CHAPTER 17
1. The rapid expansion of the benefits program over the past three decades has been attributed to all
of the following except
(a) the imposition of wage ceilings during WW II
(b) increased employee interest in receiving a tax shelter from recent past inflation causing
rising wage levels
(c) union influence has raised wages to the point where most employees’ basic needs are
satisfied, therefore causing an increased interest in greater benefits
(d) pressures from recent legal decisions require all employers to have a benefits package
including life insurance, health insurance, minimum two-weeks annual leave, Workers’
Compensation, auto insurance, and sick leave
2. The most commonly used costing methods for benefits include all of the following except
(a) number of benefits distributed per year (per employee)
(b) annual cost of benefits for all employees
(c) percentage of payroll
(d) cost per employee per year
3. Many employee benefits are taken for granted primarily because
(a) too much information is given about benefits
(b) employees demand increases in base pay rather than increases in benefits
(c) the cost of benefits cannot be determined
(d) employers fail to communicate the value of benefits to their employees
4. Which one of the following benefits is least costly to the employer?
(a) Social Security payment
(b) life insurance premium
(c) employer-provided retirement
(d) health and medical coverage insurance
5. Which of the following is not a mandated benefit payment?
(a) Workers’ Compensation
(b) unemployment compensation
(c) supplemental unemployment benefits
(d) old age, survivors, and disability insurance payment
6. In most states, who pays for unemployment compensation insurance?
(a) employees only
(b) employers only
(c) the government only
(d) a combination of employers, employees, and government
7. All but which one of the following are generally guaranteed to a golden parachute holder?
(a) immediate vesting of any stock option
(b) continuation of pay for usually one to five years
(c) the minimum level of income to be received over the term of the contract
(d) payment of taxes incurred as a result of the golden parachute contract taking effect
8. Severance pay is
(a) money received when transferred from one job to another
(b) compensation paid to hourly workers placed into new jobs
(c) a compensation payment made beyond the normal base pay when an individual leaves
the organization
(d) the amount of money paid at the end of a defined work period to an employee
9. Standard features included in most life insurance plans are all but which one of the following?
(a) inclusion of all employees regardless of health or physical condition
(b) the right of an employee to convert to an individual life insurance policy without a
physical examination upon leaving the business
(c) insuring the employee and his/her dependents for 30 days after separation
(d) discontinuation of coverage for retired employees
10. State laws now require almost every employer to provide employees with
(a) health insurance
(b) occupational disability insurance (Workers’ Compensation)
(c) life insurance
(d) sick leave
11. Major components of disability income continuation include all but
(a) LTD
(b) major medical
(c) Social Security
(d) sick leave
12. Workers in Puerto Rico and in 5 states who incur temporary disability arising from
nonoccupational illness receive partial income maintenance through disability laws. These states
include all of the following except
(a) Hawaii
(b) Georgia
(c) New York
(d) New Jersey
13. In most states, the formula used to calculate disability payments is _______ of the disabled
individual’s average weekly wage.
(a) 1/3
(b) 1/2
(c) 2/3
(d) 3/4
14. Disability income continuation payments are made through all but which one of the following
plans?
(a) severance plans
(b) travel accident insurance
(c) Social Security
(d) sick leave
15. Which of the following is not an example of pay for time not worked?
(a) holidays
(b) jury duty
(c) tuition reimbursement
(d) civic duty
16. Time off with pay for which of the following is required by state law in some states?
(a) attendance at funeral of parent
(b) voting time
(c) reserve training
(d) appearance in court under subpoena
17. Possibly the most abused employee benefit is
(a) company expense account
(b) company credit card
(c) sick leave
(d) health and accident insurance
18. The earned time, personal time, or non-fault time-off plan includes all but which one of the
following qualities?
(a) employee receives a certain amount of time off for each hour worked
(b) employee earns time off even when using an earned day off
(c) earned time off counts toward overtime during a scheduled workweek
(d) employers must first determine how much time off they want an employee to earn
19. Most educational assistance programs require the employee to take courses that
(a) interest the employee
(b) lead to a college degree
(c) help the employee get a promotion
(d) relate directly to work being performed
20. Educational assistance plans most often reimburse the employee based on
(a) type of school attended
(b) attending a local institution
(c) kind of position employee occupies
(d) successful completion of the course
21. Which one of the following is considered by many to be a highly desirable “perk”?
(a) company car
(b) company-provided medical insurance
(c) retirement plan
(d) Christmas bonus
22. Why do most organizations pay an out-of-town job applicant’s moving expenses?
(a) to reduce turnover
(b) it is required by law
(c) to avoid discrimination charges
(d) it is an attractive recruiting device
23. Supplemental Unemployment Benefits (SUBs) have all but which one of the following features?
(a) employees can accumulate SUB credits
(b) most plans set a level of payment of 60 to 65% of take-home pay
(c) recipients are guaranteed a level of payments for at least five years
(d) at GM, each employee receives one-half a GAI unit for each week worked to a
maximum of 52 GAI units
24. Which of the following is included in hospital coverage?
(a) child care
(b) room and board
(c) emergency loans
(d) income replacement
25. HMOs are important in national health planning because they use
(a) child care techniques
(b) advanced medical techniques
(c) outpatient psychiatric care
(d) preventive medicine techniques
26. Which of the following is NOT an advantage of a cafeteria style benefit plan?
(a) reduced administrative costs
(b) turnover should theoretically be reduced
(c) employees get only the benefits that are important to them
(d) employees are most likely to have a clear idea of the cost of benefits
27. A core flexible compensation plan consists of
(a) modules or packages of benefits
(b) fixed dollars of credit to buy any of a wide variety of benefits with available credits
(c) a salary reduction plan to allow employees to use pre-tax dollars to pay their share of
the cost of benefits
(d) a certain number of dollars credit to purchase benefits in addition to provided core
benefits
28. The cafeteria type of benefit plan is so named because it
(a) originated in the restaurant industry
(b) is used primarily for blue-collar workers
(c) provides participants with alternative choices
(d) requires participants to contribute to the cost
29. Section 125 plans have all but which one of the following features?
(a) employees can convert a portion of taxable wages into nontaxable dollars to pay for
specific benefits
(b) employees can receive any dollars not spent at end of year and pay tax on these dollars
(c) nontax dollars can be spent to pay for health-care insurance premiums
(d) elections must be made before beginning of plan year
Match the benefit in the right-hand column that best fits the kind of benefit program listed in the left-hand
column:
Benefit Program Benefit
30. Loss-of-Income Continuation (a) Workers’ Compensation
31. Spouse and Family Income (b) Major medical Protection
32. Disability Income Continuation (c) Unemployment insurance
33. Health and Accident Protection (d) Pension plans
34. Deferred income (e) Accidental Death & Dismemberment
Chapter 17