Topic 1

Question 1

EE Benefits Loss Exposures

Answer 1

1. Loss of income to EE
2. Medical Expenses for EE
3. Loss of productivity for ER

Question 2

EE Benefits Perils

Answer 2

1. Injury/Illness/Sickness
2. Retirement
3. Death
4. Layoffs/Unemployment
5. Personal Issues/Circumstance
6. EAP: Employee Assistance Program

Question 3

Medical Expenses

Answer 3

1. Pre Retirement (Active EE)

2. Post Retirement

Question 4

Pre Retirement Benefits

Answer 4

1. Health Insurance plans

2. Specialized Coverages for narrowly defined perils

Question 5

Health Insurance Plan Types

Answer 5

1. Indemnity Plan

2. Managed Care Plan: HMP, PPO, CDHP, HDHP

Question 6

Specialized Coverages for Narrowly Defined Perils

Answer 6

1. Vision Insurance
2. Dental Insurance
3. Prescription Drug Insurance

Question 7

Post Retirement Benefits

Answer 7

1. Medicare: Required

2. Post Retirement Health Benefits

Question 8

Post Retirement Health Benefits

Answer 8

1. PRHB

2. Medical Supplement

Question 9

Loss of Income Types

Answer 9

1. Disability
2. Occupational
3. Unemployment
4. Death
5. Retirement

Question 10

Disability Types

Answer 10

1. Occupational

2. Non Occupational

Question 11

Non Occupational Related Loss of Income

Answer 11

1. Sick Leave (PTO): Paid Time Off
2. Short Term Disability Insurance (STO)
3. Long Term Disability Insurance (CTD)
4. AD&D: Accidental Death and Dismemberment
5. Social Security Disability Benefits; OASDI (Part D)

Question 12

Occupational Related Loss of Income

Answer 12

1. Workers Compensation (Required): Disability Benefits

2. OASDI (Required)

Question 13

Unemployment Loss of Income

Answer 13

1. Unemployment Insurance (Required)

2. Severance Package

Question 14

Death Related Loss of Income

Answer 14

1. Life Insurance, ER provided
   - Term Life Insurance; most common, group based
   - GTLI: Group Term Life Insurance
2. OASDI: Required
   - Social Security Survivor Benefits
3. AD&D
4. Worker’s Compensation: Required, death benefits
5. Business Travel Accident Insurance
6. Retirement Plans: Survivor Benefits; must include if offered

Question 15

Retirement Related Loss of Income

Answer 15

1. Pension
   - Technically defined benefit plan: DB
2. Defined Contribution Plan: DC
3. 401K or 403(B)
4. OASDI: “O” for Old Age, Required

Question 16

EE Compensation Broadview

Answer 16

Total Compensation View

Question 17

Total Compensation View

Answer 17

• Any form or type of compensation other than direct, current wages paid to EE
• 18%-70% of payroll
• On average 40% of payroll

Question 18

Types of Compensation

Answer 18

1. ER share of legally required programs
2. Private Insurance Plans + Retirement Plans
   - Health, Life, Disability; 401K
3. Payments for time not worked
   - PTO: Vacation
4. Extra Cash payments: Bonuses, Tuition Reimbursement
5. “De Minimus Fringes”
   - Lunches, free coffee, free parking
   - Qualified EE Discounts; can only be so much
   - No additional cost: flight attendant

Question 19

Narrow View

Answer 19

An EE benefit plan is sponsored or initiated unilaterally or jointly by ERs and or EEs

Question 20

Jointly Sponsored

Answer 20

• Union/Collectively Bargained
• Providing Benefits stem from an employment relationship
• Not underwritten or paid directly from any government
• Providing Protection against two core loss exposures: Loss of Income, Medical Expenses

Question 21

Factors Contributing to EE Benefits as Method of Compensation

Answer 21

1. Post WWII Wage and Price Controls
2. Union Demands through collective bargaining
3. Favorable tax treatment
4. Changes in Social Economic Make up of US workforce
5. Social Legislation and Regulation

Question 22

Post WWII Wage and Price Controls

Answer 22

1. Price Inflation
2. Wage and Price Freezes
3. Substitute Health Insurance for wages
4. IRS: not tax on ER Provided Health Insurance

Question 23

Union Demands Through Collective Bargaining

Answer 23

1. Wagner Act (1935)
2. Inland Steel Case (1948)
3. Taft Hartley Act (1947)

Question 24

Wagner Act

Answer 24

• 1935

- Gave Unions right to bargain over wages and other conditions of employment

Question 25

Inland Steel Case

Answer 25

- 1948 - "Wages" under Wagner Act includes EE benefits - EE benefits are a bargain-able issue

Question 26

Taft Hartley Act

Answer 26

- 1947 - AKA Labor Management Relations Act - LMRA - Multi Employer Plan - Single Employer Plan - Collectively Bargained - Jointly Administered Welfare Funds - "Taft Hartley Plans" - Trust fund that holds money as intermediary

Question 27

Favorable Tax Treatment

Answer 27

- US Federal Income Tax (IRS) - benefits are not taxable as part of compensation to EE - Incentive for ERs to offer EE benefits

Question 28

Changes In Social Economic Makeup of US Workforce

Answer 28

1. Childcare Benefits 2. Flexibility in benefits 3. Retiree Benefits 4. Portability in Benefits

Question 29

Social Legislation and Regulation

Answer 29

1. Workers compensation laws 2. OASDI 3. ADEA: Discrimination and Employment Act 4. ADA: Americans with Disabilities Act 5. COBRA: Consolidated Omnibus Budget Reconciliation Act 6. TEA: Transportation Equity Act 7. MHRA: Mental Health Parity Act 8, FMLA: Family Medical Leave Act 9. HIPAA: Health Insurance Portability and Accountability Act 10. ERISA: Employee Retirement Income Security Act 11. PPACA: Patient Protection and Affordable Care Act

Question 30

Reasons for EE Benefits as Method of Compensation

Answer 30

1. Total Compensation 2. Favorable Tax Treatment 3 Take Advantage of Group Insurance vs Individual Insurance 4. Attract and Retain capable EEs 5. Concern for welfare of Employees: Corporate Welfare 6. Productivity or Efficiency -Childcare -Stock options -Part time Health Insurance -Mental Health Benefits, EAP