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Student name:__________
TRUE/FALSE – Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) A McKinsey survey of chief executive officers found nearly 90 percent believe benefits
are very important for attracting and retaining employees.
⊚ true
⊚ false
2) Worker’s compensation costs have been declining since 2005 partly because of employer
safety programs.
⊚ true
⊚ false
3) Workers’ compensation is covered by federal laws.
⊚ true
⊚ false
4) The Social Security Act has been designed and amended to provide a foundation of basic
financial security for American workers and their families.
⊚ true
⊚ false
5) Life insurance is one of the benefits heavily affected by movement to a flexible benefit
program.
⊚ true
⊚ false
6) Medicare is not a part of Social Security.
⊚ true
⊚ false
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7) Jim was a full-time student for four years, but he could not find a job after graduating.
Jim is eligible to collect unemployment insurance.
⊚ true
⊚ false
8) Employers who have frequent layoffs pay higher tax rates than those with few layoffs.
⊚ true
⊚ false
9) An eligible unemployed person may now collect unemployment insurance benefits for 36
weeks in most states.
⊚ true
⊚ false
10) All employers with less than 20 employees must comply with the Consolidated Omnibus
Budget Reconciliation Act.
⊚ true
⊚ false
11) Most employers prefer defined contribution pension plans to defined benefit plans.
⊚ true
⊚ false
12) Although stocks have the greatest historical rate of return, that is no guarantee of future
performance, particularly over shorter time periods.
⊚ true
⊚ false
13) A 401(k) is an example of a defined benefit plan.
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⊚ true
⊚ false
14) Under a defined contribution plan, whether an employee will be able to afford to retire
depends on decisions made by the employee.
⊚ true
⊚ false
15) Employees are the sole contributors to their cash balance plans.
⊚ true
⊚ false
16) An individual retirement account is a tax-favored retirement savings plan that individuals
can establish themselves.
⊚ true
⊚ false
17) The Employee Retirement Income Security Act states that employers must offer a
retirement plan to their employees if they work for at least 1,250 hours per year.
⊚ true
⊚ false
18) Vesting refers to the length of time an employee must work for an employer before he or
she is entitled to employer payments made into a pension plan.
⊚ true
⊚ false
19) Under the Economic Growth and Tax Reconciliation Act of 2001, employers have three
hundred vesting schedule options.
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⊚ true
⊚ false
20) The Pension Benefit Guarantee Corporation guarantees payment of vested benefits to
employees formerly covered by terminated pension plans.
⊚ true
⊚ false
MULTIPLE CHOICE – Choose the one alternative that best completes the statement or
answers the question.
21) In the context of the Consolidated Omnibus Budget Reconciliation Act, which of the
following statements is true?
A) The biggest concern for individuals getting health insurance under the Consolidated
Omnibus Budget Reconciliation Act is the relatively brief qualifying period.
B) The Consolidated Omnibus Budget Reconciliation Act is designed to lessen an
employer’s ability to deny coverage for a preexisting condition.
C) The Consolidated Omnibus Budget Reconciliation Act was enacted when stringent
new privacy provisions added considerable compliance problems for HR people charged with
enforcement.
D) Employers having 50 or more employees are covered under the Consolidated
Omnibus Budget Reconciliation Act, which entitles all eligible employees to receive unpaid
leave up to 12 weeks per year for specified medical reasons.
22) The ________ was enacted by the Congress to provide current and former employees and
their spouses and dependents with a temporary extension of group health insurance when
coverage is lost due to qualifying events.
A) Health Insurance Portability and Accountability Act
B) Social Security Act
C) Consolidated Omnibus Budget Reconciliation Act
D) Family and Medical Leave Act
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23) Jennifer is hurt at work while driving a forklift. Her employer claims that she was injured
as a result of her careless driving and is therefore not eligible for workers’ compensation. What
will be the outcome of the employer’s challenge to her worker’s compensation claim?
