Question 1

Offering benefits to employees can be cost effective for employees,but NOT for employers. (Cost Advantage)

Accepted Answer

Offering benefits to employees can actually be cost effective for employers. It can increase employee retention, productivity, and overall job satisfaction which can ultimately lead to cost savings for the company.

Question 2

Most small group health insurance policies are based on experience ratings. (Cost Advantage)

Accepted Answer

Most small group health insurance policies are based on experience ratings, which means the premium is based on the claims history and risk factor of the group. This can potentially provide a cost advantage for groups with low claims history and risk factors.

Question 3

The degree to which employers will decrease their hiring,if the market compensation level increases,can affect how much of a benefit's increase cost will be passed on to the employees. (Who Pays For Benefits?)

Accepted Answer

The statement is true. If the market compensation level increases, it may make employers decrease their hiring, which can affect how much of an increase in benefits cost will be passed on to the employees.

Question 4

Experience rating is the process of gathering information about employees' risk profiles. (Cost Advantage)

Accepted Answer

Experience rating helps organizations identify high-risk employees and take appropriate measures to manage their risk profiles, resulting in cost savings and a competitive advantage.

Question 5

Large companies are more likely to be subject to medical underwriting because more risk involved than smaller companies or individuals. (Cost Advantage)

Accepted Answer

Large companies are typically not subject to medical underwriting because they have a larger pool of employees, which spreads the risk and makes it more predictable for insurers.

Question 6

The IRS offers tax benefits to companies that offer retirement plans. (Tax Incentives)

Accepted Answer

The IRS does offer tax benefits to companies that offer retirement plans. These tax incentives are designed to encourage companies to provide retirement benefits to their employees. Some of the tax incentives include tax deductions for employer contributions, tax deferrals for employee contributions, and tax credits for small businesses that start new retirement plans.

Question 7

According to insurance statistics,women have higher average medical expenses than men. (Cost Advantage)

Accepted Answer

According to insurance statistics, women have higher average medical expenses than men, which gives them a cost advantage in terms of medical coverage. This difference can be due to various factors such as women having more regular medical check-ups, visits to the gynecologist, maternity care, and longer life expectancy.

Question 8

An insurance pool refers to all employees who fall into an insured category. (Cost Advantage)

Accepted Answer

An insurance pool is a group of individuals who share a common risk and are insured under a single policy. In the context of employee benefits, an insurance pool would typically include all employees who fall into an insured category, such as those who are eligible for health insurance or life insurance through their employer. By pooling together their risk, insurers are able to spread the cost of insurance across a larger group, which can result in lower premiums for individuals within the pool. This is known as a cost advantage.

Question 9

According to insurance statistics,medical expenses run higher for minority groups than whites. (Cost Advantage)

Accepted Answer

This statement is a stereotype and not a factual representation of insurance statistics. Medical expenses can vary widely based on numerous factors unrelated to race or ethnicity.

Question 10

Offering certain types of benefits in combination with reduced compensation is one way of recruiting desirable workers. (Recruiting Certain Types of Workers)

Accepted Answer

This statement is true. Employers often offer benefits such as health insurance, retirement plans, flexible schedules, or tuition reimbursement in order to recruit highly qualified and desirable workers. These benefits can offset any reductions in salary or other compensation.

Question 11

When health benefit costs rise for a single employer in a market,the employer will likely be able to pass along the benefit costs to workers,even if the workers valuation of the benefit has NOT changed. (Who Pays for Benefits?)

Accepted Answer

The answer of When health benefit costs rise for a...

Question 12

Even if increased health insurance costs are NOT accompanied by an increase in employees' valuation of the insurance,cash wages will probably be adjusted downward anyway. (Who Pays for Benefits?)

Accepted Answer

The answer of Even if increased health insurance costs are...

Question 13

Employees in a large company are less likely to be subject to medical underwriting than those in a small company. (Cost Advantage)

Accepted Answer

Large companies typically have more bargaining power with insurance providers, allowing them to negotiate for better terms and coverage for their employees without being subject to medical underwriting. On the other hand, small companies may have limited options and be subject to more stringent underwriting requirements.

Question 14

If health insurance premiums rise because of advances in medical care technology,employees would probably perceive that the increase added value to their insurance. (Cost Advantage)

Accepted Answer

If the increase in premiums is due to advancements in medical care technology, employees may perceive it as added value to their insurance because they are gaining access to better and more advanced medical treatments and services. This may result in lower out-of-pocket costs and better health outcomes. Therefore, it can be considered as a cost advantage.

Question 15

One of the drawbacks of Medicare and Social Security insurance,is that neither program can avoid adverse selection. (Cost Advantage)

Accepted Answer

The answer of One of the drawbacks of Medicare and...

Question 16

Offering some benefits in a compensation package can attract qualified,but undesirable job applicants. (Recruiting Certain Types of Workers)

Accepted Answer

Sometimes offering certain benefits such as a high salary or flexible work hours may attract job applicants who do not have the desired qualifications or work ethics. Therefore, it is important to carefully consider what benefits to offer in order to attract the desired and suitable job applicants.

Question 17

Benefits administration costs are usually miniscule and not considered when measuring economies of scale. (Cost Advantage)

Accepted Answer

Benefits administration costs can be significant and are often included in calculating economies of scale. These costs include expenses related to managing employee benefits such as health insurance, retirement plans, and paid time off. By consolidating and streamlining these processes, larger organizations can often achieve cost savings and a cost advantage over smaller competitors.

Question 18

Medical expenses are higher for people with new medical histories. (Cost Advantage)

Accepted Answer

Medical expenses are generally higher for people with existing medical histories, not new ones, as they may require ongoing treatment and management of chronic conditions.

Question 19

The 2009 average total medical expenditure was lowest for adults aged 18 to 44. (Cost Advantage)

Accepted Answer

The 2009 average total medical expenditure was not necessarily lowest for adults aged 18 to 44; typically, younger adults have lower medical expenses compared to older age groups, but specific data would be needed to confirm this for 2009.

Question 20

Individuals don't know more about their health than insurance companies. (Cost Advantage)

Accepted Answer

Individuals have more intimate knowledge of their own health status, behaviors, and concerns than insurance companies. While insurance companies may have access to claims data and other health information, they do not have direct insight into an individual's daily health habits, symptoms, and experiences. This highlights the importance of patient-centered care and empowering individuals to be active participants in their own health management.

Quiz 2: The Psychology and Economics of Employee Benefits