As employers develop benefit plans, they have considerable freedom to develop them in accordance with the needs of their employees and the strategies of their business. While employers have great flexibility, United States law does restrict that flexibility to some degree.

This exercise is important because there are certain legal restrictions related to benefits by which employers must abide.

The goal of this activity is to determine which benefits proposals are legal and illegal under U.S. law.

For each statement below determine if they are legal or not legal under U.S. law.

1. Offering an early retirement package where employees have six weeks to make a decision

(Click to select)LegalIllegal

2. Eliminating retiree health care benefits

(Click to select)LegalIllegal

3. Funding non-pension retirement benefits with current revenue as obligations arise

(Click to select)LegalIllegal

4. Having a health insurance plan that saves costs by not permitting family members with certain disabilities to enroll

(Click to select)IllegalLegal

5. Charging extra for health insurance to certain employees based on their health risks

(Click to select)LegalIllegal

6. Setting up a trust fund to pass off responsibility for retiree healthcare to another party

(Click to select)IllegalLegal

7. A benefit plan that may allow employees to contribute before-tax money toward retirement

(Click to select)LegalIllegal

8. Claiming tax benefits for a pension plan that only covers the executive team

(Click to select)LegalIllegal

9. Stopping contributions to a retirement plan at a given age to encourage retirement

(Click to select)LegalIllegal

10. In an attempt to match costs because women live longer on average, requiring women to pay more for pension benefits.

(Click to select)IllegalLegal

11. Requiring retirees to take an early retirement package

(Click to select)IllegalLegal

12. Allowing employees to make tax-free investments as part of a retirement plan

Illegal Legal