Chapter 13 - Benefit Options

79. (p. 446) What are the areas covered as part of the no-fault insurance under workers'

compensation? 

As a form of no-fault insurance, workers' compensation covers injuries and diseases that arise

out of, and while in the course of, employment. Benefits are given for the following:



Permanent total disability and temporary total disability



Permanent partial disability—loss of use of a body member



Survivor benefits for fatal injuries



Medical expenses



Rehabilitation

 

Difficulty: Medium

 

80. (p. 448) What is the central challenge of social security payments? How are they tackled? 

The money to pay social security benefits comes from contributions made by employees, their

employers, and self-employed people during working years. As contributions are paid in each

year, they are immediately used to pay for the benefits to current beneficiaries. This is a major

problem with social security. While the number of retired workers continues to rise, no

corresponding increase in the number of contributors to social security has offset the costs. To

maintain solvency, there has been a dramatic increase in both the maximum earnings base and

the rate at which that base is taxed.

Difficulty: Medium

 

81. (p. 451) Explain the eligibility for unemployment insurance. 

All workers except a few agricultural and domestic workers are currently covered by

unemployment insurance (UI) laws. The eligibility requirements to receive benefits are:



You must meet the State requirements for wages earned or time worked during an established

(one year) period of time referred to as a "base period."



You must be determined to be unemployed through no fault of your own [determined under

state law], and meet other eligibility requirements of State law.

Difficulty: Hard

 

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any

manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 13 - Benefit Options

82. (p. 452) Explain the coverage of the FMLA. 

The 1993 Family and Medical Leave Act applies to all employers having 50 or more employees

and entitles all eligible employees to receive unpaid leave up to 12 weeks per year for specified

family or medical reasons. To be eligible, an employee must have worked at least 1,250 hours

for the employer in the previous year.

Difficulty: Easy

 

83. (p. 452) What is the purpose of the HIPAA? 

The 1996 Health Insurance Portability and Accountability Act (HIPAA) is designed to (1) lessen

an employer's ability to deny coverage for a preexisting condition and (2) prohibit discrimination

on the basis of health-related status.

Difficulty: Easy

84. (p. 453) Compare defined benefit plans and defined contribution plans. 

In a defined benefit plan, an employer agrees to provide a specific level of retirement pension,

which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary

(increase) with years of seniority in the company. Defined contribution plans require specific

contributions by an employer, but the final benefit that will be received by employees is

unknown; it depends on the investment success of those charged with administering the pension

fund.

Difficulty: Difficult

 

85. (p. 453-454) What are the three types of defined contribution plans? 

There are three popular forms of defined contribution plans. A 401(k) plan is a savings plan in

which employees are allowed to defer income up to a $12,000 maximum. The second type of

plan is an employee stock ownership plan (ESOP). In a basic ESOP a company makes a tax-

deductible contribution of stock shares or cash to a trust. The trust then allocates company stock

to participating employee accounts. Finally, profit sharing can be considered a defined

contribution pension plan if the distribution of profits is delayed until retirement.

Difficulty: Medium

 

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any

manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.