RM370 Chapter 6

The offset in Social Security for Disability Insurance recipients concurrently eligible for workers' compensation limits the combined amount of workers' compensation and Social Security disability benefits to ___ percent of the workers' average current earnings.

80%

Scheduled and unscheduled injuries are categories used to determine benefits for which type of disability income? A) Permanent total disability B) Permanent partial disability C) Temporary partial disability D) Temporary total disability

B

Workers' compensation provides disability income to employees with work-related accidents or illnesses that limit their abilities to work. Four types of disabilities are covered by workers' compensation. A disability that preclude individuals from performing meaningful work for a limited period, eventually making a full recover is referred to as a A) permanent partial disabilities. B) temporary partial disabilities C) permanent total disability. D) temporary total disability.

D

Workers' compensation provides disability income to employees with work-related accidents or illnesses that limit their abilities to work. Four types of disabilities are covered by workers' compensation. A disability that prevents an individual from ever performing any work is referred to as A) temporary partial disability. B) temporary total disbility. C) permanent partial disabiity. D) permanent total disability.

D

Workers' compensation provides disability income to employees with work-related accidents or illnesses that limit their abilities to work. Four types of disabilities are covered by workers' compensation. The loss of a limb that limits the kind of work that individuals perform on an enduring basis is referred to as a A) temporary partial disability. B) temporary total disability. C) permanent total disability. D) permanent partial disability.

D

Workers Compensation

Established state-run insurance programs that are designed to cover medical, rehabilitation, and disability income expenses resulting from employees' work-related accidents.

Which of the following laws was NOT mentioned as having a major influence on company-sponsored disability insurance plans? -Age Discrimination in Employment Act -Employee Retirement Income Security Act -Americans with Disabilities Act -Fair Labor Standards Act

Fair Labor Standards Act

Which of the following statements is true regarding employer-sponsored discretionary disability benefits? Long-term disability (LTD) benefits usually provide benefits up to two years. Short-term disability (STD) benefits usually provide benefits up to two years. Short-term disability (STD) benefits usually provide benefits to age 65. Long-term disability (LTD) benefits usually provide benefits to age 65.

Long-term disability (LTD) benefits usually provide benefits to age 65.

Which of the following sources of disability payments does affect Social Security disability benefits?

Lump-sum workers' compensation settlement.

elimination period

Minimum amount of time an employee must wait after becoming disabled before the disability insurance payments begin; elimination periods follow the completion of the pre-eligibility period

All of the following are common offset provisions in employer-provided group long-term disability plans EXCEPT: -social security disability benefits -workers compensation benefits -residual disability -none

None. ERISA does not allow offset provisions in employer-provided group long-term disability plans

Short-term disability (STD) insurance programs classify a disability as an employees inability to do his or her work due to a sickness, illness, or injury. Which of the following circumstances usually does not qualify an employee for STD benefits? -Recovery from surgery. -Treatment of an illness requiring hospitalization. -Normal pregnancy and normal child birth. -Recovery from injuries.

Normal pregnancy and normal child birth.

Which of the following statements is not true about sick leave policies? -Sick leave policies are separate from disability plans. -Sick leave policies provide only 50% income replacement to eligible employees. -Sick leave benefits are paid from the regular payroll, rather than through insurance policies. -Sick leave compensates employees when they are occasionally absent due to minor illness or injury.

Sick leave policies provide only 50% income replacement to eligible employees.

pre-eligibility period

Spans from the initial date of hire to eligibility for coverage in a disability insurance program

Which of the following statements about employer-sponsored life insurance is not true? -More full-time employees participate in employer-sponsored life insurance than employer-sponsored disability insurance. -Life insurance death benefits are received by beneficiaries income-tax free. -Most employer-sponsored life insurance programs are contributory. -Term life insurance is the most popular type of employer-sponsored life insurance program.

Term life insurance is the most popular type of employer-sponsored life insurance program.

Which of the following statements about employer-sponsored life insurance is not true? -More full-time employees participate in employer-sponsored life insurance than employer-sponsored disability insurance. -Term life insurance is the most popular type of employer-sponsored life insurance program. -Life insurance death benefits are received by beneficiaries income-tax free. -Most employer-sponsored life insurance programs are contributory.

Term life insurance is the most popular type of employer-sponsored life insurance program.

Older Workers Benefit Protection Act (OWBPA)

The 1990 amendment to the Age Discrimination in Employment Act of 1967 (ADEA) to include all employee benefits

T/F: Becoming injured while using an employer's product to perform work is an instance of dual capacity and the injured employee would be eligible to file a workers' compensation claim.

True

T/F: Workers' compensation laws do not apply to small businesses with fewer than a stipulated number of employees.