A) She will likely receive workers’ compensation benefits.
B) She will get nothing.
C) Jennifer and her employer will share the blame and split the costs.
D) The employer has the final word in determining Jennifer’s eligibility.
24) Experts attribute the stabilization in the dollar cost of workers’ compensation since 2010
to:
A) the increased variable component of base wage.
B) the devaluation of the dollar.
C) employer safety programs.
D) relaxed federal regulations.
25) ________ relieve an employer’s liability when a preemployment injury combines with a
work-related injury to produce a disability greater than that caused by the latter alone.
A) Collateral funds
B) Second-injury funds
C) Insolvency funds
D) Preemployment funds
26) Which of the following is an objective of the unemployment insurance program?
A) To cover injuries and diseases that arise out of the course of employment
B) To offset lost income during voluntary unemployment
C) To help employed workers plan for retirement
D) To provide an incentive for employers to stabilize employment
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27) The rising costs of Social Security have been covered by:
A) increases in the maximum earnings base and the rate at which that base is taxed.
B) a reduction in Social Security benefits by providing market-driven options.
C) progressive reduction in coverage under the scheme.
D) welfare grants and annual supplements from Congress.
28) Which of the following is a benefit under Social Security?
A) Lump-sum death payments
B) Job security
C) Work/life balance
D) Overtime pay
29) Which of the following benefits is a federally administered program?
A) Workers’ compensation
B) Social Security
C) Job security
D) Occupational Safety and Health Act
30) A key provision of the ________ allows employees in publicly traded companies the
freedom to sell off any employer stock purchased through deferrals or after-tax contributions.
A) Consolidated Omnibus Budget Reconciliation Act
B) Affordable Care Act
C) Pension Protection Act
D) Employee Retirement Income Security Act
31) In the majority of states, unemployment insurance is financed exclusively by:
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A) joint contributions by employee unions.
B) the philanthropy of coworkers.
C) federal, state, and employee contributions.
D) employers that pay federal and state unemployment insurance.
32) Steve has a small company with 12 employees. One of his employees, Larry, has been
laid off because his work has been outsourced. Larry had health coverage through Steve’s
company and wants to continue that coverage. According to the Consolidated Omnibus Budget
Reconciliation Act, how long can Larry continue his coverage through Steve’s company after
being laid off?
A) 36 months
B) 24 months
C) 18 months
D) 0 months
33) The ________ is designed to lessen an employer’s ability to deny coverage to an
employee for a preexisting condition.
A) Consolidated Omnibus Budget Reconciliation Act
B) Contract with America Advancement Act
C) Health Insurance Portability and Accountability Act
D) Family and Medical Leave Act
34) Michael was laid off by his company owing to budget cuts. Before being laid off, he
earned $1,000 per week. If he has been receiving unemployment insurance benefits for 26
weeks, which of the following statements is true in this scenario?
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A) Michael can continue to avail unemployment benefits for another 26 weeks.
B) Michael is eligible for $1,000 per week if he can show that he has been earnestly
searching for jobs.
C) Michael is no longer eligible for unemployment benefits.
D) Michael will now only be eligible for 20 percent of his previous income as
unemployment benefits.
35) Today, ________ percent of workers participate in the pension plan coverage provided
by their employers.
A) 98
B) 12
C) 28
D) 53
36) The majority of defined benefit plans calculate average earnings over the last ________
years of service for a prospective retiree.
A) 2 to 4
B) 3 to 5
C) 6 to 8
D) 7 to 9
37) ________ are defined benefit plans that look like a defined contribution plan.
A) Cash balance plans
B) Profit-sharing plans
C) Employee stock ownership plans
D) Qualified deferred compensation plans
38) Which of the following is a feature of defined contribution plans?
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A) They are faster to vest than defined benefit plans.
B) They are characterized by high contribution rates.
C) They are less portable than defined benefit plans.
D) They are fully funded by employers.
