Certified Employee Benefit Specialist Group Benefits
Associate Exam 1 (CEBS GBA) Exam Questions and
Answers
Broad view of Employee Benefits (Mod 1.1) - ANSWER>>Considers Employee
Benefits to be virtually any form of compensation other than direct wages paid to
Employees (Ex: WC, Unemployment, State DI, SS, Vacation, Holidays,
401K/Retirement, Employer share of Medical, Severance Pay, Child Care, etc..)
Narrow view of Employee Benefits (Mod 1.1) - ANSWER>>Any type of plan
sponsored or initiated by Employees and Employers and engaged in providing
benefits that result from the employment relationship and that are not
underwritten or paid directly by the government; (Ex: Benefits excluded include
those legally mandated - WC, SS).
Impact of Labor Unions on Employee Benefits (Mod 1.2) - ANSWER>>Through
Collective Bargaining, Employee Benefit Plans have been impacted. In 1948 ruling
states that the duty to bargain in good faith over wages also included insurance
and fringes (pension). In WW Cross & Co, NLRB ruled wages included health and
accident plan.
What is the Taft-Hartley Act? (Mod 1.2) - ANSWER>>The Labor Management
Relations Act of 1947 is a United States federal law that restricts the activities and
power of labor unions. This set forth good-faith collective bargaining over wages,
hours, terms of employment and benefits.
3 Examples of Tax Advantages of Employee Benefit Plans (Mod 1.2) - ANSWER>>1:
Employer Contributions are Tax Deductible
2: Employer Contributions are not considered income to Employees
3: Certain Retirement Benefits Accumulate Tax-Free until distributed.
,Examples of Questions that should be addressed when creating benefit objectives
(Mod 1.3) - ANSWER>>Ex: What benefits should be provided? Who should be
covered? Should Employees have options? How should plan be financed? How
should plan be administered? How should plan be communicated to Employees?
What is the Functional Approach to Employee Benefit Planning? (Mod 1.4) -
ANSWER>>Application of a systematic method of analysis to an Employer's Total
Employee Benefits Program. It analyzes the organization's EBP as a whole in terms
of its ability to meet various employee's needs and to manage loss exposures
within the overall compensation goals and parameters.
Why is the Functional Approach appropriate when planning, designing and
administering Employee Benefits? (Mod 1.4) - ANSWER>>1: EE Benefits Significant
Element of EE Comp and are a Tax-Effective Way to Compensate
2: EE Benefit Represent Large Labor Cost, so ER's should effectively plan/cost-
control
3: In the past, EE Benefits were adopted on piece-meal basis; helps to now fill
gaps/overlap
4: Systematic Approach to planning helps to keep the EBP current, competitive
and in compliance with updated requirements (ACA)
5: Benefits to be integrated properly together
Compare Compensation/Service Oriented Benefit Philosophy with the Needs-
Oriented (Mod 1.4) - ANSWER>>Compensation/Service: EBP comprised of
primarily compensation, service or both. Level of benefits tied to salary or pay
levels/years of service
Needs Orientated: Focuses on Needs of EE's and their dependents
Identify Steps in Applying Functional Approach (Mod 1.4) - ANSWER>>1: Classify
EE/Dep Needs & Objectives (in logical/functional categories)
2: Classify Categories of EE's to be protected
3: Analyze present benefits in terms of functional categories of needs/objectives,
persons to benefit, and regulatory requirements
,4: Determine any gaps or overlap in benefits from all sources in terms of
functional categories of needs & the persons to be protected
5: Consider recommendations for changes
6: Estimate costs/savings from each recommendation
7: Evaluate alternative methods of financing for those recommended benefits
(and existing ben)
8: Consider other cost-saving techniques
9: Decide upon appropriate benefits and methods of financing as a result of
analysis
10: Implement Changes
11: Communication Changes to Employees
12: Periodically re-evaluate EBP
Define Needs/Exposures covered under EBP (Mod 1.4) - ANSWER>>1: Medical
Expenses (EE/Dep)
2: Losses due to Disability (Short/Long Term)
3: Death (EE/Dep/Retirees)
4: Retirement Needs
5: Capital Accumulation Needs/Goals
6: Needs for Unemployment/Layoff/Termination
7: Needs for Financial/Retirement Counseling
8: Losses from property/liability exposures
9: Needs for Dependent Care Assistance
10: Needs for Educational Assistance (EE/Dep)
11: Needs for Custodial-Care Expenses (LTC)
12: Other Needs/Goals (Stock Purchase Plan)
Explain Concept of Replacement Ratio in terms of creating Retirement/Disability
Plans (Mod 1.5) - ANSWER>>A Replacement Ratio is a person's gross income after
retirement, divided by his or her gross income before retirement. Should include
SS, capital accumulation benefits as well as retirement plans.
