Chapter 13 Benefit Options
10. (p. 448) The rising costs of Social Security have been covered by: A. increases in the maximum earnings base and the tax rate at which it is taxed. B. reduction in Social Security benefits by providing market-driven options. C. progressive reduction in the coverage. D. welfare grants and annual supplements from Congress.
A
14. (p. 452-452) All of the following are ways to control unemployment taxes except: A. dismiss employees "for just cause" rather than by layoffs. B. implement good human resource planning. C. step up enforcement of sanctions against fraudulent claims. D. monitor claimant behavior after termination.
A
20. (p. 453) In a _____ plan an employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company. A. defined benefit B. noncontributory benefit C. 401 (k) D. shared-benefit
A
24. (p. 456) An employer experiencing high turnover and seeking to reduce pension cost is likely to prefer: A. full vesting after three years. B. full vesting after six years. C. full vesting after seven years. D. to offer portability rights.
A
28. (p. 458) Roughly _____ of all employees have access to paid life insurance. A. three-fourths B. half C. one-third D. a quarter
A
32. (p. 461) _____ is a hybrid health plan combining features of HMO and _____. A. Point-of-service, preferred provider organization B. POS, Blue-Cross C. Managed care, POS D. Consolidated health, PPO
A
36. (p. 464) The most prevalent practice these days, in place of short-term sick leave is: A. paid time off. B. short-term disability. C. accumulated medical leaves. D. incentives for non-usage of sick leave.
A
4. (p. 446) Jennifer is hurt at work while driving a forklift. Her employer claims that she was driving too fast and therefore she is responsible for her own injury and is not eligible for workers' compensation. What will be the outcome of the employer's challenge to her worker's compensation claim? A. She will likely receive workers' compensation benefits. B. She will get nothing. C. Jennifer and her employer will share the blame and split the costs. D. The employer has the final word in determining Jennifer's eligibility.
A
Explain the eligibility for unemployment insurance.
All workers except a few agricultural and domestic workers are currently covered by unemployment insurance (UI) laws. The eligibility requirements to receive benefits are: • You must meet the State requirements for wages earned or time worked during an established (one year) period of time referred to as a "base period." • You must be determined to be unemployed through no fault of your own [determined under state law], and meet other eligibility requirements of State law.
1. (p. 444) A comparison of employee benefits for private and state and local government sector reveals that: A. private sector pays out better benefits in the long run. B. both wages and benefits are higher in the state and local governments. C. private sector paid out better wages than state and local governments. D. state and government sector paid out better wages but benefits were relatively lesser.
B
11. (p. 450) All of the following are benefits under Social Security except: A. lump-sum death payments. B. medical expenses for work-related injuries. C. benefits for dependents of retired workers. D. benefits for surviving family members of deceased workers.
B
16. (p. 452) Which of the following acts has caused HR and information technology staff considerable difficulty regarding compliance and privacy? A. COBRA B. HIPPA C. FMLA D. ERISA
B
19. (p. 453) The majority of defined benefit plans calculate average earnings over the last _____ years of service for a prospective retiree. A. 2 to 4 B. 3 to 5 C. 6 to 8 D. 7 to 9
B
21. (p. 453-454) Advantages of defined contribution plans versus defined benefit plans include all of the following except: A. vesting is usually faster. B. pre-retirement contributions are smaller. C. pension costs are more predictable. D. employee mobility is facilitated.
B
25. (p. 456) An employer seeking to use pensions to reduce turnover is likely to prefer: A. fully vested after three years. B. vesting 20 percent after 2 years and 20 each year thereafter. C. fully vested after two years. D. vesting schedules are unlikely to affect turnover.
B
29. (p. 459-460) A type of general health care plan in which health services are provided for a fixed fee at a specific site is: A. a PPO. B. an HMO. C. a POS. D. the traditional health care.
B
33. (p. 462) All of the following are examples of methods to motivate employees to change their demand for health care except: A. using intranet allowing employees access to medical information. B. promotion of preventive health plans. C. co-pays. D. setting maximum benefit levels.
B
37. (p. 465) Dental insurance is provided by _____ percent of all employers with above 500 employees. A. 30 B. 90 C. 70 D. 85
B
5. (p. 447-448) Which of the following benefits is a federally administered program? A. Workers' compensation B. Social Security C. Unemployment insurance D. Occupational Safety and Health Act
B
7. (p. 446-447) _____ relieve an employer's liability when a preemployment injury combines with a work-related injury to produce a disability greater than that caused by the latter alone. A. Collateral funds B. Second-injury funds C. Insolvency fund D. Preemployment fund
B
Which are the benefits required by statutory law?
