CEBS GBA Exam 1 2024 Questions and A
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nswers Verified 100%ik ik
BroadikviewikofikEmployeeikBenefitsik(Modik1.1)ik-ikcorrectikans-
ConsidersikEmployeeikBenefitsiktoikbeikvirtuallyikanyikformikofikcompensationikotherikthanikdirecti
kwagesikpaidiktoikEmployeesik(Ex:ikWC,ikUnemployment,ikStateikDI,ikSS,ikVacation,ikHolidays,ik
401K/Retirement,ikEmployerikshareikofikMedical,ikSeveranceikPay,ikChildikCare,iketc..)
NarrowikviewikofikEmployeeikBenefitsik(Modik1.1)ik-ikcorrectikans-
AnyiktypeikofikplaniksponsoredikorikinitiatedikbyikEmployeesikandikEmployersikandikengagedikinikp
rovidingikbenefitsikthatikresultikfromiktheikemploymentikrelationshipikandikthatikareiknotikunderwrit
tenikorikpaidikdirectlyikbyiktheikgovernment;ik(Ex:ikBenefitsikexcludedikincludeikthoseiklegallyikma
ndatedik-ikWC,ikSS).
ImpactikofikLaborikUnionsikonikEmployeeikBenefitsik(Modik1.2)ik-ikcorrectikans-
ThroughikCollectiveikBargaining,ikEmployeeikBenefitikPlansikhaveikbeenikimpacted.ikInik1948ikr
ulingikstatesikthatiktheikdutyiktoikbargainikinikgoodikfaithikoverikwagesikalsoikincludedikinsuranceika
ndikfringesik(pension).ikInikWWikCrossik&ikCo,ikNLRBikruledikwagesikincludedikhealthikandikaccid
entikplan.
WhatikisiktheikTaft-HartleyikAct?ik(Modik1.2)ik-ikcorrectikans-
TheikLaborikManagementikRelationsikActikofik1947ikisikaikUnitedikStatesikfederaliklawikthatikrestric
tsiktheikactivitiesikandikpowerikofiklaborikunions.ikThisiksetikforthikgood-
faithikcollectiveikbargainingikoverikwages,ikhours,iktermsikofikemploymentikandikbenefits.
3ikExamplesikofikTaxikAdvantagesikofikEmployeeikBenefitikPlansik(Modik1.2)ik-ikcorrectikans-
1:ikEmployerikContributionsikareikTaxikDeductible
2:ikEmployerikContributionsikareiknotikconsideredikincomeiktoikEmployees
3:ikCertainikRetirementikBenefitsikAccumulateikTax-Freeikuntilikdistributed.
ExamplesikofikQuestionsikthatikshouldikbeikaddressedikwhenikcreatingikbenefitikobjectivesik(Mo
dik1.3)ik-ikcorrectikans-
Ex:ikWhatikbenefitsikshouldikbeikprovided?ikWhoikshouldikbeikcovered?ikShouldikEmployeesikha
veikoptions?ikHowikshouldikplanikbeikfinanced?ikHowikshouldikplanikbeikadministered?ikHowiksho
uldikplanikbeikcommunicatediktoikEmployees?
WhatikisiktheikFunctionalikApproachiktoikEmployeeikBenefitikPlanning?ik(Modik1.4)ik-
ikcorrectikans-
ApplicationikofikaiksystematicikmethodikofikanalysisiktoikanikEmployer'sikTotalikEmployeeikBenefi
tsikProgram.ikItikanalyzesiktheikorganization'sikEBPikasikaikwholeikiniktermsikofikitsikabilityiktoikmeetik
variousikemployee'sikneedsikandiktoikmanageiklossikexposuresikwithiniktheikoverallikcompensati
onikgoalsikandikparameters.
