Q&A Hero

Q: A retirement plan that allows a self-employed person, or people working for a small business, to make larger tax-deductible contributions to a retirement account is called: A) a 401(k) plan. B) an individual retirement account. C) a simplified employee pension plan. D) a profit-sharing Keogh plan.

Q: Roth IRAs differ from traditional IRAs in what way? A) An employee is allowed to contribute more annually to a traditional IRA than to a Roth IRA. B) An employee is allowed to contribute more annually to a Roth IRA than to a traditional IRA. C) Traditional IRAs are restricted to people with adjusted gross incomes of less that $120,000 as a single person or $177,000 for married people filing joint returns. Roth IRAs are not restricted in this way. D) Roth IRAs are restricted to people with adjusted gross incomes of less than $120,000 as a single person or $177,000 for married people filing joint returns. Traditional IRAs are not restricted in this way.

Q: What is the maximum contribution for 401(k) plans? A) 15% of salary up to $17,500 B) 25% of gross income up to $49,000 C) 50% of gross income up to $22,300 D) 100% of salary up to $5,000

Q: The individual retirement account (IRA) is primarily appropriate for: A) employees without company pension plans. B) employees of small businesses. C) self-employed workers. D) small business owners.

Q: In a ________ plan, the employer puts in a specific amount and employees may contribute additional funds. Payout depends on the success of the investments in the retirement plan. A) pension B) defined contribution C) portable benefit D) defined benefit

Q: A(n) ________ plan is a retirement plan for which the employer assumes all the risk of meeting the plan's obligation and which provides the employee with a safe, secure, predictable retirement income. A) 401(k) B) portable benefit C) IRA D) defined benefit

Q: You have worked for Steel Workings for nearly eight years. Your employee-provided funds and employer-contributed funds are all vested. You intend to quit your job at Steel Workings to take another job. Your retirement funds will most likely: A) be lost upon your voluntary separation from Steel Workings. B) be decreased by half upon your voluntary separation from Steel Workings. C) stay with you when you move from Steel Workings. D) not be contributed to by your new employer.

Q: Which of the following guarantees that accrued retirement benefits will be given to retirement plan participants when they leave the employer? A) Pension B) Vesting C) Portable benefits D) Flexible spending

Q: Employee retirement benefits are governed by: A) COBRA. B) the Social Security Act. C) ERISA. D) the Equal Pay Act.

Q: A qualified retirement plan: A) requires employees to pay taxes on current income, but not retirement distributions. B) prohibits employees from paying tax on contributions to the plan. C) favors highly compensated employees over lower-paid workers. D) prevents employers from taking a tax deduction.

Q: Upon retirement, people typically have how many main sources of income? A) Two - Social Security benefits and retirement benefits B) Two - Social Security benefits and personal savings C) Three - Social Security benefits, personal savings, and retirement benefits D) Four - Social Security benefits, personal savings, retirement benefits, and inheritance benefits

Q: Most people can expect that Social Security will provide approximately ________ of their needed retirement income. A) 50% B) 35% C) 25% D) 15%

Q: HR can most likely help employers control health-care costs by: A) shifting their companies into traditional insurance programs. B) forming a self-funding arrangement for health insurance. C) requiring that employees use only HMO plans. D) offering low deductible health plans.

Q: Which of the following is a true statement about HSAs? A) Earnings and qualified withdrawals from HSAs are not taxed. B) Unspent money from an HSA cannot be rolled into the next year. C) HSAs offer low deductibles for people who rarely need health care. D) Premiums on HSAs are higher than other health insurance policies.

Q: Which of the following is most likely a true statement? A) Federal law mandates that firms provide domestic partner coverage. B) Insurance companies require documentation for domestic partner coverage. C) Most homosexual workers enroll their domestic partners for health care benefits. D) Health-care costs for unmarried couples are usually lower than those for married couples.

Q: All of the following are characteristics of PPOs EXCEPT: A) flexibility. B) managed health care. C) limited physician choice. D) fixed fee medical services.

Q: Layla has taken a new job at a large appliance company and must choose between health plans. If Layla is like the majority of employees, she will choose a(n) ________ plan. A) HMO B) PPO C) HSA D) HDHP

Q: Which of the following is designed to encourage preventive health care in order to reduce overall costs? A) Traditional health insurance B) Preferred provider organization C) Patient's Bill of Rights D) Health maintenance organization

Q: An HMO-based health plan: A) provides comprehensive coverage for a flat annual fee. B) provides maximum flexibility to the employee. C) covers 80% of doctor and 100% of hospital bills. D) does not cover preventive care services.

