Chapter 13 - Final Exam - MIE 330

Health Maintenance Organization (HMO)

A health care plan that provides benefits on a prepaid basis for employees who are required to use only HMO medical service providers.

Preferred Provider Organization (PPO)

A health care plan that provides benefits on a prepaid basis for employees who are required to use only HMO medical service providers.

The _____ requires employers to permit employees to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff.

Consolidated Omnibus Budget Reconciliation Act (COBRA) The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 requires employers to permit employees to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff.

_____ plans do not promise a specific benefit level for employees upon retirement.

Defined contribution Defined contribution plans do not promise a specific benefit level for employees upon retirement. Rather, an individual account is set up for each employee with a guaranteed size of contribution.

Which of the following media is most widely used by organizations to communicate benefit plans?

Enrollment materials (online or paper)

Which of the following provides 12 weeks of unpaid absence from work to care for a seriously ill child, spouse, or parent if the organization has at least 50 employees living within a 75-mile radius?

Family and Medical Leave Act Since 1993, the Family and Medical Leave Act requires organizations with 50 or more employees within a 75-mile radius to provide as much as 12 weeks of unpaid leave after childbirth or adoption; to care for a seriously ill child, spouse, or parent; or for an employee's own serious illness.

In which of the following ways do PPOs differ from HMOs?

HMOs provide benefits on a prepaid basis. PPOs differ from HMOs in that they do not provide benefits on a prepaid basis and employees often are not required to use the preferred providers. Instead, employers may provide incentives for employees to choose, for example, a physician who participates in the plan.

Which of the following is true about the Old Age, Survivors, Disability, and Health Insurance (OASDHI) program?

High earners help subsidize benefit payments to low earners.

Which of the following is true of active wellness programs?

It includes the outreach and follow-up model.

In which of the following ways may staffing practices change in response to benefit cost controls?

Organizations having their employees classified as contractors rather than employees

_____ plans permit employees to defer compensation on a pretax basis.

Section 401(k) Section 401(k) plans (named after the tax code section) permit employees to defer compensation on a pretax basis. Annual contributions in 2013 are limited to $17,500. For those age 50 or over, an additional $5,500 per year in catch-up contributions is also permitted.

Social Security

Social Security Act of 1935 was the establishment of old-age insurance and unemployment insurance. The act was later amended to add survivor's insurance (1939), disability insurance (1956), hospital insurance (Medicare Part A, 1965), and supplementary medical insurance (Medicare Part B, 1965) for the elderly. Together these provisions constitute the federal Old Age, Survivors, Disability, and Health Insurance (OASDHI) program. More than 90% of U.S. employees are covered by the program, the main exceptions being railroad and federal, state, and local government employees, who often have their own plans.

Unemployment Insurance

Social Security Act of 1935 was the establishment of old-age insurance and unemployment insurance. The act was later amended to add survivor's insurance (1939), disability insurance (1956), hospital insurance (Medicare Part A, 1965), and supplementary medical insurance (Medicare Part B, 1965) for the elderly. Together these provisions constitute the federal Old Age, Survivors, Disability, and Health Insurance (OASDHI) program. More than 90% of U.S. employees are covered by the program, the main exceptions being railroad and federal, state, and local government employees, who often have their own plans.

Workers' Compensation Laws

Workers' compensation laws cover job-related injuries and death. Workers' compensation benefits fall into four major categories: (1) disability income, (2) medical care, (3) death benefits, and (4) rehabilitative services.

Defined contribution plans made it the responsibility of the _____ to make wise investment decisions for their retirement plans.

employee Defined contribution plans put the responsibility for wise investing squarely on the shoulders of the employee. Defined contribution plans continue to grow in importance, while defined benefit plans have become less common.

