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Human Resource Management, 15e (Martocchio)
Chapter 10 Indirect Financial Compensation (Employee Benefits)
1) All financial rewards that are NOT included in direct financial compensation are known as
________.
A) bonuses
B) wages
C) commissions
D) employee benefits
2) In general, why do employees receive benefits from their employer?
A) organizational membership
B) employee productivity
C) corporate performance
D) level of education
3) Benefits are typically unrelated to employee ________.
A) engagement
B) productivity
C) compensation
D) policies
4) According to the U.S. Bureau of Labor Statistics, indirect financial compensation accounts for
approximately ________ of employers' total compensation costs.
A) 10%
B) 32%
C) 50%
D) 70%
5) Benefits are valuable for all of the following reasons EXCEPT ________.
A) improving job satisfaction
B) recruiting new employees
C) retaining current employees
D) improving worker productivity
6) ________ are employer purchased and administered benefits.
A) Legally required benefits
B) Discretionary benefits
C) Government benefits
D) Educational benefits
7) Legally required benefits currently include all of the following EXCEPT ________.
A) Social Security
B) workers' compensation
C) disability income
D) paid time off for holidays
8) Benefit payments made as a result of unilateral management decisions in nonunion firms, and
from labor-management negotiations in unionized firms are known as ________.
A) flexible spending benefits
B) direct financial compensation
C) discretionary benefits
D) workers' compensation
9) Which is the most expensive benefit for most businesses?
A) health insurance
B) disability insurance
C) worker's compensation
D) flexible spending benefits
10) Steve is employed as an accounts manager at an advertising agency. Steve has been offered a
similar position at another firm for an equivalent salary and benefits package. When making his
decision, Steve should focus primarily on nonfinancial compensation factors. Which of the
following questions is LEAST relevant to Steve's decision to remain at his current job?
A) Is the job meaningful and challenging?
B) Is the employee stock option plan risky?
C) Is there a possibility for increased responsibility?
D) Is there an opportunity for growth and achievement?
11) Organizations recognize a responsibility to their employees to provide which benefits?
A) health
B) safety
C) general welfare
D) all of the above
12) What type of indirect financial compensation is the most expensive for most businesses?
A) life insurance
B) health care insurance
C) retirement programs
D) unemployment compensation
13) Indirect financial compensation is also known as employee benefits.
14) As a rule, employees receive benefits because of their productivity in an organization.
15) Benefits do not generally serve as motivation for improved performance.
16) What is indirect financial compensation? Employee benefits derive from what broad
source(s)?
17) ________ established programs to protect individuals from catastrophic events such as
disability and unemployment.
A) Government
B) Employee
C) Managers
D) Employer
18) What Act created a system of retirement benefits?
A) Family and Medical Leave Act
B) Fair Labor Standards Act
C) Social Security Act
D) Pension Protection Act
19) Thomas is a copy machine technician for State Office Systems. He was involved in a serious
car accident while making a service call for his employer, and he cannot return to work for 8
weeks. Which of the following would most likely provide Thomas with income while he is
incapacitated?
A) life insurance
B) worker's compensation
C) direct financial compensation
D) unemployment insurance
20) Which of the following protects employees against an earnings loss when they are totally
incapacitated?
A) unemployment insurance
B) disability insurance
C) paid time off
D) sabbaticals
21) Margaret's husband, who worked as an accountant, recently died from a heart attack while on
vacation. Which of the following would most likely be provided to Margaret?
A) survivors' benefits
B) life insurance
C) unemployment compensation
D) supplemental Medicaid payments
22) Which of the following would most likely be eligible for Medicare?
A) Alex, a 35-year-old unemployed mechanic
B) Brenda, a 42-year-old school teacher
C) Charles, a 66-year-old retired realtor
D) Debra, a 21-year-old college student
23) Which of the following provides hospital and medical insurance protection for individuals
who are 65 years of age or older?
A) Medicare
B) HMO
C) Medicaid
D) PPO
24) Which of the following laws requires that employers and employees pay equally for Social
Security retirement benefits?
A) Federal Unemployment Tax Act
B) Federal Insurance Contribution Act
C) Pension Protection Act
D) Employee Retirement Income Security Act
25) What is a significant issue facing the Social Security program?
A) outsourcing of jobs
B) retiring baby boomers
C) growing unemployment rate
D) rising workers' compensation costs
26) What will be the retirement age in 2027 to receive Social Security retirement benefits?
A) 65
B) 66
C) 67
D) 68
27) Jackie's employer is downsizing to reduce expenses, and Jackie has been informed that she
will be laid off. What is the maximum number of weeks that Jackie can receive unemployment
compensation?
A) 13
B) 26
C) 52
D) 62
28) Which of the following pays for unemployment insurance?
A) state and local governments
B) employer and employee
C) employee only
D) employer only
29) Which of the following is the LEAST likely purpose of unemployment insurance payments?
