Question 1

Frank is doing some life insurance planning. A financial advisor said, "be sure to consider Social Security when examining sources of funds available for family support if you die." The financial advisor was referring to which Social Security benefit?

Accepted Answer

Survivor benefits are paid to eligible family members of a deceased worker. These benefits can include a monthly income to support the surviving spouse and minor children. It is important to consider this potential source of funds when doing life insurance planning.

Question 2

Which of the following statements about problems and issues in workers compensation insurance is (are) true?
I.Uncertainties created by the increasing use of medical marijuana is a growing problem for employers.
II.Enactment of the Affordable Care Act led many employers to stop offering medical benefits as part of the workers compensation coverage on their employees.

Accepted Answer

Statement I is true. The increasing use of medical marijuana can create uncertainties for employers regarding what constitutes reasonable and necessary medical treatment under workers compensation insurance.

Statement II is false. The enactment of the Affordable Care Act did not lead many employers to stop offering medical benefits as part of workers compensation coverage. Workers compensation insurance provides medical benefits to employees who are injured or become ill due to their job, while the Affordable Care Act primarily concerns health insurance for non-work-related medical care.

Question 3

Tony is 48 years old. He earned the maximum taxable wage base under Social Security annually between the time when he was 26 and when he was 40. At age 40, he dropped out of the workforce to care for children as his wife had a high-paying job. Which statement is true regarding Tony's insured status under Social Security?

Accepted Answer

To be fully insured under Social Security, an individual needs to earn 40 quarters of coverage, i.e. pay Social Security taxes for 10 years. Tony earned the maximum taxable wage base for 15 years (from age 26 to 40), which is more than enough to earn 40 quarters of coverage. Therefore, Tony is fully insured.

To be currently insured, an individual needs to earn 6 quarters of coverage in the 13-quarter period ending with the quarter of disability, death or retirement. Tony last earned income at age 40, and he is currently 48 years old. Therefore, he has not earned any quarters of coverage in the 13-quarter period before attaining age 48. Hence, Tony is not currently insured.

Therefore, choice B is correct.

Question 4

EFG Company experienced a reduced demand for its products during a recession. EFG managers were considering laying off some workers when the personnel director said, "Let's not lay off these workers. If we do, our unemployment insurance premiums will increase. The state considers employment stability when determining our premium." Considering the firm's employment record when determining the rate to charge for unemployment insurance is called

Accepted Answer

The practice of considering a firm's employment record when determining the rate to charge for unemployment insurance is called experience rating. This means that firms with lower layoff rates will generally pay lower unemployment insurance premiums than those with higher layoff rates.

Question 5

Which of the following statements about workers compensation programs is true?

Accepted Answer

The statement that is true about workers compensation programs is that options available for complying with the law may include one or more of the following: self-insurance, private insurance, or insurance through a state fund. This means that employers have different options to provide workers compensation coverage for their employees, and they can choose the one that works best for them. The other statements are false: injured workers do not need to prove employer responsibility to collect benefits, workers compensation benefits vary by state, and most states do not have elective laws regarding coverage.

Question 6

In order to receive unemployment insurance benefits, an unemployed worker must meet all of the following eligibility requirements EXCEPT

Accepted Answer

Most states do not require a waiting period to receive unemployment insurance benefits. The other eligibility requirements include having qualifying wages and employment, being able and available to work, and actively seeking work.

Question 7

Which of the following statements about the financing of unemployment insurance benefits is true?

Accepted Answer

Option A is incorrect as it states that each state maintains its own trust fund, but it doesn't mention how it is financed. Option B is incorrect as experience rating is used in unemployment insurance. Option D is incorrect as unemployment insurance is primarily funded by payroll taxes paid by employers, not employees. Option C is correct as it explains that an employer's contribution is used for administrative expenses, funding extended benefits, and maintaining a loan fund if the state's account is depleted.

Question 8

Which of the following statements about the financing of the Social Security program is (are) true?
I.Although the self-employed pay an OASDI tax rate that is twice the employee rate, they are allowed certain deductions that reduce the effective tax rate.
II.The earnings base on which OASDI taxes are paid increases annually based on changes in average wages in the national economy.

Accepted Answer

Statement I is true as the self-employed are allowed to deduct half of their self-employment tax from their income, which reduces their effective tax rate. 
Statement II is also true as the earnings base increases annually based on changes in average wages, which is known as the wage indexing.

Question 9

Dale, age 65, was dismayed to learn about all of the deductibles, co-pays, limits, and exclusions in the Medicare program. Dale bought a type of health insurance specifically designed to supplement Medicare, and selected his coverage from among 10 standard policies that private insurers offer. What type of health insurance did Dale purchase?

Accepted Answer

Dale purchased Medigap insurance, which is specifically designed to supplement Medicare and cover deductibles, co-pays, limits, and exclusions. Long-term care insurance is not related to Medicare coverage, major medical insurance is a broader type of insurance that typically includes hospitalization and surgery coverage, and viatical insurance is a type of life insurance that allows terminally ill individuals to access their life insurance benefits early.

