HR quiz

Four major administration issues arise in setting up a benefit package:

1. who should be protected or benefited? 2. how much choice should employees have from an array of benefits? 3. how should benefits be financed? 4. are the chosen benefits legally defensible?

Three popular forms of defined contribution plans:

-401 (k) plan - a savings plan which employees are allowed to deferred pretax income -easy to transfer and fast vesting -negative: whereas employers bear the investment risk under a defined benefit plan, investment risk is borne by employees under defined contribution plans & contribution rates are very low

Discrimination legislation (Age Discrimination in Employment Act, Civil Rights Act, Pregnancy Disability Act, various state laws):

Benefits must be administered in a manner that does not discriminate against protected groups (on basis of race, color, religion, sex, national origin, age, pregnancy).

The ________________ was enacted to provide current and former employees and their spouses and dependents with a temporary extension of group health insurance when coverage is lost due to qualifying events. All employers with 20 or more employees must comply with COBRA

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Fair Labor Standards Act 1938:

Created time-and-a-half overtime pay. Benefits linked to pay (e.g. social security) increase correspondingly with those overtime hours

_____ does not require that employers offer a pension plan. But if a company decides to have one, it is rigidly controlled by ERISA provisions. These provisions were designed to achieve two goals: 1. to protect the interest of approximately 100 million active participants 2. to stimulate the growth of such plans

Employee Retirement Income Security Act (ERISA)

The 1993 ___________ applies to all employers having 50 or more employees and entitles all eligible employees to receive unpaid leave up to 12 weeks per year for specified family or medical resources.

Family and Medical Leave Act (FMLA)

The ____ is designed to 1. lessen an employer's ability to deny coverage for a preexisting condition and 2. prohibit discrimination on the basis of health-related status.

Health Insurance Portability and Accountability Act (HIPPA)

An ____________ pulls together a group of providers (e.g., hospitals and doctors) willing to provide services at an agreed upon rate in exchange for the employer limiting employees to these providers for health services. Employee make prepayments in exchange for guaranteed health care services on demand.

Health Maintenance Organization (HMO)

Employee Retirement Income Security Act 1974:

If an employer decides to provide a pension (it is not mandated), specific rules must be followed. Plan must vest (employee has right to both personal and company contributions into pension() after five years' employment. pension Benefit Guaranty Corporation, as set up by this law, provides worker some financial coverage when a company and its pension plan go bankrupt.

An ________ is a tax-favored retirement savings plan that individuals can establish themselves. Even people not in the workforce can do so.

Individual Retirement Account (IRA)

the __________________ provides some protection of benefits. The PBGC guarantees a basic benefit, not necessarily complete pension benefit replacement, for employees who were eligible for pensions at the time of termination. The PBGC is funded by employer premiums paid annually and these premiums are larger for underfunded plans. (does not guarantee retire health care benefits)

Pension Benefit Guaranty Corporation (PBGC)

Tax reforms - 1982, 1986:

Permit individual retirement accounts (IRAs) for eligible employes. Established 401 (k) programs, a matched-contribution saving plan (employer matches part or all of employee contribution) that frequently serves as part of a retirement package

A _________ is a hybrid plan combining HMO and PPO benefits. The POS plan permits an individual to choose which plan to seek treatment from at the time that services are needed. POS plans, therefore, provide the economic benefits of the HMO with the freedom of PPO. The HMO component of the pOS plan requires office lists to an assigned priory care physician, whit he alternative of receiving treatment through PPO component. POS allows out of net work but there is a higher deductible rate.

Point-of-service (POS)

_______ is where employers can select certain providers who agree to provide price discounts and submit to strict utilization controls. In turn, the employer influxes employees to use these providers by charing higher fees if employees make selections outside the provider network.

Preferred Provider Organization (PPO)

Maintenance Act 1973:

Required employers to offer alternative health coverage (e.g., health maintenance organizations) options to employees

The Patient Protection and Affordable Care Act (2010):

Requires individuals to maintain minimal essential health insurance coverage or pay a penally unless exempted for religious beliefs or financial hardship. Employers must enroll new employees or face a levy.

