47) Riley works at Kupton Co., which provides her with a health care plan that contracts with
health care professionals to provide services at a reduced fee. Which type of health care plan is
Kupton Co. providing to its employees?
A) flexible spending account
B) preferred provider organization
C) health maintenance organization
D) consumer-driven health plan
E) managed care plan
48) Frankie is deciding between two jobs that provide equal pay. He compares the health care
benefits provided by both jobs to help him make a decision. One job offers a flexible spending
account, while the other job offers him managed care. Which statement will help Frankie make a
decision?
A) With managed care, the insurer makes all decisions about health care so Frankie has no
control.
B) Money in flexible spending accounts is not taxed, so employees get more take-home pay.
C) The money in the flexible spending accounts must meet IRS requirements.
D) At the end of each year, money remaining in a flexible spending account reverts to the
employer.
E) Contributions to a flexible spending account may not exceed $5,000 per year.
49) Jesse has a health care plan that provides him with coverage that allows him to be involved
in making decisions to help lower costs. This plan typically includes insurance with a high
deductible, a medical savings account, and ongoing health education. Which type of health care
plan is Jesse using?
A) managed care
B) health maintenance organization
C) preferred provider organization
D) flexible health plan
E) consumer-driven health plan
50) Connor, the manager of a shipping company, introduces a set of communications, activities,
and facilities designed to change health-related behaviors in ways that reduce health risks and
subsequent medical costs. The program aims at specific health risks, such as high blood pressure,
high cholesterol levels, smoking, and obesity. Based on these offerings, Connor has introduced
a(n)
A) employee wellness program.
B) health maintenance organization plan.
C) preferred provider program.
D) managed care program.
E) consumer-driven health program.
51) What is true of short-term disability insurance?
A) It pays the full amount of a disabled employee’s salary for a minimum period of one year.
B) It pays double the full salary of a disabled employee for a period of two months.
C) Only employees who have been with an organization for less than two years are eligible for
short-term disability insurance.
D) It pays a portion of a disabled employee’s salary as benefits for up to six months.
E) It is only provided to those individuals who work part time.
52) What is true about disability insurance?
A) It benefits the disabled employee only for the first year of disability.
B) Payments under short-term plans are less than that of long-term plans.
C) It pays about 50 to 70 percent of the employee’s salary in case of disability.
D) Most employers offer long-term disability plans.
E) It offers coverage when the employee’s dependent is disabled.
53) During a meeting to discuss ways to cut costs on benefits packages, the vice president of the
company, Ian, suggests getting long-term disability insurance for all employees. Patty, the HR
manager, disagrees with him, stating that short-term disability coverage is more advantageous for
the company. Which of the following supports Patty’s statement?
A) Short-term disability coverage is offered by few employers, which leads to a competitive
advantage.
B) Long-term disability coverage does not have any limits on the amount to be paid each month
to employees.
C) Short-term disability plans limit maximum coverage in a month, which makes them more
affordable for the company.
D) The nature of work is such that the level of risk involved is high and injuries could be
permanent.
E) The majority of the workforce is middle-aged and prefers long-term coverage.
54) Which federal law increased the responsibility of pension plan trustees to protect retirees?
A) the Consolidated Omnibus Budget Reconciliation Act (COBRA)
B) the Age Discrimination in Employment Act (ADEA)
C) the Americans with Disabilities Act (ADA)
D) the Fair Labor Standards Act (FLSA)
E) the Employee Retirement Income Security Act (ERISA)
55) Park Production offered employees a defined-benefit retirement plan, in which retirees
received benefits calculated on the basis of their age, earnings, and years of service. But the
company didn’t keep up with technology, and its earnings fell. When the stock market dipped,
the company could no longer afford to keep paying for its retirement benefits. What protection
will the retirees have in this situation?
A) Park Production must give the employees the option to sell their stock in the company.
B) The employees will receive payouts from their 401(k) plans.
C) The employees will receive a share of profits as part of the company’s ESOP.
D) Because the plan was underfunded, the retirees will no longer receive benefits.
E) The Pension Benefit Guarantee Corporation will provide them with a basic benefit.
56) What is an example of a defined-contribution pension plan?
A) consumer-driven pension plan
B) money purchase plan
C) cost-sharing plan
D) flexible spending account plan
E) unfunded PBGC plan
57) Evan is the human resource manager of a one-year-old technology company. The founder
wants him to set up a retirement plan. Evan thinks the best approach during the company’s early
years would be a defined-contribution plan funded with profit-sharing dollars. Which statement
best supports Evan’s idea?
A) The plan makes employees part-owners of the company.
B) The Pension Benefit Guarantee Corporation will guarantee a basic benefit.
C) Employees can buy an annuity with the contributions when they retire.