Question 10

Marco, a risk manager in California, is interviewing for a new position in the state of Washington. When Marco asked about methods of providing workers compensation, the answer surprised him. In Washington, employers can self-insure the risk or obtain coverage through a state fund. Private insurers do not market workers compensation insurance in Washington. Washington uses a

Accepted Answer

The answer is D, monopoly state fund, because private insurers do not offer workers compensation insurance in Washington and employers can only obtain coverage through the state fund or self-insure. A competitive state fund would suggest that there are multiple options for coverage, which is not the case in Washington. A guaranty fund provides protection for policyholders in the event that an insurance company becomes insolvent, but this is not relevant to the question of how workers compensation is provided in Washington. A reinsurance facility provides insurance to insurance companies, which is also not relevant to the question.

Question 11

Which of the following statements is true with regard to the Medicare program?

Accepted Answer

Medicare Part A benefits are generally not available until age 65, although some exceptions apply (such as those who are disabled or who have end-stage renal disease). Social Security retirement benefits can be claimed as early as age 62, but delaying retirement benefits does not affect eligibility for Medicare. Part B of Medicare is funded by a combination of premiums paid by beneficiaries and general revenue from taxes. Beneficiaries typically do not pay a monthly premium for Part A coverage if they or their spouse have paid Medicare taxes for at least 10 years, otherwise they may incur a premium.

Question 12

Which of the following statements about the problems and issues of unemployment insurance programs is (are) true?
I.Many state programs are inadequately financed.
II.Only a small portion of the total unemployed receive benefits at any time.

Accepted Answer

I is true as many state programs struggle to maintain sufficient funds to provide adequate unemployment benefits to those who are eligible. II is also true as the percentage of unemployed workers who receive benefits is low, often due to strict eligibility requirements and limited coverage of certain types of employment. Therefore, both statements are correct.

Question 13

Which of the following statements is (are) true with respect to the Medicare Advantage Plans?
I.These plans replace the original Medicare program, Parts A and B, which are no longer available to new retirees.
II.These plans provide an opportunity for retirees to receive Medicare coverage through private health care plans.

Accepted Answer

Medicare Advantage Plans do not replace the original Medicare program, Parts A and B, but rather provide an opportunity for retirees to receive Medicare coverage through private health care plans. Therefore, only statement II is true.

Question 14

Prior to the passage of workers compensation laws, all of the following common law defenses could be used by employers to avoid financial responsibility for work-related injuries EXCEPT

Accepted Answer

All of the options listed (contributory negligence, the fellow-servant doctrine, and assumption of the risk) were common law defenses that employers could use to avoid financial responsibility for injuries sustained by their employees. However, employer liability laws would have applied to hold employers liable for work-related injuries, so it is not a common law defense that employers could use to avoid responsibility.

Question 15

Which of the following statements about unemployment insurance benefits is true?

Accepted Answer

Most states pay regular benefits for a maximum duration of 26 weeks, as this is the standard duration set by the federal government. A) is false as benefits are typically based on a percentage of a worker's previous wages, not a flat amount. B) is false as the maximum benefit amount varies by state, based on their own calculations and regulations. D) is false as the extended benefits program provides up to 20 weeks of additional benefits, not up to 3 years.

Question 16

Which of the following statements about benefits provided by workers compensation programs is true?

Accepted Answer

Workers compensation programs typically provide death benefits and benefits to eligible survivors if a worker is killed on the job. Occupational disability is covered, but nonoccupational disability is not. Medical benefits are usually provided without deductibles or coinsurance, and there are typically fewer exclusions than with traditional health insurance. Retirement benefits are not payable through workers compensation.

Question 17

Which of the following is a current problem with workers compensation programs?

Accepted Answer

Overuse of opiate prescription drugs is a current problem with workers compensation programs. This can lead to dependence, addiction, and long-term health problems for injured workers. Opiate prescription drugs are often prescribed to manage pain for work-related injuries, but they should be used judiciously and only when necessary.

Question 18

Beth was injured at work and is eligible to receive workers compensation benefits. All of the following benefits are provided under workers compensation EXCEPT

Accepted Answer

Workers compensation benefits provide disability income to compensate for lost wages, medical care to cover treatment costs, rehabilitation benefits to assist with recovery and returning to work, but it does not provide retirement benefits for dependents.

Question 19

Objectives of unemployment insurance include which of the following?
I.To help unemployed workers find jobs.
II.To encourage employers to stabilize employment.

Accepted Answer

The objectives of unemployment insurance include both helping unemployed workers find jobs and encouraging employers to stabilize employment. By providing financial assistance, unemployment insurance can help ease the burden on workers while they search for new employment opportunities. At the same time, the program may provide a financial incentive for employers to avoid layoffs and retain their workers, as they may be required to pay into the unemployment insurance system.

Question 20

Marion owns substantial financial assets. She was surprised that she qualified for Social Security retirement benefits when she retired because of her high investment income. What characteristic of social insurance programs is Marion overlooking with respect to her Social Security retirement benefits?

Accepted Answer

Marion is overlooking the fact that social insurance benefits, including Social Security retirement benefits, are not means tested. This means that qualification for benefits is not based on a person's income or assets, but rather on their status as a retiree or other eligible beneficiary.

Quiz 18: Social Insurance