True

dual capacity

a legal doctrine that applies to the relationship between employers and employees. Specifically, a company may fulfill a role for employees that is completely different form its role as employer

preexisting condition

a mental or physical disability for which medical advice, diagnosis, care, or treatment was received during a designated period preceding the beginning of disability insurance coverage

premium

amount of money an individual or company pays to maintain insurance coverage

Long-term disability insurance carriers use a two-stage definition of disability. At the first stage, long-term disability refers to

an illness or injury preventing an employee from performing his or her "own occupation" over a designated period, often up to two years.

nonscheduled injuries

as classified in workers' comp programs, these are general injuries of the body that make working difficult or impossible; ex: back or head damage

death benefit

awarded in two forms under workers' comp: burial allowances and survivor benefits. Burial allowances reflect a fixed amount, varying by state

impairment approach

bases workers' comp benefit amounts on the physical or mental loss associated with an injury to a bodily function. This approach does not account for loss of future earnings because it ignores the physical and mental capacities necessary to perform the essential functions of one's job

wage-loss approach

bases workers' comp benefits on the actual loss of earnings that results directly from nonscheduled injuries. Application of this approach requires monitoring of an individual's income following an injury. The objective is to replace a part of or all of the earnings loss due to the injury

Federal Employees' Compensation Act

create a workers' comp program for federal civillian employees

Longshore and Harborworkers' Compensation Act

created a worker's comp program for maritime workers

underwriting

decision process that insurance companies rely upon to decide whether to offer insurance

short-term disability

for the purposes of private disability insurance plans, an inability to perform the duties of one's regular job for a limited period of time; ex: 6 months

All of the following statements are true about employer-sponsored life insurance EXCEPT most plans include accidental death and dismemberment claims. protects surviving family members by paying a specified amount upon an employee's death. most benefits equal some multiple of an employee's salary. generally requires each employee to be individually underwritten.

generally requires each employee to be individually underwritten.

mortality tables

indicate yearly probabilities of death based on factors such as age and gender established by the Society of Actuaries. Insurance companies rely on these tables in the underwriting process

temporary partial disabilities

individuals may perform limited amounts of work until making a full recovery

permanent partial disabilities

limit the kind of work an individual performs on an enduring basis

whole life insurance

pays an amount to the designated beneficiaries of the deceased employee. Unlike term life insurance, whole life plans do not terminate until payment to beneficiaries

permanent total disabilities

prevent individuals from ever performing any work

death claim

workers' comp claim for deaths that occur in the course of employment or that are caused by compensable injuries or occupational diseases

occupational disease claim

workers' comp claims for disabilities caused by ailments associated with particular industrial trades or processes

injury claim

workers' comp claims for disabilities that have resulted from accidents such as falls, injuries from equipment use, or physical strains from heavy lifting

Maya had average earnings of $6,000 a month before she became disabled. She, her non-working spouse, and their children under the age of 16 are eligible for a $2,200 monthly family Social Security disability benefits. She also receives $3,600 a month from employer-provided group long-term disability benefits. Her family's monthly Social Security benefits will be reduced by

$0

Theresa's employer provides her with group-term life insurance coverage of $200,000. Her employer pays all the premium. The annual premium for her coverage is $360. How much of the premium must her employer include on Theresa's W-2?

$270

4 types of workers' compensation benefits

-unlimited medical -death -disability -rehabilitative services

Jeff had average earnings of $8,000 a month before he became disabled. He, his non-working spouse, and their children under the age of 16 are eligible for a $2,200 monthly family Social Security disability benefits. He also receives $4,800 a month from employer-provided group long-term disability benefits. His family's monthly Social Security benefits will be reduced by

0

Most long-term disability insurance plans pay how much after a waiting period of how long? -50 - 70% after 6 - 12 months -70 - 90%, after 6 - 12 months -70 - 90%, after 3 - 6 months -50 - 70% after 3 - 6 months

50 - 70% after 6 - 12 months

Most short-term disability insurance plans pay employees around how much of their regular pay?

50-67%

Which of the following is not an exception to employer immunity provided by workers' compensation laws from legal action by an employee? A) Lawsuits against non-complying employers. B) Lawsuits alleging an employer's careless acts. C) Lawsuits relating to "dual capacity" relationships. D) Lawsuits alleging employer retaliation.

B

Which of the following statements is true when comparing workers' compensation with Social Security disability and survivors' benefits? A) Social Security payments do not have a waiting period. B) Worker's compensation pays for medical care for work-related injuries. C) Workers' compensation does not pay for permanent partial or permanent total disability. D) Social Security pays benefits for permanent partial or permanent total disability.

B

The principles behind workers compensation include: I. Employers are legally liable for benefits for occupational disabilities (injury or disease) and death, regardless of fault. II. Employers assume the associated costs in return for workers giving up their right to sue employers. A) II only B) I only C) both I and II D) neither I nor II

C

All of the following are basic objectives of workers' compensation except: A) to encourage employer interest in safety B) to relieve charities of financial drains C) to encourage lawsuits D) to provide a single remedy

C) to encourage lawsuits

All of the following are benefits provided by workers' compensation laws, EXCEPT: A) rehabilitative services. B) disability income. C) unlimited medical benefits. D) retirement benefits.

