Deck 16: Risks Related to the Job: Workers Compensation and Unemployment Compensation

Question 1

Apart from the exclusions, work-related injuries due to employee negligence are not covered by workers' compensation.

Answer 1

False

Question 2

With correct planning and effective implementation of safety mechanisms, accident frequency can be reduced to zero.

Answer 2

False

Question 3

According to the Americans with Disabilities Act, if the medical plan does not cover certain treatment needed by persons with disabilities, such as vision care, the employer does not have to add vision care treatment.

Answer 3

True

Question 4

A method of circumvention of the exclusivity of workers' compensation is the third-party over action, which begins with an employee's claim against the employer.

Question 5

Several retrospective plans with various minimum and maximum premium stipulations are available.A plan with a low minimum and a low maximum premium payment is cheaper, but this puts most of the burden of the experience on the employer.

Question 6

The stability and predictability of workers' compensation losses decreases as the number of employees of the firm increase.

Question 7

Employers with high experience ratings are considered high risk.

Question 8

Workers' compensation benefits are subject to income taxation.

Question 9

Workers' compensation and unemployment compensation are voluntary programs required of employers.

Question 10

All types of self-insurance require the use of stop-loss coverage through reinsurance.

Question 11

Unemployment compensation is a purely social insurance program.

Question 12

With the passage of the 1986 Tax Reform Act, all unemployment benefits became fully non-taxable to the recipient.

Question 13

All medical care costs have, for decades, grown much faster than the overall consumer price index.

Question 14

Severity is a better indicator of safety performance than frequency.

Question 15

Occupational illness claims are not covered by workers' compensation.

Question 16

Social insurance programs are required coverages as a matter of law.

Question 17

In workers' compensation, the limits for temporary total disability are seldom reached in practice because the typical injured worker's condition reaches "maximum medical improvement," which terminates temporary total benefits.

Question 18

Employer's liability insurance covers the employer from suits filed by injured employees who are not satisfied with the alternative benefits provided by the employer in elective states who have not opted for workers' compensation.

Question 19

The return-to-work objective is to ensure employees' presence at work under any capacity, thus incurring less workers' compensation losses.

Question 20

Exclusive laws list all the types of employment that are covered under workers' compensation.

Question 21

Some state laws provide that either the employer or the employee may elect not to be covered under workers' compensation law.Identify these laws.

A)Inclusive laws
B)Core laws
C)Derived laws
D)Elective laws
E)Exclusive laws

Question 22

In compromising between the interests of employees and those of employers, the originators of workers' compensation systems limited the benefits available to employees to some amount less than the full loss.They also made those benefits the sole recourse of the employee against the employer for work-related injuries.This give-and-take of rights and duties between employers and employees is termed:

A)obiter dictum.
B)quid pro quo.
C)uberrimae fidei.
D)stare decisis.
E)ratio decidendi.

Question 23

Under this common law defense, if an employee was injured through negligence of the employer but was partly at fault, the employer was relieved of responsibility for the injury.Identify this common law defense.

A)Concurrent negligence
B)Assumption of risk
C)Attractive nuisance
D)Contributory negligence
E)Fellow-servant rule

Question 24

Most laws specify that the loss of certain body parts constitutes:

A)permanent total disability.
B)permanent partial disability.
C)temporary total disability.
D)temporary partial disability.
E)derived sole injury.

Question 25

Which of the following is an example of a permanent partial disability?

A)An employee in coma.
B)An employee suffering from chronic insomnia.
C)An employee who has a fractured leg.
D)An employee who has lost an arm.
E)An employee with three broken ribs.

Question 26

In workers' compensation, weekly benefits for death, disability, and disfigurement are primarily based on the employee's:

A)average weekly wage multiplied by a replacement ratio, expressed as a percentage of the average weekly wage.
B)lowest weekly wage multiplied by replacement ratio, expressed as a percentage of the lowest weekly wage.
C)average annual wage multiplied by a replacement ratio, expressed as a percentage of the average monthly wage.
D)highest weekly wage multiplied by a replacement ratio, expressed as a percentage of the highest weekly wage.
E)average annual wage multiplied by a replacement ratio, expressed as percentage of the average annual wage.

