Ch.7: SOCIAL SECURITY, MEDICARE and other GOVERNMENT PROGRAMS, Chapter 4 Employer Sponsored Retirement Plans, Chapter 5 Employer-Sponsored Health-Care Plans, Chapter 1: Introducing Employee Benefits, Chapter 3: Regulating Employee Benefits, Employee...
Underwriting
The term and premium decision making process using morbidity, and mortality tables as a reference.
benefits strategies
The use of benefits practices that support total compensation strategies, human resource strategies, and competitive strategies.
total compensation strategies
The use of compensation and benefits practices that support both human resource strategies and competitive strategies.
Medicare medical savings account (MMSA) plans.
These are similar to health savings accounts (HSAs). A beneficiary has a high-deductible policy, with the size of the deductible varying from plan to plan. Medicare then puts an annual amount into a medical savings account that can be used for unreimbursed medical costs.
STATE HEALTH INSURANCE ASSISTANCE PLAN (SHIP):
These are state programs that get money from the federal government to give free health insurance counseling and assistance to people with Medicare.
* credit:
To be eligible for benefits under Social Security, an individual must have this for a minimum amount of work under the program. For 2015, a worker receives one of this (also referred to as a quarter of coverage) for each $1,220 in annual earnings on which Social Security taxes were paid. However, no more than four of these may be earned in any one calendar year. Consequently, a worker who pays Social Security taxes on as little as $4,800 ($1,220 x 4) at any time during the year will receive the maximum four credits
6 basic objectives of workers compensation
To provide income & benefits for work-accident victims, to provide a single remedy reducing court costs, to relieve charities of financial drains, to eliminate lawyer fees & time consuming trials, to encourage employer interest in safety, to promote a transparent study of accidents
Social Security pays benefits
To workers with LTD from any cause, rehab services & for survivor benefits to families of deceased workers
Definition of EE Benefits
Total Compensation = Current cash salary +Value of employee benefits
Type of Benefits:Medical Benefits
Types of EE benefits to meet loss exposures -medical expenses for an EE (Health insurance) Traditional indemnity plans Only 4% of market have indemnity plans Managed care plans (HMO, PPO, POS type HMO) Consumer Driven health plans -CDHP's with either an HRA or HSA specialty coverages for "narrowly defined perils" The type of health insurance that cover medical expenses due to many reasons, x rays, surgery etc -Dental insurance is another example And vision, it wont cover eye surgery but it will cover basic eye care Prescriptions drugs
qualified plans
Welfare and pension plans that meet various requirements set forth by the employee retirement income security act of 1974. these plans entitle employees and employers to favorable tax treatment by deducting the contributions from taxable income. Qualified plans do not disproportionalely favor highly compensated employees.
graduated first dollar of profits formula
a company may choose to share 2 percent of the first 10 million of profits and 3 percent of the profits in excess of that level
equal pay act of 1963
a federal EEO law requiring that companies pay women equally when performing work equal to that of men as defined by compensable factors.
Age discrimination in employment act of 1967 (ADEA)
a federal equal employment oppportunity law that protects older workers age 40 and over from illegal discrimination in the workplace.
Civil rights acts of 1991
a federal law that shifted the burden of proof of disparate impact from employees to employers, overturning several supreme court rulings. previously employees were responsible for indicating which employment practices created disparate impact in employment discrimination suits, and for demonstrating how the employment practice created disparate impact.
Business necessity
a legally acceptable defense against charges of alleged discriminatory employment practices in title 7 of the civil rights act (1964 and 1991) claims. Under this defense, an employer proves that the suspect practice prevented irreparable financial damage to the company.
formulary:
a list of approved drugs that the plan will cover. A formulary does not need to cover every prescription drug. By law, it must include at least two drugs in every therapeutic class.
three percent rule
a participants accrued benefit cannot be less than 3 percent of the normal retirement benefit, assuming the participant began participation at the earliest possible age under the plan, and that he or she remained employed without interruption until age 65 or until the plans designated normal retirement age
EARNINGS TEST:
a process for determining whether income benefits of Social Security beneficiaries under full retirement age should be reduced because earned income exceeds a specified amount. For the earnings test, earned income includes wages and net self-employment income. It does not include interest and dividends
Officer
administration executive in regular service, holds title or authority
Equal payments
all employees reflect a belief that all employees should share equally in the company's gains to promote cooperation among employees
Social Security Integration
allows employers to explicitiy take into account social security retirement benefits when determined company sponsored pension benefits
Health Insurance Portability and Accountability Act of 1996 (HIPPA)
an amendment to ERISA, this act imposes requirements on group health and health insurance issuers relating to portability, increased access by limiting preexisting limitation rules, renewability, and health-care privacy
qualified joint and survivor annuity QJSA
an annuity for the life of the participant with a survivor annuity for the participants spouse,
Key employee
any employee who at any time during the year is either: 1. an officer 2. individual with 5% owner or a 1% owner
qualified benefits
any employer sponsored benefit from which an employee may exclude the cost rom federal income tax calculation. For example, an employees monetary contribution than employer sponsored medical insurance plan is excluded from the calculation of annual federal taxes
fractional rule
applies to participants who terminate their employment prior to reaching normal retirement age. This rule stipulates that benefit accrual upon termination be proportional to the normal retirement benefits
plan termination rules
apply only to defined benefit plans. three types of plan terminations exist; standard termination ,distress termination, and involuntary termination
Fair market value
average price on a given day
Platinum parachute
awarded to a CEO terminated for poor performance -lucrative awards that include severance pay, continuation of benefits, and stock options
* MOTHER'S OR FATHER'S BENEFIT:
benefit for a spouse of any age if the spouse is caring for at least one child of the retired worker as long as the child is (1) under age 16 or (2) disabled and entitled to a child's benefit as described below.
