Chap 013

Chapter 13 - Providing Employee Benefits
Chapter 13 Providing Employee Benefits

True / False Questions
1. Since benefits packages are more complex than pay str ct res! they are harder for employees to nderstand and appreciate. "r e #alse
$. "he addition of creative benefits packages in the %orker&s compensation portfolio provides employers a competitive edge in ac' iring and retaining talented employees in their organi(ation. "r e #alse
3. Benefits like performance oriented bon s and ann al profit sharing provided to employees are re' ired by la% in the ).S. "r e #alse
*. +ll ).S. employees! incl ding federal! state! and local government employees! are covered nder the ,ld +ge! S rvivors! -isability! and .ealth /ns rance program. "r e #alse
0. Social Sec rity benefits are free from federal income taxes and state taxes in abo t half the states. "r e #alse
1. Spo ses of covered earners do not receive social sec rity benefits if they have no covered earnings. "r e #alse
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2. "he nemployment ins rance program is financed thro gh federal and state taxes on both employees and employers. "r e #alse
3. )nder the %orkers compensation program! an employee need not sho% that the employer %as grossly negligent in order to receive compensation. "his implies employees are eligible for the compensation even if their in4 ries are self-inflicted. "r e #alse
5. "he #amily and 6edical 7eave +ct of 1553 re' ires organi(ations %ith 08 or more employees %ithin a 20-mile radi s to provide as m ch as 1$ %eeks of npaid leave to ' alifying employees. "r e #alse
18. Benefits provided to domestic partners of employees have the same tax advantages as benefits provided to their spo ses. "r e #alse
11. Employers in the ).S. are legally re' ired to provide 38 days of paid vacation to both ne% and existing employees every year. "r e #alse
1$. +s an employee benefit! personal days are designed to extend a " esday or "h rsday holiday into a long %eekend for employees. "r e #alse
13. #or the average person! the most important benefit is a pension program. "r e #alse
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1*. 9ecent data fo nd that among %orkers %ith health ins rance! abo t t%o-thirds %ere enrolled in a PP,. "r e #alse
10. Employees are most likely to benefit from a flexible spending acco nt if they have predictable health care expenses! s ch as ins rance premi ms. "r e #alse
11. -isability ins rance payments are s ally less than 08 percent of the employee&s salary. "r e #alse
12. + defined contrib tion plan g arantees a specified level of retirement income. "r e #alse
13. E9/S+ re' ires covered organi(ations to establish employee pension plans and to do so %ithin certain management and f nding g idelines. "r e #alse
15. "ax-favored 0$5 savings plans allo% employees to set aside a portion of their pretax earnings to p rchase long-term care ins rance. "r e #alse
$8. " ition reimb rsement programs offered by certain organi(ations cover the t ition and other ed cation related expenses of their %orkers& children. "r e #alse
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$1. "he se of %ellness programs and cons mer-directed health plans in an organi(ation reflects its ob4ective of controlling the cost of healthcare benefits. "r e #alse
$$. Cafeteria-style plans permit employees to choose the types and amo nts of benefits they %ant for themselves from a given set of alternatives. "r e #alse
$3. +ccording to the +mericans %ith -isabilities +ct :+-+;! employers are re' ired to take care not to discriminate against %orkers over age *8 in providing pay or benefits. "r e #alse
$*. )nder #+SB standards! employers f nd retirement benefits on a pay-as-yo -go basis. "r e #alse
$0. 9esearch asking employees abo t their benefits has sho%n that employees significantly nderestimate the cost and val e of their benefits. "r e #alse
Multiple Choice Questions
$1. ,n average! at least 38 percent of the total compensation provided to an employee comprises of< +. performance linked incentives. B. share in company profits. C. benefits. -. ho se rents. E. transportation allo%ances.
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$2. =hy do organi(ations pay a gro%ing share of compensation in the form of benefits> +. /t allo%s them to defer labor costs. B. /t allo%s employers to en4oy economies of scale in prod ction. C. /t entitles them to government s bsidies. -. /t gives large employers a competitive edge in the labor market. E. /t improves the good%ill and credibility of the organi(ation and increases the marketability of its prod cts.
$3. =hich of the follo%ing trends has been s ggested by the data on benefits as a percentage of total compensation bet%een 15$3 and $885> +. Benefits as a percentage of total compensation remained more or less stable post 1520. B. Benefits as a percentage of total compensation almost do bled bet%een $888 and $880. C. Benefits as a percentage of total compensation mostly revealed a positive gro%th over this period. -. Benefits as a percentage of total compensation declined every year post $888. E. Benefits as a percentage of total compensation declined sharply bet%een 15$3 and 1500.
$5. =hich of the follo%ing legally re' ired employer-provided benefits help %orkers in4 red on the 4ob> +. Social sec rity B. )nemployment ins rance C. ?ro p ins rance -. =orkers& compensation E. @#amily-#riendly@ Benefits
38. =hich one of the follo%ing employer-provided benefits is re' ired by la% in the ).S.> +. #loating holidays B. Paid vacation leave C. )npaid family and medical leave -. 7ong-term disability ins rance E. 7ong-term care ins rance
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31. =hat is the earliest age at %hich an eligible %orker can retire and still receive hisAher Social Sec rity retirement benefits> +. 00 B. 18 C. 1$ -. 28 E. 08
3$. =hich legal benefit re' ires employers to pay payroll tax> +. 7ong-term disability ins rance B. )nemployment ins rance C. =orkers& compensation -. )npaid family medical leave E. .ealth care benefits
33. =hich one of the follo%ing is tr e of Social Sec rity benefits> +. Benefits are taxed as ordinary income at both the federal and state level. B. =orkers %ho meet re' irements receive retirement benefits according to age and earnings history. C. =orkers are not re' ired to meet any eligibility r les to receive benefits. -. "he cost of the program is borne entirely by the employees %ho pay a payroll tax. E. "he program covers railroad and federal! state! and local government employees.
3*. =hich one of the follo%ing is an ob4ective of the nemployment ins rance program> +. "o improve the prod ctivity and skill set of %orkers B. "o protect the employer from la%s its C. "o provide an incentive for employers to stabili(e employment -. "o offset lost income d ring a labor disp te E. "o help %orkers %ith the expenses res lting from 4ob-related accidents and illnesses
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30. "he nemployment ins rance program is financed largely thro gh federal and state taxes on< +. both employees and employers. B. employers only. C. employees only. -. all taxpayers. E. high income gro p of citi(ens.
31. /n terms of nemployment ins rance! %hich one of the follo%ing actions is most likely to keep a company&s experience rating favorable> +. External rather than internal recr itment B. + belo%-market pay line C. +cc rate h man reso rce planning -. +t-%ill-employment policies E. Bob oriented %orkshops and in-ho se training
32. /n %hich of the follo%ing areas are nemployment ins rance benefits and %orkers& compensation benefits similar> +. Both these programs are f nded by the federal taxes on employees. B. Both these costs depend on the organi(ation&s experience ratings. C. "he f nding costs of both these programs are same across the states. -. Both the programs replace the same percentage of an individ al&s previo s earnings. E. "he amo nt of compensation provided to the employees is fixed nder both the programs.
33. =orkers are eligible for nemployment benefits if they< +. vol ntarily ' it a 4ob. B. are o t of %ork d e to health reasons. C. %ere discharged for ca se. -. have been %orking for at least fo r ' arters. E. are o t of %ork beca se of a labor disp te.
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35. =hich one of the follo%ing is tr e of %orkers& compensation> +. Employees are covered nder the @no-fa lt@ provision regardless of their behavior. B. +pproximately 58 percent of all ).S. %orkers are covered by the system. C. Provides payments to offset lost income d ring invol ntary nemployment. -. # nding for the program comes from the state taxes on employees. E. "he benefits provided to the %orkers are taxable.
*8. "he cost of a %orker&s compensation ins rance depends on< +. the profit earned by the organi(ation d ring the concerned fiscal. B. the n mber of years the concerned %orker has been %orking in the organi(ation. C. the total strength of the organi(ation&s %orkforce. -. the n mber of years for %hich the organi(ation has been in b siness. E. the state %here the company is located.
*1. "o take npaid family leave nder the provisions of the #amily and 6edical 7eave +ct! employees m st meet %hich of the follo%ing criteria> +. .ave %orked for an employer %ith 08 or more employees %ithin a 20-mile radi s B. .ave %orked at least 10 ho rs per %eek C. .ave %orked for the employer for more than 0 years -. Belong to the top 18 percent of highest paid exec tives E. .ave %orked for an employer %ith at least 188 employees %ithin a 20-mile radi s
*$. "he #amily and 6edical 7eave +ct of 1553 re' ires employers to provide< +. p to 3 %eeks of npaid leave after childbirth or adoption. B. reinstatement to the same :or a comparable; 4ob pon one&s ret rn to %ork. C. paid leave to any employee %ho has one or more years of f ll-time service. -. p to 13 %eeks of npaid leave to care of a serio sly ill parent! spo se! or child. E. p to one month of paid leave to take care of a serio sly ill spo se! child! or parent.
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*3. =hy do ma4ority of employees opting for #amily and 6edical leave fail to take benefit of the f ll 1$ %eeks leave> +. /t makes record-keeping tasks very complex for the employers. B. +lmost 38 percent of employees like to take their leaves intermittently. C. Employees fear that they %ill have to take p more responsibilities once they ret rn to %ork. -. Expenses that come %ith childbirth! adoption or illness are not afforded by everyone. E. /t prevents them from opting for paid leaves for the next five years.
**. "he Pregnancy -iscrimination +ct of 1523 re' ires employers< +. to offer disability plans %ith pregnancy-related coverage. B. to offer disability plans to treat pregnancy as they %o ld any other disability. C. to provide p to six %eeks of paid leave to either parent pon the birth of a child. -. to provide p to six %eeks of npaid leave to either parent pon the birth of a child. E. to offer disability leave p to one month to either parent before the birth of a child.
*0. - e to increasing diversity %ithin the %orkplace! many employers are extending benefits s ch as health ins rance to< +. independent contractors. B. domestic partners. C. extended family members. -. anyone living %ithin the employee&s ho sehold. E. the employees& adopted children.
*1. =hile the n mber of mandatory days of paid vacation in =estern E rope is abo t 38 days! the ).S. companies typically offer< +. five paid holidays each year. B. 18 paid holidays each year. C. $8 paid holidays each year. -. more than *8 paid holidays each year. E. more than t%o %eeks of paid holidays each year.
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*2. "he p rpose of floating holidays is to allo% employees to< +. extend a " esday or "h rsday holiday into a long %eekend. B. decide %hich national holidays they %ish to observe %ith pay. C. take time off for personal reasons :%ith the approval of the s pervisor;. -. allo% international employees to observe legal holidays %ithin their co ntry of assignment. E. pool in the different types of leaves and en4oy long paid vacations.
*3. =hich one of the follo%ing is tr e of the Consolidated ,mnib s B dget 9econciliation +ct of 1530> +. Employers do not permit employees to extend their health ins rance coverage for p to 31 months follo%ing a @' alifying event.@ B. Employees can extend their health ins rance coverage only by paying a higher premi m than that nder the gro p rates. C. Employers m st contin e to pay the cost of premi ms for ' alified employees. -. C alifying events incl de! among others! termination :except for gross miscond ct;! a red ction in ho rs that leads to the loss of health ins rance! and death. E. /n case of death of the employee! the s rviving child or the dependant %ife %ill not be allo%ed to extend the coverage.
