Question 1

Tax incentives are the only reason employers offer benefits to employees. (Why Do Employers Offer Benefits)

Accepted Answer

A) True 
 B)False

Question 2

Why does health insurance become less expensive when the size of the insurance group increases? (Cost Advantage)

Accepted Answer

A) Administrative costs are lower, more employees are contributing co-payments, the threat of high-risk individuals driving out low-risk ones is less 
B) Insurance is less risky to provide, the threat of high-risk individuals driving out low-risk ones is less, administrative costs are lower 
C) More employees are contributing co-payments, insurance is less risky to provide, administrative costs are lower 
D) Insurance is less risky to provide, more employees are contributing co-payments, the threat of high-risk individuals driving out low-risk ones is less

Question 3

In most cases employees do not give up anything to get benefits because they are "free-add-ons" in a compensation package. (Who Pays for Benefits?)

Accepted Answer

A) True 
 B)False

Question 4

One of the drawbacks of Medicare and Social Security insurance,is that neither program can avoid adverse selection. (Cost Advantage)

Accepted Answer

A) True 
 B)False

Question 5

What is an insurance pool? (Cost Advantage)

Accepted Answer

A) Insurance companies that join together to underwrite a self-funded insurance policy 
B) Employers who join together to insurance all their employees under one policy 
C) People who join together to by a group insurance policy 
D) Insurance companies that join together to issue one large-group insurance policy

Question 6

Retirement plans is a good example of benefits that fulfill both transactional and
relational expectations. (Psychological Contracts)

Accepted Answer

A) True 
 B)False

Question 7

Violations of psychological contracts are likely to be more intense than unmet expectations because of feelings of betrayal and loss of trust. (Psychological Contract Violation)

Accepted Answer

A) True 
 B)False

Question 8

Once the social exchange is set between employer and employee,it does not change over time. (How Employee Benefits Constitute Social Exchange)

Accepted Answer

A) True 
 B)False

Question 9

Discuss what psychological contracts mean in employee benefit practices and how psychological contract develop. (Psychological Contracts)

Accepted Answer

The answer of Discuss what psychological contracts mean in employee...

Question 10

Large companies are more likely to be subject to medical underwriting because more risk involved than smaller companies or individuals. (Cost Advantage)

Accepted Answer

A) True 
 B)False

Question 11

Economies of scale refers to the lower amount of co-pay required of employees in a large company as opposed to those in a small company. (Cost Advantage)

Accepted Answer

A) True 
 B)False

Question 12

Being able to spread the administrative costs to larger groups of employees,to reduce the health insurance cost per employee,is referred to as what? (Cost Advantage)

Accepted Answer

A) Insurance pooling 
B) Economies of scale 
C) Economies of scope 
D) Administrative underwriting

Question 13

Which of the following can be avoided by using experience ratings? (Cost Advantage)

Accepted Answer

A) Adverse selection 
B) Medical underwriting 
C) Economies of sales 
D) Insurance pooling

Question 14

What are the three main reasons that employers offer discretionary benefits? (Why Do Employees Offer Benefits?)

Accepted Answer

A) Employers have a cost advantage, the benefits help in recruiting and retaining workers and the company gets tax incentives to offer them 
B) It's required to by law, the company gets tax incentives to offer them, employers have a cost advantage 
C) The company gets tax incentives to offer them, the benefits help in recruiting and retaining workers, it's required to by law 
D) The benefits help in recruiting and retaining workers, employers have a cost advantage, it's required to by law

Question 15

Employer's expectation of the employee is not as important as employee's expectation about the employer. (Employee Benefits as Constituting Psychological Contracts)

Accepted Answer

A) True 
 B)False

Question 16

The degree to which employers will decrease their hiring,if the market compensation level increases,can affect how much of a benefit's increase cost will be passed on to the employees. (Who Pays For Benefits?)

Accepted Answer

A) True 
 B)False

Question 17

The greater value employees place on a benefit,the larger reduction in cash wages they will accept if the benefit is introduced into a compensation package. (Who Pays for Benefits?)

Accepted Answer

A) True 
 B)False

Question 18

Health insurance or other legally required benefits would form a part of employees' transactional expectation. (Psychological Contracts)

Accepted Answer

A) True 
 B)False

Question 19

The 2009 average total medical expenditure was lowest for adults aged 18 to 44. (Cost Advantage)

Accepted Answer

A) True 
 B)False

Question 20

In insurance terms,what does adverse selection refer to? (Cost Advantage)

Accepted Answer

A) When employees choose an insurance plan they don't like, but are stuck with it for a year 
B) When insurance companies use medical underwriting to choose who to insure 
C) When employees are forced to choose between what they think are two inferior insurance programs 
D) The tendency of an insurance pool to disproportionately attract "bad risk" employees and discourage "good risk" employees

Exam 2: The Psychology and Economics of Employee Benefits

Tax incentives are the only reason employers offer benefits to employees. (Why Do Employers Offer Benefits)

Why does health insurance become less expensive when the size of the insurance group increases? (Cost Advantage)

In most cases employees do not give up anything to get benefits because they are "free-add-ons" in a compensation package. (Who Pays for Benefits?)

One of the drawbacks of Medicare and Social Security insurance,is that neither program can avoid adverse selection. (Cost Advantage)

What is an insurance pool? (Cost Advantage)

Retirement plans is a good example of benefits that fulfill both transactional and relational expectations. (Psychological Contracts)

Violations of psychological contracts are likely to be more intense than unmet expectations because of feelings of betrayal and loss of trust. (Psychological Contract Violation)

Once the social exchange is set between employer and employee,it does not change over time. (How Employee Benefits Constitute Social Exchange)

Discuss what psychological contracts mean in employee benefit practices and how psychological contract develop. (Psychological Contracts)

Large companies are more likely to be subject to medical underwriting because more risk involved than smaller companies or individuals. (Cost Advantage)

Economies of scale refers to the lower amount of co-pay required of employees in a large company as opposed to those in a small company. (Cost Advantage)

Being able to spread the administrative costs to larger groups of employees,to reduce the health insurance cost per employee,is referred to as what? (Cost Advantage)

Which of the following can be avoided by using experience ratings? (Cost Advantage)

What are the three main reasons that employers offer discretionary benefits? (Why Do Employees Offer Benefits?)

Employer's expectation of the employee is not as important as employee's expectation about the employer. (Employee Benefits as Constituting Psychological Contracts)

The degree to which employers will decrease their hiring,if the market compensation level increases,can affect how much of a benefit's increase cost will be passed on to the employees. (Who Pays For Benefits?)

The greater value employees place on a benefit,the larger reduction in cash wages they will accept if the benefit is introduced into a compensation package. (Who Pays for Benefits?)

Health insurance or other legally required benefits would form a part of employees' transactional expectation. (Psychological Contracts)

The 2009 average total medical expenditure was lowest for adults aged 18 to 44. (Cost Advantage)

In insurance terms,what does adverse selection refer to? (Cost Advantage)