Phantom stock plan
board promises to pay a bonus in the form of: -equivalent of either the value of company shares or increase in value over a period of time
age weighted profit sharing plans
combine features of defined and defined contribution plans. The benefit amounts fluctuate according to the performance of investments of plan assets.
target benefit plans
combine features of defined benefit and defined contribution plans. Target Benefit plans calculate benefits in a fashion similar to defined benefit plans based on formulas that use income and years of service
Hybrid Plans
combines features of traditional defined benefit and defined contribution plans. These four common hybrid plans; cash balance plans and pension equity plans, target benefit plans, money purchase plans and age weighted profit sharing plans
Securities Exchange Act of 1934
companies that trade on public exchanges are required to file information with the SEC; applies to executive compensation practices
Restricted stock plans
company grants stock options at market value, discounted value, or provide stock -execs must pass through a vesting period before receiving ownership -receive stocks at end of restriction period
paid time-off policies
compensate employees when they are not performing their primary work duties
Unfunded plans
contains the promise to pay in the future with no designated funds to honor the promise
prescription drug plans
cover a portion of the costs of legal drugs
mental health and substance abuse plans
cover the costs for treatment mental health ailments such as clinical depression and alcohol or chemical substance abuse
health care
covers the cost of a variety of services that promote sound physical and mental health, including physical examinations, diagnostic testing (x-rays), surgery, hospitalization
cash balance plans
defined benefit plans that define benefits for each employee by reference to the amount of the employees hypothetical account balance
money purchase plans
defined contribution plans because the benefit is based on the account balance and that is the employer contributions plus the returns on investment of employer contributions- at the time of retirement
flat benefit formulas
designate either a flat dollar amount per employee or a dollar amount based on an employees compensation
pension protection act
designed to strengthen employee rights as retirement plan participantsand is an amendment to ERISA
IRS definition of key employees
determine necessity of top-heavy provisions in qualified retirement plans
income annuities
distribute income to retirees based on retirement savings paid to insurance companies in exchange for guaranteed monthly checks for life
Profit Sharing Plans
distribute money to employees. Start by establishing a profit sharing pool- that is money earmarked for distribution to employees
alternative managed-care plans
emphasize cost control by limiting an employee's choice of doctors and hospitals. They also provide protection against healthcare expenses in the form of prepayment to health-care providers
Roth 401(K)
employee contributions are tasted at the individuals income tax rate, and upon retirement, employee withdrawals are not taxed.
defined contribution plan
employers and employees make annual contributions to separate accounts established for each participating employee, based on a formula contained in the plan document
flexible benefits
enable employees to choose from among a set of benefits and different levels of these benefits
patient protection and affordable care act of 2010
enacted on March 23, 2010, is a comprehensive law that has been in the implementation phase since its passage. The implementation of all provisions will be complete by 2018.
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 2010
enhanced transparency of executive compensation
Two types of Plans for Medicare Part D:
enrolled; stand-alone plan; main differences between these two types of plans are in the process of enrollment and premium payment.
minimum funding standards
ensure that employers contribute the minimum amount of money necessary to provide employees and beneficiaries with promised benefits
Company stock
equity in the company
Company stock shares
equity segments of equal value
Incentive stock options
execs may purchase stock in future at predetermined price -capital gains/loss -tax benefits are that capital gains is taxed at lower capital gains rate
Nonstatutory stock options
execs pay income tax when stock is granted -does NOT qualify for favorable tax rates -tax liability is lower over the LT --stock price usually increases --capital gains likely to be much greater than current tax
savings incentive match plans for employees SIMPLEs
for the purpose of small companies. Small companies that employ 100 or fewer employees whose presiding years compensation totaled at least 5,000 and that do not maintain another employer sponsored retirement plan are eligible
* Three types of insured status:
fully insured, currently insured, and disability insured
profitability threshold formulas
fund profit sharing pools only if profits exceed a predetermined minimum level but fall below some established maximum level.
ERISA requirements ONLY apply to
funded plans
Rabbi trusts
funded, not the greatest security; irrevocable grantor trust; ER maintains ownership of trust, but must still hand over the trust in event of insolvency
Employee-owned annuities
funded; greatest degree of security as the ER pays for annuity in executive's name; NOT subject to ERISA - exec sets up annuity, not the company
Secular trusts
funded; NOT subject to creditors in the event of company bankruptcy; must meet ERISA provisions
Defined Benefit Plan
guarantee retirement benefits specified in the plan document. Expressed in terms of a monthly sum equal to a percentage of a participants preretirement pay multiplied by the number of years he.she has worked for the employer
Form 5500
guides employers in reporting detailed financial and actuarial data about pension and welfare plans to the U.S. Department of the Treasury
HMO:
health maintenance organization; an alternative to original Medicare
Goal of SEC
help prospective investors understand the financial information relating to the company
Excess benefit plans
increase retirement benefits by the amount lost due to limits set by IRS; extensions to qualified defined benefit or contribution plans; may offer (un)funded basis
Supplemental retirement benefits (SERPs)
increase retirement benefits substantially more than restoration plans
Types of loss exposure managed by EBP (Employee Benefit Plan)
individuals have human capital, and human capital is a valuable asset, we are subject to some random events which can damage our human capital. Therefore we need ways to protect any losses. Loss of Income for Employees (EE's): different perils can cause loss of income such as, death, illness, and sickness Retirement Unemployment Medical Expenses for (EE's) Loss of productivity to the employer Ex: Managing Human Capital, for example offering day care services, fitness centers on site, medical centers on site. To avoid employees from missing out on work
Workers' compensation
insurance programs, run by the individual states are designed to cover employee expenses incurred in work-related accidents or injuries.
Disability definition:
is very rigid and requires a mental or physical impairment that prevents the worker from engaging in any substantial gainful employment. The disability must also have lasted (or be expected to last) at least 12 months or be expected to result in death. A more liberal definition of disability applies to blind workers who are aged 55 or older. They are considered disabled if they are unable to perform work that requires skills or abilities comparable to those required by the work they regularly performed before reaching age 55 or becoming blind, if later.
CURRENTLY INSURED:
it is only necessary that a worker have earned at least six credits during the 13 calendar quarters ending with the quarter in which his or her death occurs.
coverage requirements
limit the freedom of employers to exclude employees
Americans with Disabilities Act Amendments Act of 2008 (ADAAA)
made important changes to the definition of the term disability. These changes make it easier for an individual seeking protection under the ADA to establish that he or she has a disability with the meaning of the ADA
employee stock option plans ESOPS
make distributions in company stock rather than cash. Essentially stock bonus plans that use borrowed funds to purchase stock
dental care
may cover routine preventative procedures and necessary procedures to help restore the health of teeth and gums
Workers' compensation laws typically provide four types of benefits:
medical care, disability income, death benefits, and rehabilitation benefits.
Patient Protection and Affordable Care Act of 2010
most employers are required to provide health-care coverage to full-time workers; otherwise, they face stiff monetary penalties
Section 457 Plans
named after the section of the IRC that created them and non qualified retirement plans for government employees.
