Chapter 14 Providing Employee Benefits

Which of the following describe a defined contribution plan? (Select all that apply.)

-It places the investment risk on the employee. -It requires less administrative oversight on the part of the employer.

What three elements are associated with a consumer-driven health plan?

-high deductible -medical savings account -can carry over unused amount

Consumer-driven health plans (CDHPs) aim to lower the cost of health coverage by

-involving patients in health care decisions. -educating employees about health topics so they will be healthier and need less health care. -featuring high deductibles and medical savings accounts.

What elements are part of the OASDHI program, otherwise known as Social Security? (Select all that apply)

-medical insurance -survivor's insurance -hospital insurance

Cafeteria-Style Plan

A benefits plan that offers employees a set of alternatives from which they can choose the types and amounts of benefits they want.

Unemployment Insurance

A federally mandated program to minimize the hardships of unemployment through payments to unemployed workers, help in finding new jobs, and incentives to stabilize employment.

Employee Wellness Program (EWP)

A set of communications, activities, and facilities designed to change health-related behaviors in ways that reduce health risks.

Employee Benefits

Compensation in forms other than cash.

Flexible Spending Account (FSA)

Employee-controlled pretax earnings set aside to pay for certain eligible expenses, such as health care expenses, during the same year.

True or false: Defined-contribution plans are more risky for the employer.

False

Pension Benefit Guaranty Corporation (PBGC)

Federal agency that insures retirement benefits and guarantees retirees a basic benefit if the employer experiences financial difficulties.

Employee Retirement Income Security Act (ERISA)

Federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation

Patient Protection and Affordable Care Act

Health care reform law passed in 2010 that includes incentives and penalties for employers providing health insurance as a benefit.

Long-Term Disability Insurance

Insurance that pays a percentage of a disabled employee's salary after an initial period and potentially for the rest of the employee's life.

Defined-Benefit Plan

Pension plan that guarantees a specified level of retirement income.

Who bears the risk in a defined contribution pension plan?

The employee

In which type of retirement plan does an employee's account earn a predetermined interest rate?

a cash balance plan

A plan that allows employees to choose what they want from a list of available benefits is called a _____ plan.

cafeteria-style

Which type of plan consists of individual accounts where all contributions come from the employer?

cash balance

A typical objective most companies use when selecting employee benefits is _____.

controlling health care costs

A ______ sets up an individual account for each employee and specifies the size of the investment into that account, rather than the amount to be paid out upon retirement.

defined-contribution plan

When employees receive compensation that is not cash, the compensation is referred to as _____.

employee benefits

Which benefits are provided to more than 70% of full-time employees?

health insurance

Under the Patient Protection and Affordable Care Act, organizations that have at least 50 full-time employees (or an equivalent number of full- and part-time employees) must offer health care coverage or pay a penalty. In 2020 the penalty amounted to ______.

$2,570 annually for every full-time employee after the first 30

Why should employers tell their workers the details about what is included in their benefits packages? (Select all that apply)

-Highly desirable employees will be more apt to work for a company that offers valuable benefits that are easy to understand. -Employees often fail to understand the value of their benefits. -Health insurance and retirement plans are complex and difficult for most employees to fully understand.

Which statements characterize a health maintenance organization (HMO)? (Select all that apply)

-Physicians work on salary instead of being paid a fee for each service. -The patient pays nothing at the time of service, because premiums cover all visits and procedures in advance. -Patients are allowed to see only medical personnel who are affiliated with the HMO.

Cafeteria-style fringe benefit plans are attractive to many firms because ______. (Select all that apply)

-employees are able to choose benefits that meet their own needs -they provide a known dollar amount to employees toward whichever benefits the employee chooses -they are more equitable

Which of the following are types of defined-contribution plans?

-money purchase plan -employee stock -ownership plan -profit-sharing plan

Which U.S. employees do not receive Social Security benefits? (Select all that apply.)

-state workers -railroad workers -federal workers

What are some of the goals of unemployment insurance? (Select all that apply.)

-to financially support unemployed workers during unemployment -to help unemployed workers secure new work -to encourage employers to retain employees and not lay them off

Under the Family and Medical Leave Act (FMLA), an employee may take up to _____ weeks off work without pay if a family member is injured during active military duty,

26

Of every dollar spent on employee compensation, about how much pays for benefits?

30 cents

Under COBRA, how long must employers allow employees to retain their health care insurance after a "qualifying event"?

36 months

Preferred Provider Organization (PPO)

A health care plan that contracts with health care professionals to provide services at a reduced fee and gives patients financial incentives to use network providers.

Health Maintenance Organization (HMO)

A health care plan that requires patients to receive their medical care from the HMO's health care professionals, who are often paid a flat salary, and provides all services on a prepaid basis.

Which federal law makes it illegal to discriminate against those over 40 because of their age?

