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Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
Chapter 13: Managing Benefits
Test Bank
Multiple Choice
1. ______ include programs, services, and perquisites related to health care, retirement,
work–life balance, and income protection.
A. Traditional pay
B. Benefits
C. Bonuses
D. Pay-for-performance programs
2. On average, employee benefits cost ______ of total compensation.
A. one fourth
B. one third
C. one half
D. two third
3. Which two are considered the most common forms of voluntary benefits?
A. retirement and medical
B. medical and profit sharing
C. paid time off and retirement
D. medical and paid time off
4. Much like forms of direct pay, ______ benefits can be used to develop a strong
workforce.
A. voluntary
B. Social Security
C. Medicare
D. disability income
5. Payroll taxes for unemployment insurance are funded by ______.
A. the employee
B. the Department of Labor
C. the employer
D. workers’ compensation
6. What benefits are employers legally required to provide?
A. Social Security, workers’ compensation, unemployment insurance, and family and
medical leave
B. work–life program, workers’ compensation, managed care plan, and wellness
program
C. Social Security, wellness program, managed care plan, and unemployment
insurance
D. unemployment insurance, managed care plan, family and medical, and wellness
program
7. Both employer and employee are responsible for paying a set percentage of the
employee’s earnings. What is the name of this payroll tax?
A. Federal Insurance Contributions Act withholdings
B. Family Medical Leave Act withholdings
C. Employee Retirement Income Security Act withholdings
D. Consolidated Omnibus Budget Reconciliation Act withholdings
8. In 1935, the U.S. Congress passed the ______ which originally focused on the
provision of economic security for old-age individuals but now includes additional
programs for mothers and children in need, for individuals with disabilities, for those
who are unemployed, and for those whose family members have died.
A. Social Security Act
B. Federal Insurance Contributions Act
C. Family Medical Leave Act
D. Employee Retirement Income Security Act
9. Employers are required to contribute specific amounts to ______.
A. a simple 401(k) plan
B. Social Security
C. an employee stock ownership plan
D. a 403(b) plan
10. In 1935, the U.S. Congress passed the ______ to help assist individuals recovering
from the Great Depression.
A. Consolidated Omnibus Budget Reconciliation Act
B. Employee Retirement Income Security Act
C. Family Medical Leave Act
D. Social Security Act
11. What does FICA stand for?
A. Federal Insurance Compensation Act
B. Federal Insurance Comprehension Act
C. Federal Insurance Contributions Act
D. Federal Insurance Containment Act
12. Juan is thinking of retiring this winter when he turns 64 years old. He has earned
more than 40 work credits and has applied for Social Security retirement benefits. If
Juan retires at 64, how will his ability to collect Social Security benefits be affected?
A. He will be able to collect full Social Security retirement income when he retires.
B. He will only be able to collect reduced Social Security retirement benefits until he
reaches age 67 and then full retirement benefits for the rest of his life.
C. He will be able to collect permanently reduced Social Security retirement benefits
when he retires.
D. He will not be eligible for Social Security retirement benefits because he will not retire
at 67 years old.
13. George is hoping to retire early but is unsure if he has earned enough credits.
Which example explains the earliest age he can retire with Social Security benefits and
the number of credits he needs?
A. any age as long as he has 40 credits
B. 62 and 40 credits
C. 65 and 40 credits
D. 67 and 40 credits
14. At what age are most Americans eligible for full retirement benefits in the United
States?
A. 66–67
B. 61–62
C. 64–65
D. 60–61
15. Trevor’s wife Janine, who was eligible for Social Security benefits, passed away.
What type of benefit is Trevor entitled to collect?
A. disability
B. survivor
C. workers’ compensation
D. retirement
16. Friedrich’s adult son was recently diagnosed with a mental disorder that makes it
difficult for him to maintain employment. Friedrich receives disability benefits through his
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
employment. What would Friedrich need to prove in order for his son to qualify for
Friedrich’s disability benefits?