D) The amount employees contribute is not taxed when they contribute it.
E) Contributing a share of profits gives the company more flexibility as it establishes itself.
58) Under a 401(k) plan, the ________ is responsible for choosing specific investments.
A) employee
B) PBGC
C) ERISA fiduciary advisor
D) financial institution handling the account
E) employer
59) What is true of a cash balance plan?
A) All contributions to the plan come from the employee.
B) The money earns interest at a predetermined rate, such as the rate paid on U.S. Treasury bills.
C) Older employees with many years of service benefit to a greater degree than do younger
workers just starting their careers.
D) It penalizes employees for changing jobs.
E) Employees cannot predict retirement benefits under cash balance plans.
60) Which organizations benefit when switching from a defined-benefit plan to cash balance
plans?
A) organizations with many experienced employees
B) organizations with a few skilled employees
C) organizations with many young employees
D) organizations with many retired employees
E) organizations with highly skilled, young employees
61) Justin is a human resource manager at an advertising firm. Justin proposes that the company
adopt defined-benefit plans to attract and retain employees. In which situation will this benefit be
most valuable to the firm’s employees?
A) if all the employees are under the age of 30
B) if the nature of work demands college graduates
C) if the firm employs experienced, older people
D) if the firm employs young and creative minds
E) if the firm mainly employs freelancers
62) What are vesting rights?
A) the ability of retired employees to retain their seniority if they return to work at their former
employer
B) a government commitment to provide retirement benefits to all U.S. workers
C) the designation that retired workers will receive cost-of-living increases as part of their
monthly pension checks
D) the guarantee that employees in a pension plan will receive a pension at retirement age,
regardless of whether they stay with the employer
E) the ability of younger workers to move their retirement savings to another account after
leaving a specific employer
63) A ________ pension plan allows pension benefits for key employees, such as highly paid
managers, to exceed a government-specified share of total pension benefits.
A) top-heavy
B) multiemployer
C) special draw rights
D) deferred
E) defined-contribution
64) What does a summary plan description describe?
A) the details of a company’s health insurance coverage
B) a pension plan’s funding, eligibility requirements, and risks
C) the amount of Social Security benefits employees are allotted
D) the type and duration of disability insurance
E) a set of communications, activities, and facilities designed to change health-related behaviors
to reduce health risks
65) Weg Tech depends heavily on its workforce of software engineers, systems analysts, and
coders. Which statement best explains why Weg Tech would offer its employees paid maternity
and paternity leave?
A) Only 13 percent of workers currently have paid family leave.
B) Most industrialized nations don’t provide this type of employee benefit.
C) Management doesn’t want exhausted workers in the office.
D) These benefits are required by the Family and Medical Leave Act.
E) It makes the company more attractive to workers who are in high demand.
66) DJ is a new father. His company helps DJ by collecting information about the cost and
quality of available child care. What is true of the child care benefits provided by DJ’s company?
A) The child care benefits provided by the company is at the lowest level of involvement.
B) The child care benefits provided by the company is at the highest level of involvement.
C) According to the Family and Medical Leave Act, the company has not provided DJ with
adequate child care benefits.
D) According to the Patient Protection and Affordable Care Act, the company has exceeded the
level of involvement that is permissible.
E) The child care benefits provided by the company is a form of a dependent care assistance
plan.
67) What is true of child care benefits?
A) At the highest level of involvement, organizations provide vouchers or discounts for
employees to use at existing child care facilities.
B) Companies that provide child care facilities face liability concerns.
C) Provision of child care is mandatory under the Family and Medical Leave Act.
D) Child care benefits should be limited to provision of leaves to employees.
E) Child care benefits must include death benefits for it to be considered as a qualified plan.
68) Erika is a marketing manager at a local equipment manufacturer. She knows that saving for
college for her 5-year-old twin boys is a challenge. Her employer recently implemented a college
tuition plan that lets parents and other family members defer taxes on their contributions to the
plan. What is the type of plan being implemented?
A) 529 savings plan
B) 401(k) savings plan
C) 207 college tuition plan
D) U.S. saving bonds plan
E) TD Ameritrade college tuition plan
69) What is a function of elder care benefits offered by organizations?
A) providing direct financial assistance
B) providing tax exemptions on medical bills of the dependent elders
C) setting up elderly care facilities close to the workplace
D) providing information, referrals, and support
E) providing vouchers and discounts to help employees access the existing elderly care facilities
70) Most organizations offer ________ to encourage learning and attract the kinds of employees
who wish to develop their knowledge and skills.
A) tuition reimbursement programs
B) paid vacations
C) pension plans
D) quarterly promotions
E) medical insurance plans
71) Kevin is the founder of a new start-up company. He hires mostly young employees who are
fresh out of college. He finds that most of his employees are willing to develop their knowledge
and skills and would like to take courses to improve themselves. This additional knowledge
would benefit Kevin’s company, so he decides to encourage this behavior. Which program is
Kevin most likely to use in order to do so?