Q: Apex Consulting wants to offer its employees a health insurance plan that gives the employees the greatest amount of choice in hospital and physician selection. Which of the following would be the best choice for Apex? A) HMO B) PPO C) Traditional insurance plan D) Flexible spending account

Q: Which of the following protects an employee's ability to transfer between health insurance plans without a gap in coverage due to a preexisting condition? A) PACA B) HIPAA C) COBRA D) ERISA

Q: Once an employee leaves an employer, that employee: A) loses all health insurance coverage. B) is immediately eligible for health insurance under Social Security. C) may pay for and keep their health insurance for 18-36 months. D) gains coverage under COBRA or ERISA, depending on their age.

Q: Which country had the highest health-care costs per capita as of 2008? A) Canada B) Germany C) Great Britain D) United States

Q: The Consolidated Omnibus Budget Reconciliation Act does which of the following? A) Prevents employees from taking benefits from one company to another when they change jobs B) Allows employees to continue health insurance coverage after their employment has ended C) Requires employers to contain health-care costs through regular auditing practices D) Provides comprehensive medical services for employees through Medicare

Q: Mark lost his job at a large manufacturing company during downsizing. Which of the following ensures that Mark may continue his health insurance coverage? A) Consolidated Omnibus Budget Reconciliation Act B) Social Security Act C) Family and Medical Leave Act D) Workers' Compensation Act

Q: ________ of large and medium-sized private businesses in the United States offer health insurance to their employees, and ________ of small firms offer health insurance. A) 84% / 50% B) 64% / 76% C) 85% / 57% D) 55% / 40%

Q: What benefits are employers legally required to provide? What are some HR practices that can help employers contain the costs of these required benefits?

Q: A federal law that requires employers to provide up to 12 weeks' unpaid leave to eligible employees for the birth or adoption of a child; to care for a sick parent, child, or spouse; or to take care of health problems that interfere with job performance is called ________.

Q: ________ are benefits given by a company to laid-off employees over and above state unemployment benefits.

Q: A program established by the Social Security Act of 1935 to provide temporary income for people during periods of involuntary unemployment is referred to as ________.

Q: The Family and Medical Leave Act applies to businesses that have 25 or more employees.

Q: The Family and Medical Leave Act requires employers to give employees up to 12 weeks paid leave for the birth/adoption of a child, to care for a sick family member, or for serious personal health reasons.

Q: Employees who retire are not qualified for unemployment insurance benefits.

Q: Unemployment insurance is administered under the Social Security Act of 1935.

Q: The rates that employers pay for workers' compensation are based on: the severity of injuries sustained by the company's workforce, the risk of injury to employees, and the benefit level provided for specific injuries.

Q: Workers' compensation covers medical care and rehabilitation costs but not income replacement, since that falls under Social Security benefits.

Q: Cheyanne is a recent widow. She is the mother of a 19-year-old daughter and the care-provider of her mother-in-law who is 60 years old. Cheyanne is eligible for survivor benefits.

Q: Employees receive full Social Security benefits at the age of 62.

Q: To be eligible for Social Security, a person must have worked 40 quarter-year periods (10 years total employment) and must have earned a minimum of $1,120 per quarter.

Q: Additional Case 12.2 Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits. The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly. Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job. Refer to Additional Case 12.2. The young man who was fired is most likely: A) eligible for workers' compensation. B) not eligible for unemployment insurance benefits. C) not covered by ERISA because of his age. D) eligible for unemployment insurance benefits.

Q: Additional Case 12.2 Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits. The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly. Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job. Refer to Additional Case 12.2. Which of the following would be the best way to lower the firm's workers' compensation costs? A) Auditing all employee claims B) Mandating employee drug tests C) Placing injured workers on modified duty D) Emphasizing safe working procedures

Q: Additional Case 12.2 Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits. The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly. Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job. Refer to Additional Case 12.2. Tri-State Shipping's workers' compensation tax rate is probably mostly influenced by their: A) experience rating. B) workers' average age. C) health insurance benefits. D) probability of injury.