___________ Act has been designed and amended to provide a foundation of basic security for American workers and their families

Social Security

flexible benefit plan:

Where employees directly identify the ebefnits of greatest value to them, and by constraining the dollars employees have to spend, benefit managers are able to control benefit costs

Employee Retirement Income Security Act (ERISA):

affects pension administration, and various actions of the Internal Revenue code

When an ESOP is used as a pension vehicle the employee receive cash at retirement based upon the stock value _____.

at that time

_____- is to limit disability income payments to some maximum percentage of income and to limit medical/dental coverage for specific procedures to a certain fixed amount.

benefit limitations (cost containment method)

To control spiraling benefit costs, it is useful to adopt a _____, _______ approach.

broader, cost-centered

_____________ led to greater worker involvement in suggesting ways to improve productivity and in helping others with their work.

caring attitude

_______ are defined benefit plans that look like a defined contribution plan. Employees have a hypothetical account into which is deposited what is typically a percentage of annual compensation. The dollar amount grows both from contributions by the employer and from some predetermined interest rate.

cash balance plans

______________ arises when an employee asserts that a specific event has occurred and demands that the employer fulfill a promise of payment

claims processing

______ is requiring that employees pay a fixed or percentage amount for coverage.

copay (cost containment method)

Two generic retirement plans are:

defined benefit plans and contribution plans

-Under a defined contribution plan, whether an employee will be able to afford to retire depends on the decisions made by the _____.

employee

____________ are that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments

employee benefits

two private sources of liability income:

employee salary continuation plans, and long-term disability plans

The money to pay these benefits comes from the Social Security contributions made by _____, their ______, and _______ during working years.

employees; employers; self-employed

The extra amount a company pays depends on its ____________ -- lower percentages are charged to employers who have terminated fewer employees

experience rating

____ quarters of overage will insure any worker for life

forty

The more money paid out on behalf of a firm, the ___ is the unemployment insurance tax rate for that firm.

higher

Cost of total compensation, including both wages and salaries and benefits, is substantially higher in _____ than in _____ firms.

larger; smaller

____ establishments are much more likely than _____ establishments to offer many types of benefits.

larger; smaller

ESOPs have one major disadvantage:

limits their utility for pension accumulations

for every dollar deducted as an employees' share of social security, there is a _____ amount paid by employers.

matching

In the United States, it has been reported that "____-realted concerns are a more prevalent source of distress than those rated to health, work, or family"

money

The strategy for vesting is therefore, dependent on ____________- and _____________.

organizational goals; workforce characteristics

Paid Time off during working hours:

paid rest periods, lunch periods, was-up time, travel time, clothes-change time, and get-ready time benefits

_________ plans lump all time off together into one total allotment and deduct any day missed from this bank.

paid-time-off (PTO) plans

A ___________ plan is where an employee can choose any health care provider. (commercial insurance companies)

pay-for service

The _________ allows employees in publicly traded companies companies the freedom to ell off any employer stock purchase through deferrals or after-tax contribution

pension projection act of 2006 (PPA)

such a "financial precocity" can adversely affect employee ______ at the work place.

performance

Savings and profit-sharing plans were implemented to improve __________________.

performance and provide increased security for worker retirement years

As benefits costs, especially health care, have skyrocketed, so has their ______.

popularity

_______ pays a percentage of your salary for temporary disability because of sickness or injury (on-the-job injuries are covered by workers' compensation)

short-term disability (STD)

A major concern is evidence that employees frequently _____ the benefits provide by their organization (or in some cases may even be unaware of them).

undervalue

or the employees may want to use the six year schedule in hopes that earlier benefit accrual will reduce ______.

undesired turnover

cost effectiveness:

whether employee benefits are cost justified - can be tied to many ethical issues