Executive plans violate ________ ____
nondiscrimination rules
IRS definition of highly compensated employees
nondiscrimination rules in employer benefits
Stock grants
offer stock to employees
OASDHI:
old-age, survivors, disability, and health insurance program of the federal government
MEDICARE PART C:
originally called Medicare + Choice, in 1999 it went into effect
Golden parachutes
pay and benefits to executives after a termination due to a change in ownership or corporate takeover
Taft-Hartley Plans (multiemployer plans)
pension or welfare plans for workers in industries in which it is common to move from employer to employer when work becomes available, such as skilled trades (for example, carpentry)
qualified domestic relations orders
permit a retirement plan to divide a participants benefits in the event of divorce
top heavy provisions
pertaining to minimum benefits accrual and vesting rights. Plans are top heavy if the accrued benefits or account benefits of key employees exceed 60% of the accrued benefits or account balances for all employees
Executives must meet conditions before they convert ____ shares into ____ shares
phantom; real
Funded plans
place money or stock in trust fund or insurance contracts in executive's name; no risk of forfeiture
Executive plans
prohibit favoring highly compensated employees in contributions or benefits, availability of benefits, rights or plan features
Genetic information nondiscrimination act of 2008 (GINA)
protects job applicants, current and former employees, labor union members, and apprentices and trainees from discrimination based on their genetic information by making unlawful the misuse of genetic information to discriminate in health insurance and employment.
Top hat plans purpose is to
provide deferred income for select group of mgmt or highly compensated EEs -exempt from ERISA as long as unfunded and only for select EEs
Stock appreciation rights
provide income at the end of designated period -execs never have to exercise their stock rights to receive income --no tax paid when stock appreciation rights are granted
retirement plans
provide income to individuals and beneficiaries throughout retirement
fee-for-service plan
provide protection against health-care expenses in the form of cash benefits paid to the insured or directly to the health-care provider after receiving health-care services. These plans pay benefits on a reimbursement basis.
MEDICARE PART A:
provides benefits for expenses incurred in hospitals, skilled-nursing facilities, and hospices. Some home health care benefits are also covered. In order for benefits to be paid, the facility or agency providing benefits must participate in the Medicare program. Virtually all hospitals are participants, as are most other facilities or agencies that meet the requirements of Medicare.
Medicare Part B:
provides benefits for most medical expenses not covered under Part A.
unit benefit formulas
recognize length of service. Typically employers decide to contribute a specified dollar amount for each year worked by an employer
golden handcuffs
refer to defined benefit plans as they provide generous (golden) retirement income to workers who remain with the same employer(handcuffs) throughout their work lives
unqualified benefits
refer to pension plans that do not meet at least one of the minimum standard provisions; typically highly paid employees benefit from participation in non qualified plans
vesting
refers to an employees nonforfeitable rights to pension benefits
Social security:
refers to any of several programs resulting from the Social Security Act of 1935 and its frequent amendments over the years The act established four programs aimed at providing economic security for the American society: (1) old-age insurance, (2) unemployment insurance, (3) federal grants for assistance to certain needy groups (the aged, the blind, and children), and (4) federal grants for maternal and child welfare, public health work, and vocational rehabilitation.
distribution
refers to the payment of vested benefits to participants or beneficiaries. 3 events may initiate a mandatory distribution of benefits ; 1. participants termination of service with the employer 2. the 10th anniversary of the year the participant commenced participation in the plan and 3. the participants attainment of the earlier age 65 or the normal retirement age specified in the plan
accumulated benefit obligation
refers to the present value of benefits based on a designated date.
employment retirement income security act of 1974 (ERISA)
regulates the establishment and implementation of discretionary benefits practices. these include medical, life, and disability programs as well as pension programs.
equal-employment opportunity
related to federal laws prohibiting discrimination against various protected classes of individuals regarding all employment practices, including employee benefits.
election period
relating to the consolidated omnibus budget reconciliation act, refers to the period that begins on or before the occurrence or the qualifying event, and it extends for at least 60 days.
annuities
represent a series of payments for the life of the participant and beneficiary
tax deferred annuity
represents a type of retirement plan for employees of public educational institutions(ex.state colleges and universities) and private tax exempt organizations (charitable organizations and state supported hospitals)
equal benefit or equal cost principle
requires employers under the older workers benefit protection act to offer older workers benefits or equal or greater value than the benefits offered to younger workers.
DISABILITY INSURED:
requires that a worker (1) be fully insured and (2) have a minimum amount of work under Social Security within a recent time period. In connection with the latter requirement, workers aged 31 or older must have earned at least 20 credits during the 40 calendar quarters ending with the quarter in which disability occurs; workers aged 24 through 30 must have earned credits equal to at least one-half the number of calendar quarters from the time they turned 21 and the quarter in which disability begins; and workers under age 24 must have earned six credits during the 12 calendar quarters ending with the quarter in which disability begins.
Restoration
restores retirement income limited by qualified plans
401(K) Plans
retirement plans named after the section the the Internal Revenue Code that created them ; also known as cash or deferred arrangements, permit employees to defer part of their compensation to the trust of a qualified defined contribution plan. Only private sector or tax exempt employers are eligible to sponsor 401K plans.
stock bonus plan
reward employees with company stock. Benefits are usually paid in shares of the company stock. possess the right to vote as shareholders.
Stock options
right to buy shares of stock at designated price
wearaway
said to occur when the formula in a defined benefits plan is changed to a cash balance plan formula
Disposition
shareholder stock sale
pension equity plans
similar to cash balance plans, except for how benefits are calculated.
lump sum distributions
single payments of benefits
UNEMPLOYMENT INSURANCE:
social security Act 1935, The act stipulated that a payroll tax was to be levied on covered employers for the purpose of financing these
Separation agreements
specify compensation and benefits an executive will receive after termination
accrual rules
specify the rate at which participants accumulate(or earn) benefits
Constructive receipt
subject to taxation if the assets are available to the EE without substantial restrictions, limitations, or risk of forfeiture
voluntary benefits
supplemental benefits that companies offer on an employee-financed basis
SERPs
supplemental executive retirement plans; increase total retirement benefits to substantially greater sum than do restoration plans
What do phantom stocks provide executives?
tax advantages; they pay taxes on capital gains after they convert shares of company stock during retirement
PARTIAL ADVANCE FUNDING:
taxes are more than sufficient to pay current benefits and thus provide some accumulation of assets for the payment of future benefits
SOCIAL SECURITY STATEMENT:
the Social Security Administration sends this every five years to all persons aged 25 or older who have covered employment under Social Security and are not currently receiving monthly benefits and are not registered with a "my Social Security" account.
133 1/3 percent rule
the annual accrual rate cannot exceed 133 1/3 percent of the rate of accrual for any prior year
non leveraged ESOP
the company contributes stock or cash to buy stock. The stock is then allocated to the accounts of participants. Stock bonus plans.