Question 27

Income replacement benefits under workers' compensation are commonly referred to by industry personnel as:

A)elective benefits.
B)exclusive benefits.
C)indemnity benefits.
D)derived benefits.
E)sole benefits.

Question 28

Which of the following statements is true about workers' compensation?

A)Exclusive laws list all the types of employment that are covered under workers' compensation.
B)Workers' compensation for agricultural workers in excluded in all jurisdictions.
C)Inclusive laws cover all the types of employment under workers' compensation except those that are excluded.
D)Domestic service and casual labor are included in workers' compensation.
E)Workers' compensation laws not compulsory in New Jersey and Texas.

Question 29

Workers' compensation laws provide for four types of benefits: medical, income replacement, survivors' benefits, and rehabilitation.Identify the correct statement about medical benefits.

A)Workers' compensation imposes deductibles and coinsurance to create incentives for individuals to control their demand for medical services.
B)All laws provide unlimited medical care benefits for accidental injuries.
C)To save on the escalating costs of medical care in workers' compensation, the medical coverage excludes managed care.
D)Managed care increases the choice of doctors for the injured employee.
E)In case of an injury, the doctors' decisions are reviewed by the insurer, but medical procedures do not require approval from the insurer.

Question 30

An employee who is covered by workers' compensation cannot sue his or her employer for damages because workers' compensation is the employee's:

A)fundamental right.
B)sole remedy.
C)inclusive remedy.
D)derived remedy.
E)elective right.

Question 31

The federal portion of the unemployment compensation insurance program is administered by the Employment and Training Administration in the Department of Labor.

Question 32

Which of the following is a system that enforces a series of state laws that requires employers to pay workers' for their work-related injuries and illnesses with no relationship to who caused the injury or illness?

A)Professional liability
B)Employment practices liability
C)Workers' compensation
D)Business interruption
E)Property liability

Question 33

Permanent total disability means that the injured employee:

A)can perform some but not all work duties.
B)is expected to be able to return to work at some future time.
C)cannot perform the basic tasks, but can work.
D)has lost certain body parts.
E)is not expected to be able to work again.

Question 34

Identify the situation that is most likely to be covered by workers' compensation.

A)A firefighter suffers a heart attack off-duty.
B)An employee injured while engaged in horseplay during a vacation.
C)An employee injured due to willful misconduct.
D)A cab driver who was intoxicated meets with an accident while driving.
E)Self-inflicted injuries.

Question 35

Identify the correct statement about waiting periods in workers' compensation.

A)Every jurisdiction has a waiting period before medical benefits for temporary disability can begin.
B)The waiting period has the advantages of giving a financial incentive to work, but it increases administrative costs and the cost of benefits.
C)Moral hazard is created among employees who reach maximum medical improvement just before the time of the retroactive trigger.
D)Hawaii allows retroactive benefits.
E)Waiting periods do not exist for indemnity payments for temporary disabilities.

Question 36

For employees with temporary total disability, maximum medical improvement is reached when:

A)the employee is cured and is able to resume work on a full-time basis.
B)additional medical treatment is not expected to result in improvement of the person's condition.
C)the employee is able to do all the basic tasks of daily life, like eating, walking etc.
D)additional medical treatment is expected to completely cure the person.
E)additional medical treatment is expected to produce side-effects which have a probability to deteriorate a person's condition.

Question 37

The workers' compensation and employers' liability policy has three parts.Which of the following is not a limitation or exclusion of part 1 of the workers' compensation and employers' liability policy?

A)Serious and willful misconduct by the insured
B)The knowing employment of a person in violation of the law
C)Failure to comply with health or safety laws or regulations
D)The discharge, coercion, or other discrimination against employees
E)Domestic and farm laborers

Question 38

Before implementation of workers' compensation laws in the United States, employees were seldom paid for work-related injuries.The injured employee's ability to recover damages was hindered by the fact that even a negligent employer could use three common law defenses to disavow liability for workers' injuries.Which of the following is a common law defense?

A)Fellow-servant rule
B)Unforeseeable Misuse
C)Attractive nuisance
D)Concurrent negligence
E)Proximate cause

Question 39

Under this common law defense, an employee who was injured as a result of the conduct of a coworker could not recover damages from the employer.Identify this common law defense.

