CH12 - Employee Benefits

why are unused benefits bad?

because they waste money

______ may become the focus of negotiations with employees when large wage and salary increases are not feasible.

benefits

A diverse workforce creates demand for ____ benefit packages.

diverse packages -domestic partner benefits have become one way for employers to accommodates diverse employee needs -family friendly & flexible-workplace benefits

voluntary benefits -flexible spending accounts

employees can set aside a designated dollar amount before federal, state, and social security taxes for specified services such as health-care premiums, medical expenses, dependent child or elder care, group legal services *IRS rules to forfeit balance not spent at the end of the year have loosened a bit

Employee involvement in selecting benefits leads to ______ satisfaction.

greater

What are some voluntary benefits?

health insurance, retirement plans, time off, disability, life insurance

What do studies say about vacation leave and time spent away from work?

it reduces stress and improves productivity

What are some popular categories of benefits for international employees?

leaves, healthcare, pension plans, transportation, housing, travel, education

401 Ks

permit workers to set aside specified amount of income on tax-deferred basis, and employers may match employee contribution

legally required benefit - family and medical leave act. what does it require employers to do? (with 50 or MORE employees)

requires employers with over 50 or more employees to allow up to 12 weeks of unpaid leave for family or medical reasons -specifies record-keeping and communication requirements

employee benefits are important tools for recruiting and ______ of qualified workers

retention

voluntary benefits - disability insurance programs. what do they provide a salary continuation for?

short-term disabilities (sick leave) long-term disabilities (coverage usually effective after 6 months) *some companies provide financial incentives to employees to not use their sick leave

what are some legally required benefits?

social security, unemployment compensation, worker's compensation, family and medical leave act (FMLA)

what are some common popular voluntary benefits?

travel/dental/vision insurance, tuition reimbursement, employee assistance programs, wellness programs

what is vacation time in regards to vacation leave related to?

usually related to length of time on the job

voluntary benefits - health maintenance organizations (HMOs) what are they? does the employee have to pay at all?

-alternative benefit required by health maintenance act of 1973 -broad comprehensive care provided by physicians who are "in network" -employee incurs small co-pay

voluntary benefits - what is group term life time insurance? what is it based on?

-benefit is usually based on employee's annual rate of pay -supplemental insurance increases coverage to two to five-times the employee's salary

benefits for international workforce should be customized to consider strategy and talent management. what are some factors unique to each country?

-customs, culture, competition for employees, government benefits offered or required

paid time off - when can employees use this? is it required?

-employees can earn paid time off to use for any reason, including illness, vacation, personal time or holidays -none is required in the U.S. -many employers offer it in order to attract the best talent

Who is social security financed by? What does it do?

-financed by equal employee and employer contributions, based on a percentage of earnings -provides income for retirees, disabled workers and surviving dependents -provides some health insurance coverage through medicare

legally required benefit- unemployment compensation. who is it funded by? what does it do? how long is coverage for/

-funded by employers who pay combined federal and state tax imposed on taxable wage base -tax varies based on organization's unemployment experience: the more layoffs, the higher the rate -provides employees with some income continuation during periods of involuntary unemployment -typical coverage is for 26 weeks. may be extended past this when unemployment is high

voluntary benefit - health insurance why is it a critical benefit? what is its purpose?

-increases in healthcare costs have made health insurance a critical benefit -healthcare costs are growing faster than wages -purpose is to protect employee from catastrophic loss should a serious illness occur

what are the requirements for receiving unemployment benefits?

-involuntary loss of job (but not having been fired) -must have worked a minimum number of weeks -have applied to a state agency for unemployment -have registered for available work -are willing to accept any suitable job offered through the state agency

do long term disability insurance programs replace a portion of the employee's salary?

-long-term disability plans often replace a portion of the employee's salary (often 60%)

How can a company effectively communicate their benefits to employees?

-meetings, emails, social media, employee handbooks, newsletters, lunch and learn sessions, online benefits information

legally required benefits - worker's compensation who pays for it? what are rates based on? what do the benefits pay for?

-paid for by the organization -rates based on likelihood of accidents, past history, and the type of industry -benefits pay expenses and/or compensate for losses resulting from work-related accidents or illness, regardless of fault

required benefit - what is the health insurance portability and accountability act of 1996?