, Define Protection-Oriented Benefits (Mod 1.5) - ANSWER>>Consist of Medical
Expense Benefits, Life/STD/LTD Insurance - protect against serious loss exposures
that could spell immediate financial disaster. As such, they have a relatively short
probationary period due to the need of immediate coverage.
Define Accumulation-Orientated Benefits (Mod 1.5) - ANSWER>>Consist of
Pension Plans, Profit-Sharing, Savings, 401K, etc...which reward an Employee for
long service with an Employer. Involve a longer probationary period since viewed
as a reward - not a disadvantage for long-term employees.
Impact of making a plan Contributory on Employee Participation (Mod 1.5) -
ANSWER>>Impacts group as a whole - not everyone will elect due to cost. If
participation is mandatory in a contributory plan, may create employee relations
problem.
Describe arguments of flexibility in designing employee benefit plans as it relates
to functional approach (Mod 1.5) - ANSWER>>Argument 1: More flexibility EE has,
more likely he or she will select a benefit that best meets needs/goals - thus,
flexibility in plan design/options facilitates functional approach.
Argument 2: Works against functional approach because some EE's may not
recognize all their needs and leave some uncovered.
Define concept of risk (Mod 2.1) - ANSWER>>Uncertainty with respect to possible
losses. Inability to determine with certainty the actual number and value of
claims.
Define relationship between peril and hazard (Mod 2.1) - ANSWER>>Peril: Cause
of a loss (fires, floods, theft, death)
Hazard: Condition that increases probability that a peril will occur or tends to
increase severity of loss when a peril occurs.
Associate Exam 1 (CEBS GBA) Exam Questions and
Answers
Broad view of Employee Benefits (Mod 1.1) - ANSWER>>Considers Employee
Benefits to be virtually any form of compensation other than direct wages paid to
Employees (Ex: WC, Unemployment, State DI, SS, Vacation, Holidays,
401K/Retirement, Employer share of Medical, Severance Pay, Child Care, etc..)
Narrow view of Employee Benefits (Mod 1.1) - ANSWER>>Any type of plan
sponsored or initiated by Employees and Employers and engaged in providing
benefits that result from the employment relationship and that are not
underwritten or paid directly by the government; (Ex: Benefits excluded include
those legally mandated - WC, SS).
Impact of Labor Unions on Employee Benefits (Mod 1.2) - ANSWER>>Through
Collective Bargaining, Employee Benefit Plans have been impacted. In 1948 ruling
states that the duty to bargain in good faith over wages also included insurance
and fringes (pension). In WW Cross & Co, NLRB ruled wages included health and
accident plan.
What is the Taft-Hartley Act? (Mod 1.2) - ANSWER>>The Labor Management
Relations Act of 1947 is a United States federal law that restricts the activities and
power of labor unions. This set forth good-faith collective bargaining over wages,
hours, terms of employment and benefits.
3 Examples of Tax Advantages of Employee Benefit Plans (Mod 1.2) - ANSWER>>1:
Employer Contributions are Tax Deductible
2: Employer Contributions are not considered income to Employees
3: Certain Retirement Benefits Accumulate Tax-Free until distributed.
,Examples of Questions that should be addressed when creating benefit objectives
(Mod 1.3) - ANSWER>>Ex: What benefits should be provided? Who should be
covered? Should Employees have options? How should plan be financed? How
should plan be administered? How should plan be communicated to Employees?
What is the Functional Approach to Employee Benefit Planning? (Mod 1.4) -
ANSWER>>Application of a systematic method of analysis to an Employer's Total
Employee Benefits Program. It analyzes the organization's EBP as a whole in terms
of its ability to meet various employee's needs and to manage loss exposures
within the overall compensation goals and parameters.