*5. =hich of the follo%ing co ntries spends the least amo nt of its gross domestic prod ct on health care> +. "he )nited States of +merica B. Canada C. Bapan -. Dorea E. "he )nited Dingdom
08. =hich of the follo%ing federal la%s re' ires employers to permit employees to extend their health ins rance coverage at gro p rates for p to 31 months follo%ing a ' alifying event s ch as a layoff! red ction in ho rs! or the employee&s death> +. "he E9/S+ B. "he +-E+ C. "he +-+ -. "he #7S+ E. "he C,B9+
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01. =hich one of the follo%ing is tr e of health maintenance organi(ations> +. Costs tend to be more than the cost for traditional health ins rance. B. Services are provided on a postpaid basis. C. Employees may select physicians of their choice. -. Payment of physicians is on a flat salary basis. E. Physicians are paid a fee for each service rather than a salary.
0$. /dentify the prime difference bet%een PP,s and .6,s. +. PP,s provide benefits on a red ced-fee! per-call basis rather than on a prepaid basis. B. .6, employees are not re' ired to se only preselected plan service providers! as in PP,s. C. PP,s are less expensive plans than .6,s if the employee goes o t of the PP, net%ork. -. .6,s have more in common %ith traditional fee-for-service plans than do PP,s. E. )nlike .6,s! payments to PP, physicians are made on a flat salary basis.
03. =hich one of the follo%ing statements abo t flexible spending acco nts is tr e> +. "hey may be sed to cover only employees& :not dependents&; health-care expenses. B. "hey do not permit pretax employee contrib tions. C. Contrib tions to the acco nts may exceed E0!888 per year b t m st be designated in advance. -. # nds m st be sed by the plan&s year end or they revert to the employer. E. "he money in the flexible spending acco nt is taxed and it red ces an employee&s take home pay.
0*. =hich of the follo%ing is tr e of employee %ellness programs> +. "he programs are c rative in nat re. B. "he programs manage health-care costs by red cing employees& needs for health care services. C. "he programs are either active or passive! %ith active programs costing less than passive programs. -. "he programs have had very little s ccess in red cing risk factors associated %ith cardiovasc lar disease. E. "hey provide hospitali(ation coverage for employees.
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00. @+ctive@ employee %ellness programs< +. rely on employees to identify and obtain the services they need. B. are health ed cation programs that provide information and services! b t no formal s pport or motivation to se the program C. have not been s ccessf l in red cing risk factors associated %ith cardiovasc lar disease. -. ass me that behavior change re' ires not only a%areness and opport nity! b t s pport and reinforcement. E. cost less than passive %ellness programs.
01. #rom %hich of the follo%ing so rces do most retirees :10 and older; receive most of their income> +. Social Sec rity B. Private pensions C. Earnings from personal assets -. -isability ins rance E. Private investments
02. =hich type of retirement plan g arantees a specified level of retirement income> +. *81:k; plan B. Profit sharing plan C. 6oney p rchase plan -. -efined benefit plan E. Employee stock o%nership plan
03. =hich of the follo%ing is a typical factor sed to determine retirement benefit levels nder a defined benefit retirement plan> +. "he state %here the person %as employed d ring the retirement year. B. F mber of dependents. C. +ge. -. +verage earning d ring the last $8 years of employment. E. F mber of n sed leaves at the end of the retirement year.
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05. =hich of the follo%ing statements concerning the Pension Benefit ? arantee Corporation is tr e> +. /t %as created by the Employee 9etirement /ncome Sec rity +ct :E9/S+; of 152*. B. /t provides a s pplemental income if the employee is temporarily nemployed. C. /t provides employee protection for only defined-benefit pension plans. -. /t is f nded by a payroll tax imposed on each plan participant. E. /t g arantees retirees a basic benefit only if the employer is in a so nd financial position.
18. =hich of these had been accomplished by the Employee 9etirement /ncome Sec rity +ct of 152*> +. "he act established rights relating to vesting. B. "he act re' ired employers to offer s pplemental retirement plans. C. "he act barred portability of retirement savings. -. "he act red ced the responsibility of pension plan tr stees. E. "he act g aranteed retirees a pension e' ivalent to their last dra%n salary.
11. =hich of the follo%ing federal la%s increased the responsibility of pension plan tr stees to protect retirees> +. "he C,B9+ B. "he +-E+ C. "he +-+ -. "he #7S+ E. "he E9/S+
1$. =hich one of the follo%ing is a type of defined-contrib tion pension plan> +. Cons mer-driven pension plan B. 6oney p rchase plan C. ?ainsharing plan -. #lexible spending acco nt plan E. )nf nded PB?C plan
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13. + pop lar defined-contrib tion plan %hereby employees contrib te pretax dollars %hich are then matched by the employer is kno%n as< +. money p rchase plans. B. Section *81:k; plans. C. profit-sharing plans. -. E9/S+ benefit plans. E. employee stock o%nership plans :ES,Ps;.
1*. =ithin a *81:k; plan! %ho has the responsibility for investing %isely> +. "he employee B. "he P?BC C. "he E9/S+ #id ciary +dvisor -. "he financial instit tion handling the acco nt E. "he employer
10. =hich one of the follo%ing is tr e of defined-contrib tion plans> +. "hey shift the investment risk to the employer. B. "hey present greater administrative challenges to employers. C. "hey re' ire ann al premi m payments to the PB?C. -. "hey g arantee a basic benefit to the employee if the employer experiences financial diffic lties. E. "hey are increasingly gaining importance in retirement plans.
11. =hy are gro%ing n mbers of employers opting for defined-contrib tion plans> +. -efined-contrib tion plans are re' ired by E9/S+. B. Employers are free from the risk of poor performance of the plans. C. "he P?BC makes ann al contrib tion of E33 per participant. -. "hey g arantee a specified level of retirement income. E. "hey g arantee higher ret rns to the employees compared to the defined benefit plans.
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12. =hich one of the follo%ing is tr e of a cash balance plan> +. +ll contrib tions to the plan come from the employee. B. "he money earns interest at a predetermined rate! s ch as the rate paid on ).S. "reas ry bills. C. ,lder employees %ith many years of service benefit to a greater degree than do yo nger %orkers 4 st starting their careers. -. "hey penali(e employees for changing 4obs. E. Employees cannot predict retirement benefits nder cash balance plans.
13. #or an organi(ation %ith GGGG! s%itching from a defined-benefit plan can prod ce great savings in pension benefits. +. many experienced employees B. a fe% skilled employees C. many yo ng employees -. many retired employees E. highly skilled employees
15. =hich of the follo%ing is a vesting right according to E9/S+ g idelines> +. "he right to a pension at retirement. B. "he right to receive a pension e' ivalent to the last dra%n salary. C. "he right to a pension only if an employee has %orked for at least 10 years %ith an organi(ation. -. + g arantee that the employer %ill not s%itch the pension plan from defined-benefit to defined-contrib tion plan. E. + g arantee that the employer %ill not be able to terminate the employee&s service in the organi(ation ntil the latter vol ntarily opts for retirement.
28. "he GGGGG is a report that describes a pension plan&s f nding! eligibility re' irements! risks! and other details. +. vesting right B. ES,P C. 0$5 savings plan -. @top-heavy@ plan E. s mmary plan description
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21. =hich of the follo%ing is tr e of 0$5 savings plans> +. "hey are mandated by the federal government. B. "hey are designed to s pport the primary ed cation expenses of %orkers& children. C. "hey provide ed cation to employees& children at a s bsidi(ed rate. -. "hey provide information abo t the ed cation standards in different colleges to employees to help them enroll their children in better instit tions. E. "hey allo% parents and other family members defer taxes on the earnings of their deposits into the 0$5 acco nt.
2$. =hich level of child care is most fre' ently provided by organi(ations %ith at least 188 employees> +. "hey offer no s pport in this area. B. "hey s pply and help employees collect information abo t the cost and ' ality of available child care. C. "hey provide vo chers or disco nts for employees to se at existing child-care facilities. -. "hey operate a day-care center at or near the %orkplace. E. "hey set p flexible spending acco nts for dependent care.
23. Elder care benefit typically emphasi(es on< +. providing a direct financial assistance. B. providing tax exemptions on medical bills of the dependent elders. C. setting p an elderly care facility close to the %ork place. -. providing information and s pport. E. providing vo chers and disco nts to help employees access the existing elderly care facilities.
2*. "o enco rage learning and attract the kinds of employees %ho %ish to develop their kno%ledge and skills! many organi(ations offer< +. t ition reimb rsement programs. B. flexible sched les. C. paid leaves for more than $ %eeks. -. ' arterly promotions. E. college savings plans.
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20. /dentify the so rce of s rvey information on competitors& benefits packages and benefits costs. +. #inancial instit tions B. "he PB?C C. "he B rea of 7abor Statistics -. "he E9/S+ E. P blic employment agency
21. =hich of the follo%ing benefits sho ld be provided by organi(ations that have high-stress 4obs to help employees p t in the necessary long ho rs and alleviate stress> +. +dditional paid leaves B. ?reater n mber of medical leaves C. + share in company profits -. /ncreased coverage nder health ins rance E. 9ecreational activities s ch as on-site basketball co rts
22. -ecisions on selecting the contents of an employee benefits package sho ld be based on< +. the si(e of the organi(ation. B. the n mber of years the organi(ation has been in b siness. C. the demands of the top level of exec tives. -. the expectations of its e' ity share holders. E. the organi(ation&s b dget.
23. Benefit plans that permit employees to choose the types and amo nts of benefits they %ant from a set of alternatives are called< +. preferred provider plans. B. cafeteria-style plans. C. pay-or-play plans. -. flexible spending acco nts. E. cash balance plans.
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25. =hich one of the follo%ing is an advantage of cafeteria-style plans> +. Employees generally become more a%are of the val e of company benefits. B. "he employer can completely transfer the costs of providing benefits to the employees. C. +dministrative costs are red ced especially in design and start- p stages. -. "he company inc rs lo%er costs by allo%ing employees to select the benefits. E. "he company can estimate its costs better by allo%ing employees to select their benefits.
38. =hy are cafeteria-style plans more expensive for an organi(ation> +. Employers pay m ch higher premi m on .6, than a preferred health care plan. B. Employers are re' ired to pay higher ins rance premi m for laid-off %orkers. C. Contrib tion to P?BC to f nd the retirement plan increases nder this plan. -. Employees select the kind of benefits they expect to need the most. E. "he employers bear the cost of providing employees %ith benefits they do not val e.
31. .o% can organi(ations red ce cost of health care benefits offered to employees> +. /ncreasing the amo nts employers pay for ded ctibles and coins rance. B. Selecting traditional health ins rance to .6, and PP, as a preferred option. C. Expanding the coverage for different types of claims. -. Paying some or all of the difference in cost bet%een an .6, or PP, plan. E. Shifting from traditional health ins rance plans to PP,s and C-.Ps.
