Test Questions & Answers Ch10 Compensation Benefits

Test Bank

Chapter 10

Compensation: Benefits

True/False

1. Employee benefits programs meet the needs of the employee; however, they are not viewed as meeting the needs of employers as well.

2. Around the turn of the twentieth century, some employers provided benefit packages as a pragmatic means of keeping employees from organizing unions.

3. By the early 1970s, the majority of employees felt they were entitled to receive benefits as part of the employment relationship.

1. No statute or regulation is violated if an employer decides not to pay anyone unemployment compensation.
2. Although the majority of the benefits employers offer are voluntary, many are regulated by federal and/or state authorities.
3. The employer’s unemployment insurance premiums are based on the number of unemployment claims filed against it.
4. A person could feasibly draw disability pay and unemployment compensation at the same time.
5. An employee is automatically eligible for unemployment compensation upon termination.
6. The federal government is included as a covered employer under the FMLA, as well as state and local governments.
7. Parental leave can be taken intermittently, as long as it is taken in the first year of the child’s life.
8. Any FMLA leave used to care for seriously ill family members can be taken intermittently.
9. The FLMA grants employers the freedom to determine what constitutes a “serious health condition.”
10. Employers are authorized to require employees to substitute any accrued paid vacation or personal leave for leave requested under the FMLA.

14. The spouse and minor children of an employee are entitled to continued health coverage under COBRA in the event of the death of the employee.

15. Large employer status determines whether a business has to provide health insurance.

16. The most significant change affecting employers under the Affordable Care Act are the penalties for disclosure of employee medical information. .

17. An employer with 40 full-time employees and 15 part-time employees (who only work 20 hours per week) is not classed as a large employer under the Act.

18. ERISA and HIPAA are amendments to COBRA’s provisions.

19. USERRA does not protect the employment benefits of members of the National Guard, but it does protect the U.S. Army Reserve and U.S. Air Force Reserve.

20. Independent contractors are not employees and are, therefore, not entitled to benefits that are available to employees of a specific employer.

Multiple Choice

1. A concept by which employers voluntarily and intentionally improved the living conditions of employees through various supplements to direct money pay.

A. fringe benefits

B. welfare capitalism

C. health insurance

D. pension plans

2. The first federally mandated employee benefits emerged with the passage of the Social Security Act of _____.

A. 1935

B. 1946

C. 1957

D. 1968

1. Which is not a mandatory benefit?

A. family and medical leave

B. Social Security

C. unemployment compensation

D. paid sick leave

1. Which is a voluntary benefit?

A. workers’ compensation

B. unemployment compensation

C. retirement program

D. Social Security

1. Unemployment compensation programs are administered by:

A. individual states

B. Congress

C. the EEOC

D. unions

1. In all states, ____________ are not entitled to draw unemployment compensation under the Social Security Act.

A. police officers

B. firefighters

C. railroad workers

D. construction workers

1. To receive unemployment compensation, the terminated employee must meet ____ conditions.

A. three

B. five

C. seven

D. ten

1. If an individual is laid off by a covered employer, that individual is entitled to receive unemployment compensation for up to ____ weeks.

A. 23

B. 24

C. 25

D. 26

1. Private sector employers must comply with the FMLA when they employ ____ or more employees for at least twenty work weeks in the current or previous year.

A. 25

B. 50

C. 75

D. 100

1. To be eligible for FMLA coverage, an employee must have worked for an employer for a minimum of:

A. 1 month

B. 90 days

C. 6 months

D. 12 months

1. If a man and woman work for the same company and have a newborn baby, who would qualify for FMLA coverage?

A. the mother only

B. the father only

C. either the mother or the father could take leave

D. both the mother and father could take twelve weeks each

12. An employee could not take FMLA to care for which of the following people with serious health conditions?

A. foster child

B. father

C. mother-in-law

D. state-recognized common law husband

13. The FMLA requires that employees give employers at least ____ notice when the reason for the leave is foreseeable.

A. a one week

B. ten days’

C. thirty days’

D. sixty days’

14. Which of the following would most likely not be classified as a serious health condition under the FMLA?

A. broken bone

B. chronic illness, like diabetes

C. surgery with hospital stay

D. 24 hour stomach virus

15. Once an employer implements a group health insurance program for employees, that program is subject to ____________.

A. federal regulation

B. internal regulation only

C. state regulation only

D. no regulation

16. Employees who are protected under the USERRA are entitled a maximum of _____ COBRA coverage.

A. one year

B. two years

C. three years

D. four years

17. If an employer were to terminate health benefits as a result of one of the events below, which of the following would not be justified under COBRA?