Primary insurance amount (PIA):
the monthly amount a worker receives if he or she retires at full retirement age or becomes disabled, and it is the amount on which benefits for family members are based. The average PIA for a worker who retires in 2015 at the full retirement age is about $1,294. Table on p. 7.12 & 7.13
Leveraged ESOPs
the plan administrator borrows money from a financial institution to purchase company stock. Overtime the company makes principal and interest payments to the ESOP to repay the loan
Why do companies use platinum parachute clauses?
to avoid long legal battles or negative publicity
Common unfunded SERP
top hat plans
TEMPORARY DISABILITY LAWS:
under which employees can collect disability income benefits, regardless of whether their disability begins while they are employed or unemployed.
ERISA requirements do NOT apply to
unfunded plans
Corporate-owned life insurance
unfunded; bit less risky than general-asset; companies take out whole life insurance policies, naming themselves as beneficiary
General-Asset approach
unfunded; cash or company stock; most risky
Split-dollar life insurance
unfunded; provide separate life and death benefits; ER and executive share premiums
fixed first dollar of profits formula
uses a specific percentage of either pretax or after tax annual profits, contingent upon the successful attainment of a company goal
vision care
usually cover eye examinations, prescription lenses, frames, and fitting of glasses
FULL RETIREMENT AGE
(aka normal retirement age): or the age at which nonreduced retirement benefits are paid, is 65 for workers born in 1937 or before; now after 1960 its' 67 years or later
MEDICARE: TYPES OF BENEFITS
* PART A- Hospital Insurance * Part B - Medical Expense Insurance * Part C - Medicare Advantage * Part D - Prescription Drug Coverage
SOCIAL INSURANCE PROGRAM CATEGORIES:
* Social Security * Medicare * Unemployment insurance * Temporary disability insurance * Workers' compensation insurance
* Fully insured categories of persons eligible for benefits:
* a widow or widower aged 60 or older. * a parent aged 62 or over who was a dependent of the deceased worker at the time of death
Survivor's benefits: currently insured
* to a surviving spouse who was living with the deceased worker at the time of death * • to a surviving spouse (other than a divorced spouse) who was not living with the deceased worker at the time of death if the surviving spouse is eligible for or entitled to benefits based on the deceased wage earner's record for the month of death * • to children who are eligible for or entitled to benefits based on the deceased wage earner's record for the month of death
* WORKERS' COMPENSATION LAWS
* —a form of both social insurance and liability insurance—were enacted to require employers to provide benefits to employees for losses resulting from work-related accidents or diseases. These laws are based on the principle of liability without fault.
Two categories of insured if deceased worker was either fully or currently insured at death:
* • dependent, unmarried children under the same conditions as previously described for retirement benefits * • a spouse (including a divorced spouse) caring for a child or children under the same conditions as described for retirement benefits
Point of Service Plan (POS)
- combination of HMO and PPO - based on HMO structure but allows people to go outside of the HMO to obtain services (only with certain conditions and circumstances)
State compulsory disability laws
--> see workers compensation law: Established state-run insurance programs that are designed to cover medical, rehabilitation, and disability income expenses resulting from employees' work-related accidents.
Similarity between excess benefit plans and SERPs
-bestow vesting rights
Difference between excess benefit plans and SERPs
-lengthier vesting schedules for SERPs
Why do boards include golden parachute clauses?
-limits executive risk due to unforeseen events -promote recruitment and retention -silence executive who may resist a takeover -count as a company business expense if paid
SERP objectives
-tool in executive-level succession planning -reward substantially higher retirement benefits -compensate for short-term employment or older new hires
Why do employers offer employee benefits? Why do firms offer EE benefits as a part of compensation?
-why is average compensation comprised of: [$ 1 in salary + $.40 in benefits] vs. [$1.40 in salary + no benefits]??? -Take advantage of group insurance!! -income tax advantages for employees -to attract and retain capable employees -to enhance productivity of employees -such as bonuses/profit sharing programs -flexible leave program -day care programs These are all ways to keep employees happy!
Characteristics distinguishing NQDCs
1. ERISA qualification criteria 2. funding status 3. mandatory retirement age
3 provisions of Dodd-Frank Act
1. Say-on-pay - shareholder vote on exec compensation 2. Independence requirement for compensation committee members and advisors 3. Disclosure of golden parachute agreements
Employers may NOT set a mandatory retirement age (prohibited by ADEA) except for:
1. an EE 65+ who, for two prev years, is employed in a bona fide executive or high policy-making position 2. EE is entitled to retirement benefits of at least $44k
2 broad classes of nonqualified plans
1. excess benefit plans --> restoration 2. SERPs --> supplemental retirement benefits
5 ways separation agreements are determined
1. negotiated during hiring 2. approved by the board 3. documented in a contract 4. golden parachutes 5. platinum parachutes
Companies use NQDC plans for 2 objectives
1. restoration 2. supplemental retirement benefits
5 alternative stock option plans
1. stock options 2. restricted stock plans and units 3. stock appreciation rights 4. phantom stock plans 5. employee stock purchase plans (ESOPs)
Disadvantages of EBP
1.) Coverages may be temporarily in some cases -if EE leaves the group. ex: quit, fired, retired, dies a dependent no longer needs definition of a dependent, gets divorced, if a spouse dies, aging out. Then what happens, does the coverage terminate?? we can call this portability issues (dissuades you) two ways to address the portability issue: A.) conversion option -option to convert a group insurance contract into an individual contract. -big potential for adverse selection. As a result that insurance companies can increase the premium charged for an individual contract and coverage is limited/ restricted in some way B.) COBRA: this is just health insurance - continuation coverage, if you were part of a group, and meet the eligibility requirements. Even after you leave a group/company your entitled to keep coverage for up to 18-36 months. 2.) One side does not fit all employee. EE have heterogenous needs for benefits -cafeteria plans: any type of plan that allows employees to choose 1.) Type of benefits 2.) level of benefits
Features of employee benefits programs
1.) Eligibility vs Participation Every benefit has eligibility conditions (to avoid moral hazard) Ex: full time EE's get access to health insurance after one month of employment. You must wait at least 6-12 months to be eligible to obtain health insurance. -Participants in any benefit program means that the employee has satisfied all eligibility conditions. -Ex. Contributions are made to a retirement plan by the Er and or EE, so in order to become a participant you must contribute before being a participant
**** What benefits are Employees required to provide? ***
1.) Workers compensation (state law) 2.)unemployment insurance state/federal law 3.) social security (OASDI) Federal law employers are obligated to participate by law 4.) Health Insurance for larger firms (500 + employees) for some firms Applicable large employer (ALE) -Large corporations have to offer health Insurance If you an ALE you have to offer a certain amount of health insurance to employees under current law
Advantages of EBP (Employee provided benefits)
1.) no individual underwriting in group insurance**** (Definitely beneficial for high risk individuals). 2.) generally speaking group insurance is less expensive than individual insurance. -Key difference to why group insurance is cheaper is due to administrative!!!!! -Many people covered under one contract -employers actually ends up doing a lot of the administrative activities that an insurance company would have to do otherwise. 3.) Employer lowers the search cost for the employee -design an entire EBP for them for free/ no time commitment.
