Test your employee benefits knowledge

By Candace Walters

Published in the Rochester Business Journal, August 27, 2004 © HR Works, Inc.

Managing an employee benefits program involves many technical complexities and exposures, even for the smallest employers. As laws and legal precedents continually change, the risk of being caught out of compliance and suffering an unfavorable Department of Labor ruling increases. Furthermore, as juries continue to award hefty damages to disgruntled employees and former employees, the threat of being served with legal action remains painfully real.

Particularly at smaller companies, which often do not employ a dedicated HR professional, the CFO or CEO bears the burden of continually updating his or her knowledge of these sometimes mundane but crucial rules.

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1. The Family and Medical Leave Act applies to all employers with _____ employees within a 75-mile range of the workplace.

A. 15 or more.
B. 25 or more.
C. 50 or more.
D. 100 or more.

2. Which of the following statements DOES NOT apply to the Family and Medical Leave Act?

A. Employees taking leave are entitled to return to the same or equivalent position.
B. Health benefits must be continued while the employee is on leave.
C. Leave must be taken in one large block of time.
D. Employees can be required to use all paid leave before taking unpaid leave.

3. Over a working career, the average employee is more likely to need long-term disability benefits than life insurance benefits. Disability benefits pay only 60 to 70 percent of the employee’s wage. Given those realities, how can the employer ensure that a claimant will receive benefits tax-free?

A. Try to sneak the benefit payments past the IRS.
B. Add the annual premium to employees' taxable wages at year-end.
C. Have employees pay the premiums on a pre-tax basis.
D. Don’t buy long-term disability insurance, and hope that no employees become disabled.

4. Health insurance premiums are rising at a much faster rate than inflation. For a company with more than 50 employees, what financial arrangements are available for paying for health coverage?

A. I don't know, and I don't care. Premiums are going to keep going through the roof.
B. Community rating. My premiums have to be the same as everyone else's.
C. Community rating and self-insurance. Either I'm in with everyone else, or I'm totally on my own.
D. Community rating, experience-rating and self-insurance.

5.Which of the following is a “qualifying event” under COBRA?

A. Termination of employment.
B. Divorce.
C. Reduction of hours.
D. A and B only.
E. All are “qualifying events.”

6. Which of the following may also be covered by the Family and Medical Leave Act?

A. Military Leave.
B. Workers compensation leave.
C. Disability leave.
D. All of the above.
E. B and C only.

7. Which of the following completes the statement? Workers compensation __________

A. Provides benefits to employees only if they were at fault for the accident.
B. Costs are borne solely by the employer.
C. Provides only for reimbursement of medical expense.
D. All statements are incorrect.

8. Employees may use a flexible spending account for:

A. Co-pays for doctor visits and prescription drugs.
B. Over-the-counter drugs.
C. Contact lenses.
D. All of the above.
E. A and C only.

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Answers:

1. C. The Family and Medical Leave Act (FMLA) applies to all employers with 50 or more employees within a 75-mile range of the workplace.

2. C. The FMLA requires that time may be taken “intermittently” when medically necessary for treatment or recovery from a serious health condition, or to care for a family member with a serious health condition.

3. B. By adding the premium to taxable wages, or allowing the employee to buy his or her own insurance with taxable wages, the benefit payable is tax-free and therefore more closely replaces the actual wages the employee was receiving before the disability.

4. D. If an employer has more than 50 benefits-eligible employees, a wide array of financial arrangements are available to allow the employer to choose the level of responsibility its own group's claims will have in determining health coverage costs.

5. E. Any of these events can be qualifying if they result in the loss of health/dental insurance coverage.

6. E. Employees who are receiving disability and/or workers compensation payments are also eligible for FMLA, provided they meet the eligibility requirements.

7. B. Workers compensation costs are borne solely by the employer.

8. D. An employee may use an FSA to cover co-pays for doctor visits and prescription drugs, over-the-counter drugs, and contact lenses.

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Scoring:

7-8 correct. Bravo! You’re doing a fine job of keeping yourself current with benefits rules and regulations.

5-6 correct. Not bad, but you might consider an occasional refresher course.

3-4 correct. Hmmm. Your lack of familiarity with benefits rules could be putting your organization at risk for legal action.

1-2 correct. Run, don’t walk, to the nearest training course or HR professional.

A low score indicates that your knowledge of technical benefits details is outdated – which probably puts you in good company. Consider this quiz a friendly wake-up call, and take action now to protect your organization from needless disruption that could result from poor compliance with benefits rules.