PART6 REVIEW QUESTIONS AND ANSWERS

PART 6--REVIEW QUESTIONS AND ANSWERS

Circle your responses:

T	F	1.	Vacations, moving expenses, and financial counseling are examples of items included in a broad definition of employee benefits.
T	F	2.	Since 1965, payments for employee benefits have decreased slightly when measured as a percentage of payroll.
T	F	3.	Employers may offer generous benefit plans as a method of discouraging unionization.
T	F	4.	Benefits can usually be obtained at a lower cost through group insurance because of economies of scale that do not exist when individual policies are used.
T	F	5.	In recent years the cost of employee benefits for most employers has increased at a faster rate than wages.
T	F	6.	One reason for the growth of employee benefits has been legislation that mandates benefits for employees.
T	F	7.	The first step in the benefit-planning process is to determine the employer’s objectives.
T	F	8.	The communication of employee benefit plans involves letting employees know the value of their benefits as well as the provisions of their coverage.
T	F	9.	One reason for social insurance programs is that certain types of losses are difficult to insure in the private market.
T	F	10.	Social insurance programs are usually designed to be financed fully or at least partially by the employers of covered persons.
T	F	11.	Most social insurance programs allow covered persons to select their own benefit levels within certain prescribed limits.
T	F	12.	Social insurance benefits are subject to a needs test.
T	F	13.	Social insurance benefits are primarily based on social adequacy rather than on individual equity.
T	F	14.	All employees of the federal government are excluded from coverage under social security.
T	F	15.	Under the social security program, assets are accumulated from current contributions to pay the future benefits of those making contributions.
T	F	16.	Social security trust funds are adequate to pay benefits for at least 100 years.
T	F	17.	In order to establish an insured status under OASDI, a worker must have credit for a specified number of quarters of coverage.
T	F	18.	A worker who is fully insured under social security is automatically disability insured.
T	F	19.	To receive retirement benefits under social security, a retired worker must be both currently insured and fully insured.
T	F	20.	A divorced woman may be eligible for social security retirement benefits based on her ex-husband’s earnings record under social security as long as she was married to him for at least 10 years.
T	F	21.	All categories of survivors’ benefits under OASDI require that a worker be fully insured at the time of death.
T	F	22.	Parents of a deceased worker may be eligible for survivors’ benefits based on the social security coverage of the worker.
T	F	23.	The definition of disability under social security is based on the inability of the disabled worker to perform all the duties of his or her regular occupation for at least 5 months.
T	F	24.	Disability benefits under social security are subject to a one-year waiting period.
T	F	25.	A worker’s primary insurance amount (PIA) under social security is based on that person’s average indexed monthly earnings.
T	F	26.	In calculating a worker’s average indexed monthly earnings (AIME) under OASDI, certain years with no earnings or low earnings may be excluded.
T	F	27.	OASDI benefits for survivors are calculated as a percentage of the deceased worker’s primary insurance amount (PIA).
T	F	28.	A worker’s OASDI retirement benefit is reduced only if retirement takes place prior to age 62.
T	F	29.	The social security earnings test applies only to beneficiaries under age 70.
T	F	30.	OASDI benefits are subject to cost-of-living adjustments.
T	F	31.	A disabled worker’s OASDI benefit may be reduced on the basis of benefits received under workers’ compensation laws.
T	F	32.	Medicare is available to any person receiving benefits under OASDI.
T	F	33.	Once a benefit period commences under part A of medicare, the period continues for one year.
T	F	34.	To the extent that reserve days have been used, the lifetime reserve under medicare can be restored up to a maximum of 5 days for any calendar year in which a person is not hospitalized.
T	F	35.	In order to receive benefits for skilled nursing facilities under the hospital insurance portion of medicare, a patient must enter the facility within 30 days after being hospitalized and must have been hospitalized for at least 3 days.
T	F	36.	In order to receive home health care benefits under medicare, a person must be treated under a home health plan set up by a physician.
T	F	37.	Part B of medicare pays for doctors’ services on both an inpatient and outpatient basis.
T	F	38.	Subject to dollar maximums, part B of medicare provides benefits for eyeglasses, hearing aids, and orthopedic shoes.
T	F	39.	A $100 annual deductible applies to benefits under part B of medicare.
T	F	40.	A medicare recipient who elects HMO coverage is exempt from paying the part B premium.
T	F	41.	By electing HMO coverage a medicare participant may have more comprehensive benefits than those provided under the regular medicare program.
T	F	42.	Medicare benefits are subject to federal income taxation if a beneficiary’s income exceeds a specified amount.

Self-Test Answers

1-T, 2-F, 3-T, 4-T, 5-T, 6-T, 7-T, 8-T, 9-T, 10-T, 11-F, 12-F, 13-T, 14-F,

15-F, 16-F, 17-T, 18-F, 19-F, 20-T, 21-F, 22-T, 23-F, 24-F, 25-T, 26-T,

27-T, 28-F, 29-T, 30-T, 31-T, 32-F, 33-F, 34-F, 35-T, 36-T, 37-T, 38-F,

39-T, 40-F, 41-T, 42-F

ANSWERS TO FALSE REVIEW QUESTIONS

2.	Since 1965, payments for employee benefits have approximately doubled when measured as a percentage of payroll.
11.	Under social insurance programs, benefit amounts are prescribed by law, and covered persons can neither increase nor decrease their prescribed levels of benefits.
12.	Social insurance benefits are paid as a matter of right and are not subject to a needs test.
14.	The only federal employees not covered under social security are civilian employees who are covered under the Civil Service Retirement System and were employed prior to 1984. They are excluded, however, only from the OASDI portion of the program.
15.	Social security is financed essentially on a pay-as-you-go basis. Current payroll taxes and other contributions by the program are used to pay the current benefits of persons who are no longer paying social security taxes because of death, old age, or disability.
16.	Social security trust funds will be unable to pay benefits early in the next century unless changes are made to the system.
18.	A disability insured status generally requires that an employee, in addition to being fully insured, must have at least 20 quarters of coverage out of the last 40 quarters. The quarters of coverage are reduced for workers aged 31 or younger.
19.	Retirement benefits require fully insured status but not currently insured status.
21.	Some categories of survivors’ benefits are payable if a worker was currently insured, but not fully insured, at the time of death.
23.	The definition of disability under social security is based on the inability of a worker to engage in any substantial gainful employment. In addition, the disability must be expected to last (or must have lasted) at least 12 months, or it must be expected to result in death.
24.	Disability benefits under social security are payable beginning with the 6th full calendar month of disability.
28.	Benefits are reduced if taken prior to the normal retirement age of 65.
32.	Medicare is available only to persons over age 65, certain disabled persons, and persons with end-stage renal disease.
33.	The benefit period continues until a person has been out of a hospital or a skilled-nursing facility for 60 consecutive days.
34.	The lifetime reserve cannot be restored to the extent that reserve days have been used.
38.	The part B portion of medicare does not provide benefits for eyeglasses, hearing aids, or orthopedic shoes.
40.	The part B premium must be paid even if a medicare beneficiary elects HMO coverage.
42.	The only social security benefits that may be subject to federal income taxation are benefits received in the form of monthly income under OASDI.

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