42) How is the Social Security program funded?
A) sale of government bonds
B) tax on employee wages
C) tax on homeowners
D) tax on luxury goods
43) Which of the following provides a fixed sum when employees reach a predetermined
retirement age or can no longer work due to disability?
A) workers’ compensation
B) Social Security
C) pension plan
D) group life insurance
44) Taxes on employee wages to fund Social Security apply to all earnings up to ________.
A) $46,500
B) $63,700
C) $113,700
D) $124,300
45) Medicare provides a wide range of health services to people ________ or over.
A) 55
B) 60
C) 65
D) 70
46) When an employer makes all of the contributions to the pension plan, the pension plan is
classified as ________.
A) qualified
B) non-qualified
C) defined contribution
D) non-contributory
47) A plan that contains a formula for determining retirement benefits is known as a ________.
A) defined contribution pension plan
B) defined benefit pension plan
C) cash balance plan
D) 401(k) plan
48) Malcolm is interviewing for a new job and he is evaluating the quality of the pension plans
offered for each company he is considering. One company offers a pension plan in which the
company will make all contributions to the plan and will base his pension benefit on a formula
linked to his pay at the time of retirement and the number of years he was with the firm. This
pension plan is most likely classified as ________.
A) qualified, defined benefit
B) non-contributory, defined benefit
C) non-contributory, defined contribution
D) contributory, defined benefit
49) Jenny must contribute at least 5% of her annual salary to her pension plan, and her employer
contributes a set amount as well. She is given choices regarding how the money is invested.
When she retires, the amount she has available will depend on how much she invested herself,
and the rate of return on the investments she chose. This pension plan is most likely classified as
________.
A) qualified, defined benefit
B) non-contributory, defined benefit
C) contributory, defined contribution
D) contributory, non-qualified
50) A plan in which the employer’s contribution to employees’ retirement savings funds is
specified is known as a ________.
A) portable plan
B) default investment plan
C) defined benefit pension plan
D) defined contribution pension plan
51) All of the following are characteristic of 401(k) plans EXCEPT ________.
A) categorized as a defined contribution plan
B) deduction replaces Social Security tax
C) pretax salary deductions invested
D) considered a savings and thrift plan
52) Which of the following refers to a plan in which employees contribute a portion of their
earnings to a fund and the employer typically matches the contribution in whole or part?
A) group investment plan
B) 401(k) plan
C) deferred profit-sharing plan
D) employee stock ownership plan
53) All of the following characterize cash balance plans EXCEPT ________.
A) lacks portability
B) offers predictable benefits
C) considered hybrid pension plans
D) employees earn interest on contributed amounts
54) Which of the following requires that pension rights be vested and protected by the Pension
Benefits Guarantee Corporation?
A) Economic Growth and Tax Relief Conciliation Act
B) Employee Retirement Income Security Act
C) Job Creation and Worker Assistance Act
D) Social Security Act
55) Which of the following provides guidelines regarding what rates of return employers should
use in computing their pension plan values?
A) Employee Retirement Income Security Act
B) Job Creation and Worker Assistance Act
C) Social Security Act
D) Equal Pay Act
56) ________ provide services like financial counseling, child care referrals, elder care referrals,
adoption assistance, mental health counseling, and life event planning.
A) Pension plans
B) Employee assistance programs
C) Family-friendly benefits
D) Benefit management systems
57) ________ seek to enable employees to balance their job and family responsibilities.
A) Sick leave
B) Pension plans
C) Work-life benefits
D) Benefit management systems
58) Which of the following benefits is NOT classified as a type of family-friendly benefit?
A) sick leave
B) subsidized child care
C) on-site fitness facilities
D) flexible work schedules
59) Which term refers to individualized plans allowed by employers to accommodate employee
preferences for benefits?
A) variable pay plan
B) cafeteria benefits plan
C) matching plan
D) executive perquisite plan
60) Orion is a business software firm based in Atlanta that employs over 400 people. Orion has
traditionally provided legislatively required benefits for its employees including Social Security,
workers’ compensation, and unemployment insurance. In addition, Orion offers employees health
and dental insurance. Orion employees work Monday through Friday on a 9 to 5 schedule.
Orion’s top executives are considering the idea of adding a flexible benefits plan and
implementing a flexible work schedule.
Which of the following, if true, best supports the argument that Orion should offer its employees
a cafeteria benefits plan?
A) Orion lacks the resources to join a low-cost health insurance plan, so the firm belongs to a
pool with other businesses.
B) Some Orion employees have indicated that they would like vision insurance, while others
have no interest in dental insurance.
C) Orion offers its employees a PPO health insurance plan, but employees have expressed
interest in an HMO plan.
D) Orion outsources its employee benefits program, so employees go through the plan’s
administrator when filing claims.
61) Orion is a business software firm based in Atlanta that employs over 400 people. Orion has
traditionally provided legislatively required benefits for its employees including Social Security,
workers’ compensation, and unemployment insurance. In addition, Orion offers employees health
and dental insurance. Orion employees work Monday through Friday on a 9 to 5 schedule.