A. that his son was diagnosed with his disability while on the job
B. that his son had accrued the requisite number of work credits
C. that his son developed the mental disorder before age 22
D. that his son had sufficiently contributed to his FICA withholdings
17. On what is an individual’s eligibility for Social Security disability based?
A. age, work credits, and age they first experienced the disability
B. work credits, the severity of the disability, and age they first experienced the disability
C. age, the severity of the disability, and age they first experienced the disability
D. attainment of age 21, work credits, and the severity of the disability
18. Individuals may collect disability until they reach full retirement age, at which time
they will receive ______.
A. life insurance benefits
B. unemployment benefits
C. workers’ compensation
D. retirement benefits
19. ______ typically provides medical coverage, including rehabilitation services, and
income replacement for an individual who was injured or fell ill due to accidents or
hazards at work.
A. Workers’ compensation
B. Sick leave
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
C. Paid time off
D. Health insurance
20. Which program is funded entirely by the employer in the form of payroll taxes?
A. health-care benefits
B. workers’ compensation
C. retirement benefits
D. life insurance benefits
21. Eugene injured his lower back moving boxes to the store room at work. Which
benefit program would Eugene use for medical care?
A. work–life program
B. workers’ compensation
C. managed care plan
D. wellness program
22. In what way is workers’ compensation similar to unemployment insurance?
A. both are legally required benefits
B. both pay out when the employee is laid off
C. both are voluntary benefits
D. both pay out when the employee is hurt on the job
23. Samuel lost his job at the crayon factory after 30 years. He does not know where to
begin to find a new job. What type of benefit would Samuel apply for to assist him?
A. retirement income
B. disability income
C. workers’ compensation
D. unemployment insurance
24. The ______ was introduced in 1993 to protect employees’ job security in instances
in which they need to take unpaid leave due to family or medical issues.
A. Social Security Act
B. Federal Insurance Contributions Act
C. Family Medical Leave Act
D. Employee Retirement Income Security Act
25. Ryan and his employer meet all of the criteria for Family Medical Leave Act. This
means he can take ______ weeks of unpaid leave to care for his newborn without
losing his job and health-care benefits.
A. 12
B. 18
C. 26
D. 30
26. Jorge works in Sacramento, CA, at a very small satellite office of a nonprofit
company based out of Washington, DC. He has worked there for the past 5 years. He
wants to take some time off under the Family Medical Leave Act to care for his newborn
child. Which condition of the Family Medical Leave Act is most likely to prevent Jorge
from doing so?
A. The employer must have 50 or more employees.
B. The employee must have worked at least 1,250 hr for their employer for at least 12
months.
C. The employee must work at an employer’s location that has at least 50 employees
working within a 75-mile radius.
D. The employee must face at least one of a set of qualifying family medical challenges,
such as pregnancy complications.
27. The ______ of 1974 set minimum standards for many private employers’ health-
care plans.
A. Social Security Act
B. Federal Insurance Contributions Act
C. Family Medical Leave Act
D. Employee Retirement Income Security Act
28. What does ERISA stand for?
A. Employee Retirement Income Security Act
B. Employee Reconciliation Income Security Act
C. Employee Requirement Income Security Act
D. Employer Retirement Income Security Act
29. The ______ of 1996 adds protections to the portability of employees’ health-care
coverage as well as protections to ensure the privacy and security of employees’ health-
care data.
A. Consolidated Omnibus Budget Reconciliation Act
B. Family Medical Leave Act
C. Health Insurance Portability and Accountability Act
D. Patient Protection and Affordable Care Act
30. Before Greg’s doctor’s appointment, the receptionist asks for his insurance card and
asks him to sign a form that explains what the provider will do to protect him from
discrimination. What law does this form outline?
