Module 1: Government Influence On benefits

Question 1

What are the five components of the total rewards model?

Answer 1

Compensation
Well-being
Benefits
Development
Recognition

Question 2

What are the five major types of employee benefit benefits?

Answer 2

Group insurance plans
Retirement plans
Paid time away from work
Incentive plans/stock options
Perks

Question 3

What are examples of legally required employee benefits?

Answer 3

Social Security
Workers compensation insurance
Unemployment insurance
Medical insurance plan - ACA standards

Question 4

Regarding legally required benefits, describe workers compensation

Answer 4

Paid for by the employer, must meet state standards, employer chooses vendor in most states

Benefits to an employee may not be taxable

Covers all employees

Premium cost affected by experience rating

Premium cost lower with return to work program

Inherent risk of employee fraud

Question 5

List group insurance plans, and describe Describe group insurance plans

Answer 5

Group insurance plans can be legally required or discretionary
- Health and welfare plans can be legally required to discretionary
- Trends and healthcare insurance can affect the other kinds of benefits and employer can afford to offer

Disability plans can be legally required or discretionary
- there are certain states that require disability plans to be provided by the employer

• life insurance plans are discretionary choices for the employer to provide

Question 6

Are retirement plans legally required?

Answer 6

No retirement plans are discretionary

Question 7

Unemployment insurance is legally required benefit. What are the five attributes of unemployment insurance?

Answer 7

Paid for by the employer operated by the state

Covers employees who lose a job through no fault of their own (can also include employees who resign due to inappropriate treatment by the employer)

Premium cost affected by experience rating

Premium cost can be lowered with staffing, stability, and the use of contingent workers

Employers are required to respond to all claims

Question 8

What are the eight things for an employer to consider when evaluating a specific employee benefit?

Answer 8

Who is eligible to participate in receive the benefit?

When is the employee eligible?

What benefit coverage is included

Is it voluntarily chosen by the employee or automatic?

Is it legally required or discretionary for the employer?

Who pays for it employer versus employee?

How was the benefit plan funding determined

How is the benefit valued by the workforce?

Question 9

In order for an employee benefit law to emerge what are the five key legislative process steps?

Answer 9

Perceived need for regulation

Legislative hearings

Draft legislation

Amendments

Final legislation

Question 10

What nine government agencies have oversight responsibilities of Key legislation affecting employee benefits

Answer 10

Internal revenue service

Department of labor

Employee benefit, security administration

Equal employment opportunity commission

Department of health and human services

Pension benefit guarantee corporation

Securities and exchange commission

Occupational Safety and Health Administration

National Labor Relations Board

Question 11

What are the two government benefits programs that are required by the state?

What are the three government benefits programs that apply in some states?

Answer 11

Required state benefits:
Unemployment insurance
Workers comp compensation

Benefits that apply in some states :
Non-occupational disability laws
Mandated health benefits
Mandated paid leave benefits

Question 12

Concerning government benefits programs, what is the only federal benefits program?

Answer 12

Social Security

Question 13

Regarding state benefit programs, what are the four key attributes of unemployment compensation?

Answer 13

Federally required in all states

Experience rated tax on employers

Eligibility and benefits very by state

Benefits are fully taxable at the federal and state level

Question 14

Regarding state benefit programs, what are the seven key attributes of Worker’s Compensation?

Answer 14

Covers occupational injuries, and illnesses

No fault concept (applies regardless of accident cause if it’s work related)

Non contributory by employee

Types of event benefits include medical bills, and compensation for lost work time training and death

Insurance requirements

Benefits are not taxable

Question 15

Regarding state benefits programs, how are mandated health benefits administered for fully insured employers versus self insured employers

Answer 15

Fully insured employers are required to cover state mandated benefits on your medical plan

Self insured employers are not required to cover state Man mandated benefits

Question 16

What are the four distinct types of Social Security benefit?

Answer 16

OA - old age
S - survivor income
D- disability income
HI - health insurance benefits (Medicare was added in 1965)

Question 17

At what age are people eligible for full Social Security retirement benefits

Answer 17

At age 65 for those born prior to 1938

At age 67 for those born after 1959

Benefits eligibility is on a graduated scale for those born between 1938 and 1959

Question 18

How are Social Security old age, retirement benefits, reduced, when taken early?

Answer 18

The earliest stage which one can start receiving Social Security retirement benefits is 62

Retirement benefits are reduced 5/9 of one percent for each month up to 36 months that the benefit is paid prior to full retirement age

Retirement benefits are reduced 5/12 of one percent for each month that the benefit is paid earlier than 36 months prior to full retirement age

Question 19

How are old age, retirement benefits under Social Security impacted by delaying your benefits after full retirement age?

