Employee Benefits 5th Edition Martocchio Test Bank

Employee Benefits 5th Edition
Martocchio Test Bank

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Chapter 07 - Government-Mandated Social Security Programs
Chapter 07
Government-Mandated Social Security Programs
True / False Questions
1. The Social Security Act was amended in 1965 to create the Medicare program. (Medicare)
TRUE
2. The net job gains between March to June 2011 offset the net job losses during the 2007-2009
recession. (Unemployment Insurance)
FALSE
3. The Medicare tax is subject to a taxable wage base. (Medicare Programs)

FALSE
4. Medigap insurance supplements Medicare Parts A & B and is available from private
insurance companies. (Medigap Insurance)
TRUE
5. The employee and self-employed tax rates were each temporarily reduced by 2 percent for
the 2012 calendar year. (OASDI Programs)
TRUE
6. Unemployment Compensation Act of 2008 expanded the EUC benefits to 20 weeks

nationwide. (Unemployment Insurance)
TRUE
7. In 2011, more than 55 million Americans were expected to receive Social Security
benefits. (OASDI and Medicare)
TRUE
7-1
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in whole or part.
8. Social Security disability benefits are available to disabled workers who are unable to work
as a result of a serious medical impairment that lasts at least 12 months. (Disability Benefits,
Eligibility)
TRUE
9. Based on the 2012 report, the projected date of the Medicare trust fund exhaustion is 2035.
(Financial Status of the OASDI and Medicare Programs)
FALSE
10. The Social Security Administration increases retirement benefits by a designated

percentage for each month worked beyond full retirement until age 70. (Old-Age Benefits,
Eligibility Criteria)
TRUE
11. In general, an employee must earn at least 30 credits to be eligible to receive retirement
benefits. (Qualifying for OASDI Benefits)
FALSE
12. Social Security pays only for total disability. (Disability Benefits)
TRUE
13. Part A coverage automatically qualifies an individual to enroll in Part B coverage for a
monthly premium. (Eligibility Criteria for Medicare Benefits)
TRUE
14. The Social Security Administration pays monthly survivor benefits at a level ranging from
71.5% to 75% of the primary insurance amount. (Survivor Benefit Amount Determination)
TRUE
7-2
in whole or part.
15. Medicare Part A only covers outpatient hospital care and services. (Medicare Part A
Coverage)
FALSE
16. Self-employed individuals must pay a FICA rate that is twice as much as a factory worker
has to? (Financing OASDI and Medicare Programs)
TRUE
17. The supplemental insurance benefit (SUB) is used to extend disability

benefits. (Unemployment Insurance Benefit Amounts)
FALSE
18. An employee's average indexed monthly earnings determines the initial primary insurance
amount for OASDI benefits. (Determining Benefit Amounts)
TRUE
19. Physicians' fees and custodial care in a nursing home are covered by Medicare Part
A. (Medicare Part A Coverage)
FALSE
20. Medicare Part D was first offered in 2004. (Medicare Prescription Drug Benefit)
FALSE
21. In 2009, 6.2% of employer and employee contributions were set aside from FICA to fund
OASDI programs. (OASDI Programs)
TRUE
7-3
in whole or part.
22. Social Security retirement funds are expected to remain sustainable in the coming
decades. (Financial Status of the OASDI and Medicare Programs)
FALSE
23. Medicare Part B covers the services not included under Medicare Past A. (Medicare Part B
Coverage)
TRUE
24. Medicare Part D was established by the Medicare Prescription Drug Improvement and
Modernization Act of 2003. (Medicare Prescription Drug Benefit)
TRUE
25. Only restricted groups of workers are eligible for OASDI and Medicare
protection. (OASDI and Medicare)
FALSE
26. Medicare Select plans are Medigap policies that present higher premiums. (Medigap
Insurance)
FALSE
27. The original Medicare plan is a fee-for-service plan managed by the federal government.
(Medicare)
TRUE
7-4
in whole or part.
Multiple Choice Questions
28. In 2012, how much did an employee have to make to earn a credit for OASDI? (Qualifying
for OASDI Benefits)
A. $1500
B. $2240
C. $1200
D. $1130
29. This Medicare program offers voluntary supplemental medical insurance. (Medicare Part B
Coverage)
A. Medicare Part B
B. Medicare Part A
C. Medicare Advantage
D. Medicare Part C
30. Effective 2012, what was the annual increase in Social Security benefits? (Automatic
Cost-of-Living Adjustments)
A. 1%
B. 3.6%
C. 7.2%
D. 9%
31. Which of the following are eligible for OASDI? (OASDI and Medicare)
A. Self employed individuals
B. Federal government workers
C. 10 year railroad employees
D. Children under 21 who work for their parents
7-5
in whole or part.
32. Which Medicare program provides beneficiaries the opportunity to receive health care from
a variety of options? (Medicare Part C: Medicare Advantage)
A. Medicare Advantage
B. Medigap
C. Medicare Part C
D. Medicare Select
33. At what age are retirees first eligible for Social Security benefits? (Old-Age Benefits,
Eligibility Criteria)
A. 65
B. 62
C. 70
D. 67
7-6
in whole or part.
34. In 2012, what was the annual monthly benefit for all retired workers? (Retirement Benefit
Amount Determination)
A. $855
B. $1,000
C. $1,229
D. $1,754
35. In 2012, approximately, what was the average monthly survivor benefit for a widowed and
two children? (Survivor Benefit Amount Determination)
A. $1,500
B. $2,000
C. $2,500
D. $3,000
36. In 2012, what was the average monthly disability benefit for all disabled workers?
(Disability Benefit Amount Determination)
A. $540
B. $1,111
C. $2,245
D. $3,450
37. OASDI taxes are subject to a taxable wage base. What was the taxable wage base for
everyone in 2012? (OASDI Programs)
A. $80,100
B. $110,100
C. $120,100
D. $140,100
38. Most states pay regular unemployment benefits for how long? (Unemployment Insurance
Benefit Amounts)
A. 13 weeks
B. 16 weeks
C. 26 weeks
D. 28 weeks
7-7
in whole or part.
39. Which of the following is not one of the factors believed to have hastened the deterioration
of the OASDI and Medicare trust funds? (Financial Status of the OASDI and Medicare
Programs)
A. longer life expectancy
B. increased insurance claims
C. high levels of unemployment
D. immigration
40. Which of the following statements is not true regarding individuals who possess Medicare
coverage and simultaneously receive health insurance benefits from another health insurance
plan? (Medicare as the Primary or Secondary Payer)
A. If the person has Medicare based on End-Stage Renal Disease (ESRD), COBRA
continuation coverage pays first
B. Generally, if the person’s employer has less than 100 employees, Medicare pays first if
he/she is under 65 or he/she has Medicare because of a disability
C. If the person or his/her spouse is retired and has COBRA continuation coverage, Medicare
pays first
D. If the person is retired and has Medicare and group health plan coverage from his/her former
employer, generally his/her group health plan (retiree) coverage pays first his/her health care
bills and Medicare pays second
41. Which of the following are not covered by Medicare Part B? (Medicare Part B Coverage)
A. Outpatient care
B. Hospitalization
C. Laboratory services
D. Health screenings
42. What is the amount of contribution employer and employees must make to the Medicare tax
which supports Medicare Part A? (Medicare Programs)
A. 1.45%
B. 50%
C. 3%
D. 4%
7-8
in whole or part.
Essay Questions
43. Briefly discuss the eligibility criteria for unemployment insurance benefits? (Eligibility
Criteria for Unemployment Insurance Benefits)
Main Points
• Limited voluntary employment and involuntary unemployment