3$. =hich of the follo%ing options can be legally adopted by organi(ations looking to restr ct re the %orkforce to minimi(e the expense of benefits> +. )se independent contractors rather than hire additional employees. B. 7imit the coverage on life ins rance! based pon the employee&s age. C. )se f ll-time rather than part-time employees. -. 9ecr it ne% employees instead of demanding overtime from the existing employees. E. S bstit te .6, and PP, plans %ith traditional health ins rance plans.
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33. =hich of the follo%ing organi(ations strictly limits the definition of @independent contractors!@ so that employers cannot avoid legal obligations by classifying %orkers as selfemployed %hen the organi(ation receives the benefits of a permanent employee> +. "he /nternal 9even e Service B. "he #B?C C. "he E9/S+ -. Employee Benefit 9esearch /nstit te E. "he B rea of 7abor Statistics
3*. =hich one of the follo%ing is F," a benefit of a ' alified retirement plan> +. +n immediate tax ded ction for the f nds employees contrib te to the plan. B. "ax-free earnings on the money in the retirement f nd. C. "ax-free %ithdra%als for @highly compensated employees.@ -. Fo immediate tax on employees for the amo nt the employer contrib tes. E. Prevents an organi(ation from setting p a retirement plan that provides benefits excl sively to its o%ners and top managers.
30. =hich of the follo%ing criteria is an organi(ation re' ired to meet %hile offering early retirement incentives> +. Set an age at %hich retirement benefits stop gro%ing B. +sk female employees to pay more to defined-benefit plans C. Provide acc rate information abo t the options available -. +sk employees to sign comp lsory %aiver nder +-E+ E. Provide employees not more than *3 ho rs to make an early retirement decision
31. )nder the ,lder =orkers Benefit Protection +ct of 1558! employers %ishing to se earlyretirement %aivers m st adhere to %hich of the follo%ing g idelines> +. /nform employees that they may cons lt %ith a la%yer before signing. B. +llo% employees not more than *3 ho rs before signing the retirement agreement. C. 6ake +-E+ %aivers comp lsory and spell o t the employee&s rights nder +-E+. -. Provide lesser benefits than %o ld other%ise be available pon retirement. E. Provide employees ann al bon s and health ins rance after the retirement.
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32. "he la% that specifies that employees %ith disabilities m st have @e' al access to %hatever health ins rance coverage the employer provides other employees@ is the< +. +-+. B. +-E+. C. #7S+. -. E9/S+. E. C,B9+.
33. =hich one of the follo%ing statements is tr e of employee benefits> +. Employees generally have a thoro gh nderstanding of %hat benefits they have and %hat the market val e of these benefits is. B. Employees significantly nderestimate the cost and val e of their benefits. C. Employers do an effective 4ob of comm nicating the cost and val e of benefits to their employees. -. Employees! for the most part! are 4 st not interested in their benefits. E. Employers have very limited options for comm nicating information abo t benefits.
35. "he f nds re' ired by an organi(ation to pay retirement benefits are reported as GGGGG in the financial statement. +. c rrent assets B. c rrent liabilities C. acco nts receivable -. bad debt E. f t re liabilities
58. =hich of the follo%ing options can be sed by employers to comm nicate information abo t benefits to the existing %orkers> +. Board of directors meeting B. "he company&s official %ebsite C. =orker participation in management decisions -. ,n-camp s recr itment E. ,rgani(ing training programs
Essay Questions
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51. +ltho gh benefits are considered a part of total compensation! benefits have ni' e aspects that make them ' ite different from direct compensation. Briefly disc ss three of these ni' e aspects.
5$. -isc ss the #amily and 6edical 7eave +ct of 1553! incl ding its eligibility re' irements! scope of coverage! and effectiveness.
53. State the ob4ectives of the nemployment ins rance program established by the Social Sec rity +ct of 1530. .o% is this program f nded>
5*. =hat are sick leaves> =hat are the pros and cons of the acc m lation of sick leaves year after year>
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50. =hat are .6,s and PP,s> .o% do they differ from each other and from traditional health care providers>
51. -isc ss and contrast defined-benefit! defined-contrib tion! and cash balance retirement plans.
52. -isc ss the different types of @family-friendly@ benefits provided by employers to help the employees manage conflicts bet%een their %ork and family roles.
53. -isc ss flexible benefits plans! incl ding their nat re! p rpose! advantages and disadvantages.
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55. Compare the +ge -iscrimination in Employment +ct :+-E+; %ith the +mericans %ith -isabilities +ct :+-+; as t%o effective tools sed to minimi(e discrimination at the %orkplace.
188. =hy is it essential for organi(ations to comm nicate the nat re and val e of benefits to their employees>
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Chapter 13 Providing Employee Benefits +ns%er Dey
True / False Questions
1. (p. 384) Since benefits packages are more complex than pay str ct res! they are harder for employees to nderstand and appreciate. T !E Benefits packages are more complex than pay str ct res! so benefits are harder for employees to nderstand and appreciate.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(& Discuss t)e importance of benefits as a part of employee compensation. *opic: *)e Role of mployee Benefits
$. (p. 38+) "he addition of creative benefits packages in the %orker&s compensation portfolio provides employers a competitive edge in ac' iring and retaining talented employees in their organi(ation. T !E Some employers assemble creative benefits packages that set them apart in the competition for talent.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(& Discuss t)e importance of benefits as a part of employee compensation. *opic: *)e Role of mployee Benefits
13-$*
3. (p. 38.) Benefits like performance oriented bon s and ann al profit sharing provided to employees are re' ired by la% in the ).S. F"#$E Benefits s ch as Social Sec rity! nemployment ins rance! %orker&s compensation ins rance! family and medical leave! and healthcare are re' ired by la%.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(& Discuss t)e importance of benefits as a part of employee compensation. *opic: Benefits Re/uire- by !a0
*. (p. 381) +ll ).S. employees! incl ding federal! state! and local government employees! are covered nder the ,ld +ge! S rvivors! -isability! and .ealth /ns rance program. F"#$E "he ,ld +ge! S rvivors! -isability! and .ealth /ns rance :,+S-./; program covers over 58 percent of ).S. employees. "he main exceptions are railroad and federal! state! and local government employees! %ho often have their o%n plans.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: Benefits Re/uire- by !a0
0. (p. 381) Social Sec rity benefits are free from federal income taxes and state taxes in abo t half the states. T !E Social Sec rity benefits are free from federal income taxes and free from state taxes in abo t half the states.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: Social Security
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1. (p. 381) Spo ses of covered earners do not receive social sec rity benefits if they have no covered earnings. F"#$E Spo ses of covered earners receive benefits! even if they have no covered earnings. "hey receive either the benefit associated %ith their o%n earnings or one-half of the amo nt received by the covered earner! %hichever is greater.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: Social Security
2. (p. 388) "he nemployment ins rance program is financed thro gh federal and state taxes on both employees and employers. F"#$E 6ost of the f nding for nemployment ins rance comes from federal and state taxes on employers.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 4nemployment 5nsurance
13-$1
3. (p. 388'386) )nder the %orkers compensation program! an employee need not sho% that the employer %as grossly negligent in order to receive compensation. "his implies employees are eligible for the compensation even if their in4 ries are self-inflicted. F"#$E =orkers& compensation la%s operate nder a principle of no-fa lt liability! meaning that an employee does not need to sho% that the employer %as grossly negligent in order to receive compensation! and the employer is protected from la%s its. Employees are not eligible if their in4 ries are self-inflicted or if they res lt from intoxication or @%ilf l disregard of safety r les.@
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 7or8ers' Compensation
5. (p. 386) "he #amily and 6edical 7eave +ct of 1553 re' ires organi(ations %ith 08 or more employees %ithin a 20-mile radi s to provide as m ch as 1$ %eeks of npaid leave to ' alifying employees. T !E "he #amily and 6edical 7eave +ct :#67+; of 1553 re' ires organi(ations %ith 08 or more employees %ithin a 20-mile radi s to provide as m ch as 1$ %eeks of npaid leave after childbirth or adoptionH to care for a serio sly ill child! spo se! or parent! for an employee&s o%n serio s illnessH or to take care of rgent needs that arise %hen a spo se! child! or parent in the Fational ? ard or 9eserve is called to active d ty.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 4npai- 9amily an- ,e-ical !ea%e
13-$2
18. (p. 36() Benefits provided to domestic partners of employees have the same tax advantages as benefits provided to their spo ses. F"#$E Benefits provided to domestic partners do not have the same tax advantages as benefits provided to spo ses. "he partner&s benefits are taxed as %ages of the employee receiving the benefits.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(3 Describe t)e most common forms of pai- lea%e. *opic: #ptional Benefits :ro"rams
11. (p. 36&) Employers in the ).S. are legally re' ired to provide 38 days of paid vacation to both ne% and existing employees every year. F"#$E =estern E ropean co ntries re' ire a minim m n mber of paid vacation days! %ith ne% employees receiving 38 days off in many co ntries. "he )nited States! in contrast! has no s ch legal re' irement.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(3 Describe t)e most common forms of pai- lea%e. *opic: :ai- !ea%e
1$. (p. 363) +s an employee benefit! personal days are designed to extend a " esday or "h rsday holiday into a long %eekend for employees. F"#$E #loating holidays are paid holidays that vary from year to year. "he organi(ation may sched le floating holidays so that they extend a " esday or "h rsday holiday into a long %eekend. Paid personal days off are sched led according to the employee&s personal needs! %ith the s pervisor&s approval.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(3 Describe t)e most common forms of pai- lea%e. *opic: #ptional Benefits :ro"rams
13-$3
13. (p. 363) #or the average person! the most important benefit is a pension program. F"#$E #or the average person! the most important benefit by far is medical ins rance.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(4 5-entify t)e 8in-s of insurance benefits offere- by employers. *opic: ;roup 5nsurance
1*. (p. 36+) 9ecent data fo nd that among %orkers %ith health ins rance! abo t t%o-thirds %ere enrolled in a PP,. T !E 9ecent data fo nd that among %orkers %ith health ins rance! abo t t%o-thirds %ere enrolled in a PP,.
10. (p. 36+) Employees are most likely to benefit from a flexible spending acco nt if they have predictable health care expenses! s ch as ins rance premi ms. T !E Employees are most likely to benefit from a flexible spending acco nt if they have predictable health care expenses! s ch as ins rance premi ms.
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11. (p. 36.) -isability ins rance payments are s ally less than 08 percent of the employee&s salary. F"#$E -isability payments are a percentage of the employee&s salaryItypically 08 to 28 percent.
