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194 Cards in this Set

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Term: 401(k) plans
Plans that allow employees to make tax-favored pay deferrals toward retirement savings through a payroll deduction plan.
Term: 403(b) plans
Plans that allow employees of certain tax-exempt organizations to contribute pretax dollars toward retirement savings.
Term: 457 plans
Plans that allow employees of states, political subdivisions or agencies of states, and certain tax-exempt organizations to defer receipt of wages.
Term: 529 plans
Qualified tuition plans that provide families a federal tax-free way to save money for college.
Term: Balance billing
Practice where an uncontracted medical provider bills a patient for all charges not paid for by the patient’s insurance plan, even if those charges are above the plan’s usual and customary rate or are considered medically unnecessary.
Term: Base pay
Basic compensation an employee receives, usually as a wage or salary.
Term: Benchmark jobs
Jobs used as reference points when setting up a job classification system and when designing or modifying a pay structure.
Term: Broadbanding
Combining several salary grades or job classifications with narrow pay ranges into one band with a wider salary spread.
Term: Call-back pay
Pay that employees receive when they are called back for an extra shift in the same workday.
Term: Capitated health-care plan
Type of health-care plan in which the physician is paid on a per capita (per head) basis rather than for actual treatment provided.
Term: Cash balance plan
Form of defined benefit plan that defines the promised benefit in terms of a hypothetical account balance and features benefit portability.
Term: Cliff vesting
Requires participants to complete a specific number of years of service with an employer before they get any vested benefits, after which they are 100% vested.
Term: Commission
Payment made to salespeople, usually calculated as a percentage of sales.
Term: Compa-ratio
Pay level divided by the midpoint of the pay range.
Term: Comparable worth
Concept that states that jobs requiring comparable skills, effort, responsibility, and working conditions filled primarily by women should have the same job classification and salary as similar jobs filled by men.
Term: Compensable factors
Reflect the dimensions along which a job is perceived to add value to the organization; these factors are used to determine which jobs are worth more than others.
Term: Consolidated Omnibus Budget Reconciliation Act (COBRA)
Act that provides individuals and dependents who may lose medical coverage with opportunity to pay to continue coverage.
Term: Consumer price index (CPI)
Instrument that measures change over time for costs of a group of goods and services.
Term: Consumer-directed health care
Health-care options intended to help employers better control costs while allowing employees to make more decisions about their health care.
Term: Coordination of benefits
Eliminates the duplication of payments when an employee, spouse, or dependents have health coverage under two or more plans.
Term: Copayment
Specified percentage (typically 20% to 30%) of covered medical expenses that employee pays or fixed dollar amount that a covered person pays each time he or she visits a physician or purchases prescription drugs.
Term: Copeland "Anti-Kickback" Act
Act that prohibits federal contractors from receiving kickbacks from employees or subcontractors for wages earned on federal projects.
Term: Cost-of-living adjustment (COLA)
Periodic compensation payment given to eligible employees regardless of their performance or company profitability; usually linked to inflation.
Term: Coverdell Education Savings Account (ESA)
Trust created exclusively for the purpose of paying the qualified education expenses of a designated beneficiary.
Term: Davis-Bacon Act
Act that established prevailing wage and benefit requirements for contractors on federally funded construction projects.
Term: Deductible
Initial amount of covered medical expenses an individual must pay before receiving paid benefits under a health-care plan.
Term: Deferred compensation
Plan that provides income to employees at some future time as compensation for work performed now.
Term: Defined benefit plan
Plan that promises employee a retirement benefit amount based on a formula.
Term: Defined contribution plan
Plan in which the employer and sometimes the employee make an annual payment to the employee's retirement plan account.
Term: Differential pay
Pay that is based on when the employee works (e.g., overtime pay, shift-pay differential) or where the employee works.
Term: Direct compensation
Pay that is received by an employee, including base pay, differential pay, and incentive pay.
Term: Draw
Amount advanced on future commissions.