39) In a(n) ________, employees have a hypothetical account into which is deposited what is
typically a percentage of annual compensation.
A) qualified deferred compensation plan
B) employee stock ownership plan
C) cash balance plan
D) profit-sharing plan
40) Jacob, an 18-year-old, has been working at HoldVille Corp. for over a year. If HoldVille
offers full vesting after one year, which of the following statements is true?
A) Jacob is eligible for full pension as he has worked for over a year at HoldVille.
B) Jacob is not eligible for pension as he is not over 21.
C) Jacob is eligible for 20 percent of his pension if he has dependents.
D) Jacob is not eligible for a pension if he quits of his own volition.
41) Maxford Corp. offers full vesting after two years. However, it does not offer portability
of pension to its employees. Which of the following statements is true in this scenario?
A) Employees of Maxford will receive 20 percent of their pension if they quit after one
year.
B) Maxford does not have to provide vested benefits to employees who quit before six
months.
C) Employees of Maxford who quit can have their pension benefits transferred to the
new employer.
D) Maxford does not have to provide vested benefits if employees quit of their own
volition after two years.
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42) An employer experiencing high turnover and seeking to reduce pension costs is likely to
prefer:
A) full vesting after three years.
B) full vesting after six years.
C) full vesting after seven years.
D) partial vesting after two years.
43) What is the first question that should be asked when determining the amount of
retirement income an employer should provide?
A) Should Social Security payments be factored in when considering the level of
income an employee should have during retirement?
B) How should seniority be factored into the payout formula?
C) What level of retirement compensation would the employer like to set as a target,
expressed in relation to preretirement earnings?
D) Should other postretirement income sources be integrated with the pension payment?
44) An employee who changes jobs four or more times during his or her career will likely
receive a pension that is approximately ________ as that of an employee whose working career
is spent with one employer, assuming that both employees have the same starting salary and
receive annual increases equal to inflation rate.
A) twice as large
B) the same size
C) one-fourth the size
D) half the size
45) Approximately ________ percent of private sector employees have access to paid life
insurance.
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A) 56
B) 26
C) 75
D) 90
46) A health maintenance organization pulls together a group of providers willing to provide
services at an agreed upon rate in exchange for employers:
A) limiting employees to these providers for health services.
B) paying 30 percent of employee salary to the health maintenance organization.
C) laying off all contingent workers who are not eligible for insurance.
D) providing free child care assistance to employees.
47) A ________ plan is a hybrid health plan combining the benefits of a health maintenance
organization and a ________.
A) point-of-service; preferred provider organization
B) managed care; preferred provider organization
C) managed care; point of service
D) consolidated health; preferred provider organization
48) Which of the following is true of the Affordable Care Act?
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A) It helps an employer receive an income tax deduction even though employees may
not yet have received any benefits.
B) It is aimed at expanding health care coverage through an individual mandate to
purchase health insurance and an employer mandate to provide qualifying health insurance
coverage.
C) It applies to all employers having 50 or more employees and entitles all eligible
employees to receive unpaid leave up to 12 weeks per year for specified family or medical
reasons.
D) It requires a worker to meet the state requirements for wages earned or time worked
during an established period of time referred to as a “base period.”
49) Almost ________ percent of the companies offering child care assistance to employees
also offer elder care assistance.
A) 10
B) 30
C) 50
D) 90
50) Contingent workers receive ________ benefits than regular workers; contingent workers’
benefits cost ________ for employers than it does for regular workers.
A) more; less
B) fewer; more
C) more; more
D) fewer; less
SHORT ANSWER. Write the word or phrase that best completes each statement or
answers the question.
51) Describe a point-of-service plan.
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52) What are the eligibility requirements for unemployment insurance?
53) What is the purpose of the 1996 Health Insurance Portability and Accountability Act?
54) What are cash balance plans?
55) Explain vesting and portability.
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Answer Key
Test name: chapter 13
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