Chapter 12 - Managing Employee Benefits

Question 1

Define “Gross-Up”.

Answer 1

-To increase the net amount of what the employee receives to include the taxes owed on the amount.
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Question 2

Define “Flexible Benefits Plan”.

Answer 2

-Program that allows employees to select the benefits they prefer from options established by the employer.
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Question 3

Define “Adverse Selection”.

Answer 3

-Situation in which only higher-risk employees select and use certain benefits.
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Question 4

Define “Open Enrollment”.

Answer 4

-A time when employees can change their participation levels in various benefit plans and switch between benefit options.
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Question 5

Define “TPAs”.

Answer 5

-Third-party administrators
-Vendors that provide enrollment, record-keeping, and other administrative services to organizations.
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Question 6

Define “Workers’ Compensation”.

Answer 6

-Security benefits provided to workers who are injured on the job.
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Question 7

Define “No-Fault Insurance”.

Answer 7

-An injured worker receives benefits even if the accident was the employees’ fault.
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Question 8

Define “Exclusive Remedy”.

Answer 8

-Workers’ compensation benefits are the only benefits injured workers may receive from the employer to compensate for work-related injuries.
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Question 9

Define “Three-Legged Stool”.

Answer 9

-A model showing the 3 sources of income to fund an employee’s retirement.
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Question 10

Define “Vesting”.

Answer 10

-A benefit that cannot be taken away.

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Question 11

Define “Portability”.

Answer 11

-A retirement plan feature that allows employees to move their retirement benefits from one employer to another.
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Question 12

Define “Retirement Plan”.

Answer 12

-A program established and funded by the employer and/or employees to fund employees’ retirement years.
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Question 13

Define “Defined Benefit Plan”.

Answer 13

-Retirement program in which employees are promised a pension amount based on age and years of service.
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Question 14

Define “Defined Contribution Plan”.

Answer 14

-Retirement program in which the employer and/or employee makes an annual payment to an employee’s retirement account.
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Question 15

Define “401(k) Plan”.

Answer 15

-Plan allows for a percentage of an employee’s pay to be withheld and invested in a tax-deferred account.
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Question 16

Define “Auto-Enrollment”.

Answer 16

-Process by which employee contributions to a 401(k) plan are started automatically when an employee is eligible to join the plan.
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Question 17

Define “Auto-Escalation”.

Answer 17

-Automatic increases of 1 percent a year to a 401(k) plan.

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Question 18

Define “Deductible”.

Answer 18

-Money paid by an insured individual before a health plan pays for medical expenses.
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Question 19

Define “Health Spending Account”.

Answer 19

-A tax-favored savings plan to provide funds for paying medical expenses.
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Question 20

Define “Consumer-Driven Health (CDH) Plan”.

Answer 20

-Health plan that provides employer financial contributions to employees to help cover their health-related expenses.
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Question 21

Define “Copayments”.

Answer 21

-The portion of medical expenses paid by an insured individual for medical treatment.
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Question 22

Define “Managed Care”.

Answer 22

-Approaches that monitor and reduce medical costs through restrictions and market system alternatives.
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Question 23

Define “Well-Being”.

Answer 23

-The overall level of employee physical, mental, financial, and social wellness.
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Question 24

Define “Qualifying Event”.

Answer 24

-An event that causes a plan participant to lose group health benefits”.
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Question 25

Define “Stock Purchase Plan”.

Answer 25

-Plans where employees may buy shares in the company at a discount, or the company pays the brokerage fees.
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Question 26

Define “Serious Health Condition”.

Answer 26

-An illness or injury that requires inpatient care or continuing treatment by a health care provider for medical problems that exist beyond three days.
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Question 27

Define “Paid-Time-Off”.

Answer 27

-Plans that combine all sick leave, vacation time, and holidays into a total number of hours or days that employees can take off with pay.
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