D

Employer-sponsored disability insurance plans generally supplement legally required benefits established by which law? Social Security Act Fair Labor Standards Act Employee Retirement Income Security Act Family Medical Leave Act

Employee Retirement Income Security Act

Which of the following laws was NOT mentioned as having a major influence on company-sponsored disability insurance plans? -Fair Labor Standards Act -Americans with Disabilities Act -Age Discrimination in Employment Act -Employee Retirement Income Security Act

Fair Labor Standards Act

Which of the following statements is true about employee coverage in employer-sponsored disability programs?

Full-time workers are less likely to have long-term disability (LTD) plans than short-term disability (STD) plans.

The death benefit of a group-term life insurance policy is paid to the beneficiary or beneficiaries selected by the employee. What's the tax treatment of the death proceeds of group-term life insurance?

The death benefits is income tax free.

T/F: Scheduled injuries involve the loss of a member of the body, including an arm, leg, finger, hand, or eye.

True

T/F: State compulsory disability laws created workers' compensation programs.

True

noncontributory plans

company pays total cost of designated discretionary benefits

insurance policy

contractual relationship between an insurance company and beneficiary that specifies the obligations of both parties. For example, a health insurance company specifies that it will cover the cost of physical exams, and a life insurance company agrees to pay a spouse an amount equal to double of his deceased wife's annual salary

second-injury funds

cover a portion or all of the costs of a current workers' compensation claim associated with preexisting conditions from a work-related injury during prior employment elsewhere

rehabilitative services

cover physical and vocational rehab in workers' comp; available in all states

accidental death and dismemberment insurance (AD&D)

covers death or dismemberment as a result of an accident. Dismemberment refers to the loss of two limbs or complete loss of sight. Compared to life insurance, AD&D generally does not pay survivor benefits in the case of death by illness

loss of wage earning capacity approach

factors in two important issues that are likely to affect an injured worker's ability to compete for employment: human capital (work experience, age, education) and type of permanent impairment

exclusion provisions

in insurance plans, a list of the particular conditions that are ineligibile for coverage. For example, most disability insurance plans do not provide coverage for disabilities that result from self-inflicted injuries

rating manuals

in workers' comp programs, these manuals specify insurance rates based on classification of businesses

All of the following statements are true about group-term life insurance EXCEPT it provides a general death benefit that inn't included in income. it provides insurance that that only provides accidental death benefits. it is must generally provided at some time during the calendar year to at least 10 full-time employees. it provides an amount of insurance to employees based on a formula that prevents individual deletion.

it provides insurance that that only provides accidental death benefits.

These reduce company-sponsored benefits by subtracting a particular percentage of these disability benefits from workers' compensation and Social Security disability plans.

offset provisions

If an employee suffers a disability that limits the kind of work an individual can perform on an enduring basis, she would qualify for what type of disability income under workers' compensation?

permanent partial disability

qualified individual with a disability

person who possesses the necessary skills, experience, education and other job-related requirements and regardless of reasonable accommodation, can perform the essential functions of the job; related to the ADA

temporary total disabilities

prevent individuals from performing meaningful work for a limited period. individuals with temporary total disability eventually make a full recovery

establishment funds

primitive forms of disability insurance created and funded by employers that provided minimal cash payments to workers who became occupationally ill or injured

Americans with Disabilities Act (ADA)

prohibits discriminatory employment practices against qualified individuals with disabilities

life insurance

protects the families of employees by paying a specified amount upon the employee's death. Most policies pay some multiple of the employee's salary

long-term disability insurance

provides benefits for extended periods of time, anywhere between 6 months and life

short-term disability insurance

provides income benefits for limited periods of time, usually less than 1 year

universal life insurance

provides protection to employee's beneficiaries based on the insurance feature of term life insurance and a more flexible savings or cash accumulation plan than is found in whole life insurance plans

ratemaking service organizations

recommend rates that states charge companies to provide workers' comp insurance

offset provisions

reduce company-sponsored retirement, disability or life insurance by subtracting a particular % of these benefits from workers comp or SS disability plans

partial disabilities inclusion

refers to a provision of many company-sponsored long term disability plans. Specifically this provision offers supplemental benefits to cover a portion of income loss associated with part time employment

long-term disability

refers to illnesses or accidents that prevent an employee from performing his or her own occupation over a designated period, often times up to two years

workers' compensation (aka state compulsory disability laws)

state-run insurance programs that are designed to cover medical, rehab and disability income expenses resulting from employees' work-related accidents

violations of affirmative duty

such violations take place when an employer fails to reveal the exposure of one or more workers to harmful substances or the employer does not disclose a medical condition typically caused by exposure

contributory plans/ contributory financing

the company and its employees share the costs of discretionary benefits

scheduled injuries

the loss of a member of a body, including an arm, leg, finger, hand or eye as classified in workers' comp programs

term life insurance

the most common type of life insurance offered by companies; provides protection to an employee's beneficiaries only during a limited period based on a specified number of years or maximum age

deliberate and knowing torts

torts that entail an employer's deliberate and knowing intent to harm at least one employee

T/F: Although workers' compensation benefits have unlimited medical care benefits, it does specify a maximum amount paid for certain procedures.

true

T/F: Long-term disability (LTD) insurance programs pay employees a fixed percentage of their pay usually equal to 50% to 70% subject to a monthly maximum amount.

true