Answer 19

If you delay your benefits until after full retirement age, you could be eligible for delayed retirement credits that increase your monthly benefit between five and 8% per year, depending on your rear of birth.

Question 20

How much is the Social Security survivor benefit worth?

Who is eligible for Social Security survivor benefits

Answer 20

$255 lump sum death benefit payment

Widows and widowers
- Survivors aged 60 and over
- Survivors aged 50 to 59 if disabled
- Survivors of any age of taking care of dependent children under 16 years old

Dependent children up to age 18 (19 if a full-time student)

Dependent parents age 62 and over (they must’ve been receiving, at least half of their support from the beneficiary)

Question 21

Regarding Social Security disability benefits, what are the key attributes of the program?

Answer 21

Payable, regardless of age

Begins after five full months of continuous disability

Payment is retroactive to date of disability

Benefits are integrated with Worker’s Compensation benefits

Tedious review and appeals process

Question 22

When Social Security disability benefits are integrated with workers comp benefits what’s the maximum percent of earnings that can be provided

Answer 22

Combine benefits cannot exceed 80% of employee earnings

Question 23

Regarding Social Security hospital insurance (part a Medicare) who is eligible for Medicare

Answer 23

People age 65 and over and people who are disabled and have been receiving disability benefits from Social Security for two years

When an employee enrolled in an employer, sponsored health plan turns 65. Medicare becomes a secondary plan.

If the organization offers a retiree medical coverage plan, Medicare becomes the primary plan for retired employees age 65 or older

Question 24

Each year the government government determines the deductible for Medicare part a and part B

After the deductible is Met for Medicare part a how many days does Medicare pay full cost of remaining charges per occurrence?

Answer 24

Medicare pays the full cost of remaining charges for the first 60 days per occurrence of illness

Question 25

Medicare part a covers hospital care after deductible may cover skilled nursing facilities, home health services, hospice care Residential care is not typically covered

Answer 25

Just the statement above;-)

Question 26

What is the cost of Medicare part B supplementary medical insurance

Answer 26

Individuals who choose to participate in part B are required to pay a premium that’s adjusted annually by the government There could be penalties if you do not enroll on time and the sir charges will remain for as long as you have the part B coverage After deductible covered individuals pay 20% and Medicare pays 80%

Question 27

What is the basic list of covered services for Medicare part B supplementary medical insurance

Answer 27

Physician services Physical and occupational therapy Diagnostic x-ray laboratory, and other test

Question 28

What is a Medigap policy?

Answer 28

Social security health insurance part C Medigap, or Medicare Supplement Insurance, is a health insurance plan that helps cover out-of-pocket medical costs that Original Medicare doesn't cover

Question 29

What is Social Security health insurance part C?

Answer 29

Medicare advantage

Question 30

Is there a cost for members to enroll in Medicare advantage

Answer 30

Participants will pay a monthly premium for the Medicare advantage plan because of the extra benefits it offers Benefits are often administered via a private ensure

Question 31

Who is eligible for Medicare part C Medicare advantage

Answer 31

People with Medicare parts a and B can join a Medicare advantage, part C plan and choose to receive all of their healthcare services through one of the provider organizations

Question 32

What are the five components of Medicare advantage part C plans?

Answer 32

Medicare managed care plans Medicare preferred provider, organization plans, PPOs Medicare private fee for service plans Medicare specialty plans Prescription drugs

Question 33

What is Social Security health insurance part D?

Answer 33

Prescription drug coverage

Question 34

When did Medicare part D prescription drug coverage go into effect and what act drove the change

Answer 34

In 2006 Medicare part D went into effect in response to the Medicare prescription drug improvement and modernization act of 2003

Question 35

Who administers Medicare part D

Answer 35

The centers for Medicare and Medicaid services CMS

Question 36

What’s the cost of Medicare part D prescription drug coverage

Answer 36

Participant cost varies, depending on the participants financial situation and chosen drug plan Low income aid is available to seniors There are also employer incentives, private employers receive incentives to continue to provide prescription coverage to retirees

Question 37

What are five major influences on benefits provided to employees

Answer 37

Equal employment opportunity laws Employee retirement, income, security act of 1974 (ERISA) Internal Revenue Code Affordable care act Employer trends

Question 38

What are the six equal employment opportunity laws?

Answer 38

Title seven of the civil rights act of 1964 Age discrimination in the employment act of 1967 (older workers benefit protection act) Americans With Disabilities Act of 1990 (amended in 2008 now ADAAA) Equal pay act of 1963 Pregnancy discrimination act amendment to title seven in 1978 Genetic information non-discrimination act of 2008 (GINA)

Question 39

Regarding the dimensions of diversity list the protected classes

Answer 39

National origin Religion Race or color Sex includes gender and expanded definition Age 40 and over Physical or mental disability Veteran status Pregnancy

Question 40

What is the PURPOSE of the Employee Retirement Income Security Act of 1974? 4 primary reasons for establishing the act

Answer 40

- Provide rules on federal income tax effects * Protect interests of participants and their beneficiaries * Create federal law for employers operating in multiple states * Establish minimum standards for retirement plans

Question 41

What is another name commonly used to refer to ERISA?