A. Family Medical Leave Act
B. Federal Insurance Contributions Act
C. Health Insurance Portability and Accountability Act
D. Employee Benefits Security Administration
31. The ______ of 1985 protects employees’ (and their beneficiaries’) health-care
coverage for a designated amount of time in the event of voluntary or involuntary job
loss, work-hour reductions, or another major occurrence.
A. Consolidated Omnibus Budget Reconciliation Act
B. Family Medical Leave Act
C. Health Insurance Portability and Accountability Act
D. Patient Protection and Affordable Care Act
32. Affordable health care for individuals, increased health-care coverage, and
improved quality of care are all parts of the ______.
A. Federal Insurance Compensation Act
B. Patient Protection and Affordable Care Act
C. Pension Benefit Guaranty Corporation
D. Family and Medical Leave Act
33. The ______ of 2010 offers rights and protections associated with access to health-
care coverage.
A. Consolidated Omnibus Budget Reconciliation Act
B. Family Medical Leave Act
C. Health Insurance Portability and Accountability Act
D. Patient Protection and Affordable Care Act
34. The ______ is commonly called Obamacare.
A. Consolidated Omnibus Budget Reconciliation Act
B. Family Medical Leave Act
C. Health Insurance Portability and Accountability Act
D. Patient Protection and Affordable Care Act
35. Medical plans with higher deductibles have lower premiums than other plans. They
also have ______.
A. reduced health coverage
B. higher out-of-pocket expenses
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
C. reduced prescription medication coverage
D. a higher maximum plan limit
36. ______ plans allow participants to select any medical provider of their choosing
without affecting how they are reimbursed and participants’ expenses are reimbursed as
they are incurred.
A. Short-term care
B. Tax-deferred care
C. Managed-care
D. Traditional-care plans
37. Weldon is looking for a medical plan that will allow him the freedom to select a
provider of his choice without affecting how he is reimbursed. What type of benefit plan
is Weldon looking for?
A. health saving plan
B. traditional-care plan
C. managed-care plan
D. flexible benefit plan
38. Rhonda has a history of strep throat, which she sometimes contracts twice a year.
Her doctor suggests that removing her tonsils might make her less susceptible to strep.
This tonsillectomy would be an elective surgery. Rhonda is on a managed-care plan
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
through her employer. What is she most likely to be required to do before getting the
tonsillectomy?
A. find an out-of-network hospital that will do the surgery
B. make sure that she has reached her deductible
C. get a second opinion on the tonsillectomy
D. request reimbursement through her HSA
39. ______ plans are preferable to traditional plans when it comes to meeting cost
containment goals and managing the quality and use of medical services.
A. Short-term care
B. Tax-deferred care
C. Managed-care
D. Defined-care
40. ______ participants incur lower cost sharing when they use in-network medical
providers and services.
A. Short-term care
B. Tax-deferred care
C. Managed-care
D. Defined-care
41. What types of managed-care plans require the selection of a primary care doctor?
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
A. Preferred-Provider Organization and Exclusive-Provider Organization
B. Exclusive-Provider Organization and Point-of-Service
C. Preferred-Provider Organization and Health Maintenance Organization
D. Health Maintenance Organization and Point-of-Service
42. Aaron is developing a health savings option for his company’s employees. The plan
Aaron has chosen would allow the company (and not the employee) to contribute
unlimited funds to an account, such that the account reimburses the employee on a tax-
free basis for qualified medical costs. Which option has Aaron chosen?
A. defined contribution account
B. a health flexible spending arrangement
C. a health reimbursement arrangement
D. a health savings account
43.______ is a form of income protection for employees who temporarily become
unable to work as a result of injury, whether sustained at work or during their personal
time.
A. Health care
B. Short-term disability insurance
C. Life insurance
D. Flexible benefits plan
44. When does long-term disability activate?
A. when the disability occurs
B. after the maximum time period
C. after short-term disability expires
D. after income protection benefits expire
45. Pension Benefit Guaranty Corporation will step in as trustee when a ______ fails.
A. voluntary retirement plan
B. profit-sharing plan
C. flexible spending plan
D. health savings plan
46. Which federal law sets standards for voluntary pension and health plans in private
industries to protect employees?