Benefit Financing Issues: who is paying for these benefits???
1.) non contributory basics Meaning that once all employees meet that standards, they can be eligible for a non contributory basis meaning they do not have to pay out of pocket. -Employers pays the entire cost -an EE does not have to contribute any funds -once all eligibility conditions are satisfied, eEE's automatically become participants. Contributory Financing: -employee and employees share the cost Employers usually pays more of the premium -once all eligibility conditions are satisfied, willingness to make a contributory cost by the EE's one behalf of the employer becomes an additional condition. (Now theres 3 types of eligibility conditions: work full time, wait period, willingness to pay or make additional contributions) -optional EE pay all or voluntary benefits: EE pays the entire cost -Ex. Of common voluntary benefits -dental, vision, supplemental life insurance on spouses, auto + homeowners insurance, pet insurance.
Older workers benefit protection act (OWBPA)
1990 amendment to the age discrimination in employee act of 1967
An injury claim
A claim for a disability resulting form an accident during course of work duties
Second Surgical Opinion
A cost-management strategy that encourages or requires patients to obtain the opinion of another doctor after a physician has recommended that a non-emergency or elective surgery be performed.
title VII of the civil rights act of 1964
A federal equal employment opportunity law that makes it an unlawful employment practice or an employer to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individuals race, color, religion, sec, or national origin.
Patient Protection and Affordable Care Act (PPACA)
A law tat mandates health insurance coverage and sets minimum standards for insurance.
Dual capacity
A legal doctrine applying to the relationship between employers & employees, a company may fill a role for an employee that is different from its role as employer
Individual Coverage
A person chooses to purchase health-care coverage outside the employment setting or herself and qualifed dependents.
* FULLY INSURED:
A person is fully insured under Social Security if either of two tests is met. The first test requires 40 credits of coverage. Once a person acquires this credit, he or she is fully insured for life even if covered employment under Social Security ceases. Under the second test, a person who has a minimum of six credits is fully insured if he or she has at least as many credits as there are years elapsing after 1950 (or after the year in which he or she reaches age 21, if later) and before the year in which he or she dies, becomes disabled, or reaches age 62, whichever occurs first. Therefore, a worker who reached age 21 in 2000 and died in 2013 would need 13 credits for his or her family to be eligible for survivors benefits.
top-down approach
A proactive process for benefits planning. Companies regularly review the entire benefits program or particular parts of the program.
backing-in approach
A reactive process for making possible changes to benefits. Companies evaluate the benefits program only when unexpected problems arise.
Preferred Provider Organization (PPO)
A select group of health-care providers agrees to furnish health-care services to a given population at a lower level of reimbursement than is the case for fee-for-service plans.
employee benefits security administration
Agency of the US department of labor that possesses responsibility for enforcing title I of ERISA. This agency conducts investigations through its 10 regional offices and 5 district offices located in major cities through the country.
Temporary partial disabilities
Allows individuals to perform limited amounts of work until making a full recover
Medicare Part D
Along with numerous other changes to Medicare and the establishment of health savings accounts, the Medicare Prescription Drug, Improvement, and Modernization Act added a prescription drug program to Medicare—[this]. The act also gives employers a financial incentive to provide or continue to provide drug coverage to retirees as an alternative to enrollment in Part D.
Whole life insurance continued
Also a savings plan, combines insurance protection with savings because portion of the money paid to meet the premium is available in the future plus interest
Pregnancy discrimination act of 1978 (PDA)
Amendment to title 7 of the civil rights act. This act prohibits discrimination against pregnant women in all employment practices.
Deductable
Amount an individual pays for health-care services before benefits become active.
Flexible Spending Account (FSA)
An EE agrees to reduce his/ hers salary pre-tax by a certain amount -that money that is saved is then deposited into a medical FSA such as: 1.) Health/Medical Expenses: -Medical expenses that are not fully lowered by a health insurance plan (example: copayments, deductibles) 2.) Dependent Care: Child care, elder care Advantage of FSA: 1.) Tax advantages Example: EE has $2,700 in uncovered medical expenses Employee has the option to deposit $2,700 into an FSA -tax rate: 35% Potential savings: $945 What are the disadvantages??? Any unused funds at the end of the plan year remaining in a FSA are forfeited to the ER -Used to fund administrative costs of FSA -use it or lose it rule!!
Consolidated omnibus budget reconciliation act of 1985 (COBRA)
An amendment to ERISA that provides employees and beneficiaries the right to elect continuation coverage under group health plans if they would lose coverage due to a qualifying event.
Women's Health and Cancer Rights Act
An amendment to ERISA. Requires group health plans to provide medical and surgical benefits for mastectomies. Medical and surgical benefits must cover reconstruction of either breast for a symmetrical appearance.
Premium
An amount paid by the employer to the insurer to establish and maintain health-care plans.
vesting
An employee's nonforfeitable rights to pension benefits
4 possible expectations to employer immunity from legal action
An employers intentional acts, lawsuits alleging employer retaliation, lawsuits against non-complying employers & lawsuits relating to dual capacity relationships
Second-injury funds
An important funding element of programs whose claims are associated with pre-existing conditions
Employee Benefits
Any type of compensation other than direct current wages paid to EE's
Fully Insured Plans
Are based on a contractual relationship with one or more insurance companies to provide health-related services for employees and their qualified dependents.
Workers compensation insurance programs
Are run by individual states & are designed to cover expenses incurred in employee work-related accidents & injuries
Wage-loss approach
Bases benefits on the actual loss of earnings resulting from injuries
Impairment approach
Bases benefits on the physical or mental loss associated with an injury
Group Coverage
Basis for employer sponsored health care plans
Example of dual capacity
Becoming injured, while using an employers product to perform work
preferred-provider organizations ( PPOs).
Beneficiaries can elect out-of-network care if they are willing to pay the additional cost for such care, which can be substantial.
private fee-for-service (PFFS) plans.
Beneficiaries can go to any provider who agrees to accept the payment rates determined by the plan, but they may be required to pay a portion of these rates in the form of cost sharing. If a provider does not accept the PFFS plan rates, the beneficiary is responsible for the entire balance above what the plan pays
HMO Act of 1973
By providing financial incentives to companies, subject to becoming federally qualified, the HMO act of 1973 promoted the the use of health maintenance organizations.
