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a.
health care spending account.
b.
401(k) plan.
c.
PPO.
d.
workers’ compensation plan.
ANSWER:
a
82. The Social Security insurance program is funded by
a.
employer contributions.
b.
Old Age, Survivors, and Disability Insurance (OASDI).
c.
employee contributions with matching employer contributions.
d.
employee contributions and general tax funds.
ANSWER:
c
83. Which of the following is NOT a benefit covered under Social Security insurance?
a.
Retirement benefits
b.
Disability benefits
c.
Short-term disability
d.
Survivors’ benefits
ANSWER:
c
84. Tax revenues derived from Social Security pay for each of the following benefits, EXCEPT
a.
disability benefits.
b.
unemployment.
c.
retirement.
d.
survivors’ benefits.
ANSWER:
b
85. The amount of survivors’ insurance benefits paid by Social Security is
a.
based on the cause of death.
b.
based on a formula that takes into consideration the number of remaining years the deceased worker had to
work until retirement.
c.
fixed by law and adjusted only by the cost-of-living.
d.
based on the worker’s lifetime earnings covered by Social Security.
ANSWER:
d
86. Workers born after 1928 can receive full Social Security retirement benefits as early as age
a.
58.
b.
62.
c.
65.
d.
67.
ANSWER:
d
87. Laid off employees who have been working in an employment covered by the Social Security Act may get
unemployment insurance benefits for up to __________ weeks.
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a.
20
b.
22
c.
24
d.
26
ANSWER:
d
88. A typical unemployment insurance program does NOT require that
a.
all eligible individuals must register for available work.
b.
all eligible individuals must submit an application for benefits.
c.
recipients must be willing to accept any job that is offered to them.
d.
recipients must be willing to accept any suitable job that is offered to them.
ANSWER:
c
89. Unemployment compensation payments to individuals vary according to
a.
the type of job held before layoff.
b.
their previous wage rate and length of previous employment.
c.
job type and length of previous employment.
d.
their previous wage rate and the type of job held before layoff.
ANSWER:
b
90. To qualify for retirement benefits, a person must reach retirement age and have earned
a.
20 credits.
b.
40 credits.
c.
60 credits.
d.
80 credits.
ANSWER:
b
91. One of the limitations of the Family and Medical Leave Act is that it only applies to companies that have __________
or more employees during 20 or more calendar workweeks in the current or preceding year.
a.
30
b.
40
c.
50
d.
60
ANSWER:
c
92. The Family and Medical Leave Act
a.
applies to employers having 10 or more employees during 20 or more calendar workweeks in the current or
preceding year.
b.
preempts state laws under all circumstances.
c.
mandates continuation of medical coverage.
d.
requires the employer to provide up to 24 weeks of unpaid, job-protected leave for certain family and medical
reasons.
ANSWER:
c
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93. The Family and Medical Leave Act provides all of the following EXCEPT
a.
up to 12 weeks of unpaid leave.
b.
promotions missed during leave.
c.
continuation of medical benefits.
d.
job protection.
ANSWER:
b
94. Under the Family and Medical Leave Act, if an employee is returned to an equivalent job, rather than his/her original
job, the equivalent job must have
a.
identical pay, benefits, and terms of employment.
b.
terms of employment and responsibilities.
c.
responsibilities and benefits.
d.
identical pay, benefits, and responsibilities.
ANSWER:
a
95. Susan took early retirement at the age of 55. Even though she is no longer working, she will not be eligible for
Medicare at the age of
a.
59.
b.
62.
c.
65.
d.
67.
ANSWER:
c
96. A portion of the payroll taxes is paid by workers and matched by their employers. In 2017, workers and their
employers each paid __________ percent on every dollar of salary or wages paid.
a.
1.15
b.
1.30
c.
1.45
d.
1.60
ANSWER:
c
97. MuniMed is an organization of physicians and other health care professionals that provides health care services to
subscribers on a prepaid basis. MuniMed is a
a.
preferred provider organization (PPO).
b.
major medical plan.
c.
health maintenance organization (HMO).
d.
integrated medical practice.
ANSWER:
c
98. Employees at TynsCorp are able to submit receipts for certain out-of-pocket health care expenses and TynsCorp will
pay them back for those items. What type of account has TynsCorp set up?
a.
A flexible spending account
b.
A health reimbursement account
c.
A health care spending account
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d.
A workers’ compensation account
ANSWER:
b
99. Mac recently left his job at TynsCorp. Under the __________ TynsCorp must make health care coverage available to
Mac at the same rate the TynsCorp would pay.
a.