As a form of no-fault insurance (employees are eligible even if their actions caused the accident), ______________ covers injuries and diseases that arise out of , and while in the course of, employment.

workers' compensation

legally required benefits:

workers' compensation, social security, and unemployment compensation

Cost Effectiveness of Benefits:

1. not taxable 2.group based benefits can be obtained at a lower rate than could be obtained by employees acting on their own

The majority of benefits under Social Security fall into four categories:

1. old-age or disability benefits 2. benefits for dependents of retired or disabled workers 3. benefits for surfing family members of a deceased worker 4. lump-sum death payments

Payment for Time Not WOrked

1. paid vacations and payments in lieu of vacation 2. payments for holidays not worked 3.paid sick leave 4.other

________ is one fo the benefits heavily affected by movement to a flexible benefit program. The cost is about ten cents per hour per employee.

Life insurance

Changing values, in turn, necessitate a reevaluation of _________.

benefit packages

Without hard data about payoffs, employee benefits slowly became a ___________________.

costly entitlement of the American workforce

Over time, U.S. companies have moved away from the use of defined benefit retirement plans (pensions), which provide e a _______ to mobility, to greater use of defined contribution plans, which do not _______ mobility.

disincentive; inhibit

The perceived fairness of a plan was significantly higher when there was ___________.

extensive communications and employee participation in plan design

Other than measuring the effectiveness of the plan the planning process also should include ________________________ and ____________.

for ensuring external competitiveness; adequacy of benefits

Among benefits available, _______ and _____ are highly preferred ebefntis, while such options as early retirement, profit sharing, shorter hours, and counseling services rank among the least-preferred options

health/medical; stock

Disadvantage of qualified plan for deferred compensation is that:

in recruitment of high-talent executives (a plan will not qualify for tax exemptions if an employer pays high levels of deferred compensation to entice executives to the firm unless proportionate contributions also are made to lower-level employees)

Probably the biggest cost-containment strategy in recent years is the movement to _______.

outsourcing

A ______ can be considered a defined contribution plan if the distribution of profits is delayed until retirement.

profit-sharing plan

One possible avenue to improve employer return on investment in benefits is to _______________________.

provide employees with greater choice in the benefits they receive

Examples of salary continuation plans:

vacations days that might be used for sick; paid time off (PTO)

Three employee benefits are mandated by either the state or federal government:

workers' compensation, unemployment insurance, and social security

Consolidated Omnibus Budget Reconciliation Act (COBRA) 1984:

Employees who resign or are laid off through no fault of their own are eligible to continue receiving health coverage under employer's plan at a cost borne by the employee

Rest breaks often were implemented in the belief that fatigue increased ________ and lowered ________.

accidents; productivity

__________ is controlling costs through policies such as seeking competitive bids for program delivery.

administrative cost containment (cost containment method)

_________ plans, are plans shifting much of the burden of pushing health care over to employees. Employees choose from any of the traditional providers but the employer sets its contirbution equal to the lower cost of these three --> more expensive is out of pocket

consumer driven health plans or high deductible plans

____________, defined as workers who do not expect their jobs to last or who report their jobs are temporary, represent between 1.3 and 3.8 percent of the workforce. Because legally employers are not bined to offer benefits, it is a a good way to meet rapidly changing economic conditions.

contingent workers

The government can also play an important part in reducing unemployment expenses by _____ the number of weeks that people are unemployed.

decrease

Employees with employer provided retirement plans are more likely to have sufficient savings for a comfortable retire meant than those who _________________.

do not have these plans

Family Medical Leave Act (1993):

mandates 12 weeks of leave for all workers at companies that employ 50 or more people

________ of pension benefits becomes an issue for employee moving to new organizations ERISA does not require mandatory probability of private pensions

portability

benefits also would be valuable if we could show a link to increased ______ or other direct measures of _______. Unfortunately no strong data exist linking benefits level and employee productivity

productivity; performance

_______ in which new benefits offered by a competitor are adopted without careful consideration, simply because the employer wants to avoid hard feelings. This phenomenon is particularly apparent for employers with strong commitments to maintaining a totally or partially non-union work force.

