Deck 12: Designing and Administering Benefits

Question 1

Employee benefits are used to:

A)reward employee performance.
B)provide security for employees.
C)motivate greater productivity.
D)comply with federal regulation.

Answer 1

B

Question 2

Retirement benefits are primarily an effective employee retention tool because they:

A)provide valuable tax savings to employers.
B)decrease in value when an employee job-hops.
C)increase over the time that an employee works for a firm.
D)offer employees the opportunity to take early retirement.

Answer 2

C

Question 3

Social Security and unemployment insurance benefits originated in:

A)1971.
B)1964.
C)1958.
D)1935.

Answer 3

D

Question 4

With regards to employee benefits, the United States differs from other developed countries in that:

A)the United States government covers the costs of most employee benefits.
B)United States employers provide a small percentage of employee benefits.
C)most other countries provide better benefits than the United States.
D)United States employers provide most of their employees' benefits.

Question 5

All of the following are legally required benefits EXCEPT:

A)paid time off.
B)Social Security.
C)workers' compensation.
D)unemployment insurance.

Question 6

Sadie is meeting with her boss to discuss her indirect compensation, which is another term for:

A)nonmonetary perks.
B)employee benefits.
C)base pay.
D)total compensation.

Question 7

Employee benefits accounted for about ________ of employers' payrolls in 2013.

A)10%
B)20%
C)30%
D)40%

Question 8

Raj has personal investment plans for retirement. He also is involved with his company's retirement plan; his company contributes to his retirement each month. His personal contributions are ________, and his company's contributions are ________.

A)tax-free / tax-deferred
B)tax-deferred / tax-deferred
C)tax-deferred / tax-free
D)tax-free / tax-free

Question 9

Which of the following accounts for the largest portion of indirect compensation paid by most employers?

A)Legally required benefits
B)Payments for time not worked
C)Retirement and savings plans
D)Life and disability insurance

Question 10

Additional Case 12.1
The HR Director of The Camera Center is leading the executive team through a review of the company's benefits plan. He begins by explaining how the firm funds the benefits plan. After a few questions on that matter, he moves on to clarify what they must offer by law and what benefits the firm would like to provide.
A highly entrepreneurial, performance-driven company, The Camera Center provides an excellent profit-sharing plan and one of the best retirement packages in the industry. The firm commits a high portion of compensation funds to the benefits plan. The workforce tends to be college-educated, young professionals who are just starting their families.
The CEO wants the total benefits plan reviewed and repackaged, if necessary, to align it with The Camera Center's business culture and strategy. He also wants to contain costs as much as possible and simplify benefits
administration.
Refer to Additional Case 12.1. When reviewing the legally required benefits, the HR Director would most likely address:

A)health insurance.
B)pensions and retirement plans.
C)family and medical leave.
D)life and disability insurance.

Question 11

Legally required benefits include only:

A)health insurance.
B)life insurance.
C)medical leave.
D)disability insurance.

Question 12

American companies spend an average of nearly ________ per year per employee on benefits.

A)$9,000
B)$12,000
C)$20,000
D)$25,000

Question 13

Additional Case 12.1
The HR Director of The Camera Center is leading the executive team through a review of the company's benefits plan. He begins by explaining how the firm funds the benefits plan. After a few questions on that matter, he moves on to clarify what they must offer by law and what benefits the firm would like to provide.
A highly entrepreneurial, performance-driven company, The Camera Center provides an excellent profit-sharing plan and one of the best retirement packages in the industry. The firm commits a high portion of compensation funds to the benefits plan. The workforce tends to be college-educated, young professionals who are just starting their families.
The CEO wants the total benefits plan reviewed and repackaged, if necessary, to align it with The Camera Center's business culture and strategy. He also wants to contain costs as much as possible and simplify benefits
administration.
Refer to Additional Case 12.1. The HR Director's initial explanation is about the ________ of the benefits plan.

A)contributions
B)co-payments
C)deductible
D)flexibility

Question 14

The benefits portion of a compensation package most likely plays an important role in:

A)rewarding employees' performance.
B)attracting and retaining employees.
C)managing the profits of the company.
D)managing employee performance.

Question 15

Which of the following is most likely true?

A)Unions have done very little with regard to indirect compensation for members.
B)Benefits given at unionized firms are typically given at nonunionized firms at a later date.
C)Most large unions have been unsuccessful at securing and retaining pensions for members.
D)Unions rarely request employee benefits beyond those that are legally required.

Question 16

Effective employee benefits packages:

A)help firms train and motivate their employees.
B)maximize traditional insurance coverage.
C)help firms recruit and retrain employees.
D)replace the need for unemployment insurance.