WhyikisiktheikFunctionalikApproachikappropriateikwhenikplanning,ikdesigningikandikadministerin
gikEmployeeikBenefits?ik(Modik1.4)ik-ikcorrectikans-
1:ikEEikBenefitsikSignificantikElementikofikEEikCompikandikareikaikTax-
EffectiveikWayiktoikCompensate
2:ikEEikBenefitikRepresentikLargeikLaborikCost,iksoikER'sikshouldikeffectivelyikplan/cost-control
3:ikIniktheikpast,ikEEikBenefitsikwereikadoptedikonikpiece-
mealikbasis;ikhelpsiktoiknowikfillikgaps/overlap
,4:ikSystematicikApproachiktoikplanningikhelpsiktoikkeepiktheikEBPikcurrent,ikcompetitiveikandikinik
complianceikwithikupdatedikrequirementsik(ACA)
5:ikBenefitsiktoikbeikintegratedikproperlyiktogether
CompareikCompensation/ServiceikOrientedikBenefitikPhilosophyikwithiktheikNeeds-
Orientedik(Modik1.4)ik-ikcorrectikans-
Compensation/Service:ikEBPikcomprisedikofikprimarilyikcompensation,ikserviceikorikboth.ikLev
elikofikbenefitsiktiediktoiksalaryikorikpayiklevels/yearsikofikservice
NeedsikOrientated:ikFocusesikonikNeedsikofikEE'sikandiktheirikdependents
IdentifyikStepsikinikApplyingikFunctionalikApproachik(Modik1.4)ik-ikcorrectikans-
1:ikClassifyikEE/DepikNeedsik&ikObjectivesik(iniklogical/functionalikcategories)
2:ikClassifyikCategoriesikofikEE'siktoikbeikprotected
3:ikAnalyzeikpresentikbenefitsikiniktermsikofikfunctionalikcategoriesikofikneeds/objectives,ikperso
nsiktoikbenefit,ikandikregulatoryikrequirements
4:ikDetermineikanyikgapsikorikoverlapikinikbenefitsikfromikalliksourcesikiniktermsikofikfunctionalikcate
goriesikofikneedsik&iktheikpersonsiktoikbeikprotected
5:ikConsiderikrecommendationsikforikchanges
6:ikEstimateikcosts/savingsikfromikeachikrecommendation
7:ikEvaluateikalternativeikmethodsikofikfinancingikforikthoseikrecommendedikbenefitsik(andikexist
ingikben)
8:ikConsiderikotherikcost-savingiktechniques
9:ikDecideikuponikappropriateikbenefitsikandikmethodsikofikfinancingikasikaikresultikofikanalysis
10:ikImplementikChanges
11:ikCommunicationikChangesiktoikEmployees
12:ikPeriodicallyikre-evaluateikEBP
DefineikNeeds/ExposuresikcoveredikunderikEBPik(Modik1.4)ik-ikcorrectikans-
1:ikMedicalikExpensesik(EE/Dep)
2:ikLossesikdueiktoikDisabilityik(Short/LongikTerm)
3:ikDeathik(EE/Dep/Retirees)
4:ikRetirementikNeeds
5:ikCapitalikAccumulationikNeeds/Goals
6:ikNeedsikforikUnemployment/Layoff/Termination
7:ikNeedsikforikFinancial/RetirementikCounseling
8:ikLossesikfromikproperty/liabilityikexposures
9:ikNeedsikforikDependentikCareikAssistance
10:ikNeedsikforikEducationalikAssistanceik(EE/Dep)
11:ikNeedsikforikCustodial-CareikExpensesik(LTC)
12:ikOtherikNeeds/Goalsik(StockikPurchaseikPlan)
ExplainikConceptikofikReplacementikRatioikiniktermsikofikcreatingikRetirement/DisabilityikPlansik
(Modik1.5)ik-ikcorrectikans-
AikReplacementikRatioikisikaikperson'sikgrossikincomeikafterikretirement,ikdividedikbyikhisikorikherik
grossikincomeikbeforeikretirement.ikShouldikincludeikSS,ikcapitalikaccumulationikbenefitsikasikw
ellikasikretirementikplans.
DefineikProtection-OrientedikBenefitsik(Modik1.5)ik-ikcorrectikans-
ConsistikofikMedicalikExpenseikBenefits,ikLife/STD/LTDikInsuranceik-
ikprotectikagainstikseriousiklossikexposuresikthatikcouldikspellikimmediateikfinancialikdisaster.ikAsi
,k such,iktheyikhaveikaikrelativelyikshortikprobationaryikperiodikdueiktoiktheikneedikofikimmediateikco
verage.
