Ch.3 Regulating Employee Benefits Test Questions & Answers

Chapter 03

Regulating Employee Benefits

  / Questions TrueFalse

1. Employers can deduct the cost of the benefits they offer employees, from their annual income if the cost is considered an ordinary and necessary expense. (The Internal Revenue Code)

2. The Americans with Disabilities Act of 1990 pertains to all private sector employees, all government employees and labor unions. (The Americans with Disabilities Act of 1990)

3. According to FLSA guidelines, employees are entitled to pay at a rate of one-and-one-half times their regular pay, when they work over 8 hours in a work day. (The Fair Labor Standards Act of 1938)

4. The Equal Pay Act is an amendment to ERISA and is designed to insure that women and men receive equal pay for equal work. (The Equal Pay Act of 1963)

5. Qualified benefit plans are given favorable tax treatment, because they meet certain ERISA guidelines. (The Employee Retirement Income Security Act of 1974)

6. The Internal Revenue Code contains multiple regulations only for legally required benefits. (The Internal Revenue Code)

7. An older employee may not be required to pay more for a benefit as a condition of employment. (The Age Discrimination in Employment Act of 1967 (ADEA))

8. Employees of the federal government are not protected by FLSA regulations. (The Fair Labor Standards Act of 1938)

9. According to the Pregnancy Discrimination Act of 1978, employers must not treat pregnancy less favorably than other conditions covered under employee benefit plans, including health insurance and disability insurance. (The Pregnancy Discrimination Act of 1978)

10. Employer-provided health care is considered a permissible collective bargaining subject. (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)

11. Title I on ERISA requires employers to report detailed financial and actuarial data about their benefits plan to the US Department of Labor. (Title I: Protection of Employee Rights)

12. Diversifying a pension plan's investments to minimize the risk of large losses is considered a fiduciary responsibility. (Title I: Protection of Employee Rights)

13. The Federal Unemployment Tax Act is levied against employees to finance unemployment insurance benefits. (The Internal Revenue Code)

14. The Health Insurance Portability and Accountability Act of 1996 is a substantial amendment to the Internal Revenue Code. (The Health Insurance Portability and Accountability Act of 1996)

15. According to ERISA guidelines, companies can deduct benefit costs when they meet its nonqualification rules. (The Employee Retirement Income Security Act of 1974)

16. The Civil Rights Act of 1991 was enacted, in part, to overturn several Supreme Court rulings that limited employee rights. (The Civil Rights Act of 1991)

17. The NLRA applies to private sector companies, except for companies whose main business is passenger or freight rail or air carrier. (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)

18. The Older Workers Benefit Protection Act set limits on the development and implementation of employer early retirement practices. (The Age Discrimination in Employment Act of 1967 (ADEA))

19. The Pension Protection Act of 2006 was passed for the protection of defined benefit plans only. (The Pension Protection Act of 2006)

20. Patients' consent is required for use and disclosure of health records as of 2003. (The Health Insurance Portability and Accountability Act of 1996)

21. The Equal Employment Opportunity Commission enforces FLSA. (The Fair Labor Standards Act of 1938)

22. The Equal Pay Act is an amendment of ERISA. (The Equal Pay Act of 1963)

23. Business necessity is not a legally admissible defense against charges of employment discrimination. (The Civil Right Act of 1991)

24. The Lorance v. AT&T Technologies decision is an important example of the Civil Rights Act of 1991. (The Civil Right Act of 1991)

25. Under the Americans with Disabilities Act of 1990, an employer cannot refuse to hire a person with a disability. (The Americans with Disabilities Act of 1990)

26. The U.S. Department of Labor enforces HIPAA. (The Health Insurance Portability and Accountability Act of 1996)

27. The Pension Protection Act does not provide any advantages for the Pension Benefit Guarantee Corporation. (The Pension Protection Act of 2006)

28. Under the Fair Labor Standards Act, the overtime pay provision applies to employees whose jobs are classified as nonexempt and excludes jobs classified as exempt. (The Fair Labor Standards Act of 1938)

29. Workers were at a disadvantage after the Great Depression. (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)

30. The NLRA applies to agricultural and domestic workers. (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)

31. Paid time off is a permissive bargaining subject under NLRA provisions. (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)

32. FICA and FUTA are the main taxes that apply to employee benefits. (The Internal Revenue Code)

33. ERISA regulates paid time off programs. (The Employee Retirement Income Security Act of 1974)

34. According to the WARN Act, employers must give employees at least 30 days advance notice of a plant closing or mass layoff. (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)

35. FLSA applies to all types of employees across all industries. (The Fair Labor Standards Act of 1938)

36. ERISA, Title IV established the Pension Benefit Guarantee Corporation which is funded by the EEOC. (Title IV: Plan Termination Insurance)

