Deck 10: Indirect Financial Compensation Employee Benefits:

Question 1

Thomas is a copy machine technician for State Office Systems.He was involved in a serious car accident while making a service call for his employer,and he cannot return to work for 8 weeks.Which of the following would most likely provide Thomas with income while he is incapacitated?

A) life insurance
B) worker's compensation
C) direct financial compensation
D) unemployment insurance

Answer 1

B
Explanation: B)Workers' compensation provides a degree of financial protection for employees who incur expenses resulting from job-related accidents or illnesses.

Question 2

What is indirect financial compensation? What are the three types of indirect financial compensation provided by most employers? Give examples of each type to illustrate your answer.

Answer 2

Indirect financial compensations (benefits)include all financial rewards not included in direct financial compensation.Legislation mandates some benefits,such as Social Security,unemployment insurance,and workers' compensation.Discretionary benefits are benefit payments made as a result of unilateral management decisions in nonunion firms and from labor-management negotiations in unionized firms.Major categories of discretionary benefits include payment for time not worked,health care,life insurance,retirement plans,employee stock option plans,and employee services.Voluntary benefits,on the other hand,are usually 100 percent paid by the employee but the employer typically pays the administrative cost.The most common voluntary products provided include term life insurance,vision insurance,long-term care insurance,long-term disability insurance,accident insurance,and dental insurance.

Question 3

Surveys indicate that benefits and job security are the most important factors in job satisfaction.

Answer 3

True
Explanation: According to a recent SHRM survey,benefits are the second most important driver of job satisfaction,coming in just behind job security.

Question 4

Benefits are valuable for all of the following reasons EXCEPT ________.

A) improving job satisfaction
B) recruiting new employees
C) retaining current employees
D) improving worker productivity

Question 5

Which of the following is an advantage of voluntary benefits?

A) always less costly for small businesses
B) typically linked to worker productivity
C) usually nontaxable to the employee
D) always government sponsored

Question 6

Benefits do not generally serve as motivation for improved performance.

Question 7

What are the two components of nonfinancial compensation?

A) job and salary
B) job and job environment
C) salary and job environment
D) premium pay and job schedule

Question 8

In general,why do employees receive benefits from their employer?

A) organizational membership
B) employee productivity
C) corporate performance
D) level of education

Question 9

What type of indirect financial compensation is the most expensive for most businesses?

A) life insurance
B) health care insurance
C) retirement programs
D) unemployment compensation

Question 10

Benefit payments made as a result of unilateral management decisions in nonunion firms,and from labor-management negotiations in unionized firms are known as ________.

A) flexible spending benefits
B) direct financial compensation
C) discretionary benefits
D) workers' compensation

Question 11

In most cases,the costs of voluntary benefits are paid by ________.

A) government agencies
B) state governments
C) employees
D) employers

Question 12

Steve is employed as an accounts manager at an advertising agency.Steve has been offered a similar position at another firm for an equivalent salary and benefits package.When making his decision,Steve should focus primarily on nonfinancial compensation factors.Which of the following questions is LEAST relevant to Steve's decision to remain at his current job?

A) Is the job meaningful and challenging?
B) Is the employee stock option plan risky?
C) Is there a possibility for increased responsibility?
D) Is there an opportunity for growth and achievement?

Question 13

According to the U.S.Bureau of Labor Statistics,indirect financial compensation accounts for approximately ________ of employers' total compensation costs.

A) 10%
B) 30%
C) 50%
D) 70%

Question 14

Which of the following protects employees against an earnings loss when they are totally incapacitated?

A) unemployment insurance
B) disability insurance
C) paid time off
D) sabbaticals

Question 15

Legally required benefits currently include all of the following EXCEPT ________.

A) Social Security
B) workers' compensation
C) unemployment insurance
D) paid time off for holidays

Question 16

Which of the following is a job environment factor that is part of a total compensation package?

A) sound policies
B) working conditions
C) congenial co-workers
D) all of the above

Question 17

Mandated benefits currently account for about what percentage of total compensation costs?

A) 10%
B) 35%
C) 50%
D) 65%

Question 18

All financial rewards that are NOT included in direct financial compensation are known as ________.

A) bonuses
B) wages
C) commissions
D) employee benefits

Question 19

As a rule,employees receive benefits because of their productivity in an organization.

Question 20

What Act created a system of retirement benefits?

A) Family and Medical Leave Act
B) Fair Labor Standards Act
C) Social Security Act
D) Pension Protection Act

Question 21

What will be the retirement age in 2027 to receive Social Security retirement benefits?

