Deck 15: Employee Benefits

Question 1

Social security is a federally administered insurance system that provides funds to employees upon joining an organization.

Answer 1

False
Explanation: Social security is a federally administered insurance system designed to provide funds upon retirement or disability or both and to provide hospital and medical reimbursement to people who have reached retirement age.

Question 2

In an effort to ensure the fair treatment of employees under pension plans,Congress passed the Employee Retirement Income Security Act (ERISA)in 1974.

Answer 2

True
Explanation: In an effort to ensure the fair treatment of employees under pension plans, Congress passed the Employee Retirement Income Security Act (ERISA) in 1974. This law was designed to ensure the solvency of pension plans by restricting the types of investments that could be made with the plan's funds and providing general guidelines for fund management.

Question 3

For group life insurance,physical examination is usually required for coverage.

Answer 3

False
Explanation: A physical examination is usually not required for coverage under group life insurance.

Question 4

The latest method for communicating a benefit package within an organization is to use intranet technology.

Question 5

Flexible plans can be positive for unions because they have total control over the program detail.

Question 6

Employee benefits are those rewards given only to employees retiring from an organization.

Question 7

Unemployment compensation is designed to provide funds to employees who have lost their jobs through no fault of their own and who are seeking other jobs.

Question 8

Workers' compensation is a form of insurance that protects employees from loss of income associated with job-related injuries or illnesses.

Question 9

Private pension plans can be funded entirely by an organization or jointly by an organization and an employee.

Question 10

All employee benefits are legally required benefits.

Question 11

Early retirement incentives are an alternative to mandatory retirement.

Question 12

The Affordable Care Act (ACA)allows people who make more than the federal poverty line but less than four times the poverty line to buy insurance subsidized by the government.

Question 13

Certain employee benefits can be reserved for company executives only.

Question 14

The Health Maintenance Organization Act of 1973 ushered in the concept of one-stop,prepaid medical services as an alternative to traditional insurance programs.

Question 15

Disability insurance protects employees who experience long-term or permanent disability.

Question 16

Even though not vested,an employee can still receive pension funds paid by the employer upon leaving a company.

Question 17

In a Roth IRA,an employer contributes up to 25 percent of an employee's total salary,with a maximum of $49,000.

Question 18

An employer that establishes a SIMPLE IRA plan must make either matching contributions or elective contributions.

Question 19

Prior to the passage of the Social Security Act of 1935,employee benefits were not widespread.

Question 20

Under Internal Revenue Code's Section 125 and/or the Deficit Reduction Act (DEFRA),an employer requires an employee to complete more than three years of service before becoming eligible under a flexible-benefit plan.

Question 21

Which of the following is true about workers' compensation?

A) The laws generally do not provide for replacement of lost income.
B) An employee normally has to sue the employer to get workers' compensation.
C) The compensation is normally financed through insurance premiums paid by employees.
D) An element of coinsurance exists in the workers' compensation coverage.

Question 22

Generally,unemployment compensation is:

A) limited to a maximum of 36 weeks.
B) calculated on the basis of an individual's wages received in the previous period of employment.
C) funded through taxes paid by employees.
D) awarded to individuals who have been fired from their jobs due to their own inefficiencies or faults.

Question 23

The rights of employees to receive money paid into a pension or retirement fund on their behalf by their employer if they leave the organization prior to retirement is called:

A) binding.
B) vesting.
C) confirmation.
D) stock appreciation rights.

Question 24

The 401(k)retirement plan is the most popular type of:

A) defined-contribution plan.
B) defined-benefit plan.
C) flat-benefit plan.
D) final-average-pay plan.

Question 25

Workers' compensation is most frequently associated with:

A) vacation expense when combining business and personal travel.
B) job-related illness or injury.
C) severance pay upon termination.
D) "office pools" maintained by employees for special occasions.