The workers' compensation cost to an employer is based on the:

employers experience rating

Communication Benefits (Table 13.9)

enrollment materials group employee benefits one to one employee benefits counselig with an organizational representative internet

To be a qualified benefits plan, a pension plan should not discriminate in favor of _____.

highly compensated employees

The _____ tax rate is the percentage of additional earnings that goes to taxes.

marginal

Medical Insurance (Table 13.3)

medical dental short term disability insurance long term all retirement life insurance paid leave

Which of the following benefits involve the highest of costs?

medical and other insurance

Group insurance rates are typically lower than individual rates because:

of economies of scale Group insurance rates are typically lower than individual rates because of economies of scale, the ability to pool risks, and the greater bargaining power of a group. This cost advantage, together with tax considerations and a concern for employee security, helps explain the prevalence of employer-sponsored insurance plans.

Benefits and their unique aspects

question of legal compliance is that organizations typically offer them that they have come to be institutionalized compared with other forms of compensation is their complexity

The Pregnancy Discrimination Act of 1978 requires employers to:

treat pregnancy as they would any other disability when they do offer disability plans. The Pregnancy Discrimination Act of 1978 requires employers that offer disability plans to treat pregnancy as they would any other disability. Experience with the Family and Medical Leave Act suggests that a majority of those opting for this benefit fail to take the full allotment of time. This is especially the case among female executives.

According to the Employee Retirement Income Security Act (ERISA), the rights of employees to a pension upon retirement are known as _____.

vesting rights ERISA guarantees employees that when they become participants in a pension plan and work a specified minimum number of years, they earn a right to a pension upon retirement. These are referred to as vesting rights. Vested employees have the right to their pension at retirement age, regardless of whether they remain with the employer until that time.

Which of the following increased the fiduciary responsibilities of pension plan trustees and established vesting rights and portability provisions?

Employee Retirement Income Security Act The Employee Retirement Income Security Act (ERISA) of 1974 increased the fiduciary responsibilities of pension plan trustees, established vesting rights and portability provisions, and established the Pension Benefit Guaranty Corporation (PBGC).

Which of the following is a reason for the growth of benefits as a method of employee compensation?

Groups of employees can typically receive a cost advantage over individuals.

Which of the following is true about employee benefits?

Impact of legal regulations on benefits is greater than they are on direct compensation. Although direct compensation is subject to government regulation, the scope and impact of regulation on benefits is far greater. Some benefits, such as Social Security, are mandated by law. Others, although not mandated, are subject to significant regulation or must meet certain criteria to achieve the most favorable tax treatment; these include pensions and savings plans.

_____ guarantees to pay employees a basic retirement benefit in the event that financial difficulties force a company to terminate or reduce employee pension benefits.

Pension Benefit Guaranty Corporation

The _____ requires defined contribution plans holding publicly traded securities to provide employees with at least three investment options other than employer securities.

Pension Protection Act of 2006 The Pension Protection Act of 2006 requires defined contribution plans holding publicly traded securities to provide employees with (1) the opportunity to divest employer securities and (2) at least three investment options other than employer securities.

_____ increases are provided as part of social security benefits for each year that the consumer price index increases.

cost of living

The unemployment insurance program is financed largely through federal and state taxes on _____.

employers

Private Group Insurance

group insurance rates are typically lower than individual rates because of economies of scale, the ability to pool risks, and the greater bargaining power of a group. This cost advantage, together with tax considerations and a concern for employee security, helps explain the prevalence of employer-sponsored insurance plans. We discuss two major types: medical insurance and disability insurance. Note that these programs are not legally required; rather, they are offered at the discretion of employers. medical insurance disability insurance

The major advantage of a flexible spending account is that:

it increases the employees' take-home pay.

Growth in Benefits

laws were passed that legally required benefits like social security wage and price controls combined with labor market shortages forced employers to think of new ways to attract and retain employees tax treatment of benefits programs is more favorable for employees than the tat treatment of wages and salaries

Social Insurance

legally required is social security and unemployment insurance workers compensation

Affordable Care Act (PPACA or Obama Care)

penalties for not providing health beneftis taxes coverage of dependents wellness programs