Rate-making service organizations
Collect data on workplace accidents & produce rating manuals
point-of-service plans
Combine features of fee-forservice systems and health maintenance organizations. Employees pay noinal copayment for each visit to a designated network of physicians; alternatively, they may receive treatment from providers outside the network, but they pay more for this choice.
Universal Life insurance continued
Combines features of term & whole life, created to provide more flexibility allowing policy owner to shift money between insurance & savings components of the policy
Group term life insurance
Companies usually must cover at least 10 full-time employees & over contributory & non-contributory plans
Types of amounts of workers compensation benefits: Disability income
Compensates individuals with work-related accidents or illness which limits their abilities, benefit amounts depend on the nature of the disability
Death claim
Compensation for a death occurring in the course of employment or caused by injuries or occupational diseases
Employee benefits
Compensation other than hourly wage or salary. Examples include paid vacation, medical insurance coverage, and tuition reimbursement.
Network Model HMO
Contract with two or more independent practices of physicians. HMO's usually compensate physicians according to a capped fee schedule.
Insurance Policy
Contractual relationship specifying the amount the insurer pays, for medical claims.
Inpatient benefits
Cover expenses associated with overnight hospital stays.
Outpatient benefits
Cover expenses not associated with overnight stays in hospitals.
Health-care plans
Cover the costs of services that promote sound physical and mental health, including physical examinations, diagnostic testing, surgery, hospitalization, psychotherapy, dental treatments, and corrective prescription lenses for vision deficiencies.
Family Coverage
Covered employee and qualified dependents receive health care benefits.
* Medicare Part B—
Covered persons pay at least a $104.90 (2015) monthly premium. General revenues of the federal government cover the remainder (about 75 percent) of the program's cost.
Accidental Death & Dismemberment insurance (AD&D)
Covers death or dismemberment as a result of accidents, does not pay survivor benefits in the case of death, premiums are lower than life insurance
2 other types of amounts of workers compensations benefits
Death benefits & rehabilitation benefits
incentive pay
Defined as compensation, other than base wages or salaries, that fluctuates according to employees' attainment of some standard such as a pre-established formula, individual or group goals, or company earnings. Also known as variable pay.
Companies must complete a _____ ____ ______ which reveals information about the CEO and _____ _____ _____ (next four highest paid)
Definitive Proxy Statement; Named Executive Officers
Hospitalization benefits
Defray expenses associated with treatment in hospitals. Plans distinguish between inpatient and outpatient benefits.
strategic benefit plans
Detail different scenarios that may reasonably affect the company, and these plans emphasize long-term changes in how a company's benefit plans operate.
Managed care plans
Emphasize cost control by limiting an employee's choice of doctors and hospitals. These plans also provide protection against health care expenses in the form of prepayment to health care providers.
Workers Compensation Claims
Employees can make 3 kinds of claims (to state commission) for workers compensation benefits; an injury claim, an occupational disease claim & a death claim
* Medicare Part A—
Employees pay 1.45 percent of all earnings. Employers pay the same. Self-employed persons pay 2.9 percent of all self-employment income.
* Social Security—
Employees pay 6.2 percent of the first $118,500 (2015) of earnings. Employers pay the same. Self-employed persons pay 12.4 percent of first $118,500 (2015) of self-employment income.
Group term life insurance- Contributory plans
Employees pay the entire insurance premium or they share the cost with the employer
Employers rights under workers compensation
Employees possess the right to sue employers who retaliate for filing workers compensation
Seniority pay
Employees rewarded with permanent additions to base pay periodically according to employees' lenth of service performing their jobs.
Self-funded Plan
Employer defined health-plan. Employer determines what benefits to offer, pays medical claims for employees and their families, and assumes all of the risk. Employers pay claims directly from their own assets, either current cash flow, or funds set aside in advance for potential future claims.
employee-financed benefits
Employers do not contribute to the financing of discretionary benefits because employees bear the entire cost.
Coverage of Workers' Compensation
Employers must fund programs according to state guidelines, rejecting laws causes employers to lose common law defense of contributory negligence, workers compensation laws cover virtually all US employees
Financing workers compensation programs
Employers usually use private carriers, self insurance requires deposits of surety bonds to pay claims directly & the insurance commissioner of most states sets the maximum premium rates
strategic planning
Entails a series of judgments, under uncertainty, that companies direct toward achieving specific goals. Companies base strategy formulation on environmental scanning activities The main focus of environmental scanning is discerning threats and opportunities.
2 kinds of lawsuits allege intentional acts; Deliberate & knowing torts
Entails an employers deliberate & knowing intent to harm at least one employee
Social security act of 1935
Established four main types of legally required benefits: unemployment insurance, retirement income, benefits for dependents, and medical insurance (Medicare)
Morbidity Table
Express annual probabilities of the occurrence of health problems.
Loss of wage earning capacity approach
Factors in human capital & the type of impairment
Co-payment
Fixed fee paid by the patient at the time of an office visit.
qualified beneficiary
For the purpose of the consolidated omnibus budget reconciliation act, any individual who is a beneficiary under the group health plan such as the spouse of the covered employee or dependent child of the covered employee.
Person-focused pay
General rewards to employees for acquiring job-related competencies knowledge, or skills rather than for demonstrating successful job performances.
welfare plans
Generally refers to nonpension benefits for the purposes of ERISA:
Single-payer system
Government run healthcare system. Government regulates the health-care system and uses tax-payer dollars to fund health care, as in Canada and some other countries.
ERISA
Governs pension and welfare plans. Health benefits are considered welfare plans.
Group Insurance. (GI) vs (II)
Group insurance Insurers is insuring the entire group ( in our case an entire firm) as a whole or not. -Employer based groups, dependents of the employees, formers employees, all considered in a group Insurers establish one premium/rate per exposure in the group ex: single rate, family rate - in group insurance there is no individual evidence of insurability-no individual under writing -premiums are based on broad characteristics of the group Ex: age distribution, gender mix, occupation, industry they are in, and if the group of large enough we would look at past loss exposure. These are are factors to help generate a premium!!!!! Whats the potential problem with group insurance?????? This creates a potential problem of adverse selection, because no one in the pool knows who is a high risk individual***** Link to being insurable in GI is simply being a member of the group
defined benefit plan
Guarantee retirement benefits specified in the plan document. These benefit usually are expressed in terms of a monthly sum equal to a percentage of a participants preretirement pay multiplied by the number of years he or she has worked for the employer.
defined benefit plan
Guarantee retirement benefits specified in the plan document. These benefit usually are exressed in terms of a monthly sum equal to a percentage of a participant's preretirement pay multiplied by the number of years he or she has worked for the employer.
