Ch 10 Benefits for Employees

Answer: Employers All 401(k) plans are offered by employers to help employees save for retirement. Firms that offer traditional and Roth 401(k) plans provide added compensation and motivation to their employees. A recent study by the AON Hewitt consultancy group suggests that roughly half of all organizations do not currently offer a Roth retirement option. However, the study also found that nearly 30 percent of those without the Roth option will likely implement such a plan in the next 12 months.

401(k) plans are mainly sponsored by whom? Employers The federal government The state Individuals

Answer: Assesses the cost of each benefit to determine which are being used and which can be changed To lower costs, organizations periodically conduct utilization reviews. A utilization review assesses the cost of each benefit and provides data that shows which benefits are being used most often and which benefits could be reconfigured, redirected, or eliminated.

A utilization review _______________________. Assesses the cost of each benefit to determine which are being used and which can be changed Assesses the cost of each employee to find their overall worth in the company Assesses the cost of wages for each department to determine which are being most productive Assesses the organization's total costs to see where the organization can lower or eliminate costs

Answer: Advanced technologies decrease the desire for expensive equipment and procedures There are numerous explanations for the rise in health care, some of which are: -Deteriorating overall health in society -No accountability on patient's part for health care costs -Aging population -Advanced technologies that increase the desire for expensive equipment and procedures -An increased focus on saving the lives of premature babies and morbidly ill patients (e.g., cancer patients)

All of the following are reasons that health care costs are rising except... Overall, Americans are living longer lives There is no accountability on the patient's part for health care costs The overall health of society is deteriorating Advanced technologies decrease the desire for expensive equipment and procedures

Answer: They help employees be dedicated to other companies People who are satisfied with the company will be less likely to consider leaving. Benefits should provide a means to retain talented employees. Certain types of benefits can provide an incentive to produce and be dedicated to the company.

All of the following are ways that benefits help retain current employees, except... They help employees be dedicated to the company They provide an incentive to produce They help employees be satisfied with the company They help employees be dedicated to other companies

Answer: 50 Under the Affordable Care Act, businesses with more than 50 employees must provide health insurance to their full-time employees, or the business will be required to pay a tax penalty.

How many employees must an organization have before it is mandated to provide health insurance to their full-time employees or pay a tax penalty? 50 15 25 100

Answer: Defined benefit plan A defined benefit plan is a retirement plan in which the employer commits (and pays) a specific monthly benefit (or amount) to the employee when the employee retires. In today's global, competitive environment, the number of defined benefit plans sponsored by employers has steadily declined. In fact, most employers see pension contributions as an unsustainable expense to the firm. Organizations can avoid the long-term commitment of defined benefit plans by offering defined contribution plans instead.

Nadine works for an online data analytics company. Her employer will give her $1500 a month when she retires. What type of retirement plan is this? 401(k) Roth 401(k) Defined benefit plan Defined contribution plan

Legislatively mandated benefits Health-care cost containment Family issues

Three elements of concern regarding employee benefits are:

Answer: Have less employee participation in the design of benefit packages Increased communication and more employee participation in the design and selection of benefit packages may increase the likelihood that organizations will receive increased gains from providing indirect compensation. With regular input from employees, benefit packages will better fit the needs of the employees and keep them happy.

To increase the chances that employers will see increased gains from indirect compensation, they should do all of the following except... Have less employee participation in the design of benefit packages Have employees participate in the selection of benefit packages Have more employee participation in the design of benefit packages Increase communication about the benefits they provide to employees

Answer: False Organizations can use benefits to motivate employees if the rewards correspond with employee needs. For example, if the workforce of the organization has many students, the organization could promote education by subsidizing education costs. This type of benefit would have no meaning to a company with few students in their organization.

True or False: Any benefits will motivate employees.

Answer: False Because direct and indirect compensation are both a part of the total compensation package, they share many of the same purposes. Such as, recruiting, retaining, and keeping employees for the long-term.

True or False: Because direct compensation focuses on wages and indirect compensation focuses on benefits, they mostly focus on different purposes for the company.

Answer: True To attract qualified people, benefits should be appealing. Benefits have to power to promote a desire to want to produce, and they can influence people to believe that this is a good company to work for.

True or False: Benefits can influence people to believe that a specific organization is a good company to work for.