37. Title II of GINA restricts the deliberate acquisition of genetic information by employers and others covered by Title II and strictly limits such entities from disclosing genetic information. (Genetic Information Nondiscrimination Act of 2008)

38. The Equal Employment Opportunity Commission enforces the ADEA. (The Age Discrimination in Employment Act of 1967 (ADEA))

39. According to HIPAA, a person’s medical history is a permissible reason to limit participation in a group health care plan. (The Health Insurance Portability and Accountability Act of 1996)

40. The Pension Protection Act of 2006 permits an employer to automatically enroll employees in its defined contribution retirement plan. (The Employee Retirement Income Security Act of 1974)

Multiple Choice Questions
 

41. COBRA is an amendment to which federal law (Title I: Protection of Employee Rights)? 
A. IRCA
B. HIPPA
C. ERISA
D. FLSA

42. Under NLRA, subjects for collective bargaining fall into one of which three categories? (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)
A. Mandatory, probable, legal
B. Mandatory, permissive, illegal
C. Mandatory, probable, illegal
D. Mandatory, permissive, legal

43. This Title of ERISA has the IRC provisions pertaining to the taxation of employee benefits and pension plans. (Title II: Amendments to the Internal Revenue Code Relating to Retirement Plans)
A. Title I
B. Title II
C. Title III
D. Title IV

44. Determining whether jobs are exempt from the FLSA overtime pay provision has become even more complex since the U.S. Department of Labor introduced revised guidelines, known as the: (The Fair Labor Standards Act of 1938)
A. Qualified Plans.
B. Nondiscrimination Rules.
C. FairPay Rules.
D. Equal Benefit Principle.

45. The FLSA of 1938, contains provisions concerning which three topics? (The Fair Labor Standards Act of 1938)
A. Child labor, working conditions, minimum wage
B. Minimum wage, overtime pay, child labor
C. Working conditions, minimum wages, overtime pay
D. Overtime pay, child labor, working conditions

46. ERISA, Title I, contains provisions for all of the following, except: (Title I: Protection of Employee Rights)
A. fiduciary responsibilities.
B. mandatory bargaining subjects.
C. continuation coverage.
D. group health plan portability. 

47. Which of the following is a mandatory collective bargaining subject? (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)
A. Paid time-off
B. Retiree benefits
C. Workers' compensation
D. Minimum vesting standards

48. This equal employment opportunity law prohibits illegal discrimination against protected class individuals in employment. (Title VII of the Civil Rights Act of 1964)
A. Title VII of the Civil Rights Act of 1964
B. Civil Rights Act of 1991
C. Equal Pay Act of 1963
D. Equal Employment Opportunity Act of 1965

49. Which ERISA Title contains terms for pension insurance programs and includes the establishment of the Pension Benefit Guarantee Corporation? (Title IV: Plan Termination Insurance)
A. I
B. II
C. III
D. IV

50. This federal law was established to regulate the establishment and implementation of discretionary benefits practices. (The Employee Retirement Income Security Act of 1974)
A. NLRA
B. FLSA
C. COBRA
D. ERISA

51. A person with this title manages employee benefits plans and pension plan funds to ensure the welfare of participants and beneficiaries while defraying reasonable plan expenses. (Title I: Protection of Employee Rights) 
A. Executor
B. Actuary
C. Trustee
D. Fiduciary

52. This term refers to an unfunded deferred compensation plans for a select group of highly compensated employees? (The Employee Retirement Income Security Act of 1974)
A. Top hat plan
B. Safe harbor plan
C. Nonqualified plan
D. Fiduciary plan

53. Health care reform aims to reduce the uninsured U.S. residents by how much in 2016?  (Patient Protection and Affordable Care Act of 2010) A. 20 million
B. 32 million
C. 44 million
D. 51 million

54. Under the Equal Pay Act of 1963, what are skill, effort, responsibility and working conditions referred to as? (The Equal Pay Act of 1963)
A. Classification factors
B. Compensable factors
C. Commendable factors
D. Performance factors

55. The federal government funds the Social Security Old-Age, Survivor and Disability Insurance Program using which tax? (The Internal Revenue Code)
A. Federal Insurance Collections Act
B. Federal Income Contributions Act
C. Federal Insurance Contributions Act
D. Federal Insurance Tax Act

56. Under the Patient Protection and Affordable Care Act of 2010, employers with at least ____ employees are required to offer affordable health insurance to full-time employees. (Patient Protection and Affordable Care Act of 2010)  A. 15
B. 20
C. 50
D. 75

57. The ______ is a tax-exempt, self-financed corporation created to insure defined benefit pension plans. (Title IV: Plan Termination Insurance)
A. NLRB
B. PBGC
C. OWBPA
D. FLSA