-requires employers and health providers to protect the confidentiality of employee health information

what are some common elements of diverse benefit packages?

-social and recreational events -employee assistance programs -credit unions -housing -tuition reimbusement -paid jury duty time -uniforms -military pay -paid transportation and parking -free food -childcare services or referrals -pet health insurance -on-site fitness centers -free massages -haircut -on-site health care

legally required benefits - health insurance continuation - What is COBRA? what does it do? who pays for it?

-the consolidated omnibus budget reconciliation act (COBRA) -provides for continuation of benefits for up to three years after an employee leaves a job -cost paid for by employee

Which types of health plans are most commonly offered?

1. PPO - preferred provider - 55% 2. HMO/health maintenance organizations - 17% 3. HDHP/CDHP - 17% 4. POS - point of service plans - 10% 5. conventional - 1%

benefit and service offerings add about ____% to an organization's payroll cost

30%

Benefits are approximately ___% of total compensation.

30% 70% - salary 8 - legally required 8 -insurance 7- paid leave 4 - retirement and savings 3- supplemental pay

over ___% of employees are not aware of the content of their benefit packages

60%

___% of US workers don't take all earned vacation time each year

70%

What is workers' compensation?

Benefits that pay expenses and/or compensate for losses resulting from work-related accidents or illness, regardless of fault.

retirement benefits - defined contribution plans

Employee and employer may contribute to account based on rules established for contributions. Amount of benefits depends on success of account investments. Include: Money Purchase Pension Plans Profit-Sharing Plans Individual Retirement Accounts (IRAs) 401(k)s

What is paid time off or PTO?

Employee leave that may be used for any reason.

voluntary benefits - what are preferred provider organizations (PPO)s?

Employer or insurer agrees to use provider's network of doctors, hospitals and medical service facilities in exchange for reduced cost. Primary Care Physician is selected.

High deductible health plan - (HDHP)

Employer provides a plan with low monthly premiums and high deductibles. Less expensive for employer, but more expensive for employee.

legally required benefit - the patient protection and affordable care act. discuss the individual responsibility, employer responsibility, and insurance industry responsibility

Individual responsibility - Individuals must purchase minimum coverage or pay fine. Health Insurance Exchanges - Created by states for individuals and small businesses to buy insurance. employer- Penalties for employers with over 50 employees who do not provide coverage Employers with more than 200 employees must provide coverage Penalties for coverage that is inadequate or too expensive Insurance Industry responsibility - Ends restrictions on pre-existing coverage and lifetime limits Must provide coverage for employee's children up to age 26

What are defined contribution plans?

Money purchase pension plans, profit-sharing plans, IRAs, 401Ks.

Retirement benefits - what are defined benefit plans?

Plan specifies the dollar benefit workers receive at retirement. Usually based on some formula of years of service and average final compensation. More common in government and unionized industries.

HR often leads efforts to reduce the cost of healthcare. Provide some common methods.

Raising deductibles or percentage of premiums that employees pay. Providing wellness programs. Financial incentives for participation in wellness programs. Prescription drug mail-order with smaller co-pays or mandatory generic prescriptions. Adding a smoker surcharge. Access to online doctors. Availability of Employee Assistance Programs. Onsite clinics.

What is the family medical leave act?

Requires employers with 50 or more employees to allow up to 12 weeks of unpaid leave for family or medical reasons.

Employee Retirement Income Security Act (ERISA) of 1974

Requires summary plan description (SPD). Vesting rights - right to pension benefits even if one leaves the company. Enables pension rights to be portable. Sets up pension benefit guaranty corporation. (PBGC) Claims corporate assets to cover inadequately funded pension plans.

consumer driven health plans (CDHPs)

Similar to HDHP, but more popular with employees because it includes a Health Savings Account (HSA). Usually includes: HDHP Health savings account with tax advantages Decision support and counseling for health expense decisions.

What are point of service plans (POS)?

Similar to HMOs and PPOs. Requires employees to select a primary physician, but allows greater flexibility for using out-of-network services.

Is social security a legally required benefit?

Yes.