Why is the Functional Approach appropriate when planning, designing and
administering Employee Benefits? (Mod 1.4) - ANSWER>>1: EE Benefits Significant
Element of EE Comp and are a Tax-Effective Way to Compensate
2: EE Benefit Represent Large Labor Cost, so ER's should effectively plan/cost-
control
3: In the past, EE Benefits were adopted on piece-meal basis; helps to now fill
gaps/overlap
4: Systematic Approach to planning helps to keep the EBP current, competitive
and in compliance with updated requirements (ACA)
5: Benefits to be integrated properly together
Compare Compensation/Service Oriented Benefit Philosophy with the Needs-
Oriented (Mod 1.4) - ANSWER>>Compensation/Service: EBP comprised of
primarily compensation, service or both. Level of benefits tied to salary or pay
levels/years of service
Needs Orientated: Focuses on Needs of EE's and their dependents
Identify Steps in Applying Functional Approach (Mod 1.4) - ANSWER>>1: Classify
EE/Dep Needs & Objectives (in logical/functional categories)
2: Classify Categories of EE's to be protected
3: Analyze present benefits in terms of functional categories of needs/objectives,
persons to benefit, and regulatory requirements
,4: Determine any gaps or overlap in benefits from all sources in terms of
functional categories of needs & the persons to be protected
5: Consider recommendations for changes
6: Estimate costs/savings from each recommendation
7: Evaluate alternative methods of financing for those recommended benefits
(and existing ben)
8: Consider other cost-saving techniques
9: Decide upon appropriate benefits and methods of financing as a result of
analysis
10: Implement Changes
11: Communication Changes to Employees
12: Periodically re-evaluate EBP
Define Needs/Exposures covered under EBP (Mod 1.4) - ANSWER>>1: Medical
Expenses (EE/Dep)
2: Losses due to Disability (Short/Long Term)
3: Death (EE/Dep/Retirees)
4: Retirement Needs
5: Capital Accumulation Needs/Goals
6: Needs for Unemployment/Layoff/Termination
7: Needs for Financial/Retirement Counseling
8: Losses from property/liability exposures
9: Needs for Dependent Care Assistance
10: Needs for Educational Assistance (EE/Dep)
11: Needs for Custodial-Care Expenses (LTC)
12: Other Needs/Goals (Stock Purchase Plan)
Explain Concept of Replacement Ratio in terms of creating Retirement/Disability
Plans (Mod 1.5) - ANSWER>>A Replacement Ratio is a person's gross income after
retirement, divided by his or her gross income before retirement. Should include
SS, capital accumulation benefits as well as retirement plans.
, Define Protection-Oriented Benefits (Mod 1.5) - ANSWER>>Consist of Medical
Expense Benefits, Life/STD/LTD Insurance - protect against serious loss exposures
that could spell immediate financial disaster. As such, they have a relatively short
probationary period due to the need of immediate coverage.
Define Accumulation-Orientated Benefits (Mod 1.5) - ANSWER>>Consist of
Pension Plans, Profit-Sharing, Savings, 401K, etc...which reward an Employee for
long service with an Employer. Involve a longer probationary period since viewed
as a reward - not a disadvantage for long-term employees.
Impact of making a plan Contributory on Employee Participation (Mod 1.5) -
ANSWER>>Impacts group as a whole - not everyone will elect due to cost. If
participation is mandatory in a contributory plan, may create employee relations
problem.
Describe arguments of flexibility in designing employee benefit plans as it relates
to functional approach (Mod 1.5) - ANSWER>>Argument 1: More flexibility EE has,
more likely he or she will select a benefit that best meets needs/goals - thus,
flexibility in plan design/options facilitates functional approach.
Argument 2: Works against functional approach because some EE's may not
recognize all their needs and leave some uncovered.
Define concept of risk (Mod 2.1) - ANSWER>>Uncertainty with respect to possible
losses. Inability to determine with certainty the actual number and value of
claims.
Define relationship between peril and hazard (Mod 2.1) - ANSWER>>Peril: Cause
of a loss (fires, floods, theft, death)
Hazard: Condition that increases probability that a peril will occur or tends to
increase severity of loss when a peril occurs.
