Certified Human Resource Professional (CHRP) Practice Exam

Which of the following will increase the cost of benefits to employers?

1. Encouraging employees to live healthy lifestyles

2. Keeping employees informed about the cost of benefits

3. Moving to a defined-benefit pension plan

4. Increasing the deductibles on prescriptions

The correct answer is: Moving to a defined-benefit pension plan

Moving to a defined-benefit pension plan will indeed increase the cost of benefits to employers because these plans involve a promise to provide a specific benefit upon retirement. This requires employers to maintain sufficient funding to cover future obligations, which can be significantly more expensive than defined-contribution plans where the employer's obligation is limited to making contributions. Defined-benefit plans often require complex actuarial evaluations and ongoing funding strategies, which can add to the administrative burden and financial responsibility for the employer. In contrast, encouraging employees to live healthy lifestyles, keeping employees informed about the cost of benefits, and increasing deductibles on prescriptions are strategies that typically aim to manage or reduce costs. Healthy lifestyle programs can lead to lower healthcare costs over time. Keeping employees informed helps them make better use of their benefits, potentially optimizing costs. Increasing deductibles, while it can shift some of the financial burden to employees, generally also helps employers control their healthcare spending.