Question 26

To make its compensation structure attractive,SatLight Inc.is initiating new fringe benefits to be included in the structure.Which of the following employee benefits is legally required?

A) Company-provided housing
B) State disability insurance
C) Interest-free loan program
D) Stock bonus plan

Question 27

Most employers have dropped the word "fringe" from the term "fringe benefits":

A) in an attempt to have workers pay less attention to benefits in general.
B) because of the shift toward linking most benefits to performance.
C) for fear of minimizing the significance of benefits to total compensation.
D) in recognition of the declining importance of benefits to employees.

Question 28

Common insurance-related employee benefits include:

A) paid rest periods.
B) retirement gratuity.
C) survivor benefits.
D) annuity plans.

Question 29

As a federally administered insurance system,social security is,for the most part:

A) mandatory for employees and employers.
B) exclusively designed for U.S. government-attached employees.
C) subject to the defined requirements of local municipalities.
D) optional for employees and employers.

Question 30

The number of organizations that are extending benefits coverage to include unmarried heterosexual and homosexual partners of unmarried employees has shown:

A) a declining trend.
B) no visible change.
C) a growing trend.
D) a mixed response.

Question 31

GH Pharma Inc.is planning to introduce employer-sponsored SIMPLE IRA as the retirement plan for its employees.Which of the following is true in this context?

A) GH Pharma Inc. will need to make either matching contributions or elective contributions.
B) If GH Pharma Inc. makes matching contributions it must match employee contributions up to 7 percent of the employee's compensation for the calendar year.
C) Employees who received at least $2,000 in compensation during any prior tax years will be eligible to participate in the firm's SIMPLE IRA plan for the current year.
D) If GH Pharma Inc. establishes a SIMPLE IRA it does not have to worry about meeting the minimum participation/minimum coverage rules applicable to other types of plans.

Question 32

Health insurance under social security,commonly known as Medicare,provides:

A) free medical treatment to children under 14 and individuals over 60 years of age.
B) free prescription drug coverage for all citizens over 50.
C) universal coverage to all individuals who make social security payments.
D) partial hospital and medical reimbursement for persons over 65.

Question 33

Major categories of benefits include all of the following EXCEPT:

A) retirement related.
B) insurance related.
C) payment for time not worked.
D) payment for time worked.

Question 34

From the employers' perspective,a less costly and lower-maintenance hybrid of the traditional defined-benefit plan is termed a:

A) joint contribution plan.
B) cash-balance plan.
C) recycling plan.
D) streamlined-benefit plan.

Question 35

To receive unemployment compensation,an individual must meet all of the following requirements EXCEPT he or she must:

A) have been covered by Social Security for a minimum number of weeks.
B) have voluntarily quit the former job.
C) be willing to accept any suitable employment offered through the state's unemployment compensation commission.
D) be unemployed due to a layoff.

Question 36

The Employee Retirement Income Security Act (ERISA)is designed to:

A) provide unemployment insurance to retirees.
B) ensure the solvency of pension plans.
C) help retirees find with suitable jobs.
D) provide funds for a limited period of time, usually up to 16 weeks.

Question 37

Generally,workers' compensation is:

A) prohibited where health benefits are also provided.
B) available only in highly unionized industries.
C) compulsory in most states.
D) optional for all states.

Question 38

Although it is sometimes extended,unemployment compensation is limited to a maximum of:

A) 12 months.
B) 12 weeks.
C) 26 weeks.
D) 30 days.

Question 39

Vesting in a pension or retirement plan means that an employee upon departure from the company would:

A) have the accumulated contributions disbursed among remaining employees.
B) require legal action to secure the monetary contributions.
C) deposit all net earnings of the most recent quarterly period into the fund.
D) be eligible to receive money paid into the fund.

Question 40

The financial crisis social security faces stems from:

A) unwillingness of employers to help fund the system.
B) demographic changes in our society.
C) high rates of inflation in the economy.
D) lower levels of unemployment.