2 kinds of lawsuits allege intentional acts: Violations of an affirmative duty
Happen when an employer fails to reveal the exposure of one or more workers to harmful substances
Employee Provided Benefits (Employee Benefits)
Health Insurance Retirement plans Life insurance Disability insurance
Grandfathered plans
Health plans that existed prior to the PPACA enactment date.
welfare practices
Historical term for employee benefits: "anything for the comfort and improvement, intellectual or social, of the employees, over and above wages paid, which is not a necessity of the industry nor required by law."
3 approaches to pay for benefits for permanent partial disabilities of the nonscheduled type
Impairment approach, wage-loss approach & loss of wage earning capacity approach
Experience Rating
Indicate the incidence, type, and financial cost of claims for groups (i.e. everyone as a whole covered under a group plan). Experience ratings hold employers accountable for past claims, thus establishing the basis for charging different premiums.
Mortality Table
Indicate yearly probabilities of death based on such factors as age and sex.
fiduciaries
Individuals who manage employee benefits plans and pension plan funds.
Human Capital (Random Events)
Injuries/illness/disabilities Retirement Death Unemployment (all fall under economic losses)
Cadillac tax
Is applied to high-cost employer-sponsored health plans. Plans costing more than 10,500 (single) & 27,500 for family.
Why would employees want this benefit of ER's providing benefits?
Its convenient!!!! And its usually much cheaper than buying it out on your own.
compensable factors
Job attributes that compensation professionals use to determine the value of jobs, and whether jobs are equal for the purposes of the Equal pay act. These factors pertain to skill, effort, responsibility and working conditions.
Permanent partial disabilities
Limits the kind of work that individuals perform on an enduring basis; fall into two categories; scheduled injuries & nonscheduled injuries
Type of benefits:loss of income
Loss of income due to disability Occupational disabilities workers compensation disability benefits -non occupational disabilities -sick leave -short term disability Social security disability benefits (disability insurance) Another type of loss of income is due to unemployment -severance package Loss of income due to death Loss insurance -group term life-insurance OASDI (survivor benefits) Workers compensation death benefits Survivor benefits under retirement pan
Type of Benefits:loss of income
Loss of income due to retirement "Pension plan" (defined benefit plan) -401 (K) or 403(b) Social security retirement benefits (old age)
Employer noncompliance (failure to carry workers comp insurance) may lead to:
Lost immunity, monetary penalties, criminal penalties or liability for the full cost of workers claims
Federal unemployment tax act (FUTA)
Mandates employer contributions to fund state unemployment insurance programs. FUTA also specified two criteria used to determine whether eployers must participate in state unemployment insurance programs: the 1-in-20 test and the wage test.
Coverage of Workers' Compensation continued
Maritime workers compensation is mandated by the Longshore & Harborworkers' Compensation Act, federal workers are covered under the Federal Employees Compensation Act
Yearly limits
Maximum amount a plan will cover each year.
Lifetime limits
Maximum amount of coverage a person will receive as long as they are covered by the plan.
Workers compensation differs from Social Security insurance & medicare
Medical care for work-related injuries from immediately after the injury, temporary disability benefits after 3 to 7 days, rehabilitation & training benefits
Type of amounts of workers compensation benefits: Unlimited medical care
Medical care is paid regardless of amount, fee schedules list maximum procedure amounts
MEDICARE ADVANTAGE:
Medicare + Choice changed to this after the provisions in 2005 of the Medicare Prescription Drug, Improvement, and Modernization Act
Multiple-payer system
More than one party is responsible for covering the cost of health care. (i.e. government, employers, employees, or individuals not currently employed).
Life insurance
Most benefits equal some multiple of salary, most plans include accidental death & dismemberment claims
Nonqualified Deferred Compensation Plans
NQDC an agreement between employer and employee to pay compensation in the future
Non-Grandfathered plans
New health plans or preexisting plans that have been substantially modified after March 23, 2010
Social Security Blackout Period:
No benefits are payable for the surviving spouse of a deceased covered worker from the time the youngest child reaches age 16 (or is no longer disabled in certain cases) until the surviving spouse is 60.
National Association of Insurance Commissioners (NAIC)
Non-profit organization, addresses issues concerning the supervision of insurance within each state (www.naic.org)
Why are EE benefits to ER's?
On average, firms spend about 40% on payroll on EE benefits Second largest expense item behind payroll. In particular, healthcare is very expensive -compliance risk associated with EE benefits. -Firms aggressively "manage" EE benefits cost
coverage gap (donut hole):
Once the beneficiary and the Part D drug plan have spent $2,960 for covered drugs, the beneficiary will be in the coverage gap (donut hole) . In 2015, the beneficiary pays 45% of the cost of covered brand-name prescription medications and 65% of the cost of generic drugs. The donut hole continues until total out-of-pocket cost reaches $4,700. This annual out-of-pocket spending amount includes the yearly deductible, copayment, and coinsurance amounts.
Single coverage
Only the covered employee receives health care benefits.
Exlusive Provider Organization (EPO)
Operate similarly to PPO's, but systems differ. EPO's are more restrictive the PPO plans. EPO's offer reimbursement for services provided within the established network.
Staff Model HMO
Own a health maintenance organization that hires its own health care providers and support staff.
* FICA TAXES:
Part A of Medicare and all the benefits of the Social Security program are financed through a system of payroll and self-employment taxes paid by all persons covered under the programs. In addition, employers of covered persons are also taxed. They are often referred to as this because they are imposed under the Federal Insurance Contributions Act.
Individual Practice Association (IPA)
Partnership of independent physicians, health professionals, and group practices. IPA's charge lower fees to designated populations of employees than fees charged to others.
ORIGINAL MEDICARE -
Parts A (hospital insurance) and B (medical expense insurance) are often referred to as the this.
Whole life insurance
Pays beneficiaries a specified amount upon death of employee, does not expire until payment to beneficiaries & is more expensive than term life, not common
Pre-paid plan
Pays health care providers a fixed amount according to the number of individuals covered by the plan.
multiemployer plans
Pension plans to which more than one employer is required to contribute based on a collective bargaining agreement.
Coinsurance
Percentage of covered expenses paid by the insured.
Cost-of-living adjustments (COLAs)
Periodic base pay increases that are based on changes in prices as indexed by the consumer price index (CPI). COLAs enable workers to maintain their purchasing power and standards of living by adjusting base pay for inflation.