Benefits that are required by statutory law are workers' compensation, social security, and unemployment compensation
12. (p. 450) For an employee to gain lifetime coverage under Social Security, they must have worked for_____ quarters during which they were covered by the Act. A. 20 B. 30 C. 40 D. 50
C
17. (p. 452) _____ was designed to reduce an employer's ability to deny coverage to an employee based upon a preexisting condition. A. COBRA B. OSHA C. HIPPA D. FMLA
C
2. (p. 445) Which of the following is not a benefit that is required by statutory law? A. Workers' compensation B. Social Security C. Pension and retirement benefits D. Unemployment compensation
C
22. (p. 453-454) Which of the following is not a defined contribution plan? A. 401 K B. ESOP C. Cash-back D. Profit sharing
C
26. (p. 457) The first question to ask in determining how much retirement income an employer should provide is: A. Should Social Security payments be considered? B. How should seniority be factored into the payout formula? C. What level of retirement compensation should be provided? D. Should other, non-Social Security income sources be considered?
C
30. (p. 460) The general health care plan that uses a direct contractual relationship between employers, health-care providers and third-party payers is: A. the traditional coverage plan. B. an HMO. C. a PPO. D. a POS.
C
34. (p. 462) An account set up to cover part of a high health care deductible is a: A. POS. B. flexible spending account. C. PCA. D. PPO.
C
39. (p. 467) _____ percent of employers offer health benefits to domestic partners. A. 42 B. 31 C. 18 D. 8
C
6. (p. 446) Experts attribute the decline in dollar cost of workers' compensation cost after 2005 to: A. increased variable component. B. devaluation of the dollar. C. employer safety programs. D. relaxed federal regulations.
C
80. (p. 455) What is a cash-balance plan?
Cash balance plans are defined benefit plans that look like a defined contribution plan. Employees have a hypothetical account (like a 401[k]) into which is deposited what is typically a percentage of annual compensation. The dollar amount grows both from contributions by the employer and from some predetermined interest rate
13. (p. 450) Unemployment insurance is usually financed by: A. joint contributions by employee and employer. B. employer, employee, and state contributions. C. federal, state, and employee contributions. D. employer taxes paid to both federal and state funds.
D
15. (p. 452) Steve has a small company with 12 employees. One of his employees, Larry, has been laid off because his work has been outsourced. Larry had health coverage through Steve's company and he wants to continue that coverage after being laid off. According to C.O.B.R.A. how long can Larry continue his coverage through Steve's Company? A. 36 months B. 24 months C. 18 months D. 0 months
D
18. (p. 452) Today, _____ percent of the workforce is covered under the pension plan coverage by their employers. A. sixty-four B. fifty-eight C. fifty-six D. forty-three
D
23. (p. 453-454) _____ plans are more favorable to long-term than to short-term employees. A. 401 K B. Cash balance C. Profit sharing D. Traditional defined benefit
D
27. (p. 458) An employee who changes jobs four or more times during their career will likely experience a pension approximately _____ as that of an employee whose working career is spent with one employer. A. twice as large B. the same size C. one fourth the size D. half the size
D
3. (p. 446) _____ has been described as a major cost of doing business. A. Social Security B. Unemployment insurance C. FMLA D. Workers' compensation
D
31. (p. 461) _____ represent a variation on health-care delivery in which there is a direct contractual relationship between and among employers, health-care providers, and third-party payers. A. PSOs B. HMOs C. Traditional coverage plans D. PPOs
D
35. (p. 463)) Which of the following is not an example of a method to control health care costs by changing the structure of health care delivery systems? A. HMO B. No health care plan offered C. POS D. In-house medical teams
D
38. (p. 467) The major reasons motivating U.S. corporations to provide domestic partner benefits include all of the following except: A. Fairness to all employees regardless of their sexual orientation or marital status B. Market competition C. Diversity in today's tight labor market D. Federal legislation mandating these provisions
D
40. (p. 468) Contingent workers receive _____ benefits than regular workers; contingent workers' benefits cost employers _____ than regular workers. A. more, less B. fewer, more C. more, more D. fewer, less
D
8. (p. 447) Which of the following types of workers are generally not covered by workers' compensation? A. State government employees B. Coal miners C. Railroad employees D. Farm workers
D
9. (p. 436) Approximately _____ percent of social security benefits go to retirees and their dependants. A. 20 B. 40 C. 50 D. 70
D
41. As benefit costs have skyrocketed, especially health care, the popularity of employee benefits have declined. True False
FALSE
42. If a man's wife died while driving a truck for her employer, and if she was responsible for the accident, the husband is not eligible to receive compensation for the loss. True False
FALSE
44. Work-related injuries are covered by workers' compensation but not industrial diseases such as black lung and asbestosis. True False
FALSE
46. Workers' compensation disability payments are tied directly to the nature of the loss and not factors such as the employee's earnings or number of dependents. True False
FALSE
47. Workers' compensation is covered federal laws. True False
FALSE
48. In 48 states, employers are not allowed to self-insure their workers' compensation program but must participate in the state's program. True False
FALSE
49. The majority of those receiving social security benefits are disabled workers and their dependents and survivors of deceased beneficiaries. True False
FALSE
52. Medicare is not part of social security. True False
FALSE
54. Jim was a full-time student for four years, but could not find a job after graduating. Jim is likely eligible to collect unemployment insurance. True False
FALSE
56. An eligible unemployed person may collect unemployment insurance benefits for 36 weeks in most states. True False
FALSE
58. The two generic types of pension plans are contributory plans and noncontributory plans. True False
FALSE
59. Companies are turning away from 401K type pension plans because they require putting money in "up front" rather than when workers retire. True False
FALSE
61. A 401K is an example of a defined benefit plan. True False
FALSE
63. Employees are required to make contributions to cash balance plans. True False
FALSE
65. The Employee Retirement Security Act states that employers must offer a retirement plan to their employees if they work at least 1250 hours per year. True False
FALSE
67. Under the Economic Growth and Tax Reconciliation Act of 2001, employers have three vesting schedule options. True False
FALSE
69. Employees have greater choice of doctors in an HMO than in a PPO. True False
FALSE
78. (p. 453) Compare defined benefit plans and defined contribution plans.