Answer: False Because rewards are so diverse and employee preferences are so varied, indirect compensation is not always valued or seen as a reward by all employees.

True or False: Employee preferences are not very diverse when it comes to the different types of indirect compensation.

Answer: False False: Unfortunately, there are a number of instances where employees fraudulently claimed they were injured when, in reality, they were not. As a result, employers need to be vigilant about making sure that claims are legitimate.

True or False: Employees have no way to fraudulently make injury claims.

Answer: False Employers are increasingly shifting away from defined benefit plans. This is due, in part, to the cost incurred by the employer. Most employers see pension contributions as an unsustainable expense to the firm. Organizations can avoid the long-term commitment of defined benefit plans by offering defined contribution plans instead.

True or False: Employers are increasingly shifting toward the defined benefit plans for their employees.

Answer: True Because employees often have different needs, many organizations offer benefit flexibility. When designed effectively, a flexible benefits approach should increase the variety of plans offered to employees without increasing the cost to employers.

True or False: Flexible compensation packages have evolved because employees have different needs.

Answer: False Flexible spending plans have tax advantages, so funds can only pay medical expenses, dependent care, or other approved expenses.

True or False: Flexible spending accounts can be used for any type of benefits that the employer offers including medical expenses, time off, stock options, etc.

Answer: True As HR professionals design the compensation function, they should ensure that compensation is designed to help the organization achieve its strategic goals and objectives.

True or False: HR professionals should design compensation packages to achieve the organization's strategic goals and objectives.

Answer: True Most employees today are extremely concerned about indirect compensation. As the cost of indirect compensation grows in proportion to total compensation costs, employers become more interested in choosing benefits that are most cost-effective (and choosing benefits that employees really value).

True or False: Indirect compensation costs are growing in proportion to total compensation costs.

Answer: False Over the last few decades the importance of indirect compensation has grown significantly. While money, job challenge, and opportunities for advancement are important elements of compensation, many employees also place significant value on pension benefits, disability provisions, health insurance, and other forms of indirect compensation.

True or False: Indirect compensation is lessening in its importance to employees.

Answer: True One of the driving forces in benefits' growth and popularity was that they were not taxed as income. Today, some benefits are taxed, but most are still provided without tax.

True or False: Most benefits are not taxed.

Answer: False A number of organizations provide noncontributory life insurance coverage for their employees so that the employee does not pay premiums. Despite the cost of providing life insurance benefits to employees, many organizations make the strategic decision to provide them in order to keep up with other organizations and attract the best talent available.

True or False: Most employers decide not to provide life insurance programs for employees because of the cost to employees.

Answer: False Workers' compensation provides insurance and replaces wage and medical benefits if employees are injured on the job. In exchange for this benefit, employees waive their right to sue their employer for the tort of negligence leading to the injury.

True or False: Workers' compensation only benefits the employee, not the employer.

Answer: Indirect compensation The term "fringe benefits" and "benefits-pay" are used by many corporations to denote indirect compensation.

What are "fringe" benefits? Direct compensation Total compensation Indirect compensation

Answer: Injuries that occur on the job Workers' compensation provides insurance and replaces wage and medical benefits if employees are injured on the job.

What does workers' compensation apply to? Managers and executives who are injured Any injury that happens to an employee while he/she is employed Injuries that occur on the job Fraudulent claims of injury

Answer: When all employees are offered a general benefits program and then can either increase or expand coverage or receive cash instead of the benefits The core-plus-option plan is a common approach to developing a flexible compensation package. The general core benefits program that is offered to all eligible employees, and an option is granted to either increase or expand coverage. In some instances, employees may elect to receive cash amounts rather than benefits.

What is the core-plus-option flexible benefit plan? When all employees are offered a general benefits program and then can either increase or expand coverage or receive cash instead of the benefits When the employee is allowed to set aside a portion of their earnings for use in any expenses When employees can select a preferred package from various benefits plans When the employee is allowed to set aside a portion of their earnings for use in qualified expenses

Answer: Complete an evaluation of the total benefits package One major concern in designing and implementing benefits is cost control. If the productivity level does not justify the current costs of the benefits, then an evaluation of the total benefits package is necessary.

