Question 1

Long-term disability insurance_____.

Accepted Answer

Long-term disability insurance typically provides continuing income protection for employees who become unable to work because they are disabled. Option A is incorrect as it is not a mandatory security benefit. Option B is incorrect as it is not for those employees who are disabled yet continue to work. Option C is incorrect as it does not cover income protection, it covers long term care.

Question 2

According to the 1986 amendment to the Age Discrimination in Employment Act (ADEA)_____.

Accepted Answer

The 1986 amendment to the Age Discrimination in Employment Act (ADEA) prohibits mandatory retirement based on age for most employees. Therefore, choice A is the correct answer. Choice B is not specifically related to the amendment, and choice C is only a general principle of age discrimination law, not related to the 1986 amendment. Choice D is true in general but has been true since the original ADEA was passed in 1967, and it is not specifically related to the 1986 amendment.

Question 3

Which of the following is true of defined benefit retirement plans?

Accepted Answer

Defined benefit retirement plans are designed to provide a pre-determined amount of benefit to employees at retirement, based on factors such as years of service and salary levels. The investment risk and responsibility for funding these plans typically falls on the employer, not the employee. Defined benefit plans are more common among public sector and unionized workforces. Additionally, these plans usually guarantee benefits, meaning the employer is required to pay out the promised benefit to retirees.

Question 4

In a _____, an employer makes contributions to help employees cover their health-related expenses.

Accepted Answer

A consumer-driven health plan (CDHP) is a type of health insurance plan that typically involves an employer making contributions to an employee's health savings account (HSA) or health reimbursement arrangement (HRA) to help cover health-related expenses.

Question 5

Karen, a diabetic patient, has quit her job as an internal auditor with a bank and has joined another company as the assistant CFO. Which of the following laws would enable Karen to switch her health insurance plan from her former employer to her new employer?

Accepted Answer

HIPAA (Health Insurance Portability and Accountability Act) allows individuals to transfer and continue health insurance coverage when they change or lose their job.

Question 6

Preferred provider organizations (PPO) and health maintenance organizations (HMO) _____.

Accepted Answer

PPOs and HMOs are the two most common types of managed care organizations that aim to manage and reduce health care costs while maintaining quality care. PPOs offer more flexibility in choosing providers, while HMOs typically require patients to use providers within a network. Both types of plans are designed to provide cost savings for both employers and employees.

Question 7

Which of the following is true about the Older Workers Benefit Protection Act (OWBPA)?

Accepted Answer

The Older Workers Benefit Protection Act sets forth certain conditions that must be met when older workers are offered early retirement. Option A is false because the act does not set a maximum retirement age. Option B is false because the OWBPA was enacted in 1990, and it is an amendment to the Age Discrimination in Employment Act. Option D is false because the OWBPA does cover employees in the government sector.

Question 8

Meredith, the general manager of an IT firm, is planning to introduce certain new strategies to control and reduce the health care benefit costs to her company. Which of the following is most likely to be included in her list of strategies?

Accepted Answer

Switching to consumer-driven health plans is likely to be included in Meredith's list of strategies as it is a popular approach used by companies to control and reduce health care benefit costs. Consumer-driven health plans put employees in control of their own health care spending by offering them a fixed amount of money, typically in the form of a health savings account, which they can use to pay for health care expenses. This approach often results in employees being more careful and selective in their health care spending, which in turn can help to reduce overall costs. Decreasing copayments and eliminating high-deductible plans are unlikely to be included in Meredith's strategies as they would likely increase health care costs for the company. Avoiding managed care is also unlikely to be a strategy as managed care can help to control and reduce health care costs by negotiating discounted rates with health care providers.

Question 9

The Health Insurance Portability and Accountability Act (HIPAA)_____.

Accepted Answer

HIPAA allows employees to transfer and continue health insurance coverage when they change or lose their jobs, ensuring that preexisting conditions do not prevent them from obtaining new health coverage.

Question 10

Linda works in a company that pays for the medical insurances of all its employees. However, every time she visits her physician, she is charged $25. Her medical insurance covers the rest of the fee. This is an example of_____.

Accepted Answer

This is an example of a copayment, where the insurance plan requires the employee to pay a certain predetermined amount at the time of the service, and the insurance then covers the remainder of the cost. Managed care refers to a system that coordinates and manages healthcare services, while a consumer-driven health plan is a type of insurance plan that allows individuals to have more control over their healthcare expenses. An HMO (health maintenance organization) is a type of managed care plan that typically requires members to choose a primary care physician and receive referrals for specialty care.

Question 11

Glen, a line manager, is informed that his company would be introducing a stock purchase plan for employees. This implies that_____.