 58. The Consolidated Omnibus Reconciliation Act contains which three characteristics? (The Consolidated Omnibus Reconciliation Act of 1985)
A. An amendment to ERISA Title II, applies to private sector companies with 20 or more employees, allows employees to continue group health insurance coverage if lost due to a qualifying event
B. An amendment to ERISA Title II, applies to all employees, allows employees to continue group health insurance coverage if lost due to a qualifying event
C. An amendment to ERISA Title I, applies to private sector companies with 20 or more employees, allows employees to continue group health insurance coverage if lost due to a qualifying event
D. An amendment to ERISA Title I, applies to all employees, allows employees to continue group health insurance coverage if lost due to a qualifying event

59. Taxes fund programs for which of the following? (The Internal Revenue Code)
A. State and local governments
B. Federal and state governments
C. Federal, state and local governments
D. Local governments only

60. Benefits qualify for tax deductibility when _______ are followed. (The Internal Revenue Code)
A. FairPay Rules
B. nondiscrimination rules
C. fiduciary responsibilities
D. vesting rules

61. According to NLRA, which of the following is NOT the subject for mandatory bargaining? (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)
A. Disability pay
B. Employer-provided health insurance
C. Unpaid time-off
D. Retirement plans

62. Which of following is NOT a government agency that shares responsibility for the administration of ERISA provisions? (Title I: Protection of Employee Rights)
A. U.S. Department of Labor
B. IRS
C. NLRB
D. PBGC

63. In 2015, the PBGC paid total benefits of approximately how much? (Title IV: Plan Termination Insurance)
A. Less than 2 million
B. Around 3.5 million
C. Around 5.7 million
D. More than 8.5 million

Essay Questions
 

64. Briefly discuss the key provisions of the Pension Protection Act of 2006. (The Pension Protection Act of 2006) 

Main Points
● Designed to protect employees' company-sponsored retirement plans in two ways.
● For defined benefit plans, this law should strengthen the financial condition of the PBGC by requiring that private sector companies that under-fund their plans pay substantially higher premiums to insure retirement benefits.
● For defined contribution plans, the law makes it easier for employees to participate in plans such as 401(k) plans.
● Increase in underfunded plans poses a great risk to the financial solvency of the PBGC.
● The act aims to shore up the PBGC's financial condition by making it more difficult for companies to skip making premium payments.
● Raises the amount that employers can contribute to pension funding with tax advantages, creating an additional incentive to adequately fund pension plans.
● Many individuals do not participate in defined contribution plans because they don't have sufficient knowledge about how to choose investment options that will help them earn sufficient money for retirement.
● The act enables companies to automatically enroll their employees in defined contribution plans and provides greater access to professional advice about investments.
● The act requires that companies give multiple investment options to employees to select how much risk they are willing to bear.

65. Discuss the role of labor unions with regard to employee benefits. (Labor Unions and Employee Benefits: The National Labor Relations Act of 1935)

Main Points
● National Labor Relations Act of 1935.
● Section 1 declares the policy of the U.S. to protect commerce by encouraging collective bargaining and by protecting employees' right to unionize.
● Collective bargaining refers to the process in which representatives of employees and company management negotiate the terms of employment.
● Possible subjects for bargaining fall into one of three categories - Mandatory, Permissive, Illegal.
● Mandatory bargaining subjects are those issues that unions and employers must negotiate if either requests them and include:
● Supplemental disability pay, health care, paid time-off, and retirement plans.

66. Give a brief overview of the main provisions of HIPAA. (The Health Insurance Portability and Accountability Act of 1996)

Main Points
● The first provision guarantees that employees and their dependents who leave their employer's group health plan will have ready access to coverage under a subsequent employer's health plan regardless of their health or claims experience.
● The second provision sets limits on the length of time that health plans and health plan issuers may impose preexisting conditions, and identify conditions to which no preexisting condition may apply.

● The third provision protects the transfer, disclosure and use of health care information.

67. Discuss the recent enactment of GINA (2008) and its relevance to benefit plans. (Genetic Information Nondiscrimination Act of 2008)  

Main Points
● Congress enacted the GINA to protect job applicants, current and former employees, labor union members, and apprentices and trainees from discrimination based on genetic information by making unlawful the misuse of genetic information to discriminate in health insurance and employment.
● Title I of GINA applies to employer-sponsored group health plans.
● Title II prohibits the use of genetic information by employers and others and limits them from disclosing genetic information.
● GINA covers both private and public sectors.
● Recent developments in the field of genetics, human genome decoding, and genetic tests can inform individuals whether they may be at risk for developing a specific disease or disorder.

● As a result, individuals possess concerns about whether they may be at risk of losing access to health coverage or employment if insurers or employers have their genetic information.

● The Equal Employment Opportunity Commission enforces GINA.