12. (p. 368'366) + defined contrib tion plan g arantees a specified level of retirement income. F"#$E -efined contrib tion plans set p an individ al acco nt for each employee and specify the si(e of the investment into that acco nt! rather than the amo nt to be paid o t pon retirement. "he amo nt the retiree receives %ill depend on the acco nt&s performance.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(+ Define t)e types of retirement plans offere- by employers. *opic: Retirement :lans
13. (p. 4(('4(&) E9/S+ re' ires covered organi(ations to establish employee pension plans and to do so %ithin certain management and f nding g idelines. F"#$E +long %ith re' irements for f nding defined-benefit plans! E9/S+ specifies a n mber of re' irements related to eligibility for benefits and comm nication %ith employees. E9/S+ g arantees employees that %hen they become participants in a pension plan and %ork a specified n mber of years they earn a right to a pension pon retirement.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(+ Define t)e types of retirement plans offere- by employers. *opic: Retirement :lans
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15. (p. 4(2) "ax-favored 0$5 savings plans allo% employees to set aside a portion of their pretax earnings to p rchase long-term care ins rance. F"#$E "ax-favored 0$5 savings plans let parents and other family members defer taxes on the earnings of their deposits into the 0$5 acco nt.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(. Describe )o0 or"ani3ations use ot)er benefits to matc) employees' 0ants an- nee-s. *opic: <9amily'9rien-ly< Benefits
$8. (p. 4(3) " ition reimb rsement programs offered by certain organi(ations cover the t ition and other ed cation related expenses of their %orkers& children. F"#$E "o enco rage learning and attract the kinds of employees %ho %ish to develop their kno%ledge and skills! many organi(ations offer t ition reimb rsement programs! %hich cover t ition and related expenses for co rses that are relevant to the employee&s c rrent 4ob or f t re career at the organi(ation.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(. Describe )o0 or"ani3ations use ot)er benefits to matc) employees' 0ants an- nee-s. *opic: #t)er Benefits
$1. (p. 4(4) "he se of %ellness programs and cons mer-directed health plans in an organi(ation reflects its ob4ective of controlling the cost of healthcare benefits. T !E +mong companies that do set goals! the most common ob4ectives incl de controlling the cost of health care benefits and retaining employees. "he first goal explains the gro%ing se of %ellness programs and cons mer-directed health plans.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: asy !earnin" #b$ecti%e: &3'(1 =plain )o0 to c)oose t)e contents of an employee benefits pac8a"e. *opic: *)e #r"ani3ation's #b$ecti%es
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$$. (p. 4(.) Cafeteria-style plans permit employees to choose the types and amo nts of benefits they %ant for themselves from a given set of alternatives. T !E Cafeteria-style plans offer employees a set of alternatives from %hich they can choose the types and amo nts of benefits they %ant.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(1 =plain )o0 to c)oose t)e contents of an employee benefits pac8a"e. *opic: mployees' =pectations an- >alues
$3. (p. 4(8'4(6) +ccording to the +mericans %ith -isabilities +ct :+-+;! employers are re' ired to take care not to discriminate against %orkers over age *8 in providing pay or benefits. F"#$E "he +-E+ re' ires employers to take care not to discriminate against %orkers over age *8 in providing pay or benefits. )nder the +-+! employees %ith disabilities m st have @e' al access to %hatever health ins rance coverage the employer provides other employees.@
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(8 Summari3e t)e re"ulations affectin" )o0 employers -esi"n an- a-minister benefits pro"rams. *opic: Anti-iscrimination !a0s
$*. (p. 4(6) )nder #+SB standards! employers f nd retirement benefits on a pay-as-yo -go basis. F"#$E )nder #+SB standards! employers m st set aside the f nds they expect to need for benefits to be paid after retirement! rather than f nding those benefits on a pay-as-yo -go basis.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(8 Summari3e t)e re"ulations affectin" )o0 employers -esi"n an- a-minister benefits pro"rams. *opic: Accountin" Re/uirements
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$0. (p. 4(6) 9esearch asking employees abo t their benefits has sho%n that employees significantly nderestimate the cost and val e of their benefits. T !E 9esearch asking employees abo t their benefits has sho%n that employees significantly nderestimate the cost and val e of their benefits.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(6 Discuss t)e importance of effecti%ely communicatin" t)e nature an- %alue of benefits to employees. *opic: Communicatin" Benefits to mployees
Multiple Choice Questions
$1. (p. 384) ,n average! at least 38 percent of the total compensation provided to an employee comprises of< +. performance linked incentives. B. share in company profits. C% benefits. -. ho se rents. E. transportation allo%ances. ,n average! o t of every dollar spent on compensation! 38 cents or more go to benefits.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(& Discuss t)e importance of benefits as a part of employee compensation. *opic: *)e Role of mployee Benefits
13-33
$2. (p. 38+) =hy do organi(ations pay a gro%ing share of compensation in the form of benefits> +. /t allo%s them to defer labor costs. B. /t allo%s employers to en4oy economies of scale in prod ction. C. /t entitles them to government s bsidies. &% /t gives large employers a competitive edge in the labor market. E. /t improves the good%ill and credibility of the organi(ation and increases the marketability of its prod cts. Some employers assemble creative benefits packages that set them apart in the competition for talent.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(& Discuss t)e importance of benefits as a part of employee compensation. *opic: *)e Role of mployee Benefits
$3. (p. 38.) =hich of the follo%ing trends has been s ggested by the data on benefits as a percentage of total compensation bet%een 15$3 and $885> +. Benefits as a percentage of total compensation remained more or less stable post 1520. B. Benefits as a percentage of total compensation almost do bled bet%een $888 and $880. C% Benefits as a percentage of total compensation mostly revealed a positive gro%th over this period. -. Benefits as a percentage of total compensation declined every year post $888. E. Benefits as a percentage of total compensation declined sharply bet%een 15$3 and 1500. +s #ig re 13.1 in the text sho%s! the share of benefits as a percentage of total compensation has gro%n over the past decades.
AACSB: Reflecti%e *)in8in" Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(& Discuss t)e importance of benefits as a part of employee compensation. *opic: *)e Role of mployee Benefits
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$5. (p. 388) =hich of the follo%ing legally re' ired employer-provided benefits help %orkers in4 red on the 4ob> +. Social sec rity B. )nemployment ins rance C. ?ro p ins rance &% =orkers& compensation E. @#amily-#riendly@ Benefits =orkers& compensation la%s help %orkers %ith the expenses res lting from 4ob-related accidents and illnesses.
38. (p. 386) =hich one of the follo%ing employer-provided benefits is re' ired by la% in the ).S.> +. #loating holidays B. Paid vacation leave C% )npaid family and medical leave -. 7ong-term disability ins rance E. 7ong-term care ins rance /n the )nited States! npaid leave is re' ired by la% for certain family needs. Specifically! the #amily and 6edical 7eave +ct :#67+; of 1553 re' ires organi(ations %ith 08 or more employees %ithin a 20-mile radi s to provide as m ch as 1$ %eeks of npaid leave for vario s family-related needs and emergencies classified nder the la%.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 4npai- 9amily an- ,e-ical !ea%e
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31. (p. 381) =hat is the earliest age at %hich an eligible %orker can retire and still receive hisAher Social Sec rity retirement benefits> +. 00 B. 18 C% 1$ -. 28 E. 08 /f employees elect to begin receiving benefits at f ll retirement age :%hich rises %ith birth year;! they can receive f ll benefits! or if they elect to begin receiving benefits at age 1$! they receive benefits at a permanently red ced level.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: Social Security
3$. (p. 388) =hich legal benefit re' ires employers to pay payroll tax> +. 7ong-term disability ins rance B% )nemployment ins rance C. =orkers& compensation -. )npaid family medical leave E. .ealth care benefits 6ost of the f nding for nemployment ins rance comes from federal and state taxes on employers.
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33. (p. 381) =hich one of the follo%ing is tr e of Social Sec rity benefits> +. Benefits are taxed as ordinary income at both the federal and state level. B% =orkers %ho meet re' irements receive retirement benefits according to age and earnings history. C. =orkers are not re' ired to meet any eligibility r les to receive benefits. -. "he cost of the program is borne entirely by the employees %ho pay a payroll tax. E. "he program covers railroad and federal! state! and local government employees. =orkers %ho meet eligibility re' irements receive the retirement benefits according to their age and earnings history.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: Social Security
3*. (p. 381'388) =hich one of the follo%ing is an ob4ective of the nemployment ins rance program> +. "o improve the prod ctivity and skill set of %orkers B. "o protect the employer from la%s its C% "o provide an incentive for employers to stabili(e employment -. "o offset lost income d ring a labor disp te E. "o help %orkers %ith the expenses res lting from 4ob-related accidents and illnesses "his program has fo r ob4ectives related to minimi(ing the hardships of nemployment. ,ne of them is to provide an incentive to employers to stabili(e employment.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 4nemployment 5nsurance
13-32
30. (p. 388) "he nemployment ins rance program is financed largely thro gh federal and state taxes on< +. both employees and employers. B% employers only. C. employees only. -. all taxpayers. E. high income gro p of citi(ens. 6ost of the f nding for nemployment ins rance comes from federal and state taxes on employers.
31. (p. 388) /n terms of nemployment ins rance! %hich one of the follo%ing actions is most likely to keep a company&s experience rating favorable> +. External rather than internal recr itment B. + belo%-market pay line C% +cc rate h man reso rce planning -. +t-%ill-employment policies E. Bob oriented %orkshops and in-ho se training Caref l h man reso rce planning can minimi(e layoffs and keep their experience rating favorable.
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32. (p. 388'386) /n %hich of the follo%ing areas are nemployment ins rance benefits and %orkers& compensation benefits similar> +. Both these programs are f nded by the federal taxes on employees. B% Both these costs depend on the organi(ation&s experience ratings. C. "he f nding costs of both these programs are same across the states. -. Both the programs replace the same percentage of an individ al&s previo s earnings. E. "he amo nt of compensation provided to the employees is fixed nder both the programs. "he si(e of the nemployment ins rance tax imposed on each employer depends on the employer&s experience rating. +s %ith nemployment ins rance! nfavorable experience ratings lead to higher premi ms for %orkers& compensation.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 7or8ers' Compensation? 4nemployment 5nsurance
33. (p. 388) =orkers are eligible for nemployment benefits if they< +. vol ntarily ' it a 4ob. B. are o t of %ork d e to health reasons. C. %ere discharged for ca se. &% have been %orking for at least fo r ' arters. E. are o t of %ork beca se of a labor disp te. "o receive benefits! %orkers m st meet fo r conditions. "hey m st meet re' irements demonstrating they had been employed. "hey are available for %ork. "hey are actively seeking %ork. "hey %ere not discharged for ca se! did not ' it vol ntarily! and are not o t of %ork beca se of a labor disp te.
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35. (p. 386) =hich one of the follo%ing is tr e of %orkers& compensation> +. Employees are covered nder the @no-fa lt@ provision regardless of their behavior. B% +pproximately 58 percent of all ).S. %orkers are covered by the system. C. Provides payments to offset lost income d ring invol ntary nemployment. -. # nding for the program comes from the state taxes on employees. E. "he benefits provided to the %orkers are taxable. +bo t 5 o t of 18 ).S. %orkers are covered by state %orkers& compensation la%s! %ith the level of coverage varying from state to state.
*8. (p. 386) "he cost of a %orker&s compensation ins rance depends on< +. the profit earned by the organi(ation d ring the concerned fiscal. B. the n mber of years the concerned %orker has been %orking in the organi(ation. C. the total strength of the organi(ation&s %orkforce. -. the n mber of years for %hich the organi(ation has been in b siness. E% the state %here the company is located. "he cost of the %orkers& compensation ins rance depends on the kinds of occ pations involved! the state %here the company is located! and the employer&s experience rating.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 7or8ers' Compensation
13-*8
*1. (p. 386) "o take npaid family leave nder the provisions of the #amily and 6edical 7eave +ct! employees m st meet %hich of the follo%ing criteria> "% .ave %orked for an employer %ith 08 or more employees %ithin a 20-mile radi s B. .ave %orked at least 10 ho rs per %eek C. .ave %orked for the employer for more than 0 years -. Belong to the top 18 percent of highest paid exec tives E. .ave %orked for an employer %ith at least 188 employees %ithin a 20-mile radi s Specifically! the #amily and 6edical 7eave +ct :#67+; of 1553 re' ires organi(ations %ith 08 or more employees %ithin a 20-mile radi s to provide as m ch as 1$ %eeks of npaid leave after childbirth or adoption! to care for a serio sly ill child! spo se! or parent! for an employee&s o%n serio s illness! or to take care of rgent needs that arise %hen a spo se! child! or parent in the Fational ? ard or 9eserve is called to active d ty.