Question 41

Flexible-benefit plans are also called ____ plans.

A) standard
B) employer-sponsored
C) cash-balance
D) cafeteria

Question 42

Corva Inc.provides a group life insurance for all its employees.Which of the following is true in this context?

A) Corva Inc. will be required to provide a minimum coverage of $5,000.
B) Employees at Corva Inc. will have to go through a physical examination.
C) Employees at Corva Inc. will have the option of purchasing more insurance at their own expense.
D) Corva Inc. will need to pay a higher premium and tax for employees earning above $35,000.

Question 43

Define the following: defined-benefit plans,defined-contribution plans,cash-balance plans,401(k)plans,and 403(b)plans.

Question 44

Employees at Jupiter Systems Inc.are given the option of taking a holiday on the first day of the year.This is an optional holiday,which the employees may use or save it for some other purpose.Such holidays are referred to as ____.

A) unofficial holidays
B) floating holidays
C) emergency holidays
D) public holidays

Question 45

Unicorn Energies Inc.is planning its retirement and pension plans.Discuss the different schemes related to these plans that the company needs to know.

Question 46

Three Crescent Inc.offers its employees the option of flexible-benefit plans.In this context,which of the following is a requirement resulting from Internal Revenue Code's Section 125 and/or The Deficit Reduction Act (DEFRA)?

A) Employees will not be allowed to carryover individual balances if the selected benefits are not fully used.
B) Employees must be allowed to make a choice only among taxable benefits.
C) Employee benefits elections must be revocable.
D) Employees will need to complete more than three years of service before becoming eligible under the plan.

Question 47

Describe the employee benefits under social security.

Question 48

Why is it important for organizations to communicate the benefit package to their employees?

Question 49

Describe insurance-related benefits.

Question 50

Holidays that are observed at the discretion of the employee or employer are termed ____.

A) floating holidays
B) fixed holidays
C) unpaid holidays
D) unofficial holidays

Question 51

Describe unemployment compensation.

Question 52

Flexible benefit plans are attractive because:

A) unions often endorse them as they give them some control.
B) employees are given some control over the distribution of benefits.
C) they do not require much effort to administer.
D) they are not limited by tax laws.

Question 53

LN Inc.offers a Roth IRA retirement plan to all its employees.Which of the following is true in this context?

A) The plan mandates employees below the age 35 to contribute an additional $1,000 per year.
B) The plan will not be beneficial for young employees because of its long-term implications.
C) The plan requires the employer to contribute up to 25 percent of an employee's total salary, with a maximum of $49,000.
D) The plan allows for nondeductible contributions and tax-free withdrawals with certain restrictions.

Question 54

Explain the purposes of the Employee Retirement Income Security Act (ERISA)and the Retirement Equity Act.

Question 55

Discuss the concept of early retirement as a benefit.

Question 56

Describe workers' compensation.

Question 57

Discuss the concept of flexible-benefit plans.

Question 58

Flexible-benefit plans may be of interest to organizations for all of the following reasons EXCEPT:

A) unions often endorse them as they give them some control.
B) employees gain more familiarity with the various benefits' costs.
C) health care costs can be lowered.
D) employee recruitment and retention can be enhanced.

Question 59

The retirement plan of Cosvo Autos Inc.offers cliff vesting to its employees.Which of the following is true in this context?

A) No vesting is provided to the participants during their first five years of service.
B) The participants becomes 20 percent vested after three years of service.
C) After an initial period of service, the participants becomes vested in an additional 25 percent in each subsequent year.
D) The participants are 100 percent vested after seven years of service.

Question 60

Why are employees often unaware of the benefits their organizations offer?

A) Employees generally do not take much interest in the benefits being offered as they are all taxable.
B) Employee benefits are an insignificant component of overall compensation.
C) Organizations often make little effort to communicate their employee benefits.
D) Organizations are not legally required to provide any benefits to their employees.