Term: Economic Growth and Tax Relief Reconciliation Act (EGTRRA)
Act that adjusts minimum vesting schedules, increases retirement plan compensation and contribution limits, permits catch-up contributions by participants age 50 or older in certain retirement plans, and modifies distribution and rollover rules.
Term: Emergency-shift pay
Extra pay that employees receive when they are called into work during an emergency (e.g., a power outage).
Term: Employee Commuting Flexibility Act
Amendment to the Portal-to-Portal Act; clarifies that commuting time is not paid working time.
Term: Employee Retirement Income Security Act (ERISA)
Act that established uniform minimum standards for employer-sponsored retirement and health and welfare benefit programs.
Term: Employee stock-ownership plans (ESOPs)
Stock bonus plans by which employees gain ownership in the organization for which they work.
Term: Employees
Workers who are covered by Fair Labor Standards Act regulations as determined by the IRS.
Term: Equal Pay Act (EPA)
Act that prohibits wage discrimination by requiring equal pay for equal work.
Term: Equal work
Work having equal skills, equal effort, equal responsibility, and equal working conditions, all performed at the same location.
Term: Excess deferral plans
Nonqualified deferred compensation plans that provide benefits to selected management or highly compensated employees beyond Section 401 or 415 limitations.
Term: Excess group-term life insurance
Amount of employer-provided group-term life insurance over $50,000.
Term: Exclusive provider organization (EPO)
Plan in which participants must use providers in the network of coverage or no payment will be made.
Term: Exempt employees
Employees who are excluded from FLSA overtime pay requirements.
Term: Experience rating
Rating system that bases insurance rates on claims history.
Term: External equity
When an organization's pay rates are at least equal to market rates.
Term: Factor comparison method
Job comparison method that ranks each job by each selected compensable factor and then identifies dollar values to develop a pay rate.
Term: Fair Labor Standards Act (FLSA)
Act that regulates employee status, overtime pay, child labor, minimum wage, record keeping, and other administrative concerns.
Term: Family and Medical Leave Act (FMLA)
Act that provides employees with up to 12 weeks of unpaid leave to care for family members or because of a serious health condition of the employee.
Term: Fee-for-service health-care plan
Full-choice health-care plan that allows covered employees to go to any qualified physician or hospital and submit claims to the insurance company; also known as indemnity health-care plan.
Term: Financial Accounting Standards Board (FASB)
Private body that decides how financial executives should report their firms' financial information to their shareholders.
Term: Flat-rate pay
Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority; also known as single-rate pay.
Term: Flexible spending account (FSA)
Type of Section 125 plan that allows employees to use pretax dollars to pay for out-of-pocket health and dependent-care expenses.
Term: Frequency distribution
Listing of grouped data, from lowest to highest.
Term: Frequency table
Shows the number of people or organizations associated with data organized in a frequency distribution.
Term: Full cafeteria plan
Type of Section 125 plan that allows employees to choose from a menu of benefits and allocate pretax dollars to pay for those benefits.
Term: Fully insured health-care plan
Health-care plan in which the employer pays a third-party insurance carrier premiums that cover medical charges, administrative costs, sales commissions, taxes, and profits.
Term: Gainsharing plans
Group incentives where a portion of the gains an organization realizes from group efforts is shared with the group.
Term: Gatekeeper
Individual, usually a primary-care physician, who is given control of patient access to specialists and services in a managed care organization.
Term: General pay increase
Pay increase given to all employees (or a class of employees such as office or production workers) based on local competitive market requirements; awarded regardless of employee performance.
Term: Geographic differential pay
Pay based on where an employee works.
Term: Golden handcuffs
System of overlapping short- and long-term incentives to make it less likely that key employees will leave a company.
Term: Golden parachutes
Clauses written into executive contracts that provide special payments to key executives who might lose their position or be otherwise disadvantaged if another company took control of the organization through a merger or acquisition; also known as parachutes.