*$. (p. 386) "he #amily and 6edical 7eave +ct of 1553 re' ires employers to provide< +. p to 3 %eeks of npaid leave after childbirth or adoption. B% reinstatement to the same :or a comparable; 4ob pon one&s ret rn to %ork. C. paid leave to any employee %ho has one or more years of f ll-time service. -. p to 13 %eeks of npaid leave to care of a serio sly ill parent! spo se! or child. E. p to one month of paid leave to take care of a serio sly ill spo se! child! or parent. "he #amily and 6edical 7eave +ct :#67+; of 1553 re' ires organi(ations %ith 08 or more employees %ithin a 20-mile radi s to provide as m ch as 1$ %eeks of npaid leave after childbirth or adoption! to care for a serio sly ill child! spo se! or parent! for an employee&s o%n serio s illness! or to take care of rgent needs that arise %hen a spo se! child! or parent in the Fational ? ard or 9eserve is called to active d ty.
13-*1
*3. (p. 386) =hy do ma4ority of employees opting for #amily and 6edical leave fail to take benefit of the f ll 1$ %eeks leave> +. /t makes record-keeping tasks very complex for the employers. B. +lmost 38 percent of employees like to take their leaves intermittently. C. Employees fear that they %ill have to take p more responsibilities once they ret rn to %ork. &% Expenses that come %ith childbirth! adoption or illness are not afforded by everyone. E. /t prevents them from opting for paid leaves for the next five years. People fail to take benefit of the f ll 1$ %eeks leave beca se many are eager to ret rn to their careers! and others fear that staying a%ay for three months %o ld damage their career opport nities. +nother reason for not taking the f ll 1$ %eeks is that not everyone can afford three months %itho t pay! especially %hen responsible for the expenses that accompany childbirth! adoption! or serio s illness.
**. (p. 36() "he Pregnancy -iscrimination +ct of 1523 re' ires employers< +. to offer disability plans %ith pregnancy-related coverage. B% to offer disability plans to treat pregnancy as they %o ld any other disability. C. to provide p to six %eeks of paid leave to either parent pon the birth of a child. -. to provide p to six %eeks of npaid leave to either parent pon the birth of a child. E. to offer disability leave p to one month to either parent before the birth of a child. "he Pregnancy -iscrimination +ct of 1523 re' ires employers to offer disability plans to treat pregnancy as they %o ld any other disability.
13-*$
*0. (p. 36() - e to increasing diversity %ithin the %orkplace! many employers are extending benefits s ch as health ins rance to< +. independent contractors. B% domestic partners. C. extended family members. -. anyone living %ithin the employee&s ho sehold. E. the employees& adopted children. Benefits s ch as health ins rance often extend to employees& dependents. "oday! many employers also cover domestic partners! defined either by local la% or by the companies themselves.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(3 Describe t)e most common forms of pai- lea%e. *opic: #ptional Benefits :ro"rams
*1. (p. 36&) =hile the n mber of mandatory days of paid vacation in =estern E rope is abo t 38 days! the ).S. companies typically offer< +. five paid holidays each year. B% 18 paid holidays each year. C. $8 paid holidays each year. -. more than *8 paid holidays each year. E. more than t%o %eeks of paid holidays each year. =estern E ropean co ntries re' ire a minim m n mber of paid vacation days! %ith ne% employees receiving 38 days off in many co ntries. "he )nited States! in contrast! has no s ch legal re' irement. /n =estern E rope and the )nited States! employees typically have abo t 18 paid holidays each year! regardless of length of service.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(3 Describe t)e most common forms of pai- lea%e. *opic: :ai- !ea%e
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*2. (p. 363) "he p rpose of floating holidays is to allo% employees to< "% extend a " esday or "h rsday holiday into a long %eekend. B. decide %hich national holidays they %ish to observe %ith pay. C. take time off for personal reasons :%ith the approval of the s pervisor;. -. allo% international employees to observe legal holidays %ithin their co ntry of assignment. E. pool in the different types of leaves and en4oy long paid vacations. "he p rpose of floating holidays is to allo% employees to extend a " esday or "h rsday holiday into a long %eekend.
*3. (p. 364) =hich one of the follo%ing is tr e of the Consolidated ,mnib s B dget 9econciliation +ct of 1530> +. Employers do not permit employees to extend their health ins rance coverage for p to 31 months follo%ing a @' alifying event.@ B. Employees can extend their health ins rance coverage only by paying a higher premi m than that nder the gro p rates. C. Employers m st contin e to pay the cost of premi ms for ' alified employees. &% C alifying events incl de! among others! termination :except for gross miscond ct;! a red ction in ho rs that leads to the loss of health ins rance! and death. E. /n case of death of the employee! the s rviving child or the dependant %ife %ill not be allo%ed to extend the coverage. "he Consolidated ,mnib s B dget 9econciliation +ct :C,B9+; of 1530 re' ires employers to permit employees to extend their health ins rance coverage at gro p rates for p to 31 months follo%ing a @' alifying event.@ C alifying events incl de termination :except for gross miscond ct;! a red ction in ho rs that leads to loss of health ins rance! and the employee&s death :in %hich case the s rviving spo se or dependent child %o ld extend the coverage;.
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*5. (p. 364) =hich of the follo%ing co ntries spends the least amo nt of its gross domestic prod ct on health care> +. "he )nited States of +merica B. Canada C. Bapan &% Dorea E. "he )nited Dingdom "he )nited States spends m ch more of its total %ealth on health care than other co ntries do! %hile Dorea expends the least amo nt of it ?-P on health care.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(4 5-entify t)e 8in-s of insurance benefits offere- by employers. *opic: ;roup 5nsurance
08. (p. 364) =hich of the follo%ing federal la%s re' ires employers to permit employees to extend their health ins rance coverage at gro p rates for p to 31 months follo%ing a ' alifying event s ch as a layoff! red ction in ho rs! or the employee&s death> +. "he E9/S+ B. "he +-E+ C. "he +-+ -. "he #7S+ E% "he C,B9+ "he C,B9+ is a federal la% that re' ires employers to permit employees to extend their health ins rance coverage at gro p rates for p to 31 months follo%ing a ' alifying event s ch as a layoff! red ction in ho rs! or the employee&s death.
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01. (p. 36+) =hich one of the follo%ing is tr e of health maintenance organi(ations> +. Costs tend to be more than the cost for traditional health ins rance. B. Services are provided on a postpaid basis. C. Employees may select physicians of their choice. &% Payment of physicians is on a flat salary basis. E. Physicians are paid a fee for each service rather than a salary. By paying physicians a salary! rather than a fee for each service! the .6, hopes to remove any incentive to provide more services than the patients really need.
0$. (p. 36+) /dentify the prime difference bet%een PP,s and .6,s. "% PP,s provide benefits on a red ced-fee! per-call basis rather than on a prepaid basis. B. .6, employees are not re' ired to se only preselected plan service providers! as in PP,s. C. PP,s are less expensive plans than .6,s if the employee goes o t of the PP, net%ork. -. .6,s have more in common %ith traditional fee-for-service plans than do PP,s. E. )nlike .6,s! payments to PP, physicians are made on a flat salary basis. + preferred provider organi(ation :PP,; is a health care plan that contracts %ith health care professionals to provide services at a red ced fee. + health maintenance organi(ation :.6,; on the other hand is a health care plan that re' ires patients to receive their medical care from the .6,&s health care professionals! %ho are often paid a flat salary! and provides all services on a prepaid basis.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(4 5-entify t)e 8in-s of insurance benefits offere- by employers. *opic: ;roup 5nsurance
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03. (p. 36+) =hich one of the follo%ing statements abo t flexible spending acco nts is tr e> +. "hey may be sed to cover only employees& :not dependents&; health-care expenses. B. "hey do not permit pretax employee contrib tions. C. Contrib tions to the acco nts may exceed E0!888 per year b t m st be designated in advance. &% # nds m st be sed by the plan&s year end or they revert to the employer. E. "he money in the flexible spending acco nt is taxed and it red ces an employee&s take home pay. "he money in the acco nt may be spent on health care expenses of the employee and employee&s dependents d ring the plan year. +t the end of the year! any remaining f nds in the acco nt revert to the employer.
0*. (p. 36.) =hich of the follo%ing is tr e of employee %ellness programs> +. "he programs are c rative in nat re. B% "he programs manage health-care costs by red cing employees& needs for health care services. C. "he programs are either active or passive! %ith active programs costing less than passive programs. -. "he programs have had very little s ccess in red cing risk factors associated %ith cardiovasc lar disease. E. "hey provide hospitali(ation coverage for employees. +n employee %ellness program :E=P; is a set of comm nications! activities! and facilities designed to change health-related behaviors in %ays that red ce health risks.
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00. (p. 36.) @+ctive@ employee %ellness programs< +. rely on employees to identify and obtain the services they need. B. are health ed cation programs that provide information and services! b t no formal s pport or motivation to se the program C. have not been s ccessf l in red cing risk factors associated %ith cardiovasc lar disease. &% ass me that behavior change re' ires not only a%areness and opport nity! b t s pport and reinforcement. E. cost less than passive %ellness programs. +ctive %ellness programs ass me that behavior change re' ires s pport and reinforcement along %ith a%areness and opport nity.
01. (p. 361'368) #rom %hich of the follo%ing so rces do most retirees :10 and older; receive most of their income> "% Social Sec rity B. Private pensions C. Earnings from personal assets -. -isability ins rance E. Private investments +ccording to #ig re 13.*! social sec rity acco nts for the largest share :*8 percent; of a retired person&s income.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(+ Define t)e types of retirement plans offere- by employers. *opic: Retirement :lans
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02. (p. 368) =hich type of retirement plan g arantees a specified level of retirement income> +. *81:k; plan B. Profit sharing plan C. 6oney p rchase plan &% -efined benefit plan E. Employee stock o%nership plan + defined benefit plan g arantees a specified level of retirement income.
03. (p. 368) =hich of the follo%ing is a typical factor sed to determine retirement benefit levels nder a defined benefit retirement plan> +. "he state %here the person %as employed d ring the retirement year. B. F mber of dependents. C% +ge. -. +verage earning d ring the last $8 years of employment. E. F mber of n sed leaves at the end of the retirement year. )s ally the amo nt of defined benefit is calc lated for each employee based on the employee&s years of service! age! and earnings level.