Question 17

Health insurance typically covers all of the following EXCEPT:

A)prescriptions.
B)medical leave.
C)hospital costs.
D)physician charges.

Question 18

Which term refers to annual out-of-pocket expenses that an insurance policyholder must make before an insurance plan makes any reimbursements?

A)Co-payment
B)Contribution
C)Coinsurance
D)Deductible

Question 19

The growth of benefits costs has pushed employers to:

A)diversify the workforce.
B)hire more part-time employees.
C)move from managed care to traditional health insurance.
D)ask for more government intervention in the health industry.

Question 20

Kevin's new employer informs him that he will be allowed a flexible benefits program for the duration of his employment at Comfortable Furniture. This means that Kevin will most likely be able to:

A)receive paid time off after six months with the firm.
B)select the benefits he wants most from a menu of options.
C)receive more direct compensation by forfeiting employee benefits.
D)reduce his coinsurance payments by selecting a managed care plan.

Question 21

Why are employee benefits significant to both employers and employees? What should an employer consider when developing a benefits mix?

Question 22

Melanie is determining what benefits mix will work best for Bob's Building Corp. Which of the following questions is LEAST relevant to Melanie during this process?

A)What are the firm's objectives?
B)What benefits are legally required?
C)What benefits do competitors offer?
D)What are the characteristics of the workforce?

Question 23

Employee contributions to a qualified retirement plan are usually tax-deferred until the employee retires.

Question 24

Employers are legally required to provide health insurance to employees.

Question 25

Sam was born in 1963. What is the earliest age that Sam can retire to receive full Social Security benefits?

A)65
B)66
C)67
D)68

Question 26

Additional Case 12.1
The HR Director of The Camera Center is leading the executive team through a review of the company's benefits plan. He begins by explaining how the firm funds the benefits plan. After a few questions on that matter, he moves on to clarify what they must offer by law and what benefits the firm would like to provide.
A highly entrepreneurial, performance-driven company, The Camera Center provides an excellent profit-sharing plan and one of the best retirement packages in the industry. The firm commits a high portion of compensation funds to the benefits plan. The workforce tends to be college-educated, young professionals who are just starting their families.
The CEO wants the total benefits plan reviewed and repackaged, if necessary, to align it with The Camera Center's business culture and strategy. He also wants to contain costs as much as possible and simplify benefits
administration.
Refer to Additional Case 12.1. This company's benefits mix:

A)matches the firm's culture and objectives.
B)is almost the opposite of what the firm needs.
C)would be better if it included variable pay as well.
D)violates federal law because the firm doesn't offer health care.

Question 27

The ________ is the complete package of benefits that a company offers its employees.

Question 28

Social Security does NOT include which of the following?

A)Retirement income
B)Disability income
C)Workers' compensation
D)Survivors' benefits

Question 29

The standard Social Security tax is applied to earnings up to $106,800. Over this amount, employees are taxed at a rate of ________ on all additional earnings.

A)1.45%
B)3.2%
C)5.65%
D)7.4%

Question 30

A company that focuses on providing job security and long-term employment is likely to devote a small portion of its compensation dollars to benefits.

Question 31

Jessica recently had outpatient surgery. Her insurance plan requires a deductible of $500. This means that the insurance company will pay 100% of the first $500, but after that will only pay a percentage of the bill.

Question 32

A standardized benefits package is most likely best for a:

A)new company with a highly diverse workforce.
B)firm that employs a homogeneous workforce.
C)firm that wants to provide employees with choices.
D)new company that wants to decentralize benefits.

Question 33

The benefits mix for a company should be governed by its compensation strategy, its objectives, and the makeup of its workforce.

Question 34

The cost of employee benefits has risen to nearly 50% of an employer's payroll costs.

Question 35

To design a successful benefits strategy, employers should most likely consider:

A)two areas: benefits amount and the flexibility of benefits.
B)two areas: benefits mix and the flexibility of benefits.
C)three areas: benefits mix, the flexibility of benefits, and the benefits amount.
D)four areas: benefits mix, the flexibility of benefits, the benefits amount, and benefits communication.

Question 36

Crescent Control Systems focuses on providing job security and long-term employment opportunities for its employees. Which of the following would most likely support Crescent's strategy?

A)Applying most compensation dollars towards productivity rewards
B)Using a large portion of its compensation budget for benefits
C)Providing workers' compensation coverage to all employees
D)Offering employees variable pay and family leave

Question 37

On average, medical benefits and payments for time not worked consume about the same amount of each benefit dollar.

Question 38

________ is a government program that provides income for retirees, the disabled, and survivors of deceased workers, and health care for the aged through the Medicare program.