Term: Graded vesting
System by which qualified retirement plan participants become incrementally vested over a period of years of service.
Term: Green-circle rates
Situation where an employee's pay is below the minimum of the range.
Term: Gross earnings
Total earnings before taxes; include regular wages plus additional earnings such as tips, bonuses, and overtime pay.
Term: Group-term life insurance
Form of insurance carried by employers for their employees that provides a lump-sum payment to the employees' beneficiaries.
Term: Hazard pay
Pay earned by employees who work in an environment that is considered more risky from a safety or health point of view.
Term: Health Insurance Portability and Accountability Act (HIPAA)
Act that made changes to improve health-care coverage portability and accessibility and provide medical record privacy and security.
Term: Health insurance purchasing cooperative (HIPC)
Purchases health-care plans for large groups of employers to provide small businesses the economic advantages large companies have.
Term: Health maintenance organizations (HMOs)
Form of health care that provides services for a fixed period on a prepaid basis.
Term: Health reimbursement account (HRA)
Employer-funded plan that reimburses employees only for eligible and substantiated health-care expenses.
Term: Health savings account (HSA)
Tax-sheltered savings account similar to an IRA but created primarily to pay for medical expenses.
Term: Highly compensated employee (HCE)
Determined by an array of issues such as business ownership and/or salary.
Term: Hourly wage
Form of base pay that is dependent on the number of hours worked.
Term: In loco parentis
"In place of a parent"; term used in expansion of FMLA coverage to employees who stand in place of a parent with day-to-day responsibilities to care for and financially support a child or who have a day-to-day responsibility to care for or financially support a person who stood "in loco parentis" for them.
Term: Incentive pay
Form of direct compensation where employers pay for performance beyond normal expectations to motivate employees to perform at higher levels.
Term: Indemnity health-care plan
Full-choice health-care plan that allows covered employees to go to any qualified physician or hospital and submit claims to the insurance company; also known as fee-for-service health-care plan.
Term: Independent contractors
Workers who are not covered by Fair Labor Standards Act regulations as determined by the IRS.
Term: Indirect compensation
Form of compensation commonly referred to as benefits.
Term: Individual retirement accounts (IRAs)
Tax-deferred accounts to which wage earners can contribute an amount up to a yearly maximum.
Term: Internal equity
Occurs when people feel that performance or job differences result in corresponding differences in pay rates.
Term: International social security agreements
Bilateral social security agreements that coordinate the U.S. Social Security program with the comparable programs of other countries; also known as totalization agreements.
Term: Involuntary deductions
Payroll deductions such as tax levies and court-ordered child support that an employee must pay.
Term: Job classification
Evaluation method that groups jobs into a predetermined number of grades or classifications, each having a class description to use for job comparisons.
Term: Job evaluation
Systematic determination of the relative worth of jobs within an organization.
Term: Job ranking
Evaluation method that establishes a hierarchy of jobs from lowest to highest based on overall importance to the organization.
Term: Lifetime maximum benefit
Maximum dollar amount of covered medical expenses that a health-care plan will pay on behalf of any covered person during that person's lifetime.
Term: Line-of-sight
Concept that states that employees must be able to influence the attainment of a goal and see a direct result of their efforts in order for incentive pay plans to be effective.
Term: Long-term care insurance
Insurance coverage that provides a daily monetary benefit to people who are chronically ill and who require living assistance either at home or in a residential facility.
Term: Long-term disability (LTD) coverage
Replaces a portion of an employee's lost income after short-term disability coverage ends.
Term: Lump-sum increase (LSI)
One-time payment made to an employee; also called performance bonus.
Term: Managed care
General term for a medical plan that seeks to ensure that the treatments a person receives are medically necessary and provided in a cost-effective manner.
Term: Market-based evaluation
Method similar to job evaluation systems that evaluates jobs based upon their market value.
Term: Maturity curves
Correlate pay with time spent in a professional field such as teaching or research.
