VII. Discussion Questions and Suggested Answers
10.1. Except for the Patient Protection and Affordable Care Act, the remaining
legally required benefits were conceived more than a decade ago. What
changes in the business environment and society might affect the relevance or
perhaps the viability of any of these benefits? Discuss your ideas.
Social Security is going to be experiencing a large shift on an economic standpoint as
begins to give out more money than it’s taking in, which will cause numerous cuts in
10-2. Describe the principles of fee-for-service plans and managed care plans.
What are the similarities and differences?
Answer to this question can be found in the MyLab
10.3. Discuss some of the choices an employer may make to help control health
care costs.
Answer to this question can be found in the MyLab
10.4. In what ways may legally required benefits have contributed to an employee
entitlement mentality regarding discretionary benefit offerings? Explain
your rationale.
Employees do indeed often see benefits as entitlements for their membership in
companies because they often believe that by working for a company they should get the
10-5. Conduct some research on the future of the Social Security program (see the
Web site www.ssa.gov). Based on your research, prepare a statement not to
exceed 250 words that describes your view of the Social Security program.
(e.g., whether they are necessary, their viability, or whether there should be
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changes in how the programs are funded). How has this research influenced
your views?
Responses to this question may vary based on independent student research and their
VIII. End of Chapter Case; Instructor Notes, and Questions and Suggested
Student Responses
Case Name: A Health Savings Account at Frontline PR
Instructor Notes:
The high cost of healthcare insurance is a challenge that many employers are facing.
Controlling costs, while providing employees with an affordable option that is
competitive with other employers, is important. Consumer-driven healthcare means that
Suggested Student Responses:
10.6. What are some advantages of the implementing the HSA option?
The HSA coupled with the high deductible healthcare insurance plan offers the company
cost savings and also may reduce overall healthcare costs as the employees will be more
involved in their healthcare decisions. While the insurance plan has a high deductible,
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10.7. What are some potential disadvantages of the HSA option?
Because HSA’s are not a popular option, employees will not likely be familiar with them.
Therefore, it may be a challenge to communicate the benefits of the HSA to employees.
Employees will likely have some concerns about their out-of-pocket expenses. The
10.8. What do you recommend? Why?
Student responses may vary here. If the HSA option is recommended, the student may
determine that the cost savings is the most important aspect. The student may also
suggest that Susan first explore other options such as a preferred provider organization or
IX. Crunch the Numbers! Questions and Suggested Student Responses
10.9. The company chooses not to provide health insurance. How much will the
penalty be based on the formula presented in this chapter?
The penalty is $2,000 per employee, excluding the first 30 employees.
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10.10. The company prices health insurance for its workforce, and determines that
the annual cost is $2,500,000. Based on your answer to question 10-9, how
much money would it save by not offering health insurance?
$2,500,000 annual cost – $940,000 penalty = $1,560,000 savings by not offering health
insurance
Learning Objective: 10-3. Describe fee-for-service plans, traditional managed care
approaches, and more recent consumer-driven approaches to providing health care
coverage.
AACSB: Application of knowledge
10.11. The company is considering the purchase of a high-priced health insurance
option. The cost is equal to $16,000 per employee for individual coverage and
$30,000 per employee for family coverage. Half of the employees subscribe to
individual coverage. Based on the guidelines presented in this chapter,
calculate the Cadillac tax.
X. Additional Cases from the MyManagementLab Website; Instructor Notes,
and Suggested Student Responses
Case Name: Cutting Costs at Elite Financial Services
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Instructor Notes
The rising cost of healthcare insurance is prompting many employers to take proactive
steps to lower their costs. In addition to seeking better premiums through seeking
alternate providers and looking at different coverage options, many employers are
Suggested Student Responses:
10.12. What can Elite do to lower their healthcare insurance costs?
There are many opportunities for Elite to lower their healthcare insurance costs. First,
they may want to consider examining alternate healthcare insurance options such as
10.13. Will making changes to the company’s healthcare insurance benefit affect the
company’s ability to recruit and retain employees?
The company should be cautious about making drastic changes to healthcare insurance all
at one time. If the employees believe the company is taking away a significant part of
their benefit, they may become frustrated and consider leaving the company. The
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