Comp & Benefits Chapter 12

Tax reform - 1982, 1986

Allowed eligible employees to create individual retirement accounts (IRAs)

What type of government mandated workers' compensation?

State

Identify the examples of employee benefits: (Select all that apply) a. pay for time worked b. straight salary c. life insurance d. workers' compensation

c, d

Contributory

Employers and employees share the total costs

What type of government mandated unemployment and social security?

Federal

Fair Labor Standards Act of 1938

Introduced time-and-a-half overtime pay

Administrative cost constraint

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

Noncontributory

Total costs are paid by employers

How should administrators control spiralling employee benefit costs? a. by avoiding the cost commitments for the existing benefit package b. by negotiating benefits on a package basis rather than a cost basis c. by adopting a broad, cost-centered approach d. by providing benefits on a package basis

c

Employee financed

Employees pay total costs for some benefits

T/F: Historically, organizations have provided equal employee benefits for both part time and full time workers as all employees need to be equally benefited.

False

Maintenance Act of 1973

Required employees to give alternative health coverage options to employees

Employee Retirement Income Security Act of 1974

Set up Pension Benefit Guaranty Compensation

Probationary periods

The practice of excluding new employees from employee 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

T/F: 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 According to the cost-centered approach to employee benefit programs, if a benefit forecast suggests future cost containment may be difficult, the benefit should be offered to employees only on a cost-sharing basis. Management determines what percentage of cost it can afford to bear within budget protections, and the option is offered to employees on a cost-sharing basis, with projected increases in both employer and employee costs communicated openly

An internal organizational online Web through which all forms of communication within an organization can be streamlined is known as: a. an intranet b. an extranet c. WordWeb d. VirtualDub

a

In the process of auditing employee benefits for cost containment opportunities, employers: a. outsource benefits and administration b. avoid negotiating lower fees by providers c. accept service for pre-existing conditions d. include new employees in employee benefit coverage

a

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

A true statement about the choice for employees (flexibility) in cafeteria-style employee benefit plans is that: a. the package is inflexible as it is designed with the average employee in mind b. the flexibility in these plans is not apparent c. employees typically do not have a choice among benefits d. employees have great flexibility in choosing the benefit options of greatest value to them

d

An employee adopts new employee benefits offered by a competitor without careful consideration, just because the employer needs the avoid hard feelings. This is termed a: a. streisand effect b. domino effect c. halo effect d. bandwagon effect

d

During WWII and the Korean war, the climate fostered by wage and price controls provided a perfect opportunity for unions for flex the muscles they had gained under the: a. Sherman Antitrust Act of 1890 b. Revenue Act of 1943 c. Tax Adjustment Act of 1966 d. Wagner Act of 1935

d

An employee pays all health care costs up to some predetermined rate in a consumer-driven high deductible health care plan. After that amount, the employee: a. is responsible for paying 90% of any additional medical services b. pays a rate of 40-60% of any additional medical services c. is responsible for paying 70% of any additional medical services d. pays a rate of 10-35% of any additional medical services

d

Identify a true statement about the cost-centered approach to employee benefit programs: a. it views the costs of a particular benefit inclusion in isolation without reference to forecasts of rising costs in future years b. it negotiates or provides benefits on a package basis rather than a cost basis c. it requires benefit administrators to decide the commitments for an existing benefit package d. it views the costs of a particular benefit inclusion in isolation, without reference to total package costs

c

Many of the employee benefits that exist today were provided at employer initiative. Why did employers implement savins and profit sharing plans? (Select all that apply) a. to increase wage and price controls b. to give increased security for worker retirement years c. to avoid giving rest breaks to workers d. to improve job performance

b, d

A true statement about the cost effectiveness of employee benefits is that: a. provision of employee benefits involves payment of federal personal income tax b. provision of employee benefits involves payment of state personal income tax c. group-based employee benefits can be obtained at a lower rate than individual-based benefits d. the majority of employee benefits implemented by employers are taxable

c

To be most effective, an employee benefit manual should: a. be capable of assisting Development of Strategic Benefits Survey in identifying sample groups b. primarily elaborate the ways in which employee benefits can be taxable c. detail specific issues faced by employees such as disability, hospitalization, and unemployment d. be followed by repetition of the message in multiple media such as newsletters and social media

d

How does a good compensation manager consider employee benefit costs? a. as burdens on employees and employers b. as part of the marketing plan of the organization c. as outcomes of contributory financing d. as part of a total package of compensation costs

d

Identify a true statement about employee benefit costs over a 20-year period between 1955 and 1975: a. it reduced at a pace almost six times lesser than employee wages or the consumer price index b. it increased at a rate almost four times larger than employee wages or the consumer price index c. it reduced at a rate almost four times lesser than employee wages or the consumer price index d. it increased at a pace almost ten times larger than employee wages or the consumer price index

b

According to a recent study by the Society of Human Resource Management, what is the factor that both employees and human resource professionals consider to be the top factor driving job satisfaction? a. fixed work time b. straight salary c. employee benefits d. increased workload

c

During 1993 and 1999, the cost of employee benefits: a. increased twice as fast as wage costs b. rose at a rate almost 12 times greater than the consumer price index c. attained stability at about $14,700 per full time employee d. rose at a rate almost four times greater than employee wages

c

What are the assumptions of the demographic approach that is used to gauge employee preferences? (Select all that apply) a. there are meaningful differences between groups in terms of benefit preferences b. employee preferences for various benefit options are seldom determined by individual needs c. demographic groups can be recognized for which benefit preferences are fairly consistent across members of a group d. employers adopt new benefits offered by a competitor without careful consideration because they want to avoid hard feelings

a, c

Identify a statement that represents the evidence that employee benefits are cost-justified: a. the amount of vacation time given to employees reduces with years of service b. tying benefits to seniority makes workers less reluctant to change jobs c. employee benefits are known for helping in the retention of workers d. benefit schedules are specifically designed to favor short-term employees

c

Identify a true statement about the choice for employees (flexibility) in the plan coverage of a standard employee benefit package: a. it is also known as a cafeteria-style employee benefit plan b. the flexibility in this type of plan is apparent c. the package is created with the average employee in mind d. employees typically have been offered a choice among employee benefits in the package

c

What are the major disadvantages of flexible employee benefit plans? (Select all that apply) a. they reduce the involvement of employees and families b. they make the introduction of new benefits more costly than do nonflexible plans c. they are subject to nondiscrimination requirements in Section 125 of the Internal Revenue Code d. they increase administrative burdens and expenses

c, d

What are the factors that need to be included in the planning process of employee benefits? (Select all that apply) a. preference for individual-based benefits over group-based benefits b. integration of benefits with other compensation components c. strategies for taxing employee benefits d. strategies for ensuring adequacy of benefits e. plans to ensure external competitiveness

b, d, e

Which of the following are features of a flexible employee benefit plan? (Select all that apply) a. employees are allowed to directly identify the benefits of greatest value to them b. meaningful differences are formed between demographic groups in terms of benefit preferences c. employers adopt new benefits offered by a competitor without careful consideration d. benefit managers are capable of controlling benefit costs by constraining the dollars employees have to spend

a, d