Orion’s top executives are considering the idea of adding a flexible benefits plan and
implementing a flexible work schedule.
Which of the following, if true, undermines the argument that Orion should offer its employees a
cafeteria plan?
A) A survey of Orion employees indicates that the majority of employees are very satisfied with
the firm’s current benefit offerings.
B) Orion experiences very few workers’ compensation claims each year as compared to similarly
sized businesses in the Atlanta area.
C) Orion employee surveys indicate that most employees are interested in either 401(k) plans or
Roth IRAs as methods of saving for retirement.
D) Orion uses an employee leasing firm to handle recruiting, hiring, and benefits administration.
62) Which of the following best explains why many businesses use employee leasing firms?
A) Firms save money by hiring part-time or temporary workers.
B) Investment opportunities are more plentiful and reliable.
C) Small companies are able to get better insurance rates.
D) Franchise owners can offer more flexible schedules.
63) Stephanie has opted to work from 7 am to 3 pm so that she can be home when her son
finishes school in the afternoons. Her company must offer ________ for Stephanie to have this
option.
A) shift work
B) flextime
C) telecommuting
D) compressed workweeks
64) Which of the following is an example of a compressed workweek?
A) Maxwell works from 7 am to 3 pm Monday-Friday.
B) Shannon works from 7 am to 5 pm Monday-Thursday.
C) Tom works from 11 am to 7 pm five days per week.
D) Bob works from 12 pm to 6 pm Monday-Sunday.
65) Which of the following occupations is commonly subjected to compressed workweeks?
A) engineer
B) attorney
C) teacher
D) pilot
66) Anne and Martha are both accountant supervisors at a large marketing firm. Anne works
from 7:00 a.m. until 12:00 p.m. each day. Martha takes over the same position at 12:00 p.m. and
works until 5:00 p.m. each day. Which of the following most likely describes this type of work
arrangement?
A) flextime
B) job sharing
C) work sharing
D) compressed workweek
67) Curt works at a computer firm that is experiencing financial difficulties. In an attempt to save
money and prevent layoffs, the firm is enforcing a temporary reduction in work hours for Curt’s
division. Curt now works 35 hours a week instead of 40. Which of the following most likely
describes this situation?
A) flextime
B) job sharing
C) work sharing
D) compressed workweek
68) Orion is a business software firm based in Atlanta that employs over 400 people. Orion has
traditionally provided legislatively required benefits for its employees including Social Security,
workers’ compensation, and unemployment insurance. In addition, Orion offers employees health
and dental insurance. Orion employees work Monday through Friday on a 9 to 5 schedule.
Orion’s top executives are considering the idea of adding a flexible benefits plan and
implementing a flexible work schedule.
All of the following questions are relevant to Orion’s decision to add a cafeteria plan EXCEPT
which one?
A) What benefits are available to employees at Orion’s main competitors?
B) What costs would Orion incur for switching to a cafeteria benefits plan?
C) How would a cafeteria plan alter Orion employees’ Social Security benefits?
D) What effect would a cafeteria plan have on the coverage that Orion employees receive?
69) Orion is a business software firm based in Atlanta that employs over 400 people. Orion has
traditionally provided legislatively required benefits for its employees including Social Security,
workers’ compensation, and unemployment insurance. In addition, Orion offers employees health
and dental insurance. Orion employees work Monday through Friday on a 9 to 5 schedule.
Orion’s top executives are considering the idea of adding a flexible benefits plan and
implementing a flexible work schedule.
Which of the following, if true, best supports Orion’s decision to offer flextime to its employees?
A) Orion’s single-parent employees are frequently late when arriving to work.
B) Orion allows some of its employees to telecommute at least one day each week.
C) Many Orion employees must conduct business while traveling to different locations.
D) Orion employs a large number of part-time employees, most of whom are near retirement
age.
70) Orion is a business software firm based in Atlanta that employs over 400 people. Orion has
traditionally provided legislatively required benefits for its employees including Social Security,
workers’ compensation, and unemployment insurance. In addition, Orion offers employees health
and dental insurance. Orion employees work Monday through Friday on a 9 to 5 schedule.
Orion’s top executives are considering the idea of adding a flexible benefits plan and
implementing a flexible work schedule.
All of the following questions are relevant to Orion’s decision to offer flextime and job sharing
options to its employees EXCEPT which one?
A) What do surveys indicate regarding overall job satisfaction among Orion employees?
B) How would the productivity level of Orion’s employees most likely change?
C) How many Orion employees currently care for their aging parents?
D) What is the average rate of employee absenteeism at Orion?
71) Benefits are an important aspect of employee compensation, and they involve the direct
financial payments employees receive for remaining with an employer.
72) Health care costs have dropped significantly in recent years due to government intervention
and the increased use of HMOs.
73) Employee benefits account for about one-third of wages and salaries.
74) Legally required benefits, such as unemployment insurance, are more costly to employers
than health insurance.