AD Banker Comprehensive Practice Exam

What is the primary purpose of TEFRA?

1. Require labor unions to establish a trust for employee pension accounts

2. Regulate and standardize Medicare supplement plans

3. Prevent group plans from discriminating in favor of key employees

4. Regulate social insurance programs

The correct answer is: Prevent group plans from discriminating in favor of key employees

The primary purpose of TEFRA, which stands for the Tax Equity and Fiscal Responsibility Act, is to prevent group health plans from discriminating in favor of key employees. This act was introduced to ensure that health benefits offered by employers do not disproportionately benefit higher-paid employees over others, including lower-paid employees and groups that may be underrepresented. By enforcing this regulation, TEFRA aimed to promote fairness in employer-sponsored health plans, ensuring that all employees, regardless of their compensation levels, have access to the same quality of health insurance benefits. This helps in maintaining equity among all employees and aligns with broader objectives of workplace equality and non-discrimination. In contrast, the other options detail aspects of labor relations, Medicare, and social insurance, which do not capture the essence of what TEFRA specifically addresses regarding health benefit equality.