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Chapter Quiz
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1
Which of the following best describes marginal tax rate?
A)It is the basic earning that is taxable.
B)It is the basic earning that is exempt from tax.
C)It is the percentage of benefits within a salary that is exempt from tax.
D)It is the percentage of additional earnings that goes to taxes.
E)It is the percentage of pension that goes to taxes.
2
No earnings test is required once full retirement age is reached. This means that these workers:
A)no longer incur any earnings penalty.
B)have tax-related work disincentives.
C)have an incentive to retire.
D)have an increased incentive to work part time.
E)are penalized for any earnings after reaching full retirement age.
3
Which of the following scenarios will not qualify as an event that requires the employers to allow the extension of health insurance coverage at group rates for up to 36 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA)?
A)Mat lost his job to an offshore employee.
B)Sam lost his life in an accident.
C)Cathie lost her health insurance when she switched to a part-time job.
D)Joe lost his job due to an unethical act.
E)Lila lost her insurance due to reduction in work hours.
4
Which of the following is true of disability insurance?
A)Short-term plans typically provide benefits for at least eight months.
B)Long-term plan begins from 3 months and goes on to a maximum of 10 years.
C)The salary replacement rate is higher for long-term plans.
D)When employers contribute to the plan, there is no federal tax.
E)Long-term plans should be coordinated with Social Security benefits.
5
The _____ guarantees to pay employees a basic retirement benefit in the event that financial difficulties force a company to terminate or reduce employee pension benefits.
A)Americans with Disabilities Act
B)Employee Retirement Safety Corporation
C)Consolidated Omnibus Budget Reconciliation Act
D)Pension Benefit Guaranty Corporation
E)Dependant and Disability Pension Act
6
Which of the following is true of defined contribution plans?
A)In a money purchase plan, employees specify a level of monthly contribution.
B)At retirement age, the employee is entitled to contribution plus the investment returns.
C)Employees usually take the money as a lump sum than use it to purchase an annuity.
D)Employees avoid using profit sharing plans as retirement vehicles.
E)The responsibility of investment is on the employer.
7
The _____ requires defined contribution plans holding publicly traded securities to provide employees with the opportunity to divest employer securities.
A)Pensions Act of 2008
B)Health Insurance Portability and Accountability Act of 1996
C)Consolidated Omnibus Budget Reconciliation Act of 1985
D)Employee Retirement Income Security Act of 1974
E)Pension Protection Act of 2006
8
Which of the following retirement plans involves the employer setting up an individual account for each employee and the employer alone contributing a percentage of the employee's salary?
A)Section 401(k) plan
B)Protected benefit plan
C)Money purchase plan
D)Secure contribution plan
E)Cash balance plan
9
Increased employee mobility will reinforce the trend toward _____ that have greater portability across employers.
A)cafeteria plans
B)defined benefit plans
C)defined contribution plans
D)flexi plans
E)secure benefit plans
10
Which of the following is true about pay for time not worked?
A)The employer receives a tangible production value in return.
B)Workers must stay with an employer for 10 years to receive paid vacation.
C)There is a legal minimum of 18 days of vacation in the United States.
D)Sick leave programs provide only partial salary replacement.
E)The amount of sick leave is often based on length of service.
11
Which of the following provides 12 weeks of unpaid absence from work after childbirth or adoption if the organization has at least 50 employees living with 75-mile radius?
A)Child and Family Services Improvement and Innovation Act
B)Family and Medical Leave Act
C)Child Support Recovery Act
D)Child and Family Services Act
E)Affordable Care Act
12
_____ specifically impose higher taxes on employers with high rates of unemployment or workers' compensation claims.
A)Employers' ratings
B)Employment ratings
C)Compensation ratings
D)Experience ratings
E)Tax ratings
13
Which of the following is true of employee health care organizations?
A)Preferred provider organizations provide benefits on a postpaid basis.
B)Health maintenance organizations exclude outpatient treatment.
C)Health maintenance organizations focus on preventive care.
D)Preferred provider organizations contract with employees rather than employers.
E)Preferred provider organizations are less expensive than health maintenance organizations.
14
_____ permit pretax contributions to an employee account that can be drawn on to pay for uncovered health care expenses (like deductibles or copayments).
A)Flexible spending accounts
B)Cafeteria-style plans
C)Defined benefit plans
D)Defined contribution accounts
E)Retirement accounts
15
Financial Accounting Statement (FAS) 106, issued by the Financial Accounting Standards Board, requires that:
A)pensions cannot be funded on a pay-as-you-go basis.
B)benefits, except pensions, should be paid on a pay-as-you-go basis.
C)benefits should not be paid on an accrual basis.
D)companies must not enter future cost obligations on their financial statements.
E)health-care benefits provided after retirement should not be funded on a pay-as-you-go basis.





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