Universal life continued
Permits the cash value of investment to grow at a variable rate tied to the market & leads to changes in premium, benefits & payment schedules
qualifying events
Pertain to an employee's right to elect continuation coverage under the consolidated omnibus budget reconciliation act.
Nonqualified plans
Plans that do not meet various requirement set forth by the Employee retirement income seciruty act of 1974, disallowing favorable tax treatment for employee and employer contributions.
Paid time off
Policies that compensate employees when they are not performing their primary work duties. Companies offer most paid time off as a matter of custom, particularly paid holidays, vacations and sick leave.
Employer defenses that injuries were work related:
Pre-existing conditions, employee negligence, employee misconduct or safety violations by the employee
Open-access HMO
Pre-paid plans and require the use of network health care providers with one exception; emergency care outside of the network.
Temporary total disabilities
Preclude individuals from performing meaningful work for a limited period, eventually making a full recover
Permanent total disabilities
Prevent individuals from ever performing any work
Group Model HMO
Primarily use contracts with established practices of physicians that cover multiple specialties. They do not directly employ physicians.
Old-age, survivor, and disability insurance (OASDI)
Programs that provide retirement income, income to the survivors of deceased workers, and income to disabled workers and their family members under the Social Security Act of 1935.
Medicare
Programs that serve nearly all U.S. citizens aged at least 65 or disabled Social Security beneficiaries by providing insurance coverage for hospitalization, convalescent care, and major doctor bills.
ADA
Prohibits discrimination against people with disabilities.
Americans with disabilities act (ADA)
Prohibits discriminatory employment practices against qualified individuals with disability.
Accommodation and enhancement benefits
Promote opportunities for employees and their families, such as educational scholarships and transportation services.
termination insurance
Protects against the loss of vested pension benefits when plans fail. Employers with eligible defined benefit pension plans must purchase this insurance.
Employer-Sponsored life insurance
Protects family members by paying a specified amount upon an employees death, can be individual or group plan
Life insurance
Protects the families of employees by paying a specified amount to an employee's beneficiaries upon the employee's death. Most policies pay some multiple of the employee' salary.
Protection programs
Provide family benefits, promote health, and guard against income loss caused by catastrophic factors like unemployment, disability or serious illnesses.
pension plans
Provide income to individuals and beneficiaries throughout their retirement. Also called retirement plans.
prepaid group practice
Provide medical care for a set amount.
Fee-for-service (FFS) plan
Provide protection against health care expenses in the form of cash benefit paid to the employee or directly to the health care provider after receiving health-care services.
Family and medical leave act (FMLA)
Provides protection in cases of family or medical emergencies. FMLA permits eligible employees to take up to a total of 12 workweeks of unpaid leave during any 12-month period for family or medical emergencies.
Term life insurance
Provides protection only during a specified number of years, or a maximum age when the policy expires & no benefits are paid- less expensive, most common
Universal Life Insurance
Provides protection similar to term life insurance with a flexible savings or cash accumulation plan
continuation coverage
Refers to extended health insurance protection mandated by COBRA up to 36 months following a qualifying event.
Indemnity Plan
Reimburses either health-care provider or patient.
Total compensation
Represents both the monetary and non monetary rewards.
defined contribution plan
Require employers and employees to make annual contributions to separate retirement fund accounts established for each participating employee, based on a formula contained in the plan document.
Employer Mandate
Requirement that employers with at least 50 employees are required to offer affordable health insurance to it's full time employees.
Individual Mandate
Requirement that individuals get health insurance or pay a tax penalty to the federal government.
Occupational Disease Claim
Results from a disability caused by an ailment associated with a particular industrial trade or process
Social Security: Three types of benefits
Retirement (old-age) benefits, survivors benefits, and disability benefits
Merit pay
Reward employees with permanent increases to base pay according to differences in job performance.
special needs plans ( SNPs).
SNPs are designed primarily to meet the needs of beneficiaries who are eligible for both Medicare and Medicaid (or who have certain chronic conditions) and who live in institutions such as nursing homes, or continue to live at home but need the level of care provided by such institutions. These plans help manage and coordinate the many services and providers needed by such beneficiaries. These plans are available only in limited geographic regions.
Necessity of Coverage:
Seniors fall into three categories as to the necessity for coverage: those with creditable coverage, those with less-than-creditable coverage, and those with no drug coverage.
Essential benefits
Services provided in ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services including behavior health treatment, prescription drugs, rehabilitation services and devices, laboratory services, preventative and wellness services and chronic disease mgmt, and pediatric services including oral and vision care.
UCR (usual, customary, reasonable)
Setting fees by comparing the usual fee the provider charges for the service, the customary fee charged by most providers in the community, and the fee that is reasonable considering the circumstances.
Universal health care systems
Single payer systems as required that all citizens have access to quality health care regardless of their ability to pay.
human resource strategies
Specifies the use of multiple human resource practices that are consistent with a company's competitive strategy.
Rating Manuals
Specify insurance rates based on classifications of businesses
Collective bargaining agreements
Specify terms of employment, including pay, benefits, and working conditions. these agreements arise out of negotiations between management and labor unions that represent some or all employees in the company.
federal insurance contributions act (FICA)
Taxes employees and employers to finance the Social Security Old-Age, survivor, and disability insurance program.
4 types of disabilities
Temporary total disabilities, permanent total disabilities, temporary partial disabilities & permanent partial disabilities
Types of life insurance
Term life, whole life & universal life
contributory financing
The company and its employees share the costs of discretionary benefits.
noncontributory financing
The company pays the total costs of each discretionary benefit.
fiduciary responsibilities
The duties of managers of employee-benefits programs and pension plan funds.
Group term life insurance- non contributory plans
The employer pays the entire premium within designated limits & most common as employers enjoy higher tax benefits
reconsideration:
The first level of appeal is called this and is a complete review of the claim by someone who did not take part in the first decision.
Out-of-Pocket maximum
The maximum amount the insured will have to pay each year for health care expenses.
Base pay
The monetary compensation employees earn on a regular basis for performing their jobs. Hourly pay and salary are the main forms.
consumer-driven health care
The objective of helping companies maintain control over costs while also enabling employees to make greater choices about health care. This approach may enable employers to lower the cost of insurance premiums by selecting plans with higher employee deductibles. The most popular consumer-driven approaches are flexible spending accounts and health reimbursement accounts.
Primary Care Physician (PCP)
The physician responsible for directing all of a patient's medical care and determining whether the patient should be referred for specialty care.
competitive strategy
The planned use of company resources - technology, capital, and human resources - to promote and sustain competitive advantage.