Question 39

The benefits amount corresponds to which direct compensation decision?

A)Individual-based pay versus job-based pay
B)Fixed versus variable pay
C)Monetary versus nonmonetary rewards
D)Open versus secret pay

Question 40

A benefits program that allows employees to select the benefits they need most from a menu of choices is referred to as a(n)________.

Question 41

A self-insurance pool is best defined as a:

A)policy in which individual employees are exclusively responsible for their insurance.
B)group of companies who jointly hire an administrator to organize insurance functions.
C)policy offered by insurance companies that allows employees to choose their own benefits.
D)group of individual employees who shop for the most cost-effective health insurance.

Question 42

Which of the following would LEAST likely improve a firm's workers' compensation costs?

A)Emphasizing safe work procedures to all employees
B)Providing health insurance to high-risk employees
C)Designing jobs to reduce risk of injury
D)Auditing workers' compensation claims

Question 43

The rate of workers' compensation tax for employers is based on all of the following factors EXCEPT the:

A)workers' compensation guidelines in the employer's state.
B)employer's injury experience rating.
C)risk of injury for an occupation.
D)number of employees at the firm.

Question 44

Former employees may be denied unemployment insurance benefits if they:

A)worked for a private firm with fewer than 15 employees.
B)were government employees.
C)were fired by their employer.
D)failed a drug test.

Question 45

Workers' compensation:

A)only covers an employee who is not at fault for his/her injury.
B)provides medical care, income, and rehabilitation expenses.
C)replaces 75% of the disabled worker's income.
D)is part of Social Security.

Question 46

Dick has recently been laid off from his unionized manufacturing job where he has been a full-time worker for the last 14 years. He has been looking for work for nearly five months. Which of the following is most likely true in Dick's case?

A)Dick is not eligible for unemployment insurance.
B)Dick's unemployment insurance will run out at the end of the fifth month.
C)Dick is probably receiving 60% of the earnings he received from his job.
D)Since Dick's company was unionized, he may be eligible for supplemental unemployment benefits.

Question 47

The Family and Medical Leave Act does NOT apply to employees who have:

A)previously adopted children.
B)been with an employer less than one year.
C)reached retirement age.
D)previously taken FMLA leave.

Question 48

According to surveys, which of the following is true about FMLA?

A)Leave causes significant staffing problems for small employers.
B)Leave is primarily taken to care for sick family members.
C)Nearly 50% of eligible workers take leave each year.
D)Leave is primarily taken for overseas adoptions.

Question 49

Disability income under Social Security:

A)covers all hospital expenses for anyone over age 65.
B)requires 50% disablement for six weeks prior to the beginning of benefits.
C)does not take effect until the individual is over age 65.
D)comes in monthly payments equivalent to 30% of the individual's earnings.

Question 50

To be eligible for unemployment insurance, employees must meet all of the following requirements EXCEPT:

A)be actively seeking employment.
B)have left their job involuntarily.
C)have worked a minimum of four out of the last five quarter-year periods.
D)have filed a workers' compensation claim within the last twelve months.

Question 51

Unemployment insurance is:

A)paid for through union dues.
B)funded by the federal government.
C)paid for by a tax on employers.
D)funded by health insurance companies.

Question 52

Additional Case 12.2
Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits.
The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly.
Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job.
Refer to Additional Case 12.2. Tri-State Shipping's workers' compensation tax rate is:

A)average for U.S. companies.
B)five times the U.S. average.
C)half of the U.S. average.
D)twice the U.S. average.

Question 53

Denielle has recently taken FMLA leave from Vanderbilt, Inc. to take care of her ailing child. When she returns to her job, what responsibilities will the company have toward Denielle?

A)Vanderbilt must take the duration of Denielle's FMLA leave into account when determining length of service schedules for promotion purposes.
B)Denielle will not be entitled to any cost-of-living pay increases for the time she spends on FMLA leave.
C)Denielle is entitled to a job equivalent to her previous job when she returns from FMLA leave.
D)Vanderbilt must hold Denielle's position so that she will be able to fill it when she returns from her FMLA leave.

Question 54

HR can have an important part in lowering unemployment insurance costs for a company by:

A)making it harder to fire employees.
B)conducting exit interviews with discharged workers.
C)offering employees a flexible benefits plan.
D)setting up health insurance accounts for employees.

Question 55

The Family and Medical Leave Act requires most employers to:

A)provide parents with up to 6 weeks paid leave for the birth of a child.
B)permit unpaid leave up to 12 weeks for certain family medical issues.
C)provide health insurance for all married couples.
D)provide health insurance for all employees.