In a defined benefit plan, an employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company. Defined contribution plans require specific contributions by an employer, but the final benefit that will be received by employees is unknown; it depends on the investment success of those charged with administering the pension fund.
43. Workers' compensation covers the costs of both medical expenses and rehabilitation for work-related injuries. True False
TRUE
45. Of the many benefit claims, temporary total disability is the most frequent. True False
TRUE
50. The basic purpose of social security is to provide basic financial security for Americans and their families. True False
TRUE
51. A major problem with social security is a rising number of retirees without a corresponding increase in contributors. True False
TRUE
53. Substance abuse is not an allowed disability under social security. True False
TRUE
55. Employers who have frequent layoffs pay higher unemployment rates than those with few layoffs. True False
TRUE
57. To be eligible for FMLA, an employee has to have worked for an employer at least 1,250 hours in the previous year. True False
TRUE
60. Most employers prefer defined contribution pension plans to defined benefit plans. True False
TRUE
62. A qualified deferred compensation plan offers tax advantages to employers. True False
TRUE
64. An IRA is retirement savings plan that is not managed by an employer. True False
TRUE
66. Vesting is the amount of time an employee must work for an employer to be entitled to their employer's contributions to a pension. True False
TRUE
68. The Pension Benefit Guarantee Corporation protects vested benefits of people in terminated pension plans. True False
TRUE
70. Requiring a second opinion prior to surgery is an example of a method to reduce employee demand for health care. True False
TRUE
71. Employers have recently begun reducing the number of paid holidays. True False
TRUE
452) Explain the coverage of the FMLA.
The 1993 Family and Medical Leave Act applies to all employers having 50 or more employees and entitles all eligible employees to receive unpaid leave up to 12 weeks per year for specified family or medical reasons. To be eligible, an employee must have worked at least 1,250 hours for the employer in the previous year.
77. (p. 452) What is the purpose of the HIPAA?
The 1996 Health Insurance Portability and Accountability Act (HIPAA) is designed to (1) lessen an employer's ability to deny coverage for a preexisting condition and (2) prohibit discrimination on the basis of health-related status
74. (p. 448) What is the central challenge of social security payments? How are they tackled
The money to pay social security benefits comes from contributions made by employees, their employers, and self-employed people during working years. As contributions are paid in each year, they are immediately used to pay for the benefits to current beneficiaries. This is a major problem with social security. While the number of retired workers continues to rise, no corresponding increase in the number of contributors to social security has offset the costs. To maintain solvency, there has been a dramatic increase in both the maximum earnings base and the rate at which that base is taxed.
79. (p. 453-454) What are the three types of defined contribution plans?
There are three popular forms of defined contribution plans. A 401(k) plan is a savings plan in which employees are allowed to defer income up to a $12,000 maximum. The second type of plan is an employee stock ownership plan (ESOP). In a basic ESOP a company makes a tax-deductible contribution of stock shares or cash to a trust. The trust then allocates company stock to participating employee accounts. Finally, profit sharing can be considered a defined contribution pension plan if the distribution of profits is delayed until retirement.
81. (p. 456) Explain vesting and portability.
Vesting refers to the length of time an employee must work for an employer before he or she is entitled to employer payments made into the pension plan. Portability refers to the issue of transferring pension benefits of employees moving to new organizations.
73. (p. 446) What are the areas covered as part of the no-fault insurance under workers' compensation? As a form of no-fault insurance, workers' compensation covers injuries and diseases that arise out of, and while in the course of, employment. Benefits are given for the following:
• Permanent total disability and temporary total disability • Permanent partial disability—loss of use of a body member • Survivor benefits for fatal injuries • Medical expenses • Rehabilitation
