Exam Prep Chapter.12 Employee Benefits

File: Ch12, Chapter 12, Employee Benefits

TRUE-FALSE

Fortunately, the cost of employee benefits to organizations has remained stable over the last thirty years.

Difficulty: Easy

Learning Objective 1: Explain the elements of an effective benefits program.

An employer’s worker compensation insurance rates are determined by their history of accidents, similar to car insurance rates.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Unemployment compensation and workers’ compensation are examples of voluntary benefits.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Social security eligibility is calculated on credits earned rather than years in the workforce.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Employee insurance that provides some income continuation in the event an employee is laid off is called worker’s compensation.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

CDHP plans include health savings accounts to pay medical costs and deductibles.

Difficulty: Medium

Learning objective 3: Describe the differences in the types of health insurance plans from the perspective of an employee.

A preferred provider organization provides for continued employee benefits up to three years after an employee leaves a job.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Point-of-service plans are offered by more employers than other health insurance alternatives.

Difficulty: Easy

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits.

With a flexible spending account, an employee will take home less spendable pay.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Flexible benefit plans, although more expensive to the organization, provide more choice to the workforce.

Difficulty: Medium

Section Reference: Voluntary Benefits

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits.

The type of voluntary benefits offered is limited by federal legislation.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Defined benefit pension plans pay a specific amount of money to qualified employees, usually for the rest of the employee’s life.

Difficulty: Medium

Learning objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act

ERISA spells out employer requirements for employee health insurance benefits.

Difficulty: Medium

Learning objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

When the Pension Benefit Guaranty Corporation takes over an underfunded pension plan, if there aren’t enough assets in the pension plan to pay the retirement obligations, then taxpayers will make up the difference.

Difficulty: Hard

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

A retirement program that pays retiring employees a fixed retirement income based on average earning over a period of time is a defined contribution plan.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

PTO plans require employees to specify the reason for time off if it is to be paid by the employer.

Difficulty: Easy

Learning Objective 5: Outline the different types of employee leaves and their benefits.

The U.S is one of the few developed countries that do not require employers to provide any paid vacation time.

Difficulty: Medium

Learning Objective 5: Outline the different types of employee leaves and their benefits.

A recent survey found that as many as 70 percent of American workers didn’t take all of their vacation time.

Difficulty: Medium

Learning Objective 5: Outline the different types of employee leaves and their benefits.

MATCHING KEY TERMS AND DEFINITIONS

a) Summary Plan Description

b) Defined contribution plan

c) Wellness programs

d) Flexible benefits

e) Workers’ compensation

f) Open enrollment

g) Legally required benefits

h) Unemployment compensation

i) Social Security

j) PPO

k) Employee benefits

l) ERISA

m) Consumer driven health plan (CDHP)

n) Flexible spending accounts

o) Defined benefit plan

Limited time for employees to make benefit choices.

Difficulty: Easy

Learning Objective 1: Explain the elements of an effective benefits program.

Employee insurance which provides some income continuation in the event an employee is laid off.

Difficulty: Easy

Learning Objective 2: Outline the legally required benefits that employers must provide.

Membership-based, nonfinancial rewards offered to attract and keep employees.

Difficulty: Medium

Learning Objective 1: Explain the elements of an effective benefits program.

Social security, unemployment compensation and workers’ compensation to name a few.

Difficulty: Easy

Learning Objective 2: Outline the legally required benefits that employers must provide.

Employee insurance which provides some income continuation in the event an employee is

injured on the job.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Retirement, disability, and survivor benefits, paid by the government to aged, former members of the labor force, the disabled, or their survivors.

Difficulty: Easy

Learning Objective 2: Outline the legally required benefits that employers must provide.

Allows employees to set aside money before payroll taxes to pay healthcare or dependent care.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

A benefits program in which employees are permitted to pick benefits that most meet their needs.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Combines a health plan with a high deductible with a health savings account that the insured uses to pay for deductibles and medical care.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Organization that requires using specific physicians and health-care facilities to contain the rising costs of health care.

Difficulty: Easy

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Provided with the goal of reducing chronic illnesses and cost of healthcare.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Law passed in 1974 designed to protect employee retirement benefits.

Difficulty: Easy

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

An ERISA requirement of explaining to employees their pension program and rights.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

A type of retirement program whereby each employee has an individual account to which both the employee and the employer may make contributions.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

A retirement plan pays retiring employees a fixed retirement income based on average earnings over a period of time.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

FILL-IN-THE-BLANKS

The __________ requires organizations with 50 or more employees to provide eligible employees the opportunity to take up to 12 weeks of unpaid leave each year for family or medical reasons.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

The __________ provides for continued employee benefits up to three years after an employee leaves a job.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Employers often sponsor ________________ to reduce the risk of chronic diseases and keep employees healthy.