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05. (p. 368) =hich of the follo%ing statements concerning the Pension Benefit ? arantee Corporation is tr e> "% /t %as created by the Employee 9etirement /ncome Sec rity +ct :E9/S+; of 152*. B. /t provides a s pplemental income if the employee is temporarily nemployed. C. /t provides employee protection for only defined-benefit pension plans. -. /t is f nded by a payroll tax imposed on each plan participant. E. /t g arantees retirees a basic benefit only if the employer is in a so nd financial position. "he Employee 9etirement /ncome Sec rity +ct :E9/S+; of 152* created the Pension Benefit ? arantee Corporation :PB?C;.
18. (p. 368) =hich of these had been accomplished by the Employee 9etirement /ncome Sec rity +ct of 152*> "% "he act established rights relating to vesting. B. "he act re' ired employers to offer s pplemental retirement plans. C. "he act barred portability of retirement savings. -. "he act red ced the responsibility of pension plan tr stees. E. "he act g aranteed retirees a pension e' ivalent to their last dra%n salary. "he Employee 9etirement /ncome Sec rity +ct :E9/S+; of 152* increased the responsibility of pension plan tr stees to protect retirees! established certain rights related to vesting :earning a right to receive the pension; and portability :being able to move retirement savings %hen changing employers;.
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11. (p. 368) =hich of the follo%ing federal la%s increased the responsibility of pension plan tr stees to protect retirees> +. "he C,B9+ B. "he +-E+ C. "he +-+ -. "he #7S+ E% "he E9/S+ "he E9/S+ is a federal la% that increased the responsibility of pension plan tr stees to protect retirees! established certain rights related to vesting and portability! and created the Pension Benefit ? arantee Corporation.
1$. (p. 366) =hich one of the follo%ing is a type of defined-contrib tion pension plan> +. Cons mer-driven pension plan B% 6oney p rchase plan C. ?ainsharing plan -. #lexible spending acco nt plan E. )nf nded PB?C plan 6any kinds of defined-contrib tion plans are available! incl ding money p rchase plan! profit-sharing and employee stock o%nership plans! and section *81:k; plans.
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13. (p. 366) + pop lar defined-contrib tion plan %hereby employees contrib te pretax dollars %hich are then matched by the employer is kno%n as< +. money p rchase plans. B% Section *81:k; plans. C. profit-sharing plans. -. E9/S+ benefit plans. E. employee stock o%nership plans :ES,Ps;. )nder the section *81:k; plans! employees contrib te a percentage of their earnings! and employers may make matching contrib tions. "he amo nt employees contrib te is not taxed as part of their income ntil they receive it from the plan.
1*. (p. 366) =ithin a *81:k; plan! %ho has the responsibility for investing %isely> "% "he employee B. "he P?BC C. "he E9/S+ #id ciary +dvisor -. "he financial instit tion handling the acco nt E. "he employer "he defined-contrib tion plans! incl ding the *81:k; plan! free employers from the risks that investments %ill not perform as %ell as expected. "hey p t the responsibility for %ise investing s' arely on the sho lders of each employee.
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10. (p. 366) =hich one of the follo%ing is tr e of defined-contrib tion plans> +. "hey shift the investment risk to the employer. B. "hey present greater administrative challenges to employers. C. "hey re' ire ann al premi m payments to the PB?C. -. "hey g arantee a basic benefit to the employee if the employer experiences financial diffic lties. E% "hey are increasingly gaining importance in retirement plans. Considering the advantages to employers! it is not s rprising that a ma4ority of retirement plans are defined-contrib tion plans.
11. (p. 366) =hy are gro%ing n mbers of employers opting for defined-contrib tion plans> +. -efined-contrib tion plans are re' ired by E9/S+. B% Employers are free from the risk of poor performance of the plans. C. "he P?BC makes ann al contrib tion of E33 per participant. -. "hey g arantee a specified level of retirement income. E. "hey g arantee higher ret rns to the employees compared to the defined benefit plans. +n important advantage of the defined-contrib tion plans is that they free employers from the risks that investments %ill not perform as %ell as expected. "hey p t the responsibility for %ise investing s' arely on the sho lders of each employee.
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12. (p. 4(() =hich one of the follo%ing is tr e of a cash balance plan> +. +ll contrib tions to the plan come from the employee. B% "he money earns interest at a predetermined rate! s ch as the rate paid on ).S. "reas ry bills. C. ,lder employees %ith many years of service benefit to a greater degree than do yo nger %orkers 4 st starting their careers. -. "hey penali(e employees for changing 4obs. E. Employees cannot predict retirement benefits nder cash balance plans. "he money in the cash balance plan earns interest according to a predetermined rate! s ch as the rate paid on ).S. "reas ry bills.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(+ Define t)e types of retirement plans offere- by employers. *opic: Retirement :lans
13. (p. 4(() #or an organi(ation %ith GGGG! s%itching from a defined-benefit plan can prod ce great savings in pension benefits. "% many experienced employees B. a fe% skilled employees C. many yo ng employees -. many retired employees E. highly skilled employees #or an organi(ation %ith many experienced employees! s%itching from a defined-benefit plan can prod ce great savings in pension benefits.
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15. (p. 4(&) =hich of the follo%ing is a vesting right according to E9/S+ g idelines> "% "he right to a pension at retirement. B. "he right to receive a pension e' ivalent to the last dra%n salary. C. "he right to a pension only if an employee has %orked for at least 10 years %ith an organi(ation. -. + g arantee that the employer %ill not s%itch the pension plan from defined-benefit to defined-contrib tion plan. E. + g arantee that the employer %ill not be able to terminate the employee&s service in the organi(ation ntil the latter vol ntarily opts for retirement. E9/S+ g arantees employees that %hen they become participants in a pension plan and %ork a specified n mber of years they earn a right to a pension pon retirement. "hese rights are called vesting rights.
28. (p. 4(&) "he GGGGG is a report that describes a pension plan&s f nding! eligibility re' irements! risks! and other details. +. vesting right B. ES,P C. 0$5 savings plan -. @top-heavy@ plan E% s mmary plan description "he s mmary plan description is a report that describes the plan&s f nding! eligibility re' irements! risks! and other details.
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21. (p. 4(2) =hich of the follo%ing is tr e of 0$5 savings plans> +. "hey are mandated by the federal government. B. "hey are designed to s pport the primary ed cation expenses of %orkers& children. C. "hey provide ed cation to employees& children at a s bsidi(ed rate. -. "hey provide information abo t the ed cation standards in different colleges to employees to help them enroll their children in better instit tions. E% "hey allo% parents and other family members defer taxes on the earnings of their deposits into the 0$5 acco nt. 0$5 savings plans! named after the section of the /nternal 9even e Code that reg lates them! let parents and other family members defer taxes on the earnings of their deposits into the 0$5 acco nt.
2$. (p. 4(2) =hich level of child care is most fre' ently provided by organi(ations %ith at least 188 employees> +. "hey offer no s pport in this area. B% "hey s pply and help employees collect information abo t the cost and ' ality of available child care. C. "hey provide vo chers or disco nts for employees to se at existing child-care facilities. -. "hey operate a day-care center at or near the %orkplace. E. "hey set p flexible spending acco nts for dependent care. "he lo%est level of involvement! offered by 15 percent of companies %ith at least 188 %orkers! is for the organi(ation to s pply and help employees collect information abo t the cost and ' ality of available child care.
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23. (p. 4(2'4(3) Elder care benefit typically emphasi(es on< +. providing a direct financial assistance. B. providing tax exemptions on medical bills of the dependent elders. C. setting p an elderly care facility close to the %ork place. &% providing information and s pport. E. providing vo chers and disco nts to help employees access the existing elderly care facilities. Elder care benefit benefits typically emphasi(e information and s pport! rather than direct financial assistance.
2*. (p. 4(3) "o enco rage learning and attract the kinds of employees %ho %ish to develop their kno%ledge and skills! many organi(ations offer< "% t ition reimb rsement programs. B. flexible sched les. C. paid leaves for more than $ %eeks. -. ' arterly promotions. E. college savings plans. "o enco rage learning and attract the kinds of employees %ho %ish to develop their kno%ledge and skills! many organi(ations offer t ition reimb rsement programs.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(. Describe )o0 or"ani3ations use ot)er benefits to matc) employees' 0ants an- nee-s. *opic: #t)er Benefits
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20. (p. 4(4) /dentify the so rce of s rvey information on competitors& benefits packages and benefits costs. +. #inancial instit tions B. "he PB?C C% "he B rea of 7abor Statistics -. "he E9/S+ E. P blic employment agency Employers can p rchase s rvey information abo t benefits packages from private cons ltants. /n addition! the B rea of 7abor Statistics gathers benefits data.
21. (p. 4(4) =hich of the follo%ing benefits sho ld be provided by organi(ations that have highstress 4obs to help employees p t in the necessary long ho rs and alleviate stress> +. +dditional paid leaves B. ?reater n mber of medical leaves C. + share in company profits -. /ncreased coverage nder health ins rance E% 9ecreational activities s ch as on-site basketball co rts Especially for demanding! high-stress 4obs! organi(ations may look for benefits that help employees p t in the necessary long ho rs and alleviates stress. 9ecreational activities s ch as on-site basketball co rts or company-sponsored softball teams provide for social interaction as %ell as physical activity.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(. Describe )o0 or"ani3ations use ot)er benefits to matc) employees' 0ants an- nee-s. *opic: #t)er Benefits
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22. (p. 4(4) -ecisions on selecting the contents of an employee benefits package sho ld be based on< +. the si(e of the organi(ation. B. the n mber of years the organi(ation has been in b siness. C. the demands of the top level of exec tives. -. the expectations of its e' ity share holders. E% the organi(ation&s b dget. -ecisions abo t %hich benefits to incl de sho ld take into acco nt the organi(ation&s goals! its b dget! and the expectations of the organi(ation&s c rrent employees and those it %ishes to recr it in the f t re.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(1 =plain )o0 to c)oose t)e contents of an employee benefits pac8a"e. *opic: Selectin" mployee Benefits
23. (p. 4(.) Benefit plans that permit employees to choose the types and amo nts of benefits they %ant from a set of alternatives are called< +. preferred provider plans. B% cafeteria-style plans. C. pay-or-play plans. -. flexible spending acco nts. E. cash balance plans. Cafeteria-style plans! offer employees a set of alternatives from %hich they can choose the types and amo nts of benefits they %ant.
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25. (p. 4(.'4(1) =hich one of the follo%ing is an advantage of cafeteria-style plans> "% Employees generally become more a%are of the val e of company benefits. B. "he employer can completely transfer the costs of providing benefits to the employees. C. +dministrative costs are red ced especially in design and start- p stages. -. "he company inc rs lo%er costs by allo%ing employees to select the benefits. E. "he company can estimate its costs better by allo%ing employees to select their benefits. "he selection process for cafeteria-style plans can make employees more a%are of the val e of the benefits! partic larly %hen the plan assigns each employee a s m of money to allocate to benefits.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(1 =plain )o0 to c)oose t)e contents of an employee benefits pac8a"e. *opic: mployees' =pectations an- >alues
38. (p. 4(.) =hy are cafeteria-style plans more expensive for an organi(ation> +. Employers pay m ch higher premi m on .6, than a preferred health care plan. B. Employers are re' ired to pay higher ins rance premi m for laid-off %orkers. C. Contrib tion to P?BC to f nd the retirement plan increases nder this plan. &% Employees select the kind of benefits they expect to need the most. E. "he employers bear the cost of providing employees %ith benefits they do not val e. + dra%back of cafeteria-style plans is that they have a higher administrative cost! especially in the design and start- p stages. +nother possible dra%back is that employee selection of benefits %ill increase rather than decrease costs beca se employees %ill select the kinds of benefits they expect to need the most.
