Massachusetts Health & Accident Insurance Practice Exam

Which of the following is a benefit of employee benefit plans?

1. Mandatory provision of retirement plans

2. Helps hold down wage increase demands

3. Increased employee turnover

4. Only tax liabilities for employers

The correct answer is: Helps hold down wage increase demands

Choosing the benefit of employee benefit plans relates directly to the impact such plans have on workforce dynamics and employer-employee relationships. Employee benefit plans often provide a structured and comprehensive set of offerings that can enhance employee satisfaction and stability within the workplace. When an organization offers robust benefits, including health insurance, retirement plans, and other perks, it can mitigate the need for employees to demand higher wages. Employees may feel more secure and valued when they have access to essential benefits, leading to a more productive workforce and reducing pressure on employers to significantly increase salaries. This can be particularly beneficial in competitive labor markets where businesses must retain talent without necessarily escalating wage costs significantly. Reducing wage increase demands helps employers manage their overall payroll expenses while still attracting and retaining quality employees. In contrast, the other options do not accurately capture the advantages associated with employee benefit plans. Mandatory provision of retirement plans is not a universal aspect of employee benefits, as not all employers are required to offer such plans. Increased employee turnover contradicts the intended purpose of benefit plans, which is to enhance employee loyalty and tenure. Lastly, only considering tax liabilities for employers overlooks the broader context of how benefits can function as a strategic investment in human capital.