"bandwagon" effect

defined contribution:

-e.g., 401k, profit sharing -employer contribution is defined/promised -investment risks borne by employee -cots varies with ability to pay -employee but manage investment -faciilitiates mobility -bad investment decisions mean lower retirement income

defined benefit:

-pension -retirement benefit is defined/promised -investment risk borne by employer -cost does not vary with ability to pay -employee has no active role or responsibility -encourages retention

Employee benefits also might be valued if we could prove they increase ____________.

employee satisfaction

_____________ is when excluding new employees from benefit coverage until some term of employment is completed.

probationary periods (cost containment method)

Social Security Act provides coverage in the form of:

retirement insurance; survivors insurance; disability insurance; hospital and medical insurance for the aged, the disabled, and those with end-stage renal disease; prescription drug benefit Extra Help with Medicare Prescription Drug Costs supplemental security income; and special veterans benefits

_________ funds relieve an employer's liability when a pre-employment injury combines with a work-related injury to produce a disability greater than that caused by the latter alone

second-injury

Workers' compensation is covered by ____, not ____ laws.

state; federal

other cost containment methods:

-deny service for preexisting conditions -negotiate lower fees with providers -develop programs that encourage wellness -outsource benefits and administration -self-insure -provide accommodations for employees to return to work after illness or disability

3 parts to administering the benefit program:

1. communicating about the benefits program 2. claims processing 3. cost containment

The majority of defined benefit plan calculate average earnings over the last ___ to ___ years of service for a prospective retiree and offer a pension that I about one-half this amount adjusted for years of seniority, at least for employees who have been with the firm for a sufficiently long period of time

3;5

workers' compensation befits:

1. medical care needed to treat the job injury or illness 2. temporary disability beenfits to the employee to help replace lost wages 3. permanent disability payments to the employee to compensate for permanent effects of the injury 4. survivor death benefits 5. rehabilitation and training in most states, for those unable to retune to their prior career

Three general strategic available to benefit managers for controlling the rapidly escalating costs of healthcare:

1. organizations can motivate employees to change their demand for health care, through changes in either the design or the administration of health insurance policies (deductive, coinsurance rates, max benefits, coordination benefits, auditing of hospital charge for accuracy, requiring preauthorizing for selected lists to health care facilities, mandatory second options, using intranet tech, providing incentives to employees to using providers who meet certain high performance criteria) 2. changing the structure of health care delivery systems and participating in business coalition 3. link incentives to healthy behaviors

Several factors affect the amount of income that will be available to an employee upon retirement:

1. the earlier the age at which investments are made, the longer returns can accumulate 2. different investments have different historical rates of return 3. need to counteract investment risks by diversification because stock and bond prices can be volatile in the short run

The level of pension a company chooses to offer depends on the answers to five questions:

1. what level of retirement compensation would a company like to set as a target, expressed in relation to pre-retirement earnings? 2. should social security payments be factored in when considering the level of income an employee should have during retirement? 3. should other post-retirement income sources (e.g., savings plans that are partially funded by employer contributions) be integrated with the pension payment? 4. a company must decide how to factor seniority into the payout formula 5. decide on what they can afford

To receive unemployment insurance benefits there are eligibility requirements that need to be met:

1. you must meet the state requirements for wage earned or time worked during an established (one year) period of time referred to as a "base period" 2. you must be determined to be unemployed through no fault of your own, and meet other eligibility requirements of state law

The unemployment insurance program has four major objectives:

1.to offset lost income during involuntary unemployment 2. to help unemployed workers find new jobs 3. to provide an incentive for employers to stabilize employment 4. to preserve investments in worker skills by provide income during short-term layoffs

For _________ to be exempt from current taxation, specific requirements must be met. To qualify, an employer cannot freely choose who will participate in the plan. Instead, they must meet nondiscrimination tests that are intended to encourage companies to spread benefits coverage to all employees. This requirement eliminated the common practice building tax-friendly, extravagant pension packages (only) for executives and other highly compensated employees.