A) giving workers time to find equivalent jobs
B) minimizing the number of workers needing permanent income support from the government
C) continuing worker health benefits to prevent financial distress
D) sustaining consumer spending during difficult economic times
30) Jack, a construction worker, slipped and fell at a job site. As a result, Jack injured his knee
and needs physical therapy and medical care. Jack's medical expenses would most likely be
covered by ________.
A) workers' compensation insurance
B) unemployment insurance
C) life insurance
D) Medicaid
31) Workers' compensation insurance pays for medical expenses related to ________.
A) preexisting conditions
B) pregnancy complications
C) off-duty accidents
D) job-related illnesses
32) Legally required benefits represents a form of ________.
A) social insurance
B) Social Security
C) workers' compensation
D) paid time off
33) Employers pay the Federal Unemployment Tax at a rate of 6.0 percent on the first ________
each employee earns.
A) $1,000
B) $5,000
C) $7,000
D) $10,000
34) Which term refers to a benefit plan that requires substantially higher deductibles compared to
managed care plans and traditional fee-for-service plans?
A) cash balance plan
B) health savings account
C) high-deductible health insurance plan
D) defined health benefit account
35) With consumer-driven health plans, it is common to increase the insurance ________.
A) premium
B) deductible
C) term
D) coverage
36) Consumer-driven health savings accounts help employees defray the cost of ________.
A) lower deductibles
B) higher deductibles
C) lower copayments
D) coinsurance at any level
37) All of the following are examples of specialized health-related insurance plans EXCEPT
________.
A) dental insurance
B) vision insurance
C) managed care insurance
D) mental health insurance
38) Health care benefits represent the most expensive cost in the area of indirect financial
compensation. Which of the following is NOT a factor that has combined to create this situation?
A) shrinking population
B) growing demand for medical care
C) inefficient administrative processes
D) increasingly expensive medical technology
39) Julie has health insurance through her employer. The managed-care health organization used
by Julie's employer covers all services for a fixed fee. However, Julie may only use the doctors
and health facilities chosen by the managed-care health organization. Julie is most likely a
member of a(n) ________.
A) point-of-service
B) health maintenance organization
C) preferred provider organization
D) exclusive provider organization
40) ________ refer to fixed amounts that vary by the service.
A) Prepaid medical services
B) Copayments
C) Primary care physicians
D) Health savings plans
41) Flexible spending accounts and health savings accounts are examples of ________.
A) consumer-driven health care plans
B) legally required health benefits
C) major medical benefits
D) fee-for-service plans
42) Which of the following is a tax-free health spending and savings account available to
individuals and families with qualified high-deductible health insurance policies?
A) defined benefit plan
B) flexible spending account
C) health savings account
D) cash balance plan
43) A ________ plan pays benefits to employees on a reimbursement basis.
A) preferred provider organization
B) managed care
C) fee-for-service
D) health maintenance organization
44) Educational assistance, subsidized cafeterias, and relocation benefits are examples of
________.
A) mandatory benefits
B) employee services
C) severance pay
D) premium pay
45) Jeff lost his job in November 2015. According to COBRA, Jeff may keep his employer's
health care coverage until ________.
A) December 2015
B) May 2018
C) November 2016
D) May 2017
46) Coinsurance refers to the amount a person has to pay for medical services before the health
plan begins to pay benefits.
47) The aging population and inefficient administrative processes have been factors in the rising
cost of health care.
48) Health maintenance organizations cover all services for a fixed fee but control is exercised
over which doctors and health facilities a member may use.
49) With a health savings account, an employee can set aside an unlimited amount of pretax
funds to pay for medical expenses.
50) Patient Protection and Affordable Care Act (PPACA) allows companies to choose whether to
offer health care plans.
51) HSAs stay with an individual even if a worker takes another job.
52) An emerging class of health insurance programs is based on consumer-driven health care,
where employees play a greater role in decisions on their health care, have better access to
information to make informed decisions, and share more in the costs.
53) Coinsurance of 20 percent means that the insurance plan will pay 20 percent of the covered
expenses while the insured will pay 80 percent.
54) Health maintenance organizations (HMOs) offer prepaid services, whereas fee-for-service
plans operate on a reimbursement basis.
55) Most firms that offer food services hope to enhance employee morale and increase worker
productivity.
56) The Social Security Act of 1935 created a system of retirement benefits.
57) Disability insurance, survivors' benefits, Medicare, and unemployment insurance are
provided by and administered by the Social Security Administration.
58) Unemployment insurance provides workers whose jobs have been terminated through no
fault of their own, monetary payments for up to 26 weeks.
59) Individual states administer both unemployment insurance and workers' compensation
benefits.
60) Legally required benefits became more popular in the 1940s and 1950s.
61) Most discretionary benefits plans originated at the turn of the twentieth century.