Answer 41

Pension Reform Act

Question 42

What event prompted the 10 year legislative push to establish ERISA?

Answer 42

the 1963 closure of the Studebaker auto plant - thousands of workers lost there pension benefits.

Question 43

What are the 5 primary PROVISIONS of ERISA?

Answer 43

1. Reporting and disclosure — requires plan sponsors to provide plan participants with written communications about the details of the plans which must be written so that the average participant can understand Them. * Summary plan descriptions (SPDs) * Summary of material modifications (SMMs) * Annual reports (Form 5500) * Summary annual report (SAR) 2. Fiduciary standards * The plan must be operated for the exclusive purpose of providing benefits for plan participants and their beneficiaries. * “Prudent person standards” requires the plan fiduciary to perform their duties in the same manner as a prudent person who is familiar with such matters. 3.Preemption — ERISA calls for federal oversight and preemption of many (but not all) state laws that apply to benefits plans. Congress and many courts are considering ways to limit this. 4. Claims procedure regulation — establishes procedural, notification and disclosure requirements with respect to claims for employer benefits plans. 5. Enforcing agencies — responsibility for the interpretation and enforcement of ERISA is divided among the Department of Labor, the Department of the Treasury (particularly the Internal Revenue Service), and the Pension Benefit Guaranty Corporation.

Question 44

Does ERISA require an employer to establish a benefits plan?

Answer 44

ERISA does not require an employer to establish a plan. It only requires that those who do meet a set of minimum standards.

Question 45

What are the 2 types of ERISA qualified benefits plans?

Answer 45

Defined Contribution Plan Defined Benefit Plan

Question 46

Define - Defined Contribution Plan and Defined Benefit Plan

Answer 46

■ Defined Contribution Plan — Employer agrees to make specific payments into a retirement fund. ■ Defined Benefit Plan — Employer agrees to give retirees a specific benefit, generally a percentage of final salary.

Question 47

What Act Drives your answer? An employee nearing retirement asks you why a coworker receives a larger monthly Social Security check than him.

Answer 47

Social Security - Old Age Retirement Benefits

Question 48

What Act Drives your answer? An employee tells you he will soon turn 65 but intends to continue working. He asks if he can receive his full Social Security benefit while still working.

Answer 48

Social Security - Old Age Retirement Benefits

Question 49

What Act Drives your answer? An employee tells you her husband turned 65 and applied for Medicare. He is currently covered under your employers sponsored health-care plan. She wants to know if she should continue to keep him on her insurance.

Answer 49

Medicare Part A: Hospital Insurance

Question 50

What Act Drives your answer? A 55-year-old employee found out the company provides lower benefits to her than they do for younger workers. She asks you why and if it is legal to discriminate in that way.

Answer 50

ADEA - Age Discrimination in employment act

Question 51

What Act Drives your answer? A new employee decides to have a minor surgery, believing that her coverage begins on the first day of the month following her hire date. In fact, her coverage does not start until the first day of the following month — after 30 days of employment. Which document could have clarified that for the employee and what regulation was designed for that purpose?

Answer 51

ERISA - this is an employer benefit question...

Question 52

How is the Internal Revenue Code defined?

Answer 52

In its simplest sense, the IRC refers to the tax laws passed by Congress and administered by the Internal Revenue Service (IRS).

Question 53

Define the following terms within the Internal Revenue Code (IRC) Tax Exemption Tax Deduction Tax Credit

Answer 53

* Tax exemption — Set amounts by which one reduces taxable income * Tax deduction — Actual expenses that reduce one’s taxable income * Tax credit — Directly reduces the amount of income tax paid by offsetting other income tax liability

Question 54

The IRC provides favorable tax treatment for employer contributions for certain types of employee benefits. What are the 3 general tax advantages to employee benefits under the IRC?

Answer 54

- Tax-deductible contributions — Employer contributions are tax deductible. * Tax-free benefits — Benefits received by employees are tax free in most cases. * Tax-deferred benefits — For some benefits, the tax obligation by the employee is to be paid at a future date.