A)Concurrent negligence
B)Assumption of risk
C)Attractive nuisance
D)Contributory negligence
E)Fellow-servant rule

Question 40

Identify the correct statement about workers' compensation in states with elective laws.

A)An employer who opts out of workers' compensation retains the common law defenses.
B)If only the employee opts out of workers' compensation, the employer looses the common law defenses for that employee.
C)If both the employer and employee opt out of workers' compensation, the employer loses the common law defenses.
D)It is common for employees to opt out of workers' compensation.
E)Employees who opt out of workers' compensation must prove negligence in order to collect and need not overcome the employer's common law defenses.

Question 41

In workers' compensation programs, describe the degree and length of disability of workers.

Question 42

In the nineteenth century, before implementation of workers' compensation laws in the United States, employees were seldom paid for work-related injuries.The injured employee's ability to recover damages was hindered by the fact that even a negligent employer could use common law defenses o disavow liability for workers' injuries.Discuss these defenses.

Question 43

List the challenging issues faced by the worker' compensation industry.

Question 44

Describe workers' compensation insurance.

Question 45

Before implementation of workers' compensation laws in the United States, employees were seldom paid for work-related injuries.The injured employee's ability to recover damages was hindered by the fact that even a negligent employer could use three common law defenses to disavow liability for workers' injuries.The _____ doctrine provided that an employee who knew, or should have known, of unsafe conditions of employment assumed the risk by remaining on the job.

Question 46

Which of the following statements is true about unemployment compensation programs?

A)It is a quasi-social private insurance.
B)Private insurers are willing to provide this type of insurance.
C)Unlike workers' compensation, this law does not transfer any financial element of a risk faced by the employee to the employer.
D)Like workers' compensation, the firm's risk manager has a choice with regard to how the risk is handled.
E)Neither private insurance nor self-insurance is permitted for these programs.

Question 47

Self-insuring workers' compensation reduces benefits only if:

A)you operate in states where workers' compensation is not mandatory.
B)your insurer settles claims more efficiently than your self-insurance administrator.
C)you have more than a thousand employees working for your firm.
D)you are a member of a group self-insurance program.
E)you or your self-insurance administrator settles claims more efficiently than your insurer.

Question 48

Most state workers' compensation laws permit an employer to retain the workers' compensation risk if it can be proven that:

A)the employer's firm is public.
B)the employer is financially able to pay claims.
C)the firm's risk exposures for employees are minimum.
D)the employer's firm has an asset of $5 million or more.
E)the firm has an annual profit of $5 million or more.

Question 49

Which of the following statements is true about the residual market?

A)Premium rates for insureds in this market are higher than those of the voluntary market.
B)Firms that qualify for insurance based on normal underwriting guidelines and premiums can buy insurance through this market.
C)Operating losses in this market is lesser than operating losses in an assigned risk plan.
D)Gains in this market can be 15 to 30 or more of premiums for employers insured in the voluntary market.
E)Firms self-insure rather than opting for insurance in this market to retain profits obtained through self-insurance.

Question 50

Which of the following statements is true about American with Disabilities Act (ADA)?

A)The Supreme Court in 2002 clarified that the inability to perform a job is a disability.
B)It forbids employers with more than fifteen employees from discriminating against disabled persons in employment.
C)If the medical plan does not cover certain treatment needed by persons with disabilities, such as vision care, the employer has to add vision care treatment for disabilities.
D)If vision care is provided by the medical plan, then vision care need not be offered to employees with disabilities.
E)Specific disabilities, such as vision impairment, or disability in general, can be excluded from coverage.

Question 51

Which part of the workers' compensation policy includes employers' liability that protects against potential liabilities not within the scope of the workers' compensation law, yet arising out of employee injuries?

A)Part 1
B)Part 2
C)Part 3
D)Part 4
E)Part 5

Question 52

Describe the qualification and disqualification for benefits of unemployment compensation programs.

Question 53

_____ laws cover all the types of employment under workers' compensation except those that are excluded.

Question 54

Identify the correct statement about state funds.

A)They are concerned only with employers' liability risk.
B)Employers opting for state funds for workers' compensation have to privately insure against benefit payments under the workers' compensation law.
C)Cost comparisons between commercial insurers and state funds are very because the state fund may be subsidized.
D)It involves payment of a premium depending on the profitability of the company.
E)Employers who have access to a state fund should consider it part of the market and compare its rates with those of private insurers.