What should a company do if the productivity level doesn't justify the current costs of benefits? Increase benefits so the employees will increase their productivity Drop all benefits to employees Keep the benefits at the same level so as not to hurt morale Complete an evaluation of the total benefits package

Answer: Short-term disability insurance Short-term absences due to disability are covered by short-term disability, while longer-term absences are covered by long-term sickness and disability insurance. Short-term disability insurance protection is generally offered by more organizations than long-term disability protection.

What type of disability insurance do more organizations offer? Long-term disability insurance Short-term disability insurance

Answer: Defined contribution plan A defined benefit plan is a retirement plan in which the employer commits (and pays) a specific monthly benefit (or amount) to the employee when the employee retires. In a defined contribution plan, the employer pays a specific amount, or contribution, to an employee's retirement during each pay period that the employee is with the firm.

What type of retirement plan provides participants with individual accounts that fluctuate depending on what they contribute and investment returns? Defined contribution plan Defined benefit plan

Answer: What benefits are the least expensive, and implement those To ensure that the organization is getting the most from its indirect compensation, assessments must be made of what the organization is doing, what other organizations are doing, and what employees prefer to see the organization doing. Checking benefits to find cheaper ones is a good idea, but if those benefits are not what the employees want, then there is no reason to implement them.

When conducting assessments of the organization's indirect compensation, the assessment should look at all of the following except... What employees prefer to see the organization doing What other organizations are doing What benefits are the least expensive, and implement those What the organization is doing

Answer: Modular Plan The modular plan allows employees to select a preferred package from various existing modules (or benefit plans). These modules are then structured to satisfy common situations within the workforce.

Which flexible compensation package allows employees to select a preferred package from various benefit plans? Flexible Spending Account Modular Plan Flexible Insurance Core Plus Option

Answer: HMO In an HMO (health maintenance organization), the employee must choose a primary care physician in the network, but all health care provided must be provided by in-network physicians that are chosen by the Primary care physician. Some advantages of this program are less paperwork and lower out-of-pocket costs for the employee.

Which of the following health care plans generally has less paperwork and less out of pocket costs to the employee? HMO POS PPO Fee for Service Plan

Answer: Employee benefits The aggregate cost of benefits suggests that benefits are no longer "fringe" amounts, but instead, employee benefits are one of the fastest growing costs facing employers.

Which of the following is one of the fastest growing costs facing employers? Wages Employee benefits Recruitment costs Building costs

Answer: Roth 401(k) Under a Roth 401(k) plan, participants of traditional 401(k) plans can allocate some or all of their contributions to a separately-designed Roth account. These Roth contributions are collected and treated as after-tax dollars, that is, income tax is paid or withheld in the year contributed. Qualified distributions from a designed Roth 401(k) account are tax-free. A traditional 401(k) account is funded with pretax dollars and, in general, taxes must be paid when the original contribution and earnings are withdrawn.

Which of the following plans is taxed in the year it is contributed? 403(b) Roth 401(k) 401(k)

Answer: Total compensation Total compensation is the entire value of all direct and indirect payments to the employee. Direct compensation includes basic wages and performance-based pay. Indirect compensation, including employee services, benefits, training, etc., consists of rewards provided by the organization to employees for their membership and/or participation in the organization.

Which of the following types of compensation includes wages, benefits, and training? Indirect compensation Total compensation Direct compensation

Answer: The employee and employer Social security is funded through payroll taxes. Social security taxes are half paid by employees and half by employers. People who are self employed are required to pay both parts.

Who funds Social Security? The federal government The state The employee and employer Non-profit organizations

Answer: People who are unemployed through no fault of their own Unemployment Insurance is both a state and federal program that gives cash benefits to workers who qualify. All states are required to follow the guidelines based by the federal law, however each state administers a separate unemployment insurance program. These insurance benefits are designed to give financial assistance to unemployed workers who are unemployed through no fault of their own. Each state established its very own criteria for eligibility of the benefit program.

Who is Unemployment Insurance designed to benefit? Anyone who is insured Any employer whose company is in full compliance with OSHA standards People who are unemployed through no fault of their own Anyone who is unemployed

is a retirement plan in which the employer commits (and pays) a specific monthly benefit (or amount) to the employee when the employee retires.

defined benefit plan

the employer pays a specific amount, or contribution, to an employee's retirement during each pay period that the employee is with the firm.

defined contribution plan