Term: Medicare
Social Security Administration program that provides medical care for people after age 65.
Term: Medicare carve-out
Health plan where benefits are reduced for employees eligible for Medicare; Medicare becomes the primary provider.
Term: Medicare supplement
Health plan that covers specific expenses not covered by Medicare.
Term: Mental Health Parity Act (MHPA)
Act that addresses parity between mental health benefits and medical benefits.
Term: Merit pay
Situation where an individual's performance is the basis for either the amount or timing of pay increases; also called performance-based pay.
Term: Minimum wage
Minimum hourly amount, determined by Congress, that nonexempt employees can be paid.
Term: Money purchase plans
Plans in which employers make mandatory payments (a fixed percentage of an eligible employee's compensation) to a retirement plan.
Term: Multinational enterprises (MNEs)
Organizations with operations in multiple countries
Term: Nonduplication of benefits
In health plans, requires a secondary carrier to reimburse only up to the level of reimbursement the primary carrier would have paid.
Term: Nonexempt employees
Employees covered under FLSA regulations, including overtime pay requirements.
Term: Nonqualified deferred compensation plan
Income deferral benefit offered to a select group of management or highly compensated employees in the organization.
Term: Older Worker's Benefit Protection Act (OWBPA)
Act that amended Age Discrimination in Employment Act to include all employee benefits; also provided terminated employees with time to consider group termination or retirement programs and consult an attorney.
Term: Omnibus Budget Reconciliation Act (OBRA)
Act that reduced compensation limits in qualified retirement programs.
Term: On-call pay
Pay that employees receive when they are on call but not actually working.
Term: Out-of-pocket maximum
Stated amount out of pocket the insured can pay for medical costs in a 12-month period before copayments end.
Term: Overtime pay
Required for nonexempt workers under FLSA at 1.5 times the regular rate of pay for hours over 40 in a workweek.
Term: Paid-time-off (PTO) bank
Large bank of time comprising all of an employee's paid time off (i.e., vacation, sick leave, and holidays) that the employee can use as he or she sees fit.
Term: Paired-comparison method
Job ranking method in which evaluator compares each job with every other job being evaluated.
Term: Parachutes
Clauses written into executive contracts that provide special payments to key executives who might lose their position or be otherwise disadvantaged if another company took control of the organization through a merger or acquisition; also known as golden parachutes.
Term: Pay compression
Occurs when there is only a small difference in pay between employees regardless of their skills, experience, or seniority; also known as salary compression.
Term: Pay grades
Used to group jobs that have approximately the same relative internal worth and are paid at the same rate or within the same pay range.
Term: Pay ranges
Set the upper and lower bounds of possible compensation for individuals whose jobs fall in a pay grade.
Term: Pay surveys
Collect information on prevailing market rates and include topics such as incentive plans, overtime pay, base pay, and vacation and holiday practices.
Term: Pension Benefit Guaranty Corporation (PBGC)
Set up by ERISA to insure payment of benefits in the event that a private-sector defined benefit pension plan terminates with insufficient funds to pay the benefits.
Term: Pension Protection Act (PPA)
Act that changes the laws that affect defined benefit plans, defined contribution plans, individual retirement accounts, and other issues related to retirement planning.
Term: Performance bonus
One-time payment made to an employee; also called a lump-sum increase (LSI).
Term: Performance-based pay
Situation where an individual's performance is the basis for either the amount or timing of pay increases; also called merit pay.
Term: Performance-sharing plans
Organization-wide incentive plans in which funds are made available for incentive awards based on predetermined criteria and standards.
Term: Perquisites
Special privileges for executives that are usually noncash items.
Term: Person-based pay
Pay systems in which employee characteristics, rather than the job, determine pay.
Term: Physician hospital organizations (PHOs)
Consist of hospital and physician practices that merge into vertically integrated structures.
Term: Point-factor method
Most commonly used method of job evaluation; it involves using specific factors to evaluate job worth.