o Voluntary termination usually disqualifies workers from receiving benefits,
unless they chose to quit for reasonable causes
o Reasonable cause refers to the creation of working conditions that cannot be
tolerated by any sensible person
• Minimum earnings and employment requirements
o Must have been employed for a minimum period of time
• Called the Base Period
• Generally the first 4 of the last 5 calendar quarters preceding a claim
o Sufficient previous earnings (most states), typically $1,130
• A waiting period
o Usually one week following claim
o Possible reasons
• Need for processing time
• To limit costs
• Capacity to work and availability for work
o Mentally & physically able (ability)
o Willing and ready (motivation)
• Actively seeking suitable work
o Jobs that require skills, knowledge, ability similar to individual’s customary
work
o Job offers employment terms and conditions that don’t violate relevant laws
7-9
in whole or part.
44. What is donut hole? Explain. (Medicare Prescription Drug Benefit)
Main Points
• A participant pays the deductible, $320 in 2012, before Medicare begins to provide
coverage
• For expenses above $320 through $2,930, the participant pays small copayment for each
prescription
• For expenses above $2,930 through $4,700, the participant pays
o 50% of the cost of brand name drugs
o 86% for generic drugs
• This coverage gap known as the “donut hole” because Medicare contributes to the
payment of approved prescription medications for amounts outside the $2,930 to $4,700
range less the annual deductible
• For expenses greater than $4,700, the participant pays a small copayment
45. Briefly discuss Medicare Part A coverage. (Medicare Part A Coverage)
Main Points
• Compulsory hospitalization insurance covers both inpatient and outpatient hospital care
and services
o Inpatient hospital care in a semiprivate room, meals, general nursing, and other
hospital supplies and services
o Home health services limited to reasonable and essential part-time or
intermittent skilled nursing care and home health aide services, and physical
therapy, occupational therapy, and speech-language pathology ordered by a
doctor
o Hospice care for people with terminal illness (that is, illness that is expected to
lead to death within six months), including pharmaceutical products for
symptom control and pain relief, medical and support services from a
Medicare-approved hospice provider, and other services not otherwise covered
by Medicare (for example, grief counseling)
o Skilled nursing facility care, including semiprivate room, meals, skilled nursing
and rehabilitative services, and supplies for up to 100 days per year
o Pints of blood administered during a Medicare approved stay in a hospital or
skilled nursing facility
7-10
in whole or part.

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Martocchio Test Bank

True / False Questions

3. The Medicare tax is subject to a taxable wage base. (Medicare Programs)

6. Unemployment Compensation Act of 2008 expanded the EUC benefits to 20 weeks

10. The Social Security Administration increases retirement benefits by a designated

17. The supplemental insurance benefit (SUB) is used to extend disability

Multiple Choice Questions

• Limited voluntary employment and involuntary unemployment

44. What is donut hole? Explain. (Medicare Prescription Drug Benefit)

45. Briefly discuss Medicare Part A coverage. (Medicare Part A Coverage)

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