Health Care and Education Reconciliation Act
b.
Patient Protection and Affordable Care Act
c.
Consolidated Omnibus Budget Reconciliation Act
d.
Social Security Act
ANSWER:
c
100. Groups of physicians that contract with an employer to provide medical resources on a more cost-efficient basis in
exchange for a greater share of patients are known as
a.
preferred provider organizations (PPOs).
b.
major medical plans.
c.
health maintenance organizations (HMOs).
d.
integrated medical practices.
ANSWER:
a
101. Beginning in 2014, firms that employ __________ or more people who work 30 or more hours per week but do not
offer them health insurance will have to pay a penalty to the government.
a.
12
b.
20
c.
25
d.
50
ANSWER:
d
102. An advantage of a health savings account is that if there are funds remaining in the account at the end of the year the
money
a.
goes back to the employer, helping the employer contain costs.
b.
is forfeited.
c.
belongs to the employee.
d.
is placed in the employee’s retirement account.
ANSWER:
c
103. Disease management programs
a.
are comprehensive insurance benefits that serve as a supplemental health insurance.
b.
assist employees by providing information on monitoring and treating health conditions.
c.
assist employees as work-site fitness programs.
d.
are a major portion of worker’s compensation insurance.
ANSWER:
b
104. Holiday pay, sick leave, and vacation pay are examples of
a.
payment for time not worked.
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b.
benefits required by law.
c.
categories of health care benefits.
d.
unearned benefits.
ANSWER:
a
105. Marcus works for the federal government. He can expect to be paid for __________ holidays a year.
a.
24
b.
10
c.
15
d.
20
ANSWER:
b
106. Beginning in 2014, firms with __________ full-time employees will be required to automatically enroll new full-
time employees in their health care plans.
a.
50
b.
100
c.
200
d.
250
ANSWER:
c
107. Rose works in the mining industry. If she is laid off, which is likely because the industry is cyclical in nature, in
addition to state unemployment compensation, she can receive weekly benefits from her employer. These benefits are
referred to as
a.
severance pay.
b.
supplemental unemployment benefits.
c.
leave insurance compensation.
d.
unemployment protection payments.
ANSWER:
b
108. Under the Family and Medical Leave Act (FMLA), employees are eligible to take leave if they have worked for
their employers for at least twelve months, have at least __________ hours of service, and work in organizations that have
50 or more employees within a 75-mile radius.
a.
750
b.
1,000
c.
1,250
d.
1,500
ANSWER:
c
109. In January 2008, Congress passed the __________ which amended the Family and Medical Leave Act (FLMA) to
provide eligible employees working for covered employers new leave rights related to military service.
a.
National Defense Authorization Act
b.
Consolidated Omnibus Budget Reconciliation Act
c.
Patient Protection and Affordable Care Act
d.
Health Care and Education Reconciliation Act
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ANSWER:
a
110. Employees at TynsCorp can put aside money for health-related expenses by having it deducted from their paychecks.
This is known as a
a.
consumer-driven plan.
b.
healthcare spending plan.
c.
health reimbursement account.
d.
flexible spending account.
ANSWER:
d
111. Polaroid allows employees the opportunity to try out retirement with a leave program, or gradually reduce their work
hours as they approach retirement age. This is an example of
a.
a severance leave.
b.
a preretirement program.
c.
family-friendly benefits.
d.
policies recommended by Social Security.
ANSWER:
b
112. The decision whether a pension plan should be offered is the responsibility of the
a.
union and Department of Labor representatives.
b.
employees.
c.
employer.
d.
Pension Benefit Guaranty Corporation.
ANSWER:
c
113. Today, about __________ of households nearing retirement have 401(k)-type of accounts.
a.
20 percent
b.
30 percent
c.
50 percent
d.
60 percent
ANSWER:
d
114. TynsCorp has a pension plan in which the contributions are made jointly by TynsCorp and the employees. This is a
a.
contributory plan.
b.
noncontributory plan.
c.
defined-benefit plan.
d.
defined-contribution plan.
ANSWER:
a
115. Jolee’s company has a pension plan in which the contributions are made solely by the company for the employees.
This is a
a.
contributory plan.
b.
noncontributory plan.
c.
defined-benefit plan.
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d.
defined-contribution plan.
ANSWER:
b
116. In TynsCorp’s pension plan, the amount that an employee is to receive upon retirement is set in advance based on the
employee’s years of service, average earnings, and age at retirement. This is a
a.
contributory plan.
b.
noncontributory plan.
c.
defined-benefit plan.
d.
defined-contribution plan.
