HR Comp & Benefit Chapter 12

True or false: The federal government loosened wage and price controls during World War II and the Korean War.

False

Flexible employee benefit plans are also known as _____.

cafeteria-style benefit plans

True or false: Historically, organizations have provided equal employee benefits for both part-time workers and full-time workers.

False

Identify a true statement about the cost-centered approach to employee benefit programs.

It requires benefit administrators to decide the cost commitments for an existing benefit package.

Which of the following is a way in which employers can control spiraling employee benefit costs?

By adopting a broad, cost-centered approach to benefits

Identify a statement that represents the evidence that employee benefits are cost-justified

Employee benefits are known for helping in the retention of workers.

Identify the examples of employee benefits. (Check all that apply.)

Life Insurance Worker's Compensation

During World War II and the Korean War, the climate fostered by wage and price controls provided a perfect opportunity for unions to flex the muscles they had gained under the _____.

Wagner Act of 1935

Identify a true statement about the cost effectiveness of employee benefits.

The majority of employee benefits are not taxable.

An employer adopts new employee benefits offered by a competitor without careful consideration, just because the employer needs to avoid hard feelings. This is termed a _____.

bandwagon effect

Ryan, an employee of an organization, claims that he had an on-the-job hand injury. Sara is the organization's claims processor. Arrange the steps Sara should take as part of claims processing in the correct order of occurrence. Position 1 of 3 Sara should calculate the payment level of the employee benefit. incorrect toggle button unavailable Sara should calculate the payment level of the employee benefit.

1. Sara should find out whether the act claimed by Ryan has, in fact, occurred. 2. Sara should decide whether Ryan is eligible for the employee benefit if his assertion is true. 3. Sara should calculate the payment level of the employee benefit.

Which of the following is a way to improve employer return on investment in employee benefits?

Allowing employees to choose the benefits they receive by introducing a flexible benefits package

In the context of benefit administration issues, what are the major questions that arise in setting up an employee benefit package? (Check all that apply.)

Are the selected benefits legally defensible? Who should be benefited or protected? How should benefits be financed? How much choice should employees have from a range of benefits?

Identify an assumption of the demographic approach that is used to gauge employee preferences.

Demographic groups can be recognized for which benefit preferences are fairly consistent across members of the group.

are that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments.

Employee Benefits

Identify a statute that affects most employee benefits, pension administration, and various sections of the Internal Revenue Code.

Employee Retirement Income Security Act (ERISA)

Identify a statement that represents the evidence that employee benefits are cost-justified.

Employee benefits are known for helping in the retention of workers.

Identify a true statement about a flexible employee benefit plan.

It allots employees a fixed amount of money and allows them to spend that amount in the purchase of benefit options.

Match the methods of financing employee benefit plants (in the left column) with their descriptions (in the right column).

Noncontributory- Total costs are paid by employers Contributory- Employers and employees share the total costs Employee financed- Employees pay total costs for some benefits

Identify a true statement about the role of employee benefits in attraction, retention, and motivation.

Retention is increased by benefits.

Which of the following is an assumption of the demographic approach to determine employee preferences?

There are meaningful differences between groups in terms of benefit preferences.

What are the disadvantages of flexible employee benefit plans? (Check all that apply.)

They are subject to the nondiscrimination requirements in Section 125 of the Internal Revenue Code. They increase administrative burdens and expenses.

Which of the following is an advantage of flexible employee benefit plans?

They help firms meet the changing needs of a changing workforce.

Identify a true statement about employee benefit costs between 1955 and 1975.

They increased at a rate almost four times greater than employee wages.

Many of the employee benefits that exist today were provided at employer initiative. Why did employers implement savings and profit-sharing plans? (Check all that apply.)

To provide greater security for worker retirement years To improve job performance

The first step in a cost-centered approach to employee benefits requires _____.

policy decisions on the level of benefit expenditures acceptable both in the short and the long runs

Employee benefits slowly became a costly entitlement of the American workforce because _____.

they were taken on faith without hard data about payoffs

In the process of auditing employee benefits for cost containment opportunities, employers _____.

outsource benefits and administration

How does a good compensation manager consider employee benefit costs?

As part of a total package of compensation costs

Identify the ways in which employers can increase the effectiveness of employee benefits. (Check all that apply.)

By educating and creating awareness among employees about benefits By planning, designing, and administrating benefits in a better way

Which of the following methods of financing employee benefit plans is typically preferred by organizations?

Contributory

What are the factors that need to be included in the employee benefits planning process? (Check all that apply.)

Strategies for ensuring adequacy of benefits Integration of benefits with other compensation components Plans to ensure external competitiveness

In the context of the impact of legislation on employee benefits, discrimination legislation states that _____.

benefits must be administered in a manner that avoids differentiating against protected groups

When an employee asserts that a specific event, such as disability, hospitalization, unemployment, has occurred and demands that the employer fulfill a promise of payment,________ ______ arises.

claims processing

In the context of employee benefits, which of the following is a true statement about a Consumer-driven or High Deductible health care plan?

An employee pays all health care costs up to a pre-determined amount.

What do most organizations consider when evaluating the adequacy of employee benefits?

The financial liability of employees with and without a particular benefit

Identify a true statement about the choice available to employees in the plan coverage of a standard benefit package.

Employees typically are not offered a choice among employee benefits in a standard benefits package.

A true statement about the cost effectiveness of employee benefits is that _____.

group-based employee benefits can be obtained at a lower rate than individual-based benefits

An employee pays all health care costs up to some pre-determined rate in a Consumer-driven or High Deductible health care plan. After that amount, the employee _____.

pays a rate of 10-35 percent of any additional medical services

Which of the following are features of a flexible employee benefit plan? (Check all that apply.)

Employees are allowed to directly identify the benefits of greatest value to them. Benefit managers are capable of controlling benefit costs by constraining the dollars employees have to spend.

To be most effective, an employee benefit manual should _____.

be followed by repetition of the message in multiple media such as newsletters and social media

Identify a true statement about flexibility in cafeteria-style employee benefit plans.

Employees have great flexibility in choosing the benefit options of greatest value to them.

Match the legislations (in the left column) with their effects on employee benefits (in the right column).

The Fair Labor Standards Act of 1938- Introduced time and a half overtime pay The Employee Retirement Income Security Act of 1974-Set up the Pension Benefit Guaranty Corporation The Maintenance Act of 1973-Mandated employers to provide alternative health coverage options to employees

True or false: According to the cost-centered approach to employee benefit programs, if a benefit forecast implies future cost containment may be difficult, the benefit should be given to employees only on a cost-sharing basis.

True

An employer adopts new employee benefits offered by a competitor without careful consideration, just because the employer needs to avoid hard feelings. This is seen particularly among employers who _____.

have strong commitments to having a totally or partially nonunion work force

In the context of the impact of legislation on employee benefits, the tax reforms of 1982 and 1986 _____.

permitted individual retirement accounts (IRAs) for eligible employees and established 401(k) programs

A good compensation manager should make decisions about outlays by considering that employee benefit costs are _____.

only one part of a total package of compensation costs

Which of the following is a true statement about an employee benefit handbook that communicates employee benefits?

It consists of a description of all benefits, including coverage levels and eligibility requirements.

Match the most prevalent practices that employers follow to audit their benefit options for cost containment opportunities (in the left column) with their descriptions (in the right column).

Probationary periods- The practice of excluding new employees from benefit coverage until some term of employment is finished. Benefit limitations- The practice of limiting disability income payments to some maximum percentage of income. Copay- The practice of requiring employees to pay a fixed or percentage amount for employee benefit coverage