Q: Additional Case 12.2 Tri-State Shipping employs 45 workers. They ship commodities across the country. Until recently, they had only legally required benefits, but business has become very profitable and they can now offer their employees more benefits. The average age of their employees is 50. Most employees have been there for more than 20 years, and the company prides itself on keeping workers. The majority of the jobs require heavy lifting or the operation of heavy equipment for loading and unloading trucks, trains, etc. Their workers' compensation tax has been running about 5% per year. They are in one of the lowest workers' compensation tax rate states, but TSS has had a lot of injuries. The lifting required and type of equipment used tends to result in a lot of sprained backs, mashed fingers, or bruised muscles. When workers are injured, they tend to heal quickly and return to work quickly. Despite its reputation for keeping workers, the dock supervisor recently fired a 21-year old employee who had been with TSS for 12 months. Even though everyone liked him, the young man just couldn't learn his job. Refer to Additional Case 12.2. Tri-State Shipping's workers' compensation tax rate is: A) average for U.S. companies. B) five times the U.S. average. C) half of the U.S. average. D) twice the U.S. average.

Q: According to surveys, which of the following is true about FMLA? A) Leave causes significant staffing problems for small employers. B) Leave is primarily taken to care for sick family members. C) Nearly 50% of eligible workers take leave each year. D) Leave is primarily taken for overseas adoptions.

Q: When an employee applies for family or medical leave, an employer: A) may deny it to employees with less than one year of service. B) does not have to guarantee the employee the same/similar job upon returning to work. C) does not have to maintain health insurance coverage for the employee. D) cannot hire replacement workers while the employee is on leave.

Q: Denielle has recently taken FMLA leave from Vanderbilt, Inc. to take care of her ailing child. When she returns to her job, what responsibilities will the company have toward Denielle? A) Vanderbilt must take the duration of Denielle's FMLA leave into account when determining length of service schedules for promotion purposes. B) Denielle will not be entitled to any cost-of-living pay increases for the time she spends on FMLA leave. C) Denielle is entitled to a job equivalent to her previous job when she returns from FMLA leave. D) Vanderbilt must hold Denielle's position so that she will be able to fill it when she returns from her FMLA leave.

Q: The Family and Medical Leave Act only affects employers that: A) offer health benefits. B) are publicly held. C) are federal contractors. D) have 50 or more employees.

Q: The Family and Medical Leave Act does NOT apply to employees who have: A) previously adopted children. B) been with an employer less than one year. C) reached retirement age. D) previously taken FMLA leave.

Q: The Family and Medical Leave Act requires most employers to: A) provide parents with up to 6 weeks paid leave for the birth of a child. B) permit unpaid leave up to 12 weeks for certain family medical issues. C) provide health insurance for all married couples. D) provide health insurance for all employees.

Q: HR can have an important part in lowering unemployment insurance costs for a company by: A) making it harder to fire employees. B) conducting exit interviews with discharged workers. C) offering employees a flexible benefits plan. D) setting up health insurance accounts for employees.

Q: Dick has recently been laid off from his unionized manufacturing job where he has been a full-time worker for the last 14 years. He has been looking for work for nearly five months. Which of the following is most likely true in Dick's case? A) Dick is not eligible for unemployment insurance. B) Dick's unemployment insurance will run out at the end of the fifth month. C) Dick is probably receiving 60% of the earnings he received from his job. D) Since Dick's company was unionized, he may be eligible for supplemental unemployment benefits.

Q: Former employees may be denied unemployment insurance benefits if they: A) worked for a private firm with fewer than 15 employees. B) were government employees. C) were fired by their employer. D) failed a drug test.

Q: To be eligible for unemployment insurance, employees must meet all of the following requirements EXCEPT: A) be actively seeking employment. B) have left their job involuntarily. C) have worked a minimum of four out of the last five quarter-year periods. D) have filed a workers' compensation claim within the last twelve months.

Q: Unemployment insurance is: A) paid for through union dues. B) funded by the federal government. C) paid for by a tax on employers. D) funded by health insurance companies.

Q: A self-insurance pool is best defined as a: A) policy in which individual employees are exclusively responsible for their insurance. B) group of companies who jointly hire an administrator to organize insurance functions. C) policy offered by insurance companies that allows employees to choose their own benefits. D) group of individual employees who shop for the most cost-effective health insurance.

Q: The rate of workers' compensation tax for employers is based on all of the following factors EXCEPT the: A) workers' compensation guidelines in the employer's state. B) employer's injury experience rating. C) risk of injury for an occupation. D) number of employees at the firm.

Q: Which of the following would LEAST likely improve a firm's workers' compensation costs? A) Emphasizing safe work procedures to all employees B) Providing health insurance to high-risk employees C) Designing jobs to reduce risk of injury D) Auditing workers' compensation claims

Q: The employee benefit that provides medical care, income, and rehabilitation expenses for individuals who sustain job-related injury or illness is called: A) workers' compensation. B) Social Security. C) survivor benefits. D) unemployment insurance.

