Compensation Chapter 12 & 13

cost containment

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employee stock ownership plan (ESOP)

A retirement plan in which the company contributes its stock as the retirement benefit

Unemployment insurance

Program that provides financial security for workers during periods of joblessness

Human resource planning system

Put in place by the benefit administrator to make realistic estimates of human resources needs