plan
E) Cash compensation plan

Question 67

Which of the following 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) They 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 68

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 69

Jim 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.Which of the following is Jim 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 70

Which of the following is legally required by an organization while offering early retirement incentives?

A) Setting an age at which retirement benefits stop growing
B) Asking female employees to pay more to defined-benefit plans
C) Ensuring there is no coercion used to force employees to retire
D) Asking employees to sign compulsory waiver under ERISA
E) Providing employees no more than 48 hours to make an early retirement decision

Question 71

Grey Inc.is a start-up located in Orlando.It offers highly beneficial pension plans to its employees.Which of the following categories 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 72

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 73

Jacob is a new father.His company helps Jacob by collecting information about the cost and quality of available child care.The company also provides Jacob with 12 weeks of unpaid leave.Which of the following is true of the child care provided by Jacob's company?

A) The child care provided by the company is at the lowest level of involvement.
B) The child care 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 Jacob with adequate child care.
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 provided by the company is a form of a dependent care assistance plan.

Question 74

Which of the following is true of child care?

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 should be limited to provision of leaves to employees.
E) Child care must include death benefits for it to be considered as a qualified plan.

Question 75

_____ strictly limits the definition of "independent contractors," so that employers cannot avoid legal obligations by classifying workers as self-employed when the organization receives the benefits of a permanent employee.

A) The Internal Revenue Service
B) The Consolidated Omnibus Budget Reconciliation Act (COBRA)
C) The Employee Retirement Income Security Act (ERISA)
D) Employee Benefit Research Institute
E) The Bureau of Labor Statistics

Question 76

Which of the following is a function of elder care benefits offered by organizations?

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

Question 77

Stan,the CEO of a company,considers dropping medical insurance from the list of benefits provided to employees.Alisha,the operations director,disagrees with Stan by stating that medical insurance is a high-value benefit.Which of the following supports Alisha'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) Health insurance rate is higher than general insurance rate.
E) Employees usually realize that surgery or a major illness can be financially devastating.

Question 78

Which of the following strategies can be legally adopted by organizations looking to restructure the workforce to minimize the expense of benefits?

A) Using more independent contractors rather than hiring additional employees
B) Limiting the coverage on life insurance based upon an employee's age
C) Using more full-time rather than part-time employees
D) Recruiting new employees instead of demanding overtime from existing employees
E) Substituting HMO and PPO plans with traditional health insurance plans

Question 79

How do cafeteria-style plans increase costs for employers?

A) Employers pay much higher premiums for an HMO than a preferred health care plan.
B) Employers are required to pay higher insurance premiums for laid-off workers.
C) Contributions 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) Employers bear the cost of providing employees with benefits they do not value.

Question 80

James 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 up courses to improve themselves.Which of the following programs is James most likely to use in order to encourage this behavior?

A) Tuition reimbursement program
B) Employee wellness program
C) Worker's compensation program
D) Short-term vesting program
E) Mature education program