CEBS - GBA 1 Module 1 2023 LATEST QUESTIONS WITH COMPLETE SOLUTIONS GRADED A+

1.1 Distinguish between the broad view and the narrow view of employee benefits - ANSWER The broad view defines employee benefits as anything other than direct compensation, including both government-mandated benefits and private plans. (social security, pension plans etc.). The narrow view holds that employee benefits are any benefit sponsored unilaterally or jointly by employers and employees that is not subsidized by the government. 1.2 List the categories of benefits that generally are considered to fall under a broad view employee benefits - ANSWER • Legally required benefits (Social Security) • Payment for time not worked (rest, lunch, vacation, and holidays) • Medical • Retirement & savings plan payments • Miscellaneous benefits (employee discounts, severance pay, education, and child care) 1.3 What benefits are typically excluded when the term "employee benefits" is viewed and defined in a narrow sense? - ANSWER Those that are legally mandated (Social Security and workers' compensation) 2.1 Explain the types of businesses- or human resource-related reasons for firms establishing employee benefit plans - ANSWER So businesses may attract & retain capable employees. Good benefit plans foster corporate efficiency, productivity, and improve employee morale. 2.2 What impact have labor unions historically had in employee benefits? - ANSWER Through the practice of collective bargaining labor unions have had an impact on the growth of employee benefit plans. In 1948 the NLRB ruled in the Inland Steel case that the duty to bargain in good faith over wages also included insurance and fringes such as pension benefits. Following that, in the W.W. Cross & Co. case, the NLRB ruled that wages included health and accident plan. 2.3 Explain the significance of the Taft-Hartley Act in employee benefit planning. - ANSWER The Labor-Management Relations Act, also called the Taft-Hartley Act, sets forth the framework for good-faith collective bargaining over wages, hours, conditions and terms of employment and employee benefits. It established the distinction between retirement benefits and welfare benefits. It also provides framework for administration of those benefits. It's the legal basis on which jointly trusteed benefit plans are founded. 2.4 Summarize three major federal tax advantages associated with employee benefit plans. - ANSWER • Most contributions are deductible as long as they are reasonable business expenses • Within limits, the contributions are not considered income to employees • In certain retirement/capital plans, benefits accumulate tax-free until dispersed 2.5 Why is the employee benefit mechanism an effective and efficient way of providing insurance coverage? - ANSWER It is convenient for employees as they do not have to search for individual coverage and it is generally less expensive. Providers state it is easier to communicate employee benefits through an employer. 3.1 What is the starting point in the design of any employee benefit plan? - ANSWER Any employee benefit plan should start with setting overall objectives from the standpoints of both the employer and the employees. 3.2 List the types of overall questions that should be addressed in setting benefit objectives. - ANSWER • What benefits should be provided? o Benefits provide under both government programs and for the individual employees should be considered • Who should be covered by the benefit plan? o Besides full-time employees, part-time, retirees, dependents of employees, and survivors of deceased employees. All of which must adhere to all governmental regulations. • Should employees have benefit options? o Due to changing workforce this question has assumed great prominence. With the growth of flexible or cafeteria plans, employee choice is inevitable. • How should the benefit plan be financed? o A few factors should be decided first before answering this question: Is employer financing all costs? Or is it a shared approach with employees? If so, what percentage? • How should the benefit plan be administe