Question 55

Compensation Nondiscrimination Terms - define the following: HCE

Answer 55

Highly compensated employee (HCE) * Owns more than 5% of the company in the current or prior year, OR * Earned more than the annually indexed HCE limit in the preceding year, OR * At the employer’s election is in the top 20% of the organization’s employees in terms of pay

Question 56

Compensation Nondiscrimination Terms - define the following: NHCE

Answer 56

Does not meet the definition of HCE

Question 57

Compensation Nondiscrimination Terms - define the following: HCI

Answer 57

- Five highest paid officers, OR * Shareholders who hold more than 10% of stock in the company, OR * Highest paid 25% of employees, disregarding nonparticipating excludable employees

Question 58

Compensation Nondiscrimination Terms - define the following: Key Employee

Answer 58

* Determination is based on the prior years annual compensation - The term also covers some former employees. * An officer with compensation that exceeds annual indexed limits * A 5% owner, OR * A 1% owner with compensation that exceeds annual indexed limits

Question 59

Compensation Nondiscrimination Terms - define the following: Control Group

Answer 59

* To be a member of the controlled group, a company must be owned at least 80% by a corporation. * A separate test is applied where individuals or other noncorporate entities are owners. * For purposes of nondiscrimination testing, employers of affiliated companies must aggregate data if the companies are considered a controlled group of employers.

Question 60

What is the purpose of compensation nondiscrimination testing under the IRC?

Answer 60

Ensure that plans do not discriminate in favor of Highly compensated employees or individuals, or key employees.

Question 61

What are the 4 types of compensation nondiscrimination tests?

Answer 61

* Eligibility — covered by the plan * Benefits — level of benefits provided * Concentration — maximum 25% of total benefits to key employees (flex) * Shareholder/owner — maximum of 25% of employer’s costs for 5% owners (dependent care)

Question 61

What is the purpose of ACA - Affordable Care Act?

Answer 61

* Expand access for medical insurance coverage to uninsured Americans * Reform delivery system to improve quality * Lower overall costs of providing healthcare

Question 61

what are the consequences of noncompliance with compensation nondiscrimination testing?

Answer 61

can include loss of favorable tax status, fines and personal liability Depending on the benefit program in question and the violation.

Question 62

What is the name of the enforcing agency responsible for monitoring the ACA?

Answer 62

Department of Health and Human Services (HHS), Department of the Treasury, and the IRS.

Question 63

Which federal governing agency is responsible for ensuring that investors receive financial information concerning stocks or bonds being offered for sale? A. Securities and Exchange Commission B. Department of Labor C. Pension Benefit Guaranty Corporation D. Equal Employment Opportunity Commission

Answer 63

A. Securities and Exchange Commission

Question 64

Why is it important for benefits practitioners to understand government benefits programs? A. When state and federal regulations overlap, federal programs offering lower benefits to employees typically take precedent. B. Social Security survivor benefits are considered in the design of employer-sponsored group life insurance plans. C. Social Security programs must often be considered in the design of employer-sponsored benefits plans. D. Medicare becomes the primary insurance for employees who turn 65, even if they are enrolled in employer-sponsored medical plans.

Answer 64

C. Social Security programs must often be considered in the design of employer-sponsored benefits plans.

Question 65

3. How does Title VII of the Civil Rights Act of 1964 influence benefits administration? A. Employers can never legally base benefits decisions on race, color, sex, national origin or religion. B. Employers can give lower benefits to older employees if the benefits become more expensive because of age. C. Employers can distinguish the benefits provided to employees with disabilities based on anticipated experiences.

Answer 65

A. Employers can never legally base benefits decisions on race, color, sex, national origin or religion.

Question 66

What is the purpose of the Employee Retirement Income Security Act (ERISA)? A. To create a federal agency responsible for enforcement of federal statutes B. To protect the interests of participants and beneficiaries in employee benefits plans C. To overhaul and reform private sector employer pension and retirement plans D. To create funding to cover under-funded company pension plans

Answer 66

B. To protect the interests of participants and beneficiaries in employee benefits plans

Question 67

How has the Internal Revenue Code (IRC) encouraged the development of employer-sponsored benefits plans? A. Decreased the number of reporting requirements for benefits plans B. Provided favorable tax treatment for employer contributions C. Established minimum standards for pension plans in private industry

Answer 67

B. Provided favorable tax treatment for employer contributions

Question 68

What is the purpose of nondiscrimination rules? A. To require employers to offer benefits to all employees B. To ensure that plans do not favor highly compensated or key employees C. To guarantee that each employee has the option to enroll in a cafeteria plan

Answer 68

B. To ensure that plans do not favor highly compensated or key employees

Question 69

What is one purpose of the Affordable Care Act? A. Improve the medical benefits of Medicare beneficiaries B. Provide medical coverage to children over the age of 26 C. Expand access to medical coverage to uninsured Americans D. Increase the pay of health-care providers

Answer 69

C. Expand access to medical coverage to uninsured Americans