A) tuition reimbursement program
B) employee wellness program
C) worker’s compensation program
D) short-term vesting program
E) mature education program
72) The employee benefits at Arvin Shine, a high tech firm, includes a basketball team, a gym,
and an on-site massage therapist. In what way are these benefits most likely to support the
company’s business goals?
A) by meeting the standards of most U.S. businesses
B) by making the workplace more family-friendly
C) by protecting the company against charges of employment discrimination
D) by complying with legal requirements for benefits
E) by helping employees cope with demanding, high-stress jobs
73) A logical place to begin selecting employee benefits is to establish ________ for the benefits
package.
A) a basic hierarchy
B) limits
C) costs
D) goals
E) objectives
74) Allen, the CEO of a company, considers dropping medical insurance from the list of benefits
provided to its employees. Monique, the operations director, disagrees with Allen by stating that
medical insurance is a high-value benefit. Which of the following supports Monique’s statement?
A) Companies that do not provide medical insurance cannot have their retirement plans
considered as qualified plans.
B) Most employees do not appreciate what health insurance costs the employer.
C) Medical insurance plans do not cover mental illness.
D) A health insurance rate is higher than a general insurance rate.
E) Employees usually realize that surgery or a major illness can be financially devastating.
75) Vince, an HR manager, conducts a survey to learn which benefits employees value the most.
However, he finds that the survey results are difficult to apply. What is the most likely reason?
A) Employees expect to receive benefits that are legally required and widely available.
B) Software is the only method employees will accept to help them choose their benefits.
C) The costs of turnover at Vince’s company are high.
D) The employees only value medical insurance.
E) Employees have very different opinions about what they value.
76) Dino Corp. is a start-up located in Orlando. It offers highly beneficial pension plans to its
employees. Which category of employees is the company most likely to attract through its
pension benefits?
A) women of childbearing age
B) disabled workers
C) older people
D) young people
E) unmarried people
77) Benefit plans that permit employees to choose the types and amounts of benefits they want
from a set of alternatives are called
A) preferred provider plans.
B) cafeteria-style plans.
C) defined-benefit plans.
D) flexible spending accounts.
E) cash balance plans.
78) What is an advantage of cafeteria-style plans?
A) Employees do not have to select their individual plans.
B) Employees can get a better understanding of the value of benefits provided.
C) These types of plans have lower administrative costs.
D) Since employees will select the benefits that they need the most, it reduces the overall costs.
E) When companies provide cafeteria-style plans, they do not have to pay unemployment
insurance tax.
79) Jerome is the CEO of a magazine publishing company. He wants to provide benefits for his
employees but would still like to control his company’s costs. Ashley, the head of the HR
department, suggests implementing a cafeteria-style plan. What would be the most likely benefit
of Jerome doing so?
A) He will save time by using software packages to offer benefits packages.
B) He will avoid the cost of providing employees with benefits they don’t value.
C) Having a non-standardized plan will make Jerome’s company seem cutting-edge.
D) Employees of the company, including Jerome, will be given more vacation days.
E) Costs will be easy to estimate since all benefits options will be taken into consideration.
80) Michael is the CEO of a company that is expanding overseas. He considers introducing a
cafeteria-style benefits plan to cater to the company’s diverse workforce. However, the HR team
brings up the concern of higher expenses involved in this type of benefits. What is Michael likely
to do to lower costs at the initial stage?
A) opt for communication methods that do not stress the value of each benefit
B) avoid standardized plans available for employers opting for cafeteria-style benefits
C) use software packages to design the plan
D) discourage employees from choosing lower-cost options
E) encourage employees to choose benefits they need the most
81) How do cafeteria-style plans increase costs for employers?
A) Employers pay much higher premiums for an HMO than a preferred health care plan.
B) Employers are required to pay higher insurance premiums for laid-off workers.
C) Contributions to PBGC to fund the retirement plan increases under this plan.
D) Employees select the kind of benefits they expect to need the most.
E) Employers bear the cost of providing employees with benefits they do not value.
82) QFV International has a goal to lower the cost of employee benefits. Its human resource
department compares the costs of its benefits with averages published by the Bureau of Labor
Statistics, the U.S. Chamber of Commerce, and other sources. The investigation shows that its
cost for workers’ compensation insurance is high relative to other companies. Which action could
best help QFV International accomplish its goal?
A) accept the high cost and look for other areas in which to reduce spending
B) replace the workers’ compensation insurance with disability insurance
C) shop for a better deal on workers’ compensation insurance
D) cancel the workers’ compensation insurance
E) improve safety to lower the company’s experience rating