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31. (p. 4(1) .o% can organi(ations red ce cost of health care benefits offered to employees> +. /ncreasing the amo nts employers pay for ded ctibles and coins rance. B. Selecting traditional health ins rance to .6, and PP, as a preferred option. C. Expanding the coverage for different types of claims. -. Paying some or all of the difference in cost bet%een an .6, or PP, plan. E% Shifting from traditional health ins rance plans to PP,s and C-.Ps. Concern over health care costs has prompted many employers to shift from traditional health ins rance to PP,s and C-.Ps.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(1 =plain )o0 to c)oose t)e contents of an employee benefits pac8a"e. *opic: Benefits' Costs
3$. (p. 4(1) =hich of the follo%ing options can be legally adopted by organi(ations looking to restr ct re the %orkforce to minimi(e the expense of benefits> "% )se independent contractors rather than hire additional employees. B. 7imit the coverage on life ins rance! based pon the employee&s age. C. )se f ll-time rather than part-time employees. -. 9ecr it ne% employees instead of demanding overtime from the existing employees. E. S bstit te .6, and PP, plans %ith traditional health ins rance plans. ,rgani(ations looking for %ays to control staffing costs may look for %ays to str ct re the %orkforce so as to minimi(e the expense of benefits. "hey may re' ire overtime rather than adding ne% employees! hire part-time rather than f ll-time %orkers! and se independent contractors rather than hire employees.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(8 Summari3e t)e re"ulations affectin" )o0 employers -esi"n an- a-minister benefits pro"rams. *opic: !e"al Re/uirements for mployee Benefits
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33. (p. 4(1) =hich of the follo%ing organi(ations strictly limits the definition of @independent contractors!@ so that employers cannot avoid legal obligations by classifying %orkers as selfemployed %hen the organi(ation receives the benefits of a permanent employee> "% "he /nternal 9even e Service B. "he #B?C C. "he E9/S+ -. Employee Benefit 9esearch /nstit te E. "he B rea of 7abor Statistics "he /nternal 9even e Service strictly limits the definition of @independent contractors!@ so that employers cannot avoid legal obligations by classifying %orkers as self-employed %hen the organi(ation receives the benefits of a permanent employee.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(8 Summari3e t)e re"ulations affectin" )o0 employers -esi"n an- a-minister benefits pro"rams. *opic: !e"al Re/uirements for mployee Benefits
3*. (p. 4(8) =hich one of the follo%ing is F," a benefit of a ' alified retirement plan> +. +n immediate tax ded ction for the f nds employees contrib te to the plan. B. "ax-free earnings on the money in the retirement f nd. C% "ax-free %ithdra%als for @highly compensated employees.@ -. Fo immediate tax on employees for the amo nt the employer contrib tes. E. Prevents an organi(ation from setting p a retirement plan that provides benefits excl sively to its o%ners and top managers. /n the case of retirement plans! the nondiscrimination r les provide tax benefits to plans that do not discriminate in favor of the organi(ation&s @highly compensated employees.@
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(8 Summari3e t)e re"ulations affectin" )o0 employers -esi"n an- a-minister benefits pro"rams. *opic: *a= *reatment of Benefits
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30. (p. 4(8) =hich of the follo%ing criteria is an organi(ation re' ired to meet %hile offering early retirement incentives> +. Set an age at %hich retirement benefits stop gro%ing B. +sk female employees to pay more to defined-benefit plans C% Provide acc rate information abo t the options available -. +sk employees to sign comp lsory %aiver nder +-E+ E. Provide employees not more than *3 ho rs to make an early retirement decision Early-retirement incentive programs need to meet certain standards. "he programs may not coerce employees to retire! they m st provide acc rate information abo t the options available! and they m st give employees eno gh time to make a decision.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(8 Summari3e t)e re"ulations affectin" )o0 employers -esi"n an- a-minister benefits pro"rams. *opic: Anti-iscrimination !a0s
31. (p. 4(8'4(6) )nder the ,lder =orkers Benefit Protection +ct of 1558! employers %ishing to se early-retirement %aivers m st adhere to %hich of the follo%ing g idelines> "% /nform employees that they may cons lt %ith a la%yer before signing. B. +llo% employees not more than *3 ho rs before signing the retirement agreement. C. 6ake +-E+ %aivers comp lsory and spell o t the employee&s rights nder +-E+. -. Provide lesser benefits than %o ld other%ise be available pon retirement. E. Provide employees ann al bon s and health ins rance after the retirement. =hen employers offer early retirement! they often ask employees to sign %aivers saying they %ill not p rs e claims nder the +-E+. "he ,lder =orkers Benefit Protection +ct of 1558 set g idelines for sing these %aivers. "he employer m st inform employees that they may cons lt a la%yer before signing.
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32. (p. 4(6) "he la% that specifies that employees %ith disabilities m st have @e' al access to %hatever health ins rance coverage the employer provides other employees@ is the< "% +-+. B. +-E+. C. #7S+. -. E9/S+. E. C,B9+. )nder the +-+! employees %ith disabilities m st have @e' al access to %hatever health ins rance coverage the employer provides other employees.@
33. (p. 4(6) =hich one of the follo%ing statements is tr e of employee benefits> +. Employees generally have a thoro gh nderstanding of %hat benefits they have and %hat the market val e of these benefits is. B% Employees significantly nderestimate the cost and val e of their benefits. C. Employers do an effective 4ob of comm nicating the cost and val e of benefits to their employees. -. Employees! for the most part! are 4 st not interested in their benefits. E. Employers have very limited options for comm nicating information abo t benefits. Employees and 4ob applicants often have a poor idea of %hat benefits they have and %hat the market val e of their benefits is. 9esearch asking employees abo t their benefits has sho%n that employees significantly nderestimate the cost and val e of their benefits.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(6 Discuss t)e importance of effecti%ely communicatin" t)e nature an- %alue of benefits to employees. *opic: Communicatin" Benefits to mployees
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35. (p. 4(6) "he f nds re' ired by an organi(ation to pay retirement benefits are reported as GGGGG in the financial statement. +. c rrent assets B. c rrent liabilities C. acco nts receivable -. bad debt E% f t re liabilities )nder #+SB standards! employers m st set aside the f nds they expect to need for benefits to be paid after retirement! rather than f nding those benefits on a pay-as-yo -go basis. ,n financial statements! those f nds m st appear as f t re cost obligations.
AACSB: Analytic Bloom's: Remember Difficulty: asy !earnin" #b$ecti%e: &3'(8 Summari3e t)e re"ulations affectin" )o0 employers -esi"n an- a-minister benefits pro"rams. *opic: Accountin" Re/uirements
58. (p. 4&() =hich of the follo%ing options can be sed by employers to comm nicate information abo t benefits to the existing %orkers> +. Board of directors meeting B. "he company&s official %ebsite C. =orker participation in management decisions -. ,n-camp s recr itment E% ,rgani(ing training programs Employers have many options for comm nicating information abo t benefits. "hese incl de broch res! ' estion-and-ans%er meetings! intranet pages! memos! e-mail! paycheck inserts! retirement or health coaching! training programs! and benefits fairs.
Essay Questions
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51. (p. 384) +ltho gh benefits are considered a part of total compensation! benefits have ni' e aspects that make them ' ite different from direct compensation. Briefly disc ss three of these ni' e aspects. 1; Benefits are s b4ect to m ch more government reg lation than direct compensation. Some benefits are mandated by la%! and other benefits are s b4ect to significant reg lation or m st meet certain criteria to achieve the most favorable tax treatment. $; Even tho gh many kinds of benefits are not re' ired by la%! they have become so common that today&s employees expect them. ,rgani(ations co ld not effectively compete in the labor market if they did not offer some benefits. 3; Benefits packages are more complex than pay str ct res! so benefits are harder for employees to nderstand and appreciate. Even if employers spend large s ms on benefits! if employees do not nderstand ho% to se them or %hy they are val able! the cost of the benefits %ill be largely %asted.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(& Discuss t)e importance of benefits as a part of employee compensation. *opic: *)e Role of mployee Benefits
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5$. (p. 386) -isc ss the #amily and 6edical 7eave +ct of 1553! incl ding its eligibility re' irements! scope of coverage! and effectiveness. "he #amily and 6edical 7eave +ct :#67+; of 1553 re' ires organi(ations %ith 08 or more employees %ithin a 20-mile radi s to provide as m ch as 1$ %eeks of npaid leave after childbirth or adoption! to care for a serio sly ill child! spo se! or parent! or for an employee&s o%n serio s illness. Employers also m st g arantee these employees the same or a comparable 4ob %hen they ret rn to %ork. "he la% does not cover employees %ho have less than one year of service! %ork fe%er than $0 ho rs per %eek! or are among the organi(ation&s 18 percent highest paid. "he 1$ %eeks of npaid leave amo nt to a smaller benefit than is typical of Bapan and most co ntries in =estern E rope. Bapan and =est E ropean nations typically re' ire paid family leave. Experience %ith the #76+ s ggests that a ma4ority of those opting for this benefit fail to take the f ll 1$ %eeks. /n abo t one o t of fo r sit ations! employees take their leave intermittently! over periods of days or even ho rs! creating a significant record-keeping task. ,ther employees! especially female exec tives! are simply keeping parental leaves nder #67+ to a minim m! less than the available 1$ %eeks. 6any are eager to ret rn to their careers! and others fear that staying a%ay for three months %o ld damage their career opport nities. ,f co rse! another reason for not taking the f ll 1$ %eeks is that not everyone can afford three months %itho t pay! especially %hen responsible for the expenses that accompany childbirth! adoption! or serio s illness.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(2 Summari3e t)e types of employee benefits re/uire- by la0. *opic: 4npai- 9amily an- ,e-ical !ea%e
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53. (p. 381'388) State the ob4ectives of the nemployment ins rance program established by the Social Sec rity +ct of 1530. .o% is this program f nded> "he nemployment ins rance program %as established nder the Social Sec rity +ct of 1530. "his program has fo r ob4ectives related to minimi(ing the hardships of nemployment. 1; /t provides payments to offset lost income d ring invol ntary nemployment. $; /t helps nemployed %orkers find ne% 4obs. 3; "he payment of nemployment ins rance taxes gives employers an incentive to stabili(e employment. *; /t provides %orkers %ith income d ring short-term layoffs to preserve investments in %orker skills beca se %orkers can afford to %ait to ret rn to their employer! rather than start over %ith another organi(ation. "he federal government left it to each state&s discretion to establish an nemployment ins rance program. +t the same time! the Social Sec rity +ct created a tax incentive str ct re that ' ickly led every state to establish the program. 6ost of the f nding for nemployment ins rance comes from federal and state taxes on employers. "he federal tax rate is c rrently 8.3 percent of the first E2!888 of each employee&s %ages. "he state tax rate varies. #or a ne% employer! rates range from 1 percent to 1 percent! and the taxable %age base ranges from E2!888 to E3$!$88! so the amo nt paid depends a great deal on %here the company is located. Some states charge ne% employers %hatever rate is the average for their ind stry! so the amo nt of tax paid in those states also depends on the type of b siness. Fo state imposes the same tax rate on every employer in the state. "he si(e of the nemployment ins rance tax imposed on each employer depends on the employer&s experience rating Ithe n mber of employees the company laid off in the past and the cost of providing them %ith nemployment benefits. Employers %ith a history of laying off a large share of their %orkforces pay higher taxes than those %ith fe% layoffs. /n some states! an employer %ith very fe% layoffs may pay no state tax.
