Question 1

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

Accepted Answer

Concern over health care costs has prompted many employers to shift from traditional health insurance to PPOs and CDHPs.

Question 2

Benefit plans that permit employees to choose the types and amounts of benefits they want from a set of alternatives are called:

Accepted Answer

Cafeteria-style plans offer employees a set of alternatives from which they can choose the types and amounts of benefits they want.

Question 3

What are vesting rights?

Accepted Answer

ERISA guarantees employees that when they become participants in a pension plan and work a specified number of years they earn a right to a pension upon retirement. These rights are called vesting rights. Employees whose contributions are vested have met the requirements (enrolling and length of service) to receive a pension at retirement age, regardless of whether they remained with the employer until that time.

Question 4

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

Accepted Answer

In the case of retirement plans, the advantages include the ability for employees to immediately take a tax deduction for the funds they contribute to the plans, no immediate tax on employees for the amount the employer contributes, and tax-free earnings on the money in the retirement fund.

Question 5

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?

Accepted Answer

As workers' children grow up, their needs shift from maternity leave and child care to college tuition. Some organizations have supported this concern by sponsoring tax-favored 529 savings plans. These plans, named after the section of the Internal Revenue Code that regulates them, lets parents and other family members defer taxes on the earnings of their deposits into the 529 account.

Question 6

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?

Accepted Answer

A cafeteria-style plan is a benefits plan that offers employees a set of alternatives from which they can choose the types and amounts of benefits they want. This offers a lot of flexible and is especially useful in organizations with a lot of diversity. Hence, Ravi should adopt a cafeteria-style plan.

Question 7

Which of the following is an advantage of cafeteria-style plans?

Accepted Answer

Cafeteria-style plans have a number of advantages. The selection process can make employees more aware of the value of the benefits, particularly when the plan assigns each employee a sum of money to allocate to benefits. Also, the individual choice in a cafeteria plan enables each employee to match his or her needs to the company's benefits, increasing the plan's actual value to the employee.

Question 8

A _____ pension plan allows pension benefits for key employees,such as highly paid managers,to exceed a government-specified share of total pension benefits.

Accepted Answer

Employers may vest employees more quickly if they wish. Two less-common situations have different vesting requirements. One is a "top-heavy" pension plan, meaning pension benefits for key employees (such as highly paid top managers) exceed a government-specified share of total pension benefits.

Question 9

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?

Accepted Answer

A drawback of cafeteria-style plans is that they have a higher administrative cost, especially in the design and start-up stages. Jim's company can avoid some of the higher cost by using software packages and standardized plans that have been developed for employers wishing to offer cafeteria-style benefits.

Question 10

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

Accepted Answer

Early-retirement incentive programs need to meet certain standards. The programs may not coerce employees to retire, they must provide accurate information about the options available, and they must give employees enough time to make a decision.

Question 11

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?

Accepted Answer

Basic demographic factors such as age and sex can influence the kinds of benefits employees want. An older workforce is more likely to be concerned about (and use) medical coverage, life insurance, and pensions.

Question 12

Most organizations offer _____ to encourage learning and attract the kinds of employees who wish to develop their knowledge and skills.

Accepted Answer

To encourage learning and attract the kinds of employees who wish to develop their knowledge and skills, many organizations offer tuition reimbursement programs.

Question 13

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?

Accepted Answer

The lowest level of involvement is for the organization to supply and help employees collect information about the cost and quality of available child care. Hence, Jacob's company is at the lowest level of involvement in terms of child care.

Question 14

Which of the following is true of child care?

Accepted Answer

Child care benefits may take several forms, requiring different levels of organizational involvement. At the highest level of involvement, the employer provides child care at or near the work site. Staffing a child care facility is costly and involves important liability concerns.

Question 15

_____ 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.

Accepted Answer

The Internal Revenue Service 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.

Question 16

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

Accepted Answer

Elder care benefit benefits typically emphasize information, referrals, and support, rather than direct financial assistance.

Question 17

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?

Accepted Answer

With regard to value, medical insurance is a high-value benefit because employees usually realize that surgery or a major illness can be financially devastating. Hence, Alisha can convince Stan that medical insurance is necessary as employees appreciate this type of benefit.

Question 18

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

Accepted Answer

Organizations looking for ways to control staffing costs may look for ways to structure the workforce so as to minimize the expense of benefits. They may require overtime rather than adding new employees, hire part-time rather than full-time workers, and use independent contractors rather than hire employees.

Question 19

How do cafeteria-style plans increase costs for employers?

Accepted Answer

A drawback of cafeteria-style plans is that they have a higher administrative cost, especially in the design and start-up stages. Another possible drawback is that employee selection of benefits will increase rather than decrease costs because employees will select the kinds of benefits they expect to need the most.

Question 20

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?

Accepted Answer

To encourage learning and attract the kinds of employees who wish to develop their knowledge and skills, many organizations offer tuition reimbursement programs. A typical program covers tuition and related expenses for courses that are relevant to the employee's current job or future career at the organization. In this case, James is most likely to use a tuition reimbursement program.

Quiz 14: Providing Employee Benefits