Question 55

Which part of the workers' compensation policy includes Other States Insurance?

A)Part 1
B)Part 2
C)Part 3
D)Part 4
E)Part 5

Question 56

If your firm is large enough to self-insure, your workers' compensation premium is:

A)profit rated.
B)rated according to the number of employees in the firm.
C)experience rated.
D)rated according to the financial capacity of your firm.
E)sales rated.

Question 57

Several retrospective plans with various minimum and maximum premium stipulations are available.If you are conservative with respect to risk, you will prefer:

A)a low minimum and a low maximum limit for premium payment.
B)a high minimum and a low maximum limit for premium payment.
C)a low minimum and a high maximum limit for premium payment.
D)a high minimum and a high maximum limit for premium payment.
E)not to opt for a retrospective plan.

Question 58

Under these programs, each employer is responsible for paying the losses of the group when necessary-such as in the case of a member's insolvency.The employer's risk is not transferred; only the payment of losses is shared through the pooling mechanism.The members of these programs buy stop-loss coverage and are required to obtain regulatory approval for their existence.Identify these programs.

A)Group self-insurance programs
B)Captive reinsurance programs
C)State-operated workers' compensation programs
D)Captive insurance programs
E)Stock reinsurance programs

Question 59

An employee injured while using a product manufactured by another division of the company might seek a products liability claim against the employer.Identify this attempt to circumvent the exclusivity rule.

A)Third-party over action
B)Indemnification
C)Gentrification
D)Dual capacity
E)Claim for intentional injury

Question 60

Various market mechanisms, such as assigned risk pools and reinsurance facilities, allow employers that are considered uninsurable access to workers' compensation insurance.Employers with large losses, as depicted by high experience ratings, are considered high risk.These employers encounter difficulty in finding workers' compensation coverage.The way to obtain coverage is through these involuntary markets.Identify this market.

A)Secondary market
B)Complimentary market
C)Primary market
D)Sundry market
E)Residual market

Question 61

If an employer wants the current year's experience rating to influence what it pays for workers' compensation coverage this year, you can insure on a(n) _____ plan.

Question 62

_____ protects against potential liabilities not within the scope of the workers' compensation law, yet arising out of employee injuries.

Question 63

In states without extended benefits, the maximum number of weeks that benefits can be paid is _____.

Question 64

Firms that do not qualify for insurance based on normal underwriting guidelines and premiums can buy insurance through an assigned risk plan, that is, the _____ market.

Question 65

A(n) _____ is an injury arising out of employment and due to causes and conditions characteristic of a particular trade, occupation, process or employment, and excluding all ordinary diseases to which the general public is exposed.

Question 66

Coverage for terrorism is a major issue for workers' compensation.The problem has been somewhat alleviated by the relaunch of the Terrorism Risk Insurance Act (TRIA) of 2002 as the _____, which provides protection until December 31, 2014.

Question 67

The Supreme Court in 2002 clarified that only the inability to perform daily living activities is a disability under the _____ Act and not the inability to perform a job.

Question 68

When an employee suffers a second injury, the employee is compensated for the disability resulting from the combined injuries; the insurer (or employer) who pays the benefit is then reimbursed by a(n) _____ for the amount by which the combined disability benefits exceed the benefit that would have been paid only for the last injury.

Question 69

_____ are injuries covered under permanent partial disability.

Question 70

Workers attempt to circumvent the exclusivity rule.One method is to claim that the employer acts in a(n) _____, permitting the employee an action against the employer in the second relationship as well as a workers' compensation claim.

Question 71

The amount of the weekly benefit payment a worker may receive through unemployment compensation varies according to the _____ in the law of each state.

Question 72

The _____ Act places a tax on employers at the rate of 6.2 percent of workers' pay in covered jobs, excluding anything over $7,000 paid to a worker in a year for the purpose of financing unemployment compensation.

Question 73

An employee's exclusive remedy is also known as his/her _____.

Question 74

_____ programs pay weekly cash benefits to workers who are involuntarily unemployed.

Question 75

_____ funds are state government agencies responsible for collecting workers' compensation funds and distributing benefits.