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5*. (p. 362) =hat are sick leaves> =hat are the pros and cons of the acc m lation of sick leaves year after year> Sick leave programs pay employees for days not %orked beca se of illness. "he amo nt of sick leave is often based on length of service! so that it acc m lates over time. Employers m st decide ho% many sick days to grant and %hether to let them contin e acc m lating year after year. /f sick days acc m late %itho t limit! employees can @save@ them in case of disability. /f an employee becomes disabled! the employee can se p the acc m lated sick days! receiving f ll pay rather than smaller payments from disability ins rance! disc ssed later. Some employers let sick days acc m late for only a year! and n sed sick days @disappear@ at year-end. "his may provide an nintended incentive to se p sick days. Some healthy employees may call in sick near the end of the year so that they can obtain the benefit of the paid leave before it disappears. Employers may co nter this tendency by paying employees for some or all of their n sed sick days at year-end or %hen the employees retire or resign.
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50. (p. 36+) =hat are .6,s and PP,s> .o% do they differ from each other and from traditional health care providers> .ealth maintenance organi(ations :.6,s; and preferred provider organi(ations :PP,s; are alternative health-care providers to the traditional fee-for-service health care delivery systems. .6,s pay health-care %orkers on a flat salary basis. Paying on a salary basis is intended to red ce incentives for physicians to sched le more patient visits or medical proced res than might be deemed necessary. .6, coverage tends to cost less than traditional health ins rance. "he do%nside is that employees sometimes complain cost-control incentives %ork so %ell that they are denied access to services they act ally need. PP,s are essentially gro ps of health-care providers %ho contract %ith employers or ins rance companies to provide health care at a red ced fee. "hey differ from .6,s in that they do not provide benefits on a prepaid basis and employees often are not re' ired to se preferred providers. ,ften! the PP, does not re' ire employees to se providers in the net%ork! b t it pays a larger share of the cost of services from PP, providers. #or example! the employee might pay 18 percent of the cost of a test by an in-net%ork provider and $8 percent if the employee goes o t of the PP, net%ork.
AACSB: Analytic Bloom's: 4n-erstanDifficulty: ,e-ium !earnin" #b$ecti%e: &3'(4 5-entify t)e 8in-s of insurance benefits offere- by employers. *opic: ;roup 5nsurance
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51. (p. 368'4(() -isc ss and contrast defined-benefit! defined-contrib tion! and cash balance retirement plans. + defined-benefit plan g arantees a specified retirement benefit level to employees based typically on a combination of years of service and age as %ell as on the employee&s earnings level. /n the event of severe financial diffic lties that force a company to terminate or red ce employee pension benefits! the Pension Benefit ? arantee Corporation provides some protection of benefits. + defined-contrib tion plan does not promise a specific benefit level for employees pon retirement. 9ather! an individ al acco nt is set p for each employee %ith a g aranteed si(e of contrib tion. "he advantage of s ch plans for employers is that they shift investment risks to employees and present fe%er administrative challenges beca se there is no need to calc late payments based on age and service and no need to make payments to the PB?C. =hile many companies have both types of plans! defined contrib tions are m ch more prevalent %ithin small companies. +n increasingly pop lar %ay to combine the advantages of defined-benefits plans and defined-contrib tion plans is to se a cash balance plan. "his type of retirement plan consists of individ al acco nts! as in a *81:k; plan. B t in contrast to a *81:k;! all the contrib tions come from the employer. )s ally! the employer contrib tes a percentage of the employee&s salary! say! * or 0 percent. "he money in the cash balance plan earns interest according to a predetermined rate! s ch as the rate paid on ).S. "reas ry bills. "his arrangement helps employers plan their contrib tions and helps employees predict their retirement benefits. /f employees change 4obs! they generally can roll over the balance into an individ al retirement acco nt. -efined-benefit plans are most genero s to older employees %ith many years of service! %hile cash balance plans are most genero s to yo ng employees %ho %ill have many years ahead in %hich to earn interest.
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52. (p. 4(&'4(2) -isc ss the different types of @family-friendly@ benefits provided by employers to help the employees manage conflicts bet%een their %ork and family roles. +s employers have recogni(ed the significance of employees& need to manage conflicts bet%een their %ork and family roles many have added @family-friendly@ benefits to their employee benefits. "hese benefits incl de family leave policies and child care. "he follo%ing types of benefits are typical< 1; #amily leave I#amily or parental leave grants employees time off to care for children and other dependents. "he federal la% re' ires 1$ %eeks of npaid leave. Paid family leave remains rare in the )nited States! ho%ever! despite some state la%s. $; Child care IChild care benefits may take several forms! re' iring different levels of organi(ational involvement. "he lo%est level of involvement! offered by 15 percent of companies %ith at least 188 %orkers! is for the organi(ation to s pply and help employees collect information abo t the cost and ' ality of available child care. +t the next level! organi(ations provide vo chers or disco nts for employees to se at existing child care facilities. +t the highest level of involvement! the employer provides child care at or near the %ork site. Staffing a child care facility is costly and involves important liability concerns. +t the same time! the res lts of this type of benefit! in terms of red cing absenteeism and enhancing prod ctivity! have been mixed. 3; College savings I +s %orkers& children gro% p! their needs shift from maternity leave and child care to college t ition. Some organi(ations have s pported this concern by sponsoring tax-favored 0$5 savings plans. "hese plans let parents and other family members defer taxes on the earnings of their deposits into the 0$5 acco nt. Some states also provide a :limited; tax ded ction for these contrib tions. *; Elder care I+s the pop lation of the nation&s elderly gro%s! so do the demands on ad lt children to care for elderly parents! a nts! and ncles. =hen these people become ill or disabled! they rely on family or professional caregivers. "he elder care benefits typically emphasi(e information and s pport! rather than direct financial assistance.
AACSB: Analytic Bloom's: Remember Difficulty: ,e-ium !earnin" #b$ecti%e: &3'(. Describe )o0 or"ani3ations use ot)er benefits to matc) employees' 0ants an- nee-s. *opic: <9amily'9rien-ly< Benefits
13-2$
53. (p. 4(.'4(1) -isc ss flexible benefits plans! incl ding their nat re! p rpose! advantages and disadvantages. ,rgani(ations can address differences in employees& needs and empo%er their employees by offering flexible benefits plans in place of a single package for all employees. "hese plans! often called cafeteria-style plans! offer employees a set of alternatives from %hich they can choose the types and amo nts of benefits they %ant. "he plans vary. Some improve minim m levels for certain benefits! s ch as health care coverage. Some allo% employees to receive money in exchange for choosing a @light@ package! and some let employees pay extra for the privilege of receiving more benefits. #or example! some plans let employees give p vacation days for more pay or to p rchase extra vacation days in exchange for a red ction in pay. Cafeteria-style plans have a n mber of advantages. "he selection process can make employees more a%are of the val e of the benefits! partic larly %hen the plan assigns each employee a s m of money to allocate to benefits. +lso! the individ al choice in a cafeteria plan enables each employee to match hisAher needs to the company&s benefits! increasing the plan&s act al val e to the employee. +nd beca se employees %o ld not select benefits they do not %ant! the company avoids the cost of providing employees %ith benefits they do not val e. +nother %ay to control costs is to give employees incentives to choose lo%er-cost options. Cafeteria-style plans also have several disadvantages. ,ne dra%back is that they have a higher administrative cost! especially in the design and start- p stages. +nother possible dra%back is that employee selection of benefits %ill increase rather than decrease costs beca se employees %ill select the kinds of benefits they expect to need the most. #or example! an employee expecting to need dental %ork is more likely to sign p for a dental plan. "he heavy se of the dental coverage %o ld then drive p the employer&s premi ms for that coverage. Costs also can be diffic lt to estimate %hen employees select their benefits.
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55. (p. 4(8'4(6) Compare the +ge -iscrimination in Employment +ct :+-E+; %ith the +mericans %ith -isabilities +ct :+-+; as t%o effective tools sed to minimi(e discrimination at the %orkplace. "%o ma4or iss es have received attention nder the +ge -iscrimination in Employment +ct :+-E+; and amendments. #irst! employers m st take care not to discriminate against %orkers over age *8 in providing pay or benefits. +lso! early-retirement incentive programs need to meet certain standards. "he programs may not coerce employees to retire! they m st provide acc rate information abo t the options available! and they m st give employees eno gh time to make a decision. /n effect! employees m st really have a choice abo t %hether they retire. =hen employers offer early retirement! they often ask employees to sign %aivers saying they %ill not p rs e claims nder the +-E+. "he ,lder =orkers Benefit Protection +ct of 1558 set g idelines for sing these %aivers. "he %aivers m st be vol ntary and nderstandable to the employee and employer! and they m st spell o t the employee&s rights nder the +-E+. +lso! in exchange for signing the %aiver! the employee m st receive @compensation!@ that is! greater benefits than he or she %o ld other%ise receive pon retirement. "he employer m st inform employees that they may cons lt a la%yer before signing! and employees m st have time to make a decision abo t signingI$1 days before signing pl s 2 days after%ard in %hich they can revoke the agreement. "he +mericans %ith -isabilities +ct imposes re' irements related to health ins rance. )nder the +-+! employees %ith disabilities m st have @e' al access to %hatever health ins rance coverage the employer provides other employees.@
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188. (p. 4(6'4&() =hy is it essential for organi(ations to comm nicate the nat re and val e of benefits to their employees> ,rgani(ations m st comm nicate benefits information to employees so that they %ill appreciate the val e of their benefits. "his is essential so that benefits can achieve their ob4ective of attracting! motivating! and retaining employees. Employees are interested in their benefits! and they need a great deal of detailed information to take advantage of benefits s ch as health ins rance and *81:k; plans. /t follo%s that electronic technology s ch as the /nternet and s pporting databases can play a significant role in modern benefit systems. 6any companies are p tting benefits information on their intranets. "he @.9 .o% "o@ box provides f rther s ggestions for comm nicating effectively the val e of the organi(ation&s benefits. /n act ality! employees and 4ob applicants often have a poor idea of %hat benefits they have and %hat the market val e of their benefits is. 9esearch asking employees abo t their benefits has sho%n that employees significantly nderestimate the cost and val e of their benefits. Probably a ma4or reason for their lack of kno%ledge is a lack of comm nications from employers. Employees don&t kno% %hat employers are spending for benefits! so many of them do bt employers& complaints abo t soaring costs and their impact on the company&s f t re. 9esearch s ggests to employers that better comm nication! co pled %ith %ell-designed benefits plans! %ill pay off in practical terms.
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Chapter 13 - Providing Employee Benefits

Chapter 13 Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Multiple Choice Questions

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 Providing Employee Benefits +ns%er Dey

True / False Questions

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Multiple Choice Questions

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits

Chapter 13 - Providing Employee Benefits