DefineikAccumulation-OrientatedikBenefitsik(Modik1.5)ik-ikcorrectikans-
ConsistikofikPensionikPlans,ikProfit-
Sharing,ikSavings,ik401K,iketc...whichikrewardikanikEmployeeikforiklongikserviceikwithikanikEmpl
oyer.ikInvolveikaiklongerikprobationaryikperiodiksinceikviewedikasikaikrewardik-
iknotikaikdisadvantageikforiklong-termikemployees.
ImpactikofikmakingikaikplanikContributoryikonikEmployeeikParticipationik(Modik1.5)ik-
ikcorrectikans-Impactsikgroupikasikaikwholeik-
iknotikeveryoneikwillikelectikdueiktoikcost.ikIfikparticipationikisikmandatoryikinikaikcontributoryikplan,ik
mayikcreateikemployeeikrelationsikproblem.
Describeikargumentsikofikflexibilityikinikdesigningikemployeeikbenefitikplansikasikitikrelatesiktoikfun
ctionalikapproachik(Modik1.5)ik-ikcorrectikans-
Argumentik1:ikMoreikflexibilityikEEikhas,ikmoreiklikelyikheikoriksheikwillikselectikaikbenefitikthatikbestik
meetsikneeds/goalsik-
ikthus,ikflexibilityikinikplanikdesign/optionsikfacilitatesikfunctionalikapproach.
Argumentik2:ikWorksikagainstikfunctionalikapproachikbecauseiksomeikEE'sikmayiknotikrecognizei
kalliktheirikneedsikandikleaveiksomeikuncovered.
Defineikconceptikofikriskik(Modik2.1)ik-ikcorrectikans-
Uncertaintyikwithikrespectiktoikpossibleiklosses.ikInabilityiktoikdetermineikwithikcertaintyiktheikactu
aliknumberikandikvalueikofikclaims.
Defineikrelationshipikbetweenikperilikandikhazardik(Modik2.1)ik-ikcorrectikans-
Peril:ikCauseikofikaiklossik(fires,ikfloods,iktheft,ikdeath)
Hazard:ikConditionikthatikincreasesikprobabilityikthatikaikperilikwillikoccurikoriktendsiktoikincreaseiks
everityikofiklossikwhenikaikperilikoccurs.
Defineikphysicalikhazard,ikmoralikhazard,ikmoraleikhazardik(Modik2.1)ik-ikcorrectikans-
Physical:ikPhysicalikConditionik(DefectiveikWiring,ikNoikFireikExtinguisher),ikincreasesikchancei
kofikloss
Moral:ikDishonestyikincreasesikchanceikofiklossik(Arson)...b/cikofikMoral,ikpremiumsikareikhigheri
ktoikall.ikAttemptiktoikcontrolikbyikcarefulikUW ikandikprovisionsiksuchikasikdeductibles,ikwaitingikperi
ods,ikexclusions
Morale:ikCarelessnessikorikIndifferenceikbyikinsuredsiksinceiktheyikhaveikinsuranceik(protectedik
fromikloss).
Howikdoesikpureikriskikdifferikfromikspeculativeikriskik(Modik2.2)ik-ikcorrectikans-
PureikRisk:ikSituationsikwhereiktwoikalternativesikareikpossibleik-
ikriskikwillikhappenik(noikloss)ikorikitikwillikhappenikandikaikfinancialiklossiktakesikplace.ikManyikEBikC
overagesikfallikintoikthisikclassification.ikNothingikpositiveikcanikresultikfromikPureikRisk,ikbutikman
yikareikinsuredik(Fire,ikAuto,ikIllness,ikDisability)
SpeculativeikRisk:ikInvolveikaikpossibilityik(thatikisiknotikpresentikinikpureikrisk)ikofikaikgain.ikThreeik
potentialikoutcomes:ikLoss,ikNoikLoss,ikGainik(Ex:ikPurchaseikStock,ikGambling)
MostikImportantikTypeikofikPureikRiskik(Modik2.2)ik-ikcorrectikans-
PersonalikRiskik(Death,ikIllness,ikDI,ikUnemployment)
SummarizeikMethodsikforikHandlingikRiskik(Modik2.2)ik-ikcorrectikans-1:ikAvoidanceik-
ikdoesiknotiktakeikonikrisk/getsikridikof
2:ikControlik-ikattemptsiktoikpreventikorikreduceiktheikprobability/severityikofikaiklossiktakingikplace
3:ikRetentionik-ikriskikisikassumedikandikpaidikforikbyiktheikpersoniksufferingiktheikloss
, 4:ikTransferik-ikoneikshiftsiktheikfinancialikburdenikofikriskiktoikanotherikparty
5:ikInsuranceik-
ikformikofiktransferikwhichiktheikfinancialikburdenikisiktransferrediktoikinsuranceikcompany
HowikisikinsuranceikaikmechanismikforikEBP's?ik(Modik2.3)ik-ikcorrectikans-
Insuredik(EE/ER)ikpaysikmoneyik(premium)ikintoikaikfundik(insuranceikcompany).ikUponikoccurr
enceikofikloss,ikreimbursementikisikprovidediktoikpersoniksufferingikloss.ikThus,ikriskikhasikbeenikr
educed/eliminatedikandikallikwhoikpaidikintoiktheikfundikshareiktheikresultingikloss.