A. Health Insurance Portability and Accountability Act
B. Employee Retirement Income Security Act
C. Family Medical Leave Act
D. Consolidated Omnibus Budget Reconciliation Act
47. A ______ plan is paid over a fixed amount of time and has a preestablished benefit
provided by the employer.
A. cash balance
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
B. defined benefit
C. defined contribution
D. 401(k)
48. With a ______, the employer provides the employee with a predetermined benefit to
be paid out over a fixed amount of time.
A. traditional pension plan
B. defined-contribution plan
C. 401(k)
D. cash balance plan
49. A ______, sometimes referred to as a guaranteed account plan, is a type of defined-
benefit plan.
A. defined contribution
B. tax deferred
C. defined benefit
D. cash balance
50. A ______ does not yield a preestablished benefit for the employee. Instead, it is
predicated on employee and/or employer contributions to an investment fund.
A. defined contribution
B. tax deferred
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
C. defined benefit
D. cash balance
51. An employee enrolled in a ______ makes contributions to an individual account in
the form of deferred income. The employer may also be able to contribute to the
employee’s plan.
A. profit-sharing plan
B. 401(k) or 403(b)
C. defined benefit
D. cash balance
52. In what way is a 401(k) similar to a 403(b)?
A. Both are profit-sharing plans.
B. Both are retirement plans.
C. Both are employee stock ownership plans.
D. Both are money purchasing plans.
53. A cash balance plan is what type of plan?
A. defined-benefit plan
B. direct benefit plan
C. college savings plan
D. defined-contribution plan
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
54. Louise has learned that her new employer offers a pay-for-performance program.
The money that the company makes is distributed among the employees based on a
discretionary formula. What kind of program does Louise’s company use?
A. a profit-sharing program
B. a life insurance program
C. an employee stock ownership program
D. a money-purchase program
55. Which benefit can double as a retirement program and a pay-for-performance
program?
A. an employee stock ownership plan
B. a Roth IRA
C. a college savings plan
D. a traditional IRA
56. Money-purchase plans are what type of voluntary benefit?
A. cash-balance plan
B. defined-contribution pan
C. defined benefit plan
D. profit-sharing plan
57. In the defined-contribution plan known as a ______, employers simply contribute a
specified amount to each plan participant’s account.
A. profit sharing
B. employee stock ownership
C. money purchase
D. traditional IRA
58. A plan that allows individuals to make tax-deferred investments for retirement is a
______ plan.
A. flexible benefits plan
B. employee stock ownership
C. money-purchase
D. traditional IRA
59. In what way is a traditional IRA similar to a Roth IRA?
A. Both allow employee-only contributions toward retirement and tax advantages.
B. Both allow contributions toward retirement and tax advantages.
C. Both allow employer-only contributions toward retirement and tax advantages.
D. Both are considered a direct pay benefit.
60. Which type of voluntary benefit program addresses issues such as weight loss,
behavioral coaching, and smoking cessation?
A. direct benefit
B. work–life
C. managed care
D. wellness
61. Employers offer employees incentives for participation in ______ programs that are
associated with positive work and health outcomes.
A. life insurance
B. wellness
C. work–life
D. profit-sharing
62. When an employer compensates employees for time away from work, it is most
often under a ______ program.
A. compensatory time
B. paid time off
C. telecommuting
D. flextime
63. When an employee takes time off from work due to a personal health issue or an
immediate family member’s health issue, it is referred to as ______.
A. flextime
B. paid time off
C. traditional care
D. sick leave
64. Phyllis has the flu and is unable to return to work for several days. In order to cover
her time off, Phyllis should most appropriately use ______.
A. personal leave
B. sick time
C. paid time off
D. compensatory time
65. When employees take time off from work on a recognized federal, state, or local
holiday, employers use ______ to compensate workers.
