MGT of Compensation Chapter 12

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

Contributory

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

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

Unemployment insurance and social security (types of govt that mandates this employee benefit)

Federal

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.

How does a good compensation manager consider employee benefit costs?

As part of a total package of compensation costs

The Fair Labor Standards Act of 1938 (effect of legislation of employee benefits)

Introduced time-and-a-half overtime pay

The Employee Retirement Income Security Act of 1974 (effect of legislation of employee benefits)

Set up the Pension Benefit Guaranty Corporation

Workers' compensation (types of govt that mandates this employee benefit)

State

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

Employee financed (methods of financing employee benefit plans)

Employees pay total costs for some benefits.

The federal government loosened wage and price controls during World War II and the Korean War.

False (During both World War II and the Korean War, the federal government instituted strict wage and price controls. The compliance agency charged with enforcing these controls was relatively lenient in permitting reasonable increases in benefits.)

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

Retention is increased by benefits.

Flexible employee benefit plans are also known as _____.

cafeteria-style benefit plans

The Patient Protection and Affordable Care Act of 2010 (effect that statutes have on employee benefits)

Requires individuals to maintain minimal essential health insurance coverage or pay a penalty unless exempted for religious beliefs or financial hardship

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

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

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.

Noncontributory (methods of financing employee benefit plans)

Total costs are paid by employers.

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

outsource benefits and administration

What are the disadvantages of flexible employee benefit plans?

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

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

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

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.

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

The financial liability of employees with and without a particular benefit

Identify the examples of employee benefits.

-Life insurance -Workers' compensation

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

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

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

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

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.

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.

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

What are the factors that need to be included in the employee benefits planning process?

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

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

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

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

Contributory (methods of financing employee benefit plans)

Employers and employees share the total costs.

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.

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

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

Identify the ways in which employers can increase the effectiveness of employee benefits.

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

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 (Management determines what percentage of cost it can afford to bear within budget projections, and the option is offered to employees on a cost-sharing basis, with projected increases in both employer and employee costs communicated openly.)

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

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

Which of the following are features of a flexible employee benefit plan?

-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.

In the context of benefit administration issues, what are the major questions that arise in setting up an employee benefit package?

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

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.

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

Probationary periods (the most prevalent practices that employers follow to audit their benefit options for cost containment opportunities)

The practice of excluding new employees from employee benefit coverage until some term of employment is finished

Copay (the most prevalent practices that employers follow to audit their benefit options for cost containment opportunities)

The practice of requiring employees to pay a fixed or percentage amount for employee benefit coverage

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

False (Every organization has a variety of employees with different employment statuses. Historically, companies have provided far fewer benefits for part-time workers than for full-time workers.)

Administrative cost containment (the most prevalent practices that employers follow to audit their benefit options for cost containment opportunities)

The practice of controlling costs using policies such as seeking competitive bids for program delivery

Benefit limitations (the most prevalent practices that employers follow to audit their benefit options for cost containment opportunities)

The practice of limiting disability income payments to some maximum percentage of income

The Maintenance Act of 1973 (effect of legislation of employee benefits)

Mandated employers to provide alternative health coverage options to employees

The Family Medical Leave Act of 1993 (effect that statutes have on employee benefits)

Mandates 12 weeks of time off for all workers at companies that employ 50 or more people

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

Identify a true statement about employee benefit costs over a 20-year period between 1955 and 1975.

It increased at a rate almost four times larger than employee wages or the consumer price index.

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

The Consolidated Omnibus Budget Employees Reconciliation Act (COBRA) of 1984 (effect that statutes have on employee benefits)

Makes employees who resign or are laid off through no fault of their own eligible to continue receiving health coverage under the employer's plan at a cost borne by the employees

____ ____ 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

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