Age Discrimination in Employment Act

After a layoff or other "qualifying event," employers are required to allow employees to extend their health care coverage at group rates for as long as three years. The legislation that mandates this coverage is the _____.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

What acronym refers to a set of communications, activities, and facilities designed to change health-related behaviors in ways that reduce health risks?

EWP (Employee Wellness Program)

True or false: Most tuition reimbursement programs will cover tuition for any type of college- or graduate-level course.

False

Family and Medicare Leave Act (FMLA)

Federal law requiring organizations with 50 or more employees to provide up to 12 weeks of unpaid leave after childbirth or adoption; to care for a seriously ill family member or for an employee's own serious illness; or to take care of urgent needs that arise when a spouse, child, or parent in the National Guard or Reserve is called to active duty.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Federal law that requires employers to permit employees or their dependents to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff, reduction in hours, or the employee's death.

Vesting Rights

Guarantee that when employees become participants in a pension plan and work a specified number of years, they will receive a pension at retirement age, regardless of whether they remained with the employer.

High Deductible Health Plan (HDHPs)

Health care plans that provide incentives for employees to make decisions that help lower health care costs.

Short-Term Disability Insurance

Insurance that pays a percentage of a disabled employee's salary as benefits to the employee for six months or less.

Which of the following is not a workers' compensation benefit?

Paid vacation days

Which type of health care plan contracts with health care professionals to offer services at lower rates?

Preferred provider organization (PPO)

Summary Plan Description

Report that describes a pension plan's funding, eligibility requirements, risks, and other details.

Contributory Plan

Retirement plan funded by contributions from the employer and employee.

Noncontributory Plan

Retirement plan funded entirely by contributions from the employer.

Cash Balance Plan

Retirement plan in which the employer sets up an individual account for each employee and contributes a percentage of the employee's salary; the account earns interest at a predefined rate.

Defined-Contribution Plan

Retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account.

Unemployment insurance was established as a result of the ______.

Social Security Act

Workers Compensation

State programs that provide benefits to workers who suffer work-related injuries or illnesses, or to their survivors.

Social Security

The federal Old Age, Survivors, Disability, and Health Insurance (OASDHI) program, which combines old age (retirement) insurance, survivor's insurance, hospital insurance (Medicare Part A), & medical insurance (Medicare Part B) for older individuals.

Experience Rating

The number of employees a company has laid off in the past and the cost of providing them with unemployment benefits.

A defined-benefit retirement plan guarantees _____.

a specific level of retirement income

An employee with a preferred provider organization (PPO) health care plan would pay a smaller share of the cost of health services when using _____ health care provider.

an in-network

Under some circumstances, an adult who is not a relative or spouse, is financially interdependent, and lives permanently with another adult can be legally defined as a ________ partner.

domestic

In the United States the amount of sick leave given to employees is often based on the ______.

employee's years of service

If the money in a flexible spending account is not spent within the year, the money goes to the _____.

employer

Contributory retirement plans are funded by the _____.

employer and employee

When a company undergoes the process of selecting employee benefits, it should _____.

establish written benefits objectives

After his son was born, John took three weeks of unpaid leave from his company. He returned to his regular full-paying job after the three weeks. Which type of family-friendly benefit did John use?

family leave

The unemployment insurance program is financed primarily through ______.

federal and state taxes on employers

Isaac is able to set aside $2,500 tax free each year out of his earnings to pay for eligible medical expenses. This is an example of a _____ account.

flexible spending

If Kenneth wants to benefit from his company health insurance, he is allowed to visit only doctors who are in the company's network of providers. This type of coverage is known as a _____.

health maintenance organization (HMO)

Disability insurance provides protection against loss of _____.

income

Vesting rights are based on an employee's _____.

length of service

What type of insurance pays a percentage of a disabled employee's salary after an initial period and potentially for the rest of the employee's life?

long-term disability insurance

o be classified as a qualified plan for tax purposes, a pension plan _____.

must be available for lower-level employees, not only the owners and top managers

What is the legal minimum of paid days off required for employees of U.S. companies?

no minimum

Retirement plans funded entirely by the employer are referred to as _____.

noncontributory plans

A(n) (passive/active) employee wellness program would provide health education and fitness facilities but no formal support to use the program.

passive

An employer sets up a _____ fund to invest the contributions to a defined-benefit plan.

pension

Benefits that are classified as _____ plans offer various tax advantages.

qualified

The benefits available to domestic partners do not have the same _____ as those received by spouses.

tax advantages

Some companies provide reimbursement programs to encourage employees to take classes to improve knowledge and skills related to their career.

tuition

Companies should explain their benefits packages to employees so they will _____.

understand what their benefits are worth

The Family and Medical Leave Act (FMLA) provides ______.

up to 12 weeks of leave for serious illness

Workers whose contributions are have satisfied the requirements to be paid a pension when they retire, even if they did not remain with the employer until that time.

vested

Which of the following is not typically covered as part of basic medical insurance coverage?

vision care