Question 1

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) ________.

Accepted Answer

B) HMOs cover all services for a fixed fee but exercise control over which doctors and health facilities a member may use. PPOs provide incentives for members using services within the system, but out-of-network providers may be used at higher costs.

Question 2

Which of the following covers extraordinary expenses that result from long-term or serious health problems?

Accepted Answer

C) Some plans provide for major medical benefits to cover extraordinary expenses that result from long-term or serious health problems. The use of deductibles is a common feature of medical benefits.

Question 3

Sharon's employer offers a defined contribution plan. The firm contributes stock shares to a trust in hopes of aligning employee interests with the interest of the firm. Sharon is most likely invested in a(n) ________.

Accepted Answer

A) An employee stock option plan (ESOP) is a plan in which a firm contributes stock shares to a trust. The trust then allocates the stock to participating employee accounts according to employee earnings. ESOP advocates have promoted employee ownership plans as a means to align the interests of workers and their companies to stimulate productivity.

Question 4

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

Accepted Answer

A) Consumer-driven health care plans give each employee a set amount of money annually with which to purchase health care coverage which involves high-deductible insurance coverage combined with a tax-advantaged account like a flexible spending account or health savings account. They are a good way for employers to provide the same caliber of benefits to their employees while also reducing premiums and involving employees in the cost of coverage.

Question 5

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?

Accepted Answer

A) A number of factors have combined to create the high cost of health care: an aging population; a growing demand for medical care; increasingly expensive medical technology; and inefficient administrative processes.

Question 6

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

Accepted Answer

D) A 401(k) plan is a defined contribution plan in which employees may defer income up to a maximum amount allowed. A cash balance plan is a hybrid plan with elements of both defined benefit and defined contribution plans.

Question 7

Howard Paper Company, which employs 1,200 workers, is planning to establish a worksite medical clinic at its manufacturing facility. Which of the following best supports this decision?

Accepted Answer

C) On-site health care assists in treating minor illnesses and injuries, vaccinations, physical therapy, and providing follow-up care. Employers can reduce the number of visits employees make to more costly facilities, such as physicians' offices and hospital emergency rooms. The approach reduces time spent on doctors' visits and recovery, which is why a worksite medical clinic would benefit Howard.

Question 8

What managed-care health organization offers a smaller PPO provider network and usually provides little, if any, benefits when an out-of-network provider is used?

Accepted Answer

D) Exclusive provider organizations (EPOs) offer a smaller PPO provider network and usually provides little, if any, benefits when an out-of-network provider is used. Point-of-service (POS) requires a primary care physician and referrals to see specialists, as with HMOs, but permits out-of-network health care access.

Question 9

What type of insurance is a benefit commonly provided to protect an employee's family in the event of the employee's death?

Accepted Answer

C) Group life insurance is a benefit provided to protect the employee's family in the event of his or her death. Although the cost of group life insurance is relatively low, some plans call for the employee to pay part of the premium.

Question 10

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?

Accepted Answer

C) A flexible spending account (FSA) is a health benefit plan established by employers that allows employees to deposit a certain portion of their salary into an account (before paying income taxes) to be used for eligible expenses. Health savings accounts (HSA) are tax-free health spending and savings accounts available to individuals and families who have qualified high-deductible health insurance policies as determined by IRS regulations.

Question 11

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?

Accepted Answer

C) Health savings accounts (HSA) are tax-free health spending and savings accounts available to individuals and families who have qualified high-deductible health insurance policies as determined by IRS regulations. A flexible spending account (FSA) is a health benefit plan established by employers that allows employees to deposit a certain portion of their salary into an account (before paying income taxes) to be used for eligible expenses.

Question 12

Stephanie, who belongs to a managed-care health organization, is experiencing knee pain and needs to see a specialist. Stephanie must first visit a primary care physician and receive a referral to see a knee specialist. Stephanie has access to out-of-network health care if necessary. Stephanie is most likely a member of a(n) ________.

Accepted Answer

D) Point-of-service (POS) requires a primary care physician and referrals to see specialists, as with HMOs, but permits out-of-network health care access. HMOs do not pay for out-of-network health care.

Question 13

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?

Accepted Answer

A) A defined contribution plan is a retirement plan that requires specific contributions by an employer to a retirement or savings fund established for the employee. A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement.

Question 14

The Patient Protection and Affordable Care Act of 2010 placed a limit of ________ on flexible spending accounts.

Accepted Answer

B) Under The Patient Protection and Affordable Care Act of 2010 there is a limit of $2,500 on a flexible spending account. Also, employees will no longer be able to use FSA funds to pay for over-the-counter medications.

Question 15

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

Accepted Answer

D) A cash balance plan is a hybrid plan with elements of both defined benefit and defined contribution plans. A 401(k) plan is a defined contribution plan in which employees may defer income up to a maximum amount allowed.

Question 16

A results-only work environment allows employees to ________.

Accepted Answer

B) A results-only work environment allows employees to work whenever and wherever they wish, as long as they complete projects on time.

Question 17

A defined contribution plan in which a firm contributes stock shares to a trust is known as a(n) ________.

Accepted Answer

C) An employee stock option plan (ESOP) is a plan in which a firm contributes stock shares to a trust. The trust then allocates the stock to participating employee accounts according to employee earnings.

Question 18

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

Accepted Answer

C) A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. A defined contribution plan is a retirement plan that requires specific contributions by an employer to a retirement or savings fund established for the employee.

Question 19

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?

Accepted Answer

B) A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. Although defined benefit formulas vary, they are typically based on the participant's final years' average salary and years of service.

Question 20

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) ________.

Accepted Answer

C) Preferred provider organizations (PPOs) are managed-care health organizations in which incentives are provided to members to use services within the system; out-of-network providers may be used at greater cost. HMOs cover all services for a fixed fee but exercise control over which doctors and health facilities a member may use.

Quiz 10: Indirect Financial Compensation Benefits and Nonfinancial Compensation