Chapter 12: Employee Benefits
1. The cost of employee benefits to organizations has remained stable over the last thirty years.
Ans: False
Response: The cost of employee benefits to organizations has substantially increased over the last thirty years.
2. Social Security is an example of a voluntary benefit.
Ans: False
Response: It is legally required.
3. In the United States, employees average 10 paid holidays per year.
Ans: True
4. A defined contribution planis a type of retirement program whereby each employee has an individual account to which both the employee and the employer may make contributions.
Ans: True
5. A defined benefit plan is a retirement program that pays retiring employees a fixed retirement income based on average earnings over a period of time.
Ans: True
Multiple Choice
6. Today, benefit and service offerings add nearly ______to organizational payroll costs.
a) 20%
b) 30%
c) 40%
d) 50%
e) 60%
Ans: c
Response A: No.
Response B: No.
Response C: Correct!
Response D: No.
Response E: No.
7. Which of the following is not a legally required benefit?
a) Health insurance
b) Social Security
c) Unemployment compensation
d) Workers’ compensation
e) Unpaid family and medical leave
Ans: a
Response A: Correct!
Response B: Legally required benefit. Response C: Legally required benefit.
Response D: Legally required benefit.
Response E: Legally required for organizations with 50 or more employees.
8. Maria took a month off from work to care for her husband, Mario, who was injured when an oven exploded at the pizza factory where he worked. What program protected Maria’s job and her benefits while she cared for Mario?
a) Workers’ compensation
b) Social Security
c) Family and Medical Leave
d) Unemployment insurance
e) Medicare
Ans: c
Response A: No. That’s for Mario’s pay.
Response B: No.
Response C: Correct!
Response D: No. That’s for job loss.
Response E: No.
9. Joe works for a large service organization. Last year, they paid nothing for authorized baby immunizations for their children. The children receive well-child pediatric care for $5 a visit. Joe complains that although the costs are reasonable, the family has to go the Local Clinic for all of their nonemergency care. What kind of health insurance does Joe have?
a) Traditional
b) HMO
c) PPO
d) HBO
e) COBRA
Ans: b
Response A: No. See page 320. This type costs more and gives more choices.
Response B: Correct!
Response C: No. The physician specialists are the difference.See page 320.
Response D: These letters should be familiar to you for other reasons.See page 320.
Response E: No. That extends coverage between jobs.See page 320.
10. Which of the following piece of legislation provides for continued employee benefits up to three years after an employee leaves a job?
a) COBRA
b) HMO
c) HIPPA
d) ERISA
e) PPO
Ans: a
Response A: Correct!
Response B: No.
Response C: No.
Response D: No.
Response E: No.
11. Which of the following best describes ERISA?
a) Law that provides some health insurance coverage through the federal Medicare program.
b)Established the requirement that companies offering traditional health insurance to its employees must also offer alternative health-care options.
c)Law passed in 1974 designed to protect employee retirement benefits.
d) Law that requires organizations with 50 or more employees to provide eligible employees the opportunity to take up to 12 weeks of unpaid leave each year for family or medical reasons.
e) Law that provides for continued employee benefits up to three years after an employee leaves a job.
Ans: c
Response A: No. Social Security.
Response B: No. Health Maintenance Act of 1973.
Response C: Correct!
Response D: No. Family and Medical Leave Act.
Response E: No. Consolidated Omnibus Budget Reconciliation Act.
12. Which of the following is not a type of defined contribution plan?
a) Roth IRAs
b) Money purchase pension plan.
c) A summary plan description
d) 401(k)s
e) Individual retirement accounts
Ans: c
Response A: Yes.
Response B: Yes.
Response C: Correct! A summary plan description is an ERISA requirement of explaining to employees their pension program and rights.
Response D: Yes.
Response E: Yes.
13. In Japan, employees have ______paid holidays.
a) 3
b) 7
c) 10
d) 15
e) 20
Ans: d
Response A: No.
Response B: No.
Response C: No.
Response D: Correct!
Response E: No.
14. Melvin invests $2400 of his pre-tax earnings into an account each year. The money grows tax-free, and he can withdraw the money tax free when he reaches a certain age. What kind of retirement program does Melvin have?
a) Scanlon Plan
b) Individual Retirement Account
c) Defined benefit plan
d) Profit sharing plan
e) 405©3
Ans: b
Response A: No. That’s not a retirement program.
Response B: Correct!
Response C: No.
Response D: No.
Response E: No.
15. Your neighbor, Dwayne, hasn’t worked in the past five years. He fell from a truck at work and hurt his back and leg. He draws 60% of his salary. Under what benefit plan is Dwayne covered?
a) Wellness
b) Keough
c) Jordan
d) Short-term disability
e) Long-term disability
Ans: e
Response A: No. Wellness programs are designed to prevent disability.
Response B: No. That’s a retirement plan.
Response C: No, not the right term.
Response D: No. Five years is not short term.
Response E: Correct!