83) Which action helps organizations reduce the cost of health care benefits offered to
employees?
A) increasing the amount employers pay for deductibles and coinsurance
B) selecting traditional health insurance over HMOs and PPOs as a preferred option
C) expanding the coverage for different types of claims
D) paying some or all of the difference in cost between an HMO or PPO plan
E) shifting from traditional health insurance plans to PPOs and CDHPs
84) Which strategy can be legally adopted by organizations looking to restructure the workforce
to minimize the expense of benefits?
A) using more independent contractors rather than hiring additional employees
B) limiting the coverage on life insurance based upon an employee’s age
C) using more full-time rather than part-time employees
D) recruiting new employees instead of demanding overtime from existing employees
E) substituting HMO and PPO plans with traditional health insurance plans
85) ________ strictly limits the definition of “independent contractors,” so that employers cannot
avoid legal obligations by classifying workers as self-employed when the organization receives
the benefits of a permanent employee.
A) The Internal Revenue Service
B) The Consolidated Omnibus Budget Reconciliation Act (COBRA)
C) The Employee Retirement Income Security Act (ERISA)
D) Employee Benefit Research Institute
E) The Bureau of Labor Statistics
86) What is an advantage of a qualified plan in retirement benefits?
A) immediate tax deductions for the funds employees contribute to the plan
B) taxable earnings on the money in the retirement fund
C) tax-free withdrawals for highly compensated employees
D) exemption of contribution from employees
E) a retirement plan that provides benefits exclusively to its owners and top managers
87) What must be true for a pension plan to be deemed a qualified plan?
A) It must not discriminate in favor of an organization’s highly compensated employees.
B) It must not be a cafeteria-style plan.
C) It should include elder care and child care.
D) It has to be a defined-contribution plan.
E) It has to be a defined-benefit plan that requires most of the funding to come from the
employer.
88) In a meeting to discuss pension plans, management decides to offer retirement plans
exclusively to the organization’s owners and top managers. Jeremy, one of the top managers,
disagrees with this decision because he believes the company can benefit more by providing
pensions to a broad range of employees. Which statement strengthens Jeremy’s belief?
A) Nondiscrimination rules provide tax benefits to plans that do not favor the organization’s
highly compensated employees.
B) The ADEA provides more favorable tax treatment of benefits when they are offered to a
broad range of employees.
C) A top-heavy plan requires faster vesting for non-key employees.
D) Extending pension plans to employees at all levels will triple the costs.
E) Pension plans are determined exclusively by state and federal laws.
89) Edgar, a production worker, complains to a human resource professional at his company that
when he asked his supervisor for a week off to care for his son after surgery, the supervisor
replied, “Can’t your wife do that instead?” Which statement best summarizes what the HR
professional should explain to the supervisor?
A) Benefits apply whether a spouse is of the same or the opposite sex.
B) Females may not be required to contribute more than men to defined-benefit plans.
C) Fatherhood is a protected category in the antidiscrimination laws.
D) Edgar has not yet used all of his sick leave.
E) Equal employment opportunity requires that access to benefits not be limited by sex.
90) What is legally required by an organization while offering early-retirement incentives?
A) setting an age at which retirement benefits stop growing
B) asking female employees to pay more to defined-benefit plans
C) ensuring there is no coercion used to force employees to retire
D) asking employees to sign compulsory waiver under ERISA
E) providing employees no more than 48 hours to make an early retirement decision
91) Under the Older Workers Benefit Protection Act of 1990, which guideline must employers
follow when asking employees to sign early-retirement waivers?
A) inform employees that they may consult with a lawyer before signing
B) allow employees no more than 48 hours before signing the retirement agreement
C) make Age Discrimination in Employment Act (ADEA) waivers compulsory
D) provide lesser benefits than would otherwise be available upon retirement
E) provide employees with an annual bonus and health insurance after the retirement
92) Under the Americans with Disabilities Act, which employer is most likely to face legal
challenges?
A) an employer who switches to a risk-based policy after hiring a disabled employee
B) an employer who sets guidelines for using waivers
C) an employer who discriminates against workers over age 40 in providing pay or benefits
D) an employer who has risk-based insurance and then hires an employee with a disability
E) an employer who does not have risk-based insurance
93) An organization employs Roger, a bilateral amputee, to work as a research analyst. When
Lauren, the organization’s chief advisor, becomes aware of this, she argues that the organization
is going to experience legal challenges. According to the Americans with Disabilities Act, which
statement will strengthen Lauren’s argument?