Term: Point-of-service (POS) organizations
Combination of a PPO and an HMO; provide direct access to specialists.
Term: Portal-to-Portal Act
Act that defines what is included as hours worked and is therefore compensable and a factor in calculating overtime.
Term: Preexisting conditions
Medical conditions that existed before a health-care policy is taken out.
Term: Preferred provider organizations (PPOs)
Formed by an insurance company, an employer, or a group of employers who negotiate discounted fees with networks of health-care providers; in return, the employers guarantee a certain volume of patients.
Term: Premium pay
Extra pay for working holidays or vacation days.
Term: Premium sharing
Situation in which employee pays a portion of the required monthly premium for health-care coverage.
Term: Premium-only plan (POP)
Type of Section 125 plan that allows employees to pay for certain qualified benefits with pretax dollars.
Term: Private-letter rulings
Rulings issued by the IRS to specific taxpayers or organizations that request an interpretation of the law.
Term: Productivity-based pay
Pay based on the quantity of work and outputs that can be accurately measured.
Term: Profit-sharing plans
Plans that distribute a portion of an organization's profits to its employees.
Term: Prudent person rule
States that an ERISA plan fiduciary has legal and financial obligations not to take more risks when investing employee benefit program funds than a reasonably knowledgeable, prudent investor would under similar circumstances.
Term: Qualified deferred compensation plan
Retirement benefit offered to all employees in the organization; provides tax advantages and is protected under the Employee Retirement Income Security Act.
Term: Qualified domestic relations orders (QDROs)
Create or recognize the right of an alternative payee to receive all or a portion of the benefits under a retirement plan.
Term: Qualifying event
Under the Consolidated Omnibus Budget Reconciliation Act, an event, such as termination for reasons other than gross misconduct, that allows employees to continue their group health-care coverage for a specified period of time.
Term: Rabbi trust
Grantor trust designed to segregate nonqualified deferred compensation benefits from an employer's general accounts.
Term: Reasonable and customary
Reimbursement standard used by insurance companies to determine how much providers should be paid for their services.
Term: Red-circle rates
Describe situations where employees' pay is above the range maximum.
Term: Reporting pay
Pay provided to employees who report for work as scheduled but then find that no work is available.
Term: Retirement Equity Act (REA)
Act that provided certain legal protections for spousal beneficiaries of qualified retirement plans.
Term: Revenue Act
Act that added Sections 125 and 401(k) to the Tax Code.
Term: Revenue rulings
Rulings published by the IRS as general guidelines to all taxpayers or organizations.
Term: Roth 401(k)/403(b) plans
Plans that allow after-tax contributions to existing 401(k) or 403(b) plans.
Term: Roth IRA
Account providing tax-free income growth; contributions are made with after-tax dollars.
Term: Salary
Uniform amount of money paid to a worker regardless of how many hours are worked.
Term: Salary compression
Occurs when there is only a small difference in pay between employees regardless of their skills, experience, or seniority; also known as pay compression.
Term: Sarbanes-Oxley Act (SOX)
Act that requires administrators of defined contribution plans to provide notice of covered blackout periods; provides whistleblower protection for employees.
Term: Savings Incentive Match Plan for Employees (SIMPLE)
Retirement plan by which employees can contribute each year to a 401(k) plan or IRA.
Term: Section 125 benefit plans
Written benefit plans maintained by the employer that allow employees to use pretax dollars to pay for certain qualified benefits.
Term: Securities and Exchange Act
Act that regulated "insider trading."
Term: Self-funded health-care plan
Health-care plan in which the employer assumes the role of the insurance company and assumes some or all of the risk.
Term: Seniority
System that shows preference to employees with the longest service.
Term: Serious health condition
As defined in DOL regulations, a condition that involves employee incapacity for more than three calendar days plus "two visits to a health-care provider."
Term: Service Contract Act
Act that extended prevailing wage rate and benefit requirements to employers providing services under federal government contracts.