ANSWER:
c
117. A pension plan that establishes the basis on which an employer will contribute to a pension plan is referred to as a
a.
contributory plan.
b.
noncontributory plan.
c.
defined-benefit plan.
d.
defined-contribution plan.
ANSWER:
d
118. A popular plan that offers employees an opportunity to save through payroll deductions and have their contributions
matched by the employer is known as the
a.
401(k) plan.
b.
tax reduction plan.
c.
ERISA benefit plan.
d.
Individual Retirement Plan.
ANSWER:
a
119. Annual interest earned on cash-balance pension plans are often tied to a
a.
20-year Treasury rate.
b.
10-year Treasury rate.
c.
15-year Treasury rate.
d.
30-year Treasury rate.
ANSWER:
d
120. Private pensions are subject to federal legislation under
a.
Employee Retirement Income Security Act (ERISA).
b.
Consolidated Omnibus Budget Reconciliation Act (COBRA).
c.
Tax Equity and Fiscal Responsibility Act (TEFRA).
d.
Retirement Equity Act (REA).
ANSWER:
a
121. After an employee works for an employer for a certain period of time, the employee is entitled to the money in his or
her pension plan. This employee is now
a.
secured.
b.
endowed.
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c.
vested.
d.
integrated.
ANSWER:
c
122. Vesting guarantees
a.
withdrawal of benefits at any time.
b.
automatic funding of pension plans.
c.
accrued pension benefits at retirement age.
d.
selection of pension options.
ANSWER:
c
123. An advantage to HRAs and FSAs is that
a.
employees can accumulate savings with tax deferred until they take the money out at retirement.
b.
there is no limit to the dollar amount that can be put in those accounts or what the money can be spent on.
c.
employees pay income tax on the money as it goes into the account, but then it grows tax free until retirement.
d.
employees do not have to pay income tax on money received from their employers through these accounts.
ANSWER:
d
124. The health insurance plans offered by TynsCorp has higher copays for visits to psychiatrists than for physicians. This
is a violation of the
a.
Mental Health Parity and Addiction Equity Act.
b.
Employee Retirement Income Security Act.
c.
Health Insurance Portability and Accountability Act.
d.
Health Care and Education Reconciliation Act.
ANSWER:
a
125. TynsCorp is pursuing a comprehensive plan that hopes to cut costs, but focuses more on the medical care that
employees really need. Benefits and health programs will be targeted towards those needs, which should, ultimately, lead
to cost savings. TynsCorp is turning to
a.
value-based health initiatives.
b.
medical supervision.
c.
health reimbursement programs.
d.
cafeteria plans.
ANSWER:
a
126. Employer-sponsored child care programs and elder care programs are similar because
a.
under both programs, most of the caregivers are men.
b.
both types of programs typically offer on-site care facilities to the employees who bring their wards to the
workplace.
c.
both programs try to maintain or increase productivity by assisting employees with their responsibilities
outside the workplace.
d.
both programs offer substantial income tax benefits to employees.
ANSWER:
c
127. The Social Security Administration administers the __________ program.
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a.
Childcare
b.
ERISA
c.
Medicare
d.
SNL
ANSWER:
c
128. Employers struggling to help employees meet elder care needs may want to consider banding together, similar to the
model set by the Partnership for Elder Care, which is a cooperative arrangement referred to as a
a.
consortium.
b.
limited partnership.
c.
combined subsidiary.
d.
hostel.
ANSWER:
a
129. Workers’ compensation insurance may be provided through private or __________ insurance.
a.
state-funded
b.
employee-prepaid
c.
federally-funded
d.
SNL-funded
ANSWER:
a
130. Workers’ compensation insurance covers certain work-related
a.
lawsuits.
b.
misunderstandings.
c.
pay inequities.
d.
illnesses.
ANSWER:
d
131. Employers pay for workers’ compensation insurance in __________ states.
a.
all
b.
a majority of
c.
large
d.
heavily industrialized
ANSWER:
a
132. TynsCorp is looking for a way to help employees solve some of their personal problems, or keep those problems
from escalating and affecting their ability to work. TynsCorp should consider developing a(n)
a.
medical leave program.
b.
group health plan.
c.
workers’ compensation program.
d.
employee assistance program.
ANSWER:
d
133. Explain why an organization may choose to develop a cafeteria benefits plan for its employees.
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ANSWER:
To make it easier to accommodate the individual needs of different employees, a wide range of organizations
have begun offering flexible benefits plans, also known as cafeteria plans. Rather than one-size-fits-all plans,
these plans allow individual employees to choose the benefits that are best suited to their particular needs.