A) The organization has a risk-based insurance in place before recruiting Roger.
B) The organization plans to stop Roger’s benefits when he reaches the age of 50.
C) The organization switched to a risk-based policy after hiring Roger.
D) The organization gave Roger access to the same health insurance that is provided to the other
employees.
E) The organization does not have a risk-based insurance.
94) What is a requirement set for employers under the Financial Accounting Standards Board
standards?
A) Employers must fund benefits on a pay-as-you-go basis.
B) Benefits must not appear as future cost obligations.
C) Employers should encourage employees to participate in management functions.
D) Financial statements should be made in such a way that outsiders cannot understand them.
E) Employers must set aside the funds they expect to need for benefits to be paid after
retirement.
95) Organizations must communicate benefits information to employees so that they will
A) be motivated to work harder.
B) choose the least-expensive benefits package.
C) be legally liable in an employee lawsuit.
D) be informed of future career opportunities within the organization.
E) appreciate the value of their benefits.
96) What is true of employee benefits?
A) Employees have a thorough understanding of what benefits they have and what the market
value of these benefits is.
B) Employees have a hard time understanding the cost and value of their benefits.
C) It is up to employees to determine the cost and value of their benefits.
D) Employees, for the most part, are just not interested in their benefits.
E) Employers have very limited options for communicating information about benefits.
97) Which action related to benefits can best give employers an advantage in the labor market?
A) teaching employees about the value of their benefits
B) limiting benefits to a few simple options
C) explaining complex benefits with sophisticated language
D) keeping messages about benefits basic and uncreative
E) simplifying messages about benefits by delivering them through one medium
98) David, the HR vice president at Redding Co., evaluates responses from an employee survey
at the company’s annual benefits presentation. He concludes that many employees are confused
about their options for health insurance, and they are often unhappy with the policy they choose.
What should David do about this situation?
A) accept that it is difficult for employees to understand the value of insurance
B) save money by reducing printed messages about health insurance
C) downplay the role of health insurance in the benefits package, relative to other benefits
D) discontinue health insurance, since it is a source of dissatisfaction
E) introduce software that will guide employees to the insurance option for their needs
99) Tina, an HR manager, and her staff devote long hours to planning and running a “benefits
fair,” where employees can view displays and ask questions about the various parts of the
company’s benefits package. The following week, the marketing manager asks if the effort was
worthwhile. Tina says it was. What is the most likely reason for Tina’s opinion?
A) It lowered the cost of communicating with employees, because now the company doesn’t
need to use printed media.
B) It lowered the cost of providing benefits, because employees know what to sign up for.
C) It increased employees’ commitment to saving for retirement, so they won’t need Social
Security.
D) It increased employees’ happiness and job commitment, so they are more fun to be around.
E) It increased employees’ commitment and satisfaction, so they contribute more to the company.
100) What are the objectives of the unemployment insurance program established by the Social
Security Act of 1935? How is this program funded?
1) It provides payments to offset lost income during involuntary unemployment.
2) It helps unemployed workers find new jobs.
3) The payment of unemployment insurance taxes gives employers an incentive to stabilize
4) It provides workers with income during short-term layoffs in order to preserve investments in
worker skills. This is because workers can afford to wait to return to their employer, rather than
101) Discuss the Family and Medical Leave Act (FMLA) of 1993, including its eligibility
requirements, scope of coverage, and effectiveness.
102) How are cash balance plans different from defined-benefit and defined-contribution plans?
103) What are family-friendly benefits? Explain the common types of family-friendly benefits.
1) Family leave—Family or parental leave grants employees time off to care for children and
other dependents. The federal law requires 12 weeks of unpaid leave, and companies may choose
2) Child care—Child care benefits may take several forms, requiring different levels of
organizational involvement. The lowest level of involvement is for the organization to supply
3) College savings—As workers’ children grow up, their needs shift from maternity leave and
child care to college tuition. Some organizations have supported this concern by sponsoring tax-
4) Elder care—As the population of the nation’s elderly grows, so do the demands on adult
children to care for elderly parents, aunts, and uncles. When these people become ill or disabled,
104) What are flexible benefit plans? Explain their advantages and disadvantages.
105) What is the importance of benefits as a part of employee compensation?
106) What are sick leave programs?
107) How do HMOs and PPOs differ from each other and from traditional health care providers?
108) Discuss strategies the HR department might use to communicate the type and value of
employee benefits.
109) Why is it essential for organizations to communicate the nature and value of benefits to
their employees?