Term: Severance package
Set of benefits provided to employees who are terminated for some reason other than cause.
Term: Shift pay
Refers to supplemental pay paid to employees who work less-desirable hours, such as second or third shifts.
Term: Short-term disability (STD) coverage
Replaces a portion of lost income for a specified period of time for employees who are ill or have nonwork-related injuries.
Term: Sick leave
Specified period of time during which employees who are ill or have nonwork-related injuries receive their full salary.
Term: Simplified Employee Pension (SEP)
Tax-deferred account to which the self-employed and employees of very small businesses can contribute.
Term: Single-rate pay
Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority; also known as flat-rate pay.
Term: Small Business Job Protection Act (SBJPA)
Act that made changes to rules regarding the ability of tax-exempt organizations to institute retirement plans modeled after 401(k) and IRA accounts and to the definition of highly compensated employees.
Term: Social Security
Social Security Administration program that provides retirement, disability, death, and survivor's benefits.
Term: Stop-loss coverage
Insurance policy that protects employers with partially self-funded insurance plans by limiting individual and group-wide claims.
Term: Sunset clause
Identified time period and ending point that should be identified in incentive pay plans.
Term: Supplemental unemployment benefits (SUB)
Benefits paid to unemployed workers beyond required government unemployment benefits.
Term: Supplemental wages
Pay beyond base salary or wages such as bonuses and commissions.
Term: Tax Reform Act
Act that made significant changes in employee benefit programs, especially retirement plans.
Term: Taxable wages
All remuneration for services (including noncash benefits) that is taxable when paid.
Term: Taxpayer Relief Act (TRA)
Act that created tax-advantaged savings mechanisms.
Term: Time-based differential pay
Pay rates that are affected by when an employee works.
Term: Time-based step-rate pay
System in which pay is based on longevity in the job and pay increases occur on a predetermined schedule.
Term: Top hat plan
Nonqualified deferred compensation plan that provides retirement benefits to select group of management or highly compensated employees.
Term: Total rewards
All forms of financial and nonfinancial returns that employees receive from their employers.
Term: Totalization agreements
Bilateral social security agreements that coordinate the U.S. Social Security program with the comparable programs of other countries; also known as international social security agreements.
Term: Travel pay
Typically paid to nonexempt workers for the time they spend traveling to or between work assignments.
Term: Unemployment Compensation Amendments (UCA)
Imposed a mandatory 20% federal income tax withholding requirement on most qualified retirement plan proceeds that a recipient does not roll over into another qualified retirement plan or individual retirement account.
Term: Unemployment insurance
Mandatory benefit program set up as part of the Social Security Act designed to provide employees with some income when they lose their jobs through no fault of their own.
Term: Uniformed Services Employment and Reemployment Rights Act
Act that protects employment, reemployment, and retention rights for persons who voluntarily or involuntarily serve or have served in the uniformed services.
Term: Unweighted average
Raw average of data that gives equal weight to all factors with no regard to individual factors such as the number of incumbents or companies.
Term: Utilization review
Audit of health-care use and charges to identify which benefits are used and to make certain that care is necessary and costs are in line.
Term: Vesting
Process by which a retirement benefit becomes nonforfeitable.
Term: Voluntary deductions
Payroll deductions selected by the employee such as charitable contributions.
Term: Walsh-Healey Act
Act that extended concept of prevailing wage to employers who manufacture or supply goods under government contracts and required time and a half.
Term: Weighted average
Average of data that takes other factors such as the number of incumbents into account.
Term: Work Opportunity Tax Credit (WOTC)
Tax credit to encourage employers to hire people from targeted groups.
Term: Work-related disability
Physical condition (accident or illness) that is caused, aggravated, precipitated, or accelerated by work activity or the work environment.
Term: Workers' compensation
State insurance program designed to protect workers in cases of work-related injuries or diseases.
Term: Workweek
Any fixed, recurring period of 168 hours (7 days times 24 hours = 168 hours).