HRCI Compensation and Benefits 2 — Questions and Answers
Question 1: Under COBRA, how long may a terminated employee typically continue group health coverage?
- Up to 18 months (Correct answer)
- Up to 6 months
- Up to 36 months for all qualifying events
- Indefinitely at no cost
Correct answer: Up to 18 months
COBRA generally allows qualified beneficiaries to continue group health coverage for up to 18 months following termination or reduction in hours.
Question 2: What is 'job evaluation' in the context of compensation?
- A systematic process of determining the relative worth of jobs within an organization (Correct answer)
- A performance appraisal of an individual employee
- A market salary survey
- A legal audit of wage compliance
Correct answer: A systematic process of determining the relative worth of jobs within an organization
Job evaluation uses methods such as point factor, job ranking, or job classification to establish internal pay hierarchies based on job content and requirements.
Question 3: Which term describes compensation paid to employees for work not performed, such as holidays and vacation?
- Paid time off (PTO) / paid leave (Correct answer)
- Deferred compensation
- Supplemental pay
- Shift differential
Correct answer: Paid time off (PTO) / paid leave
Paid time off for vacations, holidays, sick leave, and personal days is indirect compensation representing pay for time not worked.
Question 4: What is the purpose of a 'compa-ratio' in compensation management?
- To compare an employee's actual salary to the midpoint of their pay range (Correct answer)
- To calculate the company's total compensation cost
- To measure the ratio of exempt to non-exempt employees
- To compare benefits costs year over year
Correct answer: To compare an employee's actual salary to the midpoint of their pay range
Compa-ratio (actual salary ÷ range midpoint × 100) indicates whether an employee is paid below (< 100%), at (= 100%), or above (> 100%) the market midpoint.
Question 5: What distinguishes a 'merit increase' from a 'cost-of-living adjustment (COLA)'?
- Merit increases are tied to individual performance; COLAs apply uniformly to offset inflation (Correct answer)
- Merit increases are mandatory by law; COLAs are discretionary
- COLAs only apply to union employees; merit increases apply to exempt staff
- Merit increases reduce base pay; COLAs increase it
Correct answer: Merit increases are tied to individual performance; COLAs apply uniformly to offset inflation
Merit increases reward individual performance differentially, while COLAs are flat adjustments given to all employees to preserve purchasing power against inflation.
Question 6: Under the ACA, what is the 'employer mandate' for applicable large employers (ALEs)?
- Offer affordable, minimum value health coverage to full-time employees or face potential penalties (Correct answer)
- Provide dental and vision coverage to all employees
- Fund an HSA for each enrolled employee
- Pay 100% of employee health insurance premiums
Correct answer: Offer affordable, minimum value health coverage to full-time employees or face potential penalties
ALEs (50+ full-time equivalent employees) must offer health coverage meeting minimum value and affordability standards to full-time staff or risk IRS penalties under the Employer Shared Responsibility provisions.
HRCI Compensation and Benefits 2
Under COBRA, how long may a terminated employee typically continue group health coverage?