deferred compensation

In a _______ plan an employer agrees to provide a specific level of retirement pension, which is expired as either a fixed dollar amount or a percentage-of-earnings amount, which typically varies with years of seniority in the company. The firm finances this obligation by following an actuarially determined benefit formula and making current payments that will yield the future pension benefit for a retiring employee

defined benefit

in a ______ plan the employer makes provisions for contributions to an account set up for each participating employee. Years later when employees retire, the pension is base don their contributions, employer contributions, and any gains in stock investment s

defined contribution

The ______ approach assumes that demographic groups can be identified for which benefit preferences are fairly consistent across members of the group. Furthermore, it assumes that meaningful differences exist between groups in terms of benefit preferences.

demographic

Major advantage of a qualified plan for deferred compensation is that:

employer receives an income tax deduction for contributions made to the plan even though employees may not yet have received any benefits

in the majority of states, unemployment compensation paid out to eligible worker is financed exclusively by _________________________.

employers that pay federal and state unemployment insurance tax

benefits communication, however conducted, remains very important because _________________________________________________.

failure to understand benefit components and their value is still one of the root causes of employee dissatisfaction with a benefit package and/or a low return on investment for employers

Most organizations evaluating adequacy consider the ___________ of employees with and without a particular benefit (e.g., employee medical expenses with and without medical expense benefits)

financial liability

an employer who experiences ___ turnover may wish to use the three-year service schedule. by so doing, any employee with less than three years' service at time of termination receives no vested benefits.

high

Employers have increasingly shifted increased benefit costs to employees by implementing __________ and _____ and such

higher deductibles; copay

Efforts to control these costs quite logically should begin with a well-designed ______________. Realistic estimates of human resource needs will reduce the pattern of hasty hiring followed by morale-breaking terminations.

human resource planning system

_______ if available, typically kick in after the short-term plan expires. Long-term disability is usually underwritten by insurance firms and provides 60 to 70 precent of predicability pay for a period varying between two years and life.

long-term disability plans

younger investors may wish to have more _____, while those closer to retirement age typically have less _____ in their portfolios.

stock;stock

Any evaluation of employee benefits must be placed in the context of _____________.

total compensation costs

Decisions on whether to adopt certain options must be considered in light of the impact on ______ and in relationship to expenditures of ______.

total cost; competitors

Among private sector employers in the United States, the average cost of benefit is _____/hour, which accounts for ___ percent of total compensation (Wages and salaries + benefits) and adds ___ cents on top of every dollar of wages and salaries.

10.25; 30; 44

ERISA requires that employees be eligible for pension plans beginning at the age of ____. Employers may require ___ months of service as a precondition for participation. The service requirement may be extended to three years I the pension plan offers full and immediate vesting.

21; 12

many companies are switching from __________, to ____________.

traditional time-off plants (TTO); paid-time-off (PTO) plans

some experts speculate that a key element in reward attractiveness (and benefits) may be their ______.

visibility

Maximum benefits duration retuned to ___ weeks; but because unemployment has fallen to under 6 percent in many states, there has been some state legislation to reduce duration to as low as ___ weeks.

26;20

The second type of DC plan is an ________, where a company makes a tax-deductible contribution of stock shares or cash to a trust. The trust then allocates company stock to participating employee accounts. the amount allocated is based on the empire earnings.

employee stock ownership plan (ESOP)

_____ refers to the length of time an employee must work for an employer before he or she is entitled to employer payments made into the pension plan. -first, any contributions made by the employee to a pension fund are immediately and irrevocably vested (vesting right becomes questionable only with respect to the employer's contributions - 3 or 6 year plan)

vesting

Benefits communications revolves around four issues:

what is communicated, to whom, how it's communicated and how frequently

Competitiveness requires an understanding of ___________________________________.

what other firms in your product and labor market offer as benefits