They also prevent certain benefits from being wasted on employees who have no need for them. Furthermore,
companies realize they can get a better return on investment by tailoring benefits to an employee’s stage of life
or family status. For example, younger employees can select a more comprehensive family health plan or
dental insurance, while older employees can spend their benefits dollars on improved retirement or disability
coverage. In short, a cafeteria plan allows benefits dollars to be spent in a more satisfying and cost-effective
manner.
134. Describe employer costs by explaining where each dollar of employee compensation is spent.
ANSWER:
Employee compensation is divided between wages and benefits, and benefits can represent more than 50
percent of the total payroll costs. On average, though, wages generally account for 69 cents of each dollar, and
benefits the other 31. Benefits are, on average, broken down as follows:
Retirement and savings: 4.5%
Supplemental pay: 2.3%
Paid leave: 7%
Health, life, and disability insurance: 8.8%
Legally required benefits: 7.8%
135. Describe the requirements and provisions of the Family and Medical Leave Act.
ANSWER:
Under the Family and Medical Leave Act (FMLA), all employers with 50 or more employees during 20 or
more calendar workweeks, in the current or proceeding year, must provide up to 12 weeks of unpaid leave in a
12-month period for a serious health condition affecting the employee’s family. Reasons include, but are not
limited to, birth or adoption of a child, care of spouse, child, or parent, or serious health condition affecting the
employee. Upon return to work, the employee must be restored to his/her original job, or an equivalent job in
terms of pay, benefits, and terms of employment.
The employer may provide paid leave but is not required to. The employee should provide 30 days notice for
leave request when foreseeable.
136. Describe some of the ways employers have been trying to contain health insurance costs.
ANSWER:
Employer efforts have focused on two areas. First, employers have altered medical coverages so that
employees either share more of the costs or have to better document the need for particular treatments.
Examples of this type of effort include higher co–payments, reductions in coverages, larger deductibles,
required second opinions, and preadmission hurdles for hospital admissions (see HRM 5 for a detailed list).
Second, employers are enlisting health systems that potentially help control costs. Examples of these efforts
include the negotiation of advantageous contracts with health maintenance organizations (HMOs) and
preferred provider organizations (PPOs). Finally, employers are incorporating various consumer-driven health
plans.
137. Compare and contrast the risks to the employee in regard to defined contribution and defined benefit pension plans.
ANSWER:
In a defined benefit pension plan, retiring employees are guaranteed a particular payment level (the retirement
benefit is “defined”). However, in a defined contribution pension plan, the only guarantee to employees is that
the employer will contribute a set dollar amount on their behalf to the pension plan (the contribution is
“defined”). While the pension benefits under a defined benefit plan are fixed, the pension benefits of the
defined contribution plan vary according to the success of the plan’s investments (superior investment
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risk is associated with the general risks and rewards of investments, the quality of investment advice, and the
risks commonly associated with the defined-benefit plans.
138. Explain the concept of work-life benefits. Name and discuss at least five of these benefits employers offer their
employees.
ANSWER:
Many organizations are seeking to create a work-life organizational environment that allows employees to
balance work and personal needs. There are a wide variety of work-life benefits that organizations may offer.
To help workers cope with a wide variety of problems that interfere with the way they perform their jobs,
organizations have developed employee assistance programs. These programs provide diagnosis, counseling,
and referral for advice or treatment when necessary for problems related to alcohol or drug abuse, emotional
difficulties, and financial or family difficulties. One of the benefits most frequently mentioned in the literature
for employees is the use of an educational assistance plan to help employees keep up to date with advances in
their fields and to help them get ahead in the organization. Usually the organization covers, in part or totally,
costs of tuition, books, and related fees. The increased employment of women with dependent children has
created an unprecedented demand for child care arrangements. In response many organizations provide
financial assistance and on-site child care centers. Related, many organizations are implementing employee-
accumulated leave days for dependent care and extended leave policies for child and/or older care. Many
organizations offer flexible work hour scheduling or work-at-home arrangement, such as telecommuting, that
enables employees to have more flexibility to meet the family needs. Other benefits include food services,
onsite health services, credit unions, and gift cards.
139. Why have 401(k) plans become so popular?
ANSWER:
Employers like them because they shift the burden of retirement planning, risk, and investment management to
employees. Employees like the tax advantages and flexibility offered by such plans.