Compareikinsuranceikmechanismiktoikgamblingik(Modik2.3)ik-ikcorrectikans-
Insuranceikisikaikmechanismiktoikhandlingikexistingikriskik-
ikgamblingikcreatesikriskikwhereikoneikdidiknotikpreviouslyikexist.ikRiskikcausedikbyikgamblingikisik1
00%ikspeculative,ikwhileikinsuranceikdealsikwithikpureikrisk.ikGamblingikinvolvesikaikgainikforikone
ikpartyikwhileikinsuranceikisikaikmutualiksharingikofikanyiklosses.ikTheikloserikiniktheikgamblingiktran
sactionikremainsikinikaiknegativeiksituationikwhileiktheikinsuredikisikfinanciallyikrestoredikinikwholeik
orikpartiktoikpriorikcondition.
DefineikIndemnificationik(Modik2.3)ik-ikcorrectikans-
Principleikofikmakingiktheikinsuredikwholeikagainikafterikreimbursementikforikcoverediklossiktakesi
kplaceik-iksimilarikfinancialiksituationikthanikprioriktoikclaim.
Whichikriskikhandlingiktechniqueikisikmutuallyikexclusiveik(Modik2.3)ik-ikcorrectikans-Avoidanceik-
ikwhenikyouikavoidikaikrisk,ikyouikhaveiknoiklossesiksoikthereikisiknoikneedikforikotheriktechniques
Stateikadvantages/disadvantagesikofikusingikinsuranceiktoikfundikanikEBPik(Modik2.3)ik-
ikcorrectikans-Advantages:
-KnownikPremiumsik(Budgeting)
-OutsideikAdministrationik(HandledikbyikInsurance)
-FinancialikBackingik
-CostikManagementik(DesignikPlansiktoiklimitikcost)
-Economyik(Insuranceikmoreikefficient/lowerikcost)
Disadvantages:
-PossibleikAdditionalikCostsik(Admin,ikComm,ikOverhead,ikPremiumikTaxes)
-EmployeeikSatisfactionik(Slow,ikClaimikDenials)
Describeikcharacteristicsikofikidealikinsurableikriskik(Modik2.3)ik-ikcorrectikans-
1:ikMustikbeiklargeiknumberikofiksimilarikrisksik(lawikofiklargeiknumbers)
2:ikLossikshouldikbeikverifiableikandikmeasurable
3:ikLossikshouldiknotikbeikcatastrophicikiniknature
4:ikChanceikofiklossiksubjectiktoikcalculationik(avgikfrequency/severity)ik-ikadequateikpremiumik
5:ikPremiumikshouldikbeikeconomicallyikfeasibleik-
ikinsuredikshouldikaffordikpremium/lessikthanikfaceikvalueikorikamountikofikpolicyikcoverage
6:ikLossikshouldikbeikaccidentalikandikunintentionalikfromiktheikinsured'sikstandpoint/controlik(m
oral)
Describeikcharacteristicsikofikgroupiktechniqueikthatikenableiklife/healthiktoikbeikwrittenikasikEBPik
byikminimizingikadverseikselectionik(Modik2.5)ik-ikcorrectikans-
1:ikOnlyikcertainikgroupsikareikeligible
2:ikSteadyikflowikofiklivesikthroughiktheikgroup
3:ikMinimumiknumberikofikcoverediklives
4:ikMinimumikportionikmustikparticipateik
5:ikEligibilityikRequirements
6:ikMaximumikLimitsikImposedik(preventikexcessikcov)