A) 65
B) 66
C) 67
D) 68

Question 22

Unemployment insurance provides workers whose jobs have been terminated through no fault of their own,monetary payments for up to 26 weeks.

Question 23

Workers' compensation insurance pays for medical expenses related to ________.

A) pre-existing conditions
B) pregnancy complications
C) off-duty accidents
D) job-related illnesses

Question 24

Legally required benefits represents a form of ________.

A) social insurance
B) Social Security
C) workers' compensation
D) paid time-off

Question 25

Which of the following is the LEAST likely purpose of unemployment insurance payments?

A) giving workers time to find equivalent jobs
B) minimizing the number of workers needing permanent income support from the government
C) continuing worker health benefits to prevent financial distress
D) sustaining consumer spending during difficult economic times

Question 26

Jack,a construction worker,slipped and fell at a job site.As a result,Jack injured his knee and needs physical therapy and medical care.Jack's medical expenses would most likely be covered by ________.

A) workers' compensation insurance
B) unemployment insurance
C) life insurance
D) Medicaid

Question 27

Jackie's employer is downsizing to reduce expenses,and Jackie has been informed that she will be laid off.What is the maximum number of weeks that Jackie can receive unemployment compensation?

A) 13
B) 26
C) 52
D) 62

Question 28

Disability insurance,survivors' benefits,Medicare,and unemployment insurance are provided by and administered by the Social Security Administration.

Question 29

Which of the following laws requires that employers and employees pay equally for Social Security retirement benefits?

A) Federal Unemployment Tax Act
B) Federal Insurance Contribution Act
C) Pension Protection Act
D) Employee Retirement Income Security Act

Question 30

Margaret's husband,who worked as an accountant,recently died from a heart attack while on vacation.Which of the following would most likely be provided to Margaret?

A) survivors' benefits
B) life insurance
C) unemployment compensation
D) supplemental Medicaid payments

Question 31

Which of the following would most likely be eligible for Medicare?

A) Alex, a 35-year-old unemployed mechanic
B) Brenda, a 42-year-old school teacher
C) Charles, a 66-year-old retired realtor
D) Debra, a 21-year-old college student

Question 32

Employers pay the Federal Unemployment Tax at a rate of 6.2 percent on the first ________ each employee earns.

A) $1,000
B) $5,000
C) $7,000
D) $10,000

Question 33

Which of the following provides hospital and medical insurance protection for individuals who are 65 years of age or older?

A) Medicare
B) HMO
C) Medicaid
D) PPO

Question 34

Individual states administer both unemployment insurance and workers' compensation benefits.

Question 35

Which term refers to a benefit plan established by employers that allows employees to deposit a certain portion of their pre-tax salary into an account to be used for eligible expenses?

A) cash balance plans
B) health savings account
C) flexible spending account
D) defined health benefit account

Question 36

Legally required benefits became more popular in the 1940s and 1950s.

Question 37

What is a significant issue facing the Social Security program?

A) outsourcing of jobs
B) retiring baby-boomers
C) growing unemployment rate
D) rising workers' compensation costs

Question 38

Which of the following pays for unemployment insurance?

A) state and local governments
B) employer and employee
C) employee only
D) employer only

Question 39

The Social Security Act of 1935 created a system of retirement benefits.

Question 40

In a short essay,describe the reasons the U.S.government established particular legally required benefits.

Question 41

An emerging class of health insurance programs is based on consumer-driven health care,where employees play a greater role in decisions on their health care,have better access to information to make informed decisions,and share more in the costs.

Question 42

With consumer-driven health plans,it is common to increase the insurance ________.

A) premium
B) deductible
C) term
D) coverage

Question 43

Health maintenance organizations cover all services for a fixed fee but control is exercised over which doctors and health facilities a member may use.

Question 44

All of the following are examples of specialized health-related insurance plans EXCEPT ________.

A) dental insurance
B) vision insurance
C) managed care insurance
D) mental health insurance

Question 45

Health care benefits represent the most expensive cost in the area of indirect financial compensation.Which of the following is NOT a factor that has combined to create this situation?

A) shrinking population
B) growing demand for medical care
C) inefficient administrative processes
D) increasingly expensive medical technology

Question 46

The aging population and inefficient administrative processes have been factors in the rising cost of health care.

Question 47

Most discretionary benefits plans originated at the turn of the 20th century.

Question 48

Jeff lost his job in November 2015.According to COBRA,Jeff may keep his employer's health care coverage until ________.

A) December 2015
B) May 2018
C) November 2016
D) May 2017

Question 49

Julie has health insurance through her employer.The managed-care health organization used by Julie's employer covers all services for a fixed fee.However,Julie may only use the doctors and health facilities chosen by the managed-care health organization.Julie is most likely a member of a(n)________.