Accepted Answer

A stock purchase plan typically allows employees to purchase company stocks at a discounted rate, so option C is the most likely scenario. Option A may also be true, but it is not explicitly stated in the information given. Option B is unlikely as it is rare for employees to be given free stocks, and option D is not mentioned at all.

Question 12

Hugo, an experienced electrician who has recently quit his job, wants to join a company that provides a defined benefit pension plan. Which of the following employers is Hugo most likely to join?

Accepted Answer

Unionized public firms typically offer defined benefit pension plans as part of their collective bargaining agreements with employees. The start-up wind-energy firm and privately owned restaurant are unlikely to have defined benefit pension plans due to their small size and lack of unionization, and the printing company may or may not offer a defined benefit plan depending on its financial resources and business strategy.

Question 13

_____ typically consists of approaches that monitor and reduce medical costs through restrictions and market system alternatives.

Accepted Answer

Managed care typically involves the use of utilization review and other cost-saving measures to control medical expenses. A medical review program and medical option plan can be components of managed care, but they do not encompass the entire approach. Choice A is similar to managed care, but is not as comprehensive.

Question 14

A company that has been providing generous defined benefit pension plans to all its retirees for the past 50 years is now facing bankruptcy and is unable to pay the pension amount. Which of the following statements is true of the given scenario?

Accepted Answer

The Pension Benefit Guaranty Corporation (PBGC) is a federally funded corporation that protects the retirement incomes of over 34 million American workers and retirees. It guarantees a certain level of retirement benefits paid from private sector defined benefit plans. Therefore, in the given scenario, the PBGC will pay the retiree benefits from the solvency fund. However, the amount they receive may be less than what was originally promised by the company.

Question 15

Which of the following is a provision of the Patient Protection and Affordable Care Act?

Accepted Answer

The provision of the Affordable Care Act that extends dependent coverage up to age 26 is known as the "Age 26 Rule." This provision allows young adults to remain on their parents' health insurance plans until they reach the age of 26, even if they are no longer living with or financially dependent on their parents. This has helped to increase the number of young adults who have health insurance coverage. Option A is not completely correct, as the Affordable Care Act requires firms with 50 or more employees to provide health care coverage. Option B is not correct, as the individual mandate requires individuals to maintain minimum essential coverage, not employers. Option D is not correct, as the Affordable Care Act actually requires insurance plans to cover certain preventive services without cost-sharing.

Question 16

Which of the following is one of the approaches taken by employers offering health care benefits to control and reduce their costs?

Accepted Answer

Increasing employee contributions is one approach taken by employers to control and reduce their costs for health care benefits. This can include increasing monthly premiums or requiring employees to pay a larger share of deductibles and copayments. Decreasing deductibles and copayments or providing unlimited family coverage would likely increase costs for employers, while decreasing high-deductible plans may limit choice and potentially increase costs for employees.

Question 17

What are the requirements of the Consolidated Omnibus Budget Reconciliation Act (COBRA) with respect to health care?

Accepted Answer

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires most employers with 20 or more employees to offer extended health care coverage to certain groups of employees after they leave the organization. This coverage includes widowed or divorced spouses and dependent children of former or current employees. However, employees who are terminated for gross misconduct need not be offered coverage. Option A is incorrect because it is not a requirement of COBRA, and Option C and D are also incorrect as they are not true statements.

Question 18

A pension plan in which retirement benefits are based on the accumulation of annual company contributions plus interest credited each year is called a(n) _____ plan.

Accepted Answer

A cash balance plan is a type of defined contribution plan where an employee's retirement benefit is based on the accumulation of annual company contributions plus interest credited each year. The employee's benefit statement displays their account balance much like a 401(k), but the employer bears the risk if investment returns falter. Auto-enrollment refers to a feature of retirement plans that automatically enrolls eligible employees in the plan, while defined benefit plans provide a specific monthly benefit amount to employees based on their years of service and salary.

Question 19

How do insurance plans offered by employers benefit employees even when employers do not pay any of the costs?

Accepted Answer

Insurance plans offered through group programs often have lower rates than the individual market, which can save employees money on their healthcare costs even if their employer does not contribute to the premium. Additionally, having access to healthcare coverage through their employer can provide security and peace of mind to employees.

Question 20

_____ is the federal law that ensures the privacy of employee medical records.

Accepted Answer

HIPAA (Health Insurance Portability and Accountability Act) is the federal law that ensures the privacy of employee medical records. It outlines specific regulations that protect the confidentiality of individuals' health information and provides penalties for any violations of these regulations.

Quiz 13: Managing Employee Benefits