Question 56

The Family and Medical Leave Act only affects employers that:

A)offer health benefits.
B)are publicly held.
C)are federal contractors.
D)have 50 or more employees.

Question 57

When an employee applies for family or medical leave, an employer:

A)may deny it to employees with less than one year of service.
B)does not have to guarantee the employee the same/similar job upon returning to work.
C)does not have to maintain health insurance coverage for the employee.
D)cannot hire replacement workers while the employee is on leave.

Question 58

The employee benefit that provides medical care, income, and rehabilitation expenses for individuals who sustain job-related injury or illness is called:

A)workers' compensation.
B)Social Security.
C)survivor benefits.
D)unemployment insurance.

Question 59

Disability income is provided to employees who are:

A)totally and continuously disabled for 2 months.
B)disabled and cannot work for at least 12 months.
C)disabled and the primary breadwinners of the family.
D)earning less than $20,000/year prior to their disability.

Question 60

Shirley's husband has recently died. She is eligible for survivor benefits if she:

A)is at least 55 years old.
B)is at least 55 years old and has an unmarried child younger than 19 years of age.
C)cares for a dependent parent of 60 years of age or older.
D)is at least 60 years of age.

Question 61

Additional Case 12.2
Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits.
The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly.
Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job.
Refer to Additional Case 12.2. The young man who was fired is most likely:

A)eligible for workers' compensation.
B)not eligible for unemployment insurance benefits.
C)not covered by ERISA because of his age.
D)eligible for unemployment insurance benefits.

Question 62

The Consolidated Omnibus Budget Reconciliation Act does which of the following?

A)Prevents employees from taking benefits from one company to another when they change jobs
B)Allows employees to continue health insurance coverage after their employment has ended
C)Requires employers to contain health-care costs through regular auditing practices
D)Provides comprehensive medical services for employees through Medicare

Question 63

The rates that employers pay for workers' compensation are based on: the severity of injuries sustained by the company's workforce, the risk of injury to employees, and the benefit level provided for specific injuries.

Question 64

Employees who retire are not qualified for unemployment insurance benefits.

Question 65

Unemployment insurance is administered under the Social Security Act of 1935.

Question 66

Employees receive full Social Security benefits at the age of 62.

Question 67

The Family and Medical Leave Act applies to businesses that have 25 or more employees.

Question 68

Cheyanne is a recent widow. She is the mother of a 19-year-old daughter and the care-provider of her mother-in-law who is 60 years old. Cheyanne is eligible for survivor benefits.

Question 69

To be eligible for Social Security, a person must have worked 40 quarter-year periods (10 years total employment)and must have earned a minimum of $1,120 per quarter.

Question 70

Workers' compensation covers medical care and rehabilitation costs but not income replacement, since that falls under Social Security benefits.

Question 71

Additional Case 12.2
Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits.
The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly.
Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job.
Refer to Additional Case 12.2. Tri-State Shipping's workers' compensation tax rate is probably mostly influenced by their:

A)experience rating.
B)workers' average age.
C)health insurance benefits.
D)probability of injury.

Question 72

A federal law that requires employers to provide up to 12 weeks' unpaid leave to eligible employees for the birth or adoption of a child; to care for a sick parent, child, or spouse; or to take care of health problems that interfere with job performance is called ________.

Question 73

________ are benefits given by a company to laid-off employees over and above state unemployment benefits.

Question 74

A program established by the Social Security Act of 1935 to provide temporary income for people during periods of involuntary unemployment is referred to as ________.

Question 75

Mark lost his job at a large manufacturing company during downsizing. Which of the following ensures that Mark may continue his health insurance coverage?

A)Consolidated Omnibus Budget Reconciliation Act
B)Social Security Act
C)Family and Medical Leave Act
D)Workers' Compensation Act

Question 76

________ of large and medium-sized private businesses in the United States offer health insurance to their employees, and ________ of small firms offer health insurance.

A)84% / 50%
B)64% / 76%
C)85% / 57%
D)55% / 40%

Question 77

The Family and Medical Leave Act requires employers to give employees up to 12 weeks paid leave for the birth/adoption of a child, to care for a sick family member, or for serious personal health reasons.

Question 78

Which country had the highest health-care costs per capita as of 2008?

A)Canada
B)Germany
C)Great Britain
D)United States

Question 79

What benefits are employers legally required to provide? What are some HR practices that can help employers contain the costs of these required benefits?

Question 80

Additional Case 12.2
Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits.
The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly.
Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job.
Refer to Additional Case 12.2. Which of the following would be the best way to lower the firm's workers' compensation costs?

A)Auditing all employee claims
B)Mandating employee drug tests
C)Placing injured workers on modified duty
D)Emphasizing safe working procedures