A) point-of-service
B) health maintenance organization
C) preferred provider organization
D) exclusive provider organization

Question 50

With a health savings account,an employee can set aside an unlimited amount of pretax funds to pay for medical expenses.

Question 51

A ________ plan pay benefits to employees on a reimbursement basis.

A) preferred provider organization
B) managed care
C) fee-for-service
D) health maintenance organization

Question 52

Flexible spending accounts and health savings accounts are examples of ________.

A) consumer-driven health care plans
B) legally required health benefits
C) major medical benefits
D) fee-for-service plans

Question 53

A major disadvantage of an FSA is that generally employees forfeit any amounts left unspent in the accounts at year end.

Question 54

Educational assistance,subsidized cafeterias,and relocation benefits are examples of ________.

A) mandatory benefits
B) employee services
C) severance pay
D) premium pay

Question 55

In a brief essay,discuss some of the reasons why companies choose to offer employee benefits.

Question 56

Which of the following is a tax-free health spending and savings account available to individuals and families with qualified high-deductible health insurance policies?

A) defined benefit plan
B) flexible spending account
C) health savings account
D) cash balance plan

Question 57

Consumer-driven health savings accounts help employees defray the cost of ________.

A) lower deductibles
B) higher deductibles
C) lower copayments
D) coinsurance at any level

Question 58

Coinsurance refers to the amount a person has to pay for medical services before the health plan begins to pay benefits.

Question 59

If David uses an in-network provider of his employer's managed-care health organization,then he pays lower fees than if he uses an out-of-network provider.David is most likely a member of a(n)________.

A) HMO
B) POS
C) PPO
D) FSA

Question 60

Money deposited into FSAs can be rolled over into the next year,while HSA funds left over at the end of the year are forfeited.

Question 61

A cash balance plan is a hybrid retirement fund with elements of both defined benefit and defined contribution plans.

Question 62

Maura's retirement plan requires her employer to make specific contributions to a retirement fund established for Maura.Which type of plan does Maura most likely have?

A) defined contribution plan
B) deferred contribution plan
C) defined benefit plan
D) deferred salary plan

Question 63

Most firms that offer food services hope to enhance employee morale and increase worker productivity.

Question 64

Which type of plan balances the risk an employee takes while saving for retirement?

A) defined benefit plan
B) cash balance plan
C) pension equity plan
D) defined contribution plan

Question 65

A defined contribution plan requires specific contributions by an employer to an employee's retirement or savings fund.

Question 66

Health maintenance organizations (HMOs)offer prepaid services,whereas fee-for-service plans operate on a reimbursement basis.

Question 67

The 2007/2009 recession caused 401(k)balances to fall sharply and firms to reduce or eliminate 401(k)matching plans.

Question 68

Leroy has a formal retirement plan based on his final years' average salary and years of service at Royce Pharmaceuticals.Which type of plan does Leroy most likely have?

A) defined contribution
B) defined benefit
C) cash balance
D) 401(k)

Question 69

Coinsurance of 20 percent means that the insurance plan will pay 20 percent of the covered expenses while the insured will pay 80 percent.

Question 70

Tax incentives encourage companies to offer pension programs.

Question 71

________ provides protection to employees' beneficiaries only during a limited period.

A) Term life insurance
B) Universal life insurance
C) Whole life insurance
D) Social Security survivor's insurance

Question 72

A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement.

Question 73

A defined contribution plan in which employees may defer income up to a maximum amount allowed is a ________.

A) stock option plan
B) cash balance plan
C) hybrid plan
D) 401(k) plan

Question 74

Discuss the basis for distinguishing between qualified plans and nonqualified plans.Be sure to provide definitions of each.

Question 75

Retirement plans that qualify for preferential tax treatment are referred to as ________.

A) tax exempt plans
B) qualified plans
C) tax efficient plans
D) nonqualified plans

Question 76

What type of retirement plan provides the participant with a fixed benefit upon retirement?

A) defined contribution
B) deferred contribution
C) defined benefit
D) deferred balance

Question 77

Which law set the criteria for distinguishing between qualified and nonqualified plans?

A) Social Security Act
B) Employee Retirement Income Security Act
C) Pension Protection Act
D) Retirement Parity Act

Question 78

What type of retirement plan has elements of both defined benefit plans and defined contribution plans?

A) 401(k) plan
B) 403(b) plan
C) benefit plan
D) cash balance plan

Question 79

A 401(k)plan is a defined benefit plan in which employees may defer income up to a maximum amount allowed.

Question 80

What is a consumer-driven health care plan? How do they benefit employers?