Q: Workers' compensation: A) only covers an employee who is not at fault for his/her injury. B) provides medical care, income, and rehabilitation expenses. C) replaces 75% of the disabled worker's income. D) is part of Social Security.

Q: Shirley's husband has recently died. She is eligible for survivor benefits if she: A) is at least 55 years old. B) is at least 55 years old and has an unmarried child younger than 19 years of age. C) cares for a dependent parent of 60 years of age or older. D) is at least 60 years of age.

Q: Disability income is provided to employees who are: A) totally and continuously disabled for 2 months. B) disabled and cannot work for at least 12 months. C) disabled and the primary breadwinners of the family. D) earning less than $20,000/year prior to their disability.

Q: Disability income under Social Security: A) covers all hospital expenses for anyone over age 65. B) requires 50% disablement for six weeks prior to the beginning of benefits. C) does not take effect until the individual is over age 65. D) comes in monthly payments equivalent to 30% of the individual's earnings.

Q: Sam was born in 1963. What is the earliest age that Sam can retire to receive full Social Security benefits? A) 65 B) 66 C) 67 D) 68

Q: The standard Social Security tax is applied to earnings up to $106,800. Over this amount, employees are taxed at a rate of ________ on all additional earnings. A) 1.45% B) 3.2% C) 5.65% D) 7.4%

Q: Social Security does NOT include which of the following? A) Retirement income B) Disability income C) Workers' compensation D) Survivors' benefits

Q: ________ is a government program that provides income for retirees, the disabled, and survivors of deceased workers, and health care for the aged through the Medicare program.

Q: The ________ is the complete package of benefits that a company offers its employees.

Q: A company that focuses on providing job security and long-term employment is likely to devote a small portion of its compensation dollars to benefits.

Q: The benefits mix for a company should be governed by its compensation strategy, its objectives, and the makeup of its workforce.

Q: Additional Case 12.1 The HR Director of The Camera Center is leading the executive team through a review of the company's benefits plan. He begins by explaining how the firm funds the benefits plan. After a few questions on that matter, he moves on to clarify what they must offer by law and what benefits the firm would like to provide. A highly entrepreneurial, performance-driven company, The Camera Center provides an excellent profit-sharing plan and one of the best retirement packages in the industry. The firm commits a high portion of compensation funds to the benefits plan. The workforce tends to be college-educated, young professionals who are just starting their families. The CEO wants the total benefits plan reviewed and repackaged, if necessary, to align it with The Camera Center's business culture and strategy. He also wants to contain costs as much as possible and simplify benefits administration. Refer to Additional Case 12.1. This company's benefits mix: A) matches the firm's culture and objectives. B) is almost the opposite of what the firm needs. C) would be better if it included variable pay as well. D) violates federal law because the firm doesn't offer health care.

Q: A standardized benefits package is most likely best for a: A) new company with a highly diverse workforce. B) firm that employs a homogeneous workforce. C) firm that wants to provide employees with choices. D) new company that wants to decentralize benefits.

Q: Crescent Control Systems focuses on providing job security and long-term employment opportunities for its employees. Which of the following would most likely support Crescent's strategy? A) Applying most compensation dollars towards productivity rewards B) Using a large portion of its compensation budget for benefits C) Providing workers' compensation coverage to all employees D) Offering employees variable pay and family leave

Q: The benefits amount corresponds to which direct compensation decision? A) Individual-based pay versus job-based pay B) Fixed versus variable pay C) Monetary versus nonmonetary rewards D) Open versus secret pay

Q: Melanie is determining what benefits mix will work best for Bob's Building Corp. Which of the following questions is LEAST relevant to Melanie during this process? A) What are the firm's objectives? B) What benefits are legally required? C) What benefits do competitors offer? D) What are the characteristics of the workforce?

Q: To design a successful benefits strategy, employers should most likely consider: A) two areas: benefits amount and the flexibility of benefits. B) two areas: benefits mix and the flexibility of benefits. C) three areas: benefits mix, the flexibility of benefits, and the benefits amount. D) four areas: benefits mix, the flexibility of benefits, the benefits amount, and benefits communication.

Q: Why are employee benefits significant to both employers and employees? What should an employer consider when developing a benefits mix?

Q: A benefits program that allows employees to select the benefits they need most from a menu of choices is referred to as a(n) ________.

Q: Employers are legally required to provide health insurance to employees.

Q: Employee contributions to a qualified retirement plan are usually tax-deferred until the employee retires.

Q: The cost of employee benefits has risen to nearly 50% of an employer's payroll costs.