A. The covered individual fails to pay premiums on time.

B. The employer no longer offers group health coverage to employees.

C. The employee is terminated because of documented insubordination.

D. An employee gets divorced, so the company immediately drops the health insurance for his ex-wife and minor children.

18. Which of the following would be classed as a large employer under the Patient Protection and Affordable Care Act?

A. An employer with 50 full-time employees

B. An employer with 25 full-time employees and 25 part-time employees working 29 hours per week

C. An employer with 15 full-time employees and 25 part-time employees working 29 hours per week

D. A & B

19. What is the tax penalty for each employee offered health coverage which does not conform the Department of Health and Human Services’ definition of affordable?

A. $2,000

B. $2,000 for each employee less the first 30 full-time employees.

C. $3,000

D. $3,000 for each employee less the first 30 full-time employees.

20. Walter is the only applicant hired by XYZ Corporation in January. Prior to Bill’s hiring the employer had 100 employees. In April, Frank and Ashley are hired. No other applicants are hired and no current employees are terminated for the remainder of the year. If XYZ offers no health insurance, what is the annul tax for the employer?

A. $206,000

B. $145,000

C. $146,000

D. $144,000

21. A retirement plan in which the employer develops a program that identifies how much a retiring employee will receive each month for the remainder of his or her life.

A. payout plan

B. individual account plan

C. defined benefit plan

D. defined contribution plan

22. The most comprehensive (all encompassing) employee benefit regulation statute.

A. COBRA

B. ERISA

C. HIPAA

D. OWBPA

23. Which of the following should be included in a summary plan description under ERISA?

A. The names and addresses of the plan administrator and trustee

B. The plan’s requirements respecting eligibility for participation and benefit.

C. The description of the provisions providing for nonforfeitable pension benefits.

D. All of the above

24. ______ is a person who is placed in a position of trust and confidence to exercise a standard of care in the administration or management of an activity.

A. fiduciary

B. successor employer

C. joint employer

D. independent contractor

25. _____ means an individual has a nonforfeitable right to pension benefits.

A. fiduciary

B. vesting

C. waivers

D. defined contribution plan

26. Under ERISA, one method for becoming vested gives employers the option of allowing employees to become 100 percent vested after ____ years of service.

A. three

B. five

C. seven

D. ten

27. Which is not one of the four major provisions of ERISA?

A. protection against age discrimination
B. vesting rights

C. termination insurance

D. fiduciary standards

28. The _______ was enacted to protect older workers from discrimination in benefits based on age.

A. COBRA

B. ERISA

C. OWBPA

D. HIPAA

29. ______ was enacted in 1994 for the express purpose of protecting the civilian jobs and employment benefits of veterans and members of reserve armed forces components when called to active duty.

A. USERRA

B. EEOC

C. HIPAA

D. None of the Above

30. Independent contractors are responsible for their own:

A. withholding FICA taxes

B. withholding their own federal income taxes

C. benefits

D. All of the above

Essay

1. Who is a covered employer under the Affordable Care Act and what is the penalty that a covered employer will experience for not providing group health insurance for his or her employees after January 1, 2015? (2 points) What is the penalty that a covered employer will experience for providing group health insurance for his or her employees that does not meet minimum federal standards, after January 1, 2015? To which federal agency must an employer report information pertaining to his or her benefit programs?

2. Under COBRA, explain the four qualifying events, the beneficiaries of the events, and the length of coverage for the events.

3. What is vesting? What are the basic provisions for vesting under ERISA?

4. Who is an employer under the Family Medical Leave Act (FMLA)? What conditions must an employee meet in order to be eligible for FMLA benefits? What are the FMLA benefits?

5. In January 2015, an employer has 45 full-time employees and 15 part-time employees. The part-time employees work an average of 20 hours per week. She offers no health insurance benefits to her employees. If his work force remains stable through out the year, what would be her tax penalty under the Affordable Care Act? What would it be if she reduced all full-time employees to part-time status in July?

a. First calculate fulltime employees and FTEs to determine if she is a large employer under the ACA: 15 part-time employees × 20 hours = 300 hours /30 = 10 FTEs

• 45 Full-time + 10 FTEs = 55 which is above the 50 Full-time/FTE threshold.

• The employer is a large employer under the ACA.

b. The penalty is calculated using only full-time employees (less 30): ((45 – 30)($2,000))/12 = $2500.

• If the work force is stable for the entire year then the annual penalty will be $30,000 ($2500 × 12).

c. What if she reduces all 45 full-time employees to part-time in July? First calculate fulltime employees and FTEs to determine if she is still a large employer under the ACA: 55 part-time employees × 20 hours = 1100 hours /30 = 36.67 FTEs

• 55 FTEs = 36.67 which is below the 50 Full-time/FTE threshold, hence after July 2015 she is no longer a large employer. However, she is still responsible for the period before July when she was:

((45 – 30)($2,000))/12 = $2500. At the end of 2015 she will be responsible for $15,000 in tax penalties ($2500 × 6).