A. holiday pay
B. vacation pay
C. money-purchase plans
D. personal leave
66. Nico works 3 days in the office, the other 2 days from home. This an example of
______.
A. compensatory time
B. flexible benefits
C. telecommuting
D. work–life program
67. Which type of benefit is offered to supplement vacation time and sick time and is
offered as paid or unpaid?
A. telecommuting
B. flextime
C. compensatory time
D. personal leave
68. Chelsea, a nonexempt, public-sector employee, is asked to work on a Saturday to
help with customer service calls. She will work more than her usual 40 hr for the week.
What is Chelsea entitled to if she does not receive overtime pay?
A. vacation pay
B. holiday pay
C. personal leave
D. compensatory time off
69. What are two forms of flexible work arrangements?
A. dependent care and telecommuting
B. telecommuting and flextime
C. flextime and eldercare
D. eldercare and childcare
68. What is the overarching reason why an employer may offer legal services to their
employees?
A. to meet federal employment regulations
B. to guard against identity theft
C. to gain insight into the employee’s financial status
D. to prevent or limit absenteeism
71. A company provides its employees with free dry cleaning, free lunches, and free
coffee. These are part of a ______.
A. direct benefit
B. perquisites program
C. flexible benefit plan
D. profit-sharing program
72. Which is an example of a perquisites benefit?
A. giving an employee the option to sign up for health and vision benefits
B. allowing an employee to take 12 weeks unpaid time off to care for a family member
C. paying for an employee’s medical treatment after being injured on the job
D. giving an employee a designated parking spot
73. Which of these is considered a flexible benefit plan?
A. managed-care plan
B. money-purchase plan
C. cafeteria plan
D. cash balance plan
True/False
1. In the civilian workforce, 70% of workers have access to two of the most common
forms of voluntary benefits: medical and retirement.
2. The Social Security Act focuses on the economic security of one population: the
elderly.
3. An individual is eligible for Medicare at the age of 60.
4. The employer, not the employee, is responsible for funding a company’s workers’
compensation program.
5. Industries with higher rates of illness and injury contribute more to workers’
compensation.
6. The Consolidated Omnibus Budget Reconciliation Act gives laid off workers
opportunity to continue their existing health insurance coverage while seeking a new
place to work.
7. The Patient Protection and Affordable Care Act provides increased access to health-
care coverage for individuals not covered by employer health-care plans.
8. A managed-care plan allows individuals freedom to choose a provider of their choice
with the same benefit coverage.
9. Wendy hurt her knee playing tennis and will need 6 months to heal before returning
to work. She can begin collecting payment from short-term disability immediately.
10. The Employee Retirement Income Security Act does not mandate that employers
provide retirement plans for their employees.
11. Defined-contribution plans are employee- and employer funded and are tax
deferred.
Bauer, Human Resource Management, 1e
SAGE Publishing, 2020
12. Flexible benefits plans offer employees a selection of benefit offerings.
13. Government-mandated reporting is legally required for benefits such as social
insurance and workers’ compensation.
14. Both employees and employers typically make contributions to flexible benefits
plans.
1. Imagine you are a human resource professional. Provide a cost–benefit analysis to
help your employer decide which benefits to offer for maximum organizational gain.
2. Why do you think employers in the United States are required to provide various
social insurance programs such as worker’s compensation, unemployment insurance,
and family and medical leave? Provide examples of how these programs protect
people.
3. What is the function of the Employee Retirement Income Security Act (ERISA) of
1974 and its subsequent amendments? What examples can you provide of
amendments to ERISA and their implications for employees?
4. As a human resource professional, would you be more inclined to recommend that
your employer offer a defined-benefit plan or a defined-contribution plan to employees
of the company? Why?
5. What do think are possible challenges that a human resource professional may face
when communicating the details and value of benefit programs offered by an employer?
Identify which method of communication you think is most effective when explaining
benefits programs and explain why.
