Chapter 11: Employee Benefits

OBAMACARE: THE PATIENT PROTECTION AND AFFORDABLE CARE ACT

1. Adult children may remain as dependents on their parents' policy until their 27th birthday 2. Children under age 19 may not be excluded for pre-existing conditions 3. No lifetime or annual caps on coverage 4. Free preventative care.

Cost Containment

Approaches used to contain costs are reduction in coverage, mandatory second opinions for surgery, increased coordination of benefits, increased deductibles or co payments, incentives for outpatient surgery, and use of health maintenance organizations (HMOs)

Strategic Benefits Planning

Employee benefits must be compatible with the philosophy and policies of the organization.

Human Resource Information System

Employees can quickly learn about and change their benefits selection as their family needs change. Additionally, employees need not contact HR for benefit forms, thus saving time and the employer expense of maintaining a benefits staff

401(k) Savings Plans

Employees have their savings withheld through payroll deduction, and employers match the saved amounts on some percentage basis.

advantages of flexible benefits plans.

Employees select benefits to match their individual needs. Benefit selections adapt to a constantly changing (diversified) workforce. Employees gain greater understanding of the benefits offered to them and the costs incurred. Employers maximize the psychological value of their benefits program by paying only for highly desired benefits. Employers limit benefit costs by allowing employees to "buy" benefits only up to a maximum (defined) amount. Employers gain a competitive advantage in the recruiting and retention of employees.

The Family and Medical Leave Act

Family and Medical Leave Act (FMLA) applies only to employers having fifty or more employees. It requires the employer to provide up to twelve weeks of unpaid job-protected leave. Upon return from a leave under the Act, employees must be returned to their original job or to an equivalent job. An equivalent job is one having the same pay, benefits, and other employment terms as the original job.

EMPLOYEE BENEFITS PROGRAMS

Improve satisfaction Take care of employee health and security Attract and motivate employees Reduce Turnover Maintain a favorable competitive position

High Health Care Costs

Medical and medically related benefits payments average 12.1 percent of payroll costs. The cost to employers of providing medical and dental insurance has increased by more than 250 percent since 1980.

Unemployment Insurance

Normally his insurance provides benefits for a period of up to twenty-six weeks if you were laid off, recently extended to 99 weeks during the recession. Employees terminated for serious misconduct are not eligible for UI

disadvantages of flexible benefits plans.

Poor employee benefits selection results in unwanted financial costs. There are certain added costs to establishing and maintaining the flexible plan. Employees may choose benefits of high use to them that increase employer premium costs.

Social Security Insurance

Retired individuals age 65 or older are eligible for Medicare benefits. Medicare is financed by a portion of the payroll tax paid by workers and employers. Both the worker and the employer contribute 6.2% of base pay. Also provides long term disability. Must work 40 quarters to be eligible. Benefits determined by individual's lifetime earnings

The exchange

States or the Federal Government have established new health care exchanges, where those without job-based insurance could purchase policies. Exchanges are online market places where insurance companies compete and offer policies

Requirements for a Sound Benefits Program

Strategic Benefits Planning Allowing for Employee Involvement Benefits for a Diverse Workforce Providing for Flexibility

Life Insurance

The amount of life insurance offered employees is frequently based on salary earned and additional amounts can be purchased at nominal costs up to a specified limit.

The Health Insurance Portability and Accountability Act

This law allows employees to switch their medial insurance between employers.

Consolidated Omnibus Budget Reconciliation Act

This law extends employer-provided health care coverage to terminated employees for specified periods. Terminated employees, their spouses, or dependents will pay for health benefit costs at the rate the employer would pay for employed individuals. Employers are responsible for the administration of the extended benefits.

backup care program

a benefit program whereby an employer provides or subsidizes temporary care for its employee's elders or children when their regular arrangements fall through

vesting

a guarantee of accrued pension benefits to participants at retirement age, regardless of their employment status at that time

high-deductible health insurance plan (HDHP)

a medical insurance plan characterized by high deductibles but lower premiums for workers and a health spending account to which employers contribute funds employees can keep should they leave the organization

preferred provider organization (PPO)

a network of physicians who establish an organization that guarantees lower health care costs to employers and their employees

severance pay

a one-time payment sometimes given to an employee who is being involuntarily terminated

Defined-contributory plan

a pension plan in which contributions are made jointly by employees and employers

noncontributory plan

a pension plan in which contributions are made solely by the employer

Defined-benefit plan

a pension plan in which the amount an employee is to receive on retirement is specifically set forth. Are not popular with employers today because they cost more and employers are obligated pay a certain amount guaranteed

supplemental unemployment benefits (SUBs)

a plan that enables an employee who is laid off to draw, in addition to state unemployment compensation, weekly benefits from the employer that are paid from a fund created for this purpose

phased retirement

a program that allows its employees to gradually cut their hours before retiring

sabbatical

an extended period of time in which an employee leaves an organization to pursue other activities and later returns to his or her job

flexible benefits plan (cafeteria plans)

benefit plans that enable individual employees to choose the benefits that are best suited to their particular needs

elder care

care provided to an elderly relative by an employee who remains actively at work

wellness programs

employer-sponsored programs designed to encourage employees to maintain and improve their health and well-being by getting regular checkups, eating properly, exercising, and managing their stress levels so as to prevent costly and protracted illneses

health maintenance organization (HMO)

organizations of physicians and health care professionals that provide a wide range of services to subscribers and dependents on a prepaid basis

disease management programs

programs that provide patients and their caregivers with information on monitoring and treating medical conditions, while coordinating communication between them, their health care providers, employers, and insurers

employee assistance program (EAP)

services provided by employers to help workers cope with a wide variety of problems that interfere with the way they perform their jobs