Difficulty: Easy

Learning Objective 2: Outline the legally required benefits that employers must provide.

__________ is one of the most important benefits for employees because of the tremendous increases in cost.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

If an employee is unable to work due to injury or illness, ________________ pays a percentage of his or her income for up to 6 months.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

_________ provides a menu of benefits for employees to select, within monetary limits imposed.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

__________ is one of the most important benefits for employees because of the tremendous increases in cost.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

If an employee is unable to work due to injury or illness, ________________ pays a percentage of his or her income for up to 6 months.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

One of the most popular types of short-term disability is a company’s _________ plan.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

The most common healthcare plan that employers provide is ___________________.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

“Use it or lose it” describes the money employees contribute to_________________.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

The Pension Benefit Guaranty Corporation lays claim to an organization’s assets to fund pension programs under ___________.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

A __________ is a retirement program that pays retiring employees a fixed retirement income based on average earnings over a period of time.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

These retirement accounts are named for the tax code that created them ___________.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Many employers provide __________, combining vacation, sick leave and personal days into one pool for employees to use as they please.

Difficulty: Easy

Learning Objective 5: Outline the different types of employee leaves and their benefits.

MULTIPLE CHOICE

Which of these situations would not be classified as a qualifying event?

a) Car accident

b) Birth of a baby

c) Marriage

d) Divorce

e) Adoption

Difficulty: Easy

Learning Objective 1: Explain the elements of an effective benefits program.

Which of these is not considered an employee benefit?

a) Retirement savings

b) Bonuses

c) Pet health insurance

d) Gym memberships

e) PTO

Difficulty: Easy

Learning Objective 1: Explain the elements of an effective benefits program.

Which of these is not true of open enrollment?

a) Usually occurs in the fall

b) HR staff is really busy

c) Qualifying events are required

d) Benefit providers handle some of the work

e) Benefit decisions are required.

Difficulty: Easy

Learning Objective 1: Explain the elements of an effective benefits program.

Benefits add nearly _________ to an organization payroll costs.

a) 20%

b) 30%

c) 40%

d) 50%

e) 60%

Difficulty: Easy

Learning Objective 1: Explain the elements of an effective benefits program.

Why do organizations offer domestic partner benefits?

a) Maid service frees up employee time for more recreational activities.

b) Living arrangements and family definition differ today from those in any other time in our history.

c) Companies are legally required to do so.

d) Health care benefits are an inexpensive way to recruit good workers.

e) Global standards require it.

Difficulty: Medium

Learning Objective 1: Explain the elements of an effective benefits program.

Which of the following is NOT a legally required benefit?

a) Retirement plans

b) Social Security

c) Unemployment compensation

d) Workers’ compensation

e) Unpaid family and medical leave

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Which of the following is NOT true regarding Social Security?

a) Social Security provides a source of income for American retirees, disabled workers, and surviving dependents of workers who have died.

b) Social Security provides some health insurance coverage through the federal Medicare program.

c) Social Security is financed only by the employer contributions.

d) To be eligible for Social Security, employees must be employed for a minimum of 40 quarters.

e) Social Security benefits vary based on the previous year’s inflation, additional earnings, and recipient age.

Difficulty: Hard

Learning Objective 2: Outline the legally required benefits that employers must provide.

Unemployment compensation laws provide benefits to those meeting the following conditions EXCEPT

a) Individuals are without a job due to layoffs.

b) Individuals are without a job due to discharges for gross misconduct.

c) Individuals have applied to their state employment agency for unemployment compensation.

d) Individuals have registered for available work.

e) Individuals are willing and able to accept any suitable employment offered through their state unemployment compensation commission.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

At the Federal level, the unemployment tax (called FUTA) is _________ on the first $7,000 of earnings of employees.

a) 3.0%

b) 4.2%

c) 5.4%

d) 6.0%

e) 7.2%

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

All of the following statements about workers’ compensation are accurate EXCEPT:

a) Workers’ compensation is counted as part of labor expenses due to the accountability factor.

b) Cost of workers’ compensation is shared between the employee and the employer.

c) Workers’ compensation benefits are based on fixed schedules of minimum and maximum payments.

d) Some states allow employers to self-insure for workers’ compensation.

e) Some states provide a required insurance system for handling workers’ compensation.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Andre, a pizza maker, fell against an oven and injured his hand. His company was reluctant to file a workers’ compensation report for this injury. Why?

a) Insurance rates are computed based on the organization’s accident experience.

b) Workers’ compensation is designed to provide income for employees who are between jobs, not for injuries.

c) Hand injuries are not covered under this legislation.

d) Workers’ compensation benefits are paid to surviving relatives. John did not die.

e) John’s company self-insured with a private company.

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Which legally required benefit is paid for by the employer and the employee?

a) Unemployment compensation

b) Family and Medical Leave Act (FMLA)

c) Social Security

d) The Consolidated Omnibus Budget Reconciliation Act (COBRA)

e) Worker’s compensation

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Which legally required benefit is designed to protect employees’ salaries and to shift the cost of accidents and rehabilitation to employers?

a) Unemployment compensation

b) Family and Medical Leave Act (FMLA)

c) Social Security

d) The Consolidated Omnibus Budget Reconciliation Act (COBRA)

e) Worker’s compensation

Difficulty: Easy

Learning Objective 2: Outline the legally required benefits that employers must provide.

Which of the following expanded the availability and regulation of health insurance coverage, making changes in how health insurance is provided and paid for?

a) Health Insurance Portability and Accountability Act of 1996 (HIPAA)

b) Patient Protection and Affordable Care Act

c) Worker’s compensation

d) Consolidated Omnibus Budget Reconciliation Act (COBRA)

e) Social Security

Difficulty: Medium

Learning Objective 2: Outline the legally required benefits that employers must provide.

Which type of health care option includes a tax advantage to the employees who contribute to them?

a) Health maintenance organizations

b) Preferred provider organizations

c) Employee

d) Point of Service Plan

e) Health Savings Account

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

What is the advantage to an employer who offers an employee assistance program?

a) Decreased turnover and absenteeism

b) Lower insurance premiums

c) Support of the organizational strategy and employee development

d) Increased incentives that make recruitment easier

e) Less time off work for illness and on-the-job injuries

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Employees can set aside pretax dollars for health needs and childcare through the use of:

a) health savings accounts.

b) group insurance benefits.

c) employee assistance programs.

d) flexible spending accounts.

e) wellness programs.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

The main benefit to companies that offer flexible benefits to employees is:

a) Compliance with federal wage and hour law regulations.

b) Employee productivity.

c) Avoid paying for benefits that are not used.

d) Enter new geographical markets.

e) Eliminate defined benefit pension plans.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Which is NOT true about The Patient Protection and Affordable Care Act:

a) Was passed by Congress in 2010.

b) Has faced numerous challenges in Congress and in the courts.

c) Expanded employer responsibility by requiring many employers to offer health insurance benefits to employees.

d) Requires protections for adoptive parents in the workplace.

e) Provides workplace protections for nursing mothers for up to a year after the birth of a child.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Raj, president of a medium-sized manufacturing company, believes that flexible benefits would be too expensive and confusing to administer and not worth the hassle. “I checked into it before. It includes goofy things like pet insurance. We manufacture parts for heavy equipment manufacturers. How would that look? Nobody would take us seriously.” As you attempt to explain the benefits of the flexible plan to him, which statement would you NOT use:

a) Flexible benefit plans are really attractive and might help you recruit for hard-to-fill positions.

b) You would save money because you would only provide benefits that employees actually want and use.

c) It is more expensive, but it will increase productivity if employees like the benefits.

d) You can pay all expense for the selected benefits or you can have the employee pay a portion.

e) Employees can save money on health expenses if you include flexible spending accounts.

Difficulty: Hard

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Last year Rebecca set aside $5000 pretax dollars for childcare in a flexible spending account. She only used $3200. What happened to the remaining $1800?

a) She received a lump sum payment of $1800 in her first January paycheck.

b) It reverted to her employer.

c) She had to pay taxes on the amount before it was added back to her income.

d) She transferred it to her medical care account.

e) It stays in the account to be used this year, a rollover.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Which of the following is NOT an element of the Employment Retirement Income Security Act (ERISA)?

a) Employers are required to keep pension plan assets separate from assets of the business.

b) An SPD that must be provided to employees that explains how the retirement plan works in plain language.

c) It established the PBGC.

d) Individual Retirement Accounts (IRAs) were established.

e) Employees whose pension plans failed receive a minimum benefit.

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Lizzie has employer-provided health insurance. She makes a small contribution toward the cost of insurance but pays for most of her expenses every year because her insurance plan has a $5,000 deductible. To offset the out-of-pocket costs, she contributes through payroll deduction to a savings account that she can use to cover the out-of-pocket costs. Her employer also contributes to this savings account. Which type of plan does Lizzie have?

a) HIPPA

b) HDHP

c) PPO

d) COBRA

e) HMO

Difficulty: Hard

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Which is NOT true of the Health Insurance Portability and Accountability Act?

a) Individuals decide who can receive personal health information and how it will be communicated.

b) Doctors and insurance companies cannot communication with an individual’s employer with out the individual’s permission.

c) It is also called Obamacare.

d) Employers may require doctor’s note for employee absences.

e) Employers may require doctor’s notes for ADA accommodation requests

Difficulty: Hard

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Vinita, a nurse, broke her hand tending a patient. She has used up her annual sick leave and will be unable to work for six more weeks. She is receiving pay for her time not worked through which benefit plan?

a) Employee assistance

b) Worker's replacement

c) Short-term disability

d) Company sick leave

e) Long-term disability

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Jermaine, a janitor, fell from a ladder while he was changing a light bulb and hurt his leg and shoulder. As a result, he has been unable to work for the past five years and is drawing 60% of his salary. Under what benefit plan is he covered?

a) Wellness

b) Short-term disability

c) Keogh

d) Long-term disability

e) Employee assistance

Difficulty: Medium

Learning Objective 3: Describe the major types of health insurance options and other voluntary benefits

Ilsa and Ramon recently married and changed jobs. Both of their employers provide retirement savings plans and they are trying to determine which plan is best for them so they can put more of their savings in it. What should they look at to compare the retirement plans?

a) Social Security Administration Review

b) COBRA

c) Summary Plan Description

d) HIPAA

e) Pension Benefit Guaranty Corporation Publications

Difficulty: Hard

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

All of the following are advantages of offering paid time off (PTO) leave to employees EXCEPT

a) Employees can take unused time as additional vacation days.

b) Employees do not need to explain to their manager why they taking time off.

c) Employees may consider PTO as vacation time and not use it when they are ill.

d) Absences are reduced as a PTO day is scheduled in advanced.

e) Employees like the flexibility and trust that employers offer with PTO policies.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Which of the following will guarantee an employee’s right to a pension benefit offered by the employer?

a) Money purchase pension plans

b) Pension Benefit Guaranty Corporation

c) Summary plan description

d) Employee Retirement Income Security Act (ERISA)

e) Vesting

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

A large publishing house decided to voluntarily terminate its pension program. What protection do its employees and retirees have?

a) If the firm is located in California, such action is illegal.

b) The SPD will supply 90% of accrued pension benefits until all recipients are eligible for Social Security retirement benefits.

c) The PBGC will claim corporation assets to pay benefits that have been promised to employees.

d) There is no protection for employees.

e) COBRA will cover 30% of the benefits that have been promised to employees.

Difficulty: Hard

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Rajiv works for a major private employer. Each year, he contributed a substantial amount to a retirement benefit plan. The employer matches these pre-tax dollars up to 6% of his income. What kind of retirement program does Rajiv have?

a) Defined benefit plan

b) Profit-sharing plan

c) Money purchase pension plan

d) 401(k)

e) 403(b)

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Which of the following is NOT a type of defined contribution plan?

a) Money purchase pension plan

b) Profit-sharing plan

c) IRA

d) SPD

e) 401(k)

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Which of the following is the organization that lays claim to corporate assets to pay or fund inadequate pension programs?

a) SPD

b) HIPAA

c) PBGC

d) IRA

e) ERISA

Difficulty: Easy

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Jose’s employer provides 50 cents for each dollar he invests of his pay each year a retirement account. His firm has contributed to this optional program every year, even when they lost money. What kind of retirement program does Jose have?

a) Defined benefit plan

b) Profit-sharing plan

c) Money purchase pension plan

d) 401(k)

e) Roth Individual Retirement Account

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Two types of individual retirement accounts are:

a) Money purchase IRA and profit-sharing IRA.

b) SEP and money purchase.

c) Profit-sharing and SIMPLE IRA.

d) SEP IRA and SIMPLE IRA.

e) Defined benefit and defined contribution.

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

Which of the following is a retirement program that pays retiring employees a fixed retirement income based on average earnings over a period of time?

a) Defined benefit plan

b) Keogh plan

c) Defined contribution plan

d) IRA plan

e) Roth IRA plan

Difficulty: Medium

Learning Objective 4: Discuss the types of retirement programs employers offer and the legal requirements of the Employee Retirement Income Security Act.

U.S. workers earn an average of_______ days of vacation after one year of employment.

a) 5

b) 10

c) 15

d) 20

e) 25

Difficulty: Easy

Learning Objective 5: Outline the different types of employee leaves and their benefits.

Sick leave, holiday leave, and long-term disabilities are grouped together as

a) intrinsic job enhancement.

b) retirement benefits.

c) paid time off.

d) health preservation benefits.

e) long-term maintenance.

Difficulty: Easy

Learning Objective 5: Outline the different types of employee leaves and their benefits.

In Germany, paid vacation mandated are _____.

a) 4 weeks

b) 6 days

c) 2 weeks

d) 10 days

e) 30 days

Difficulty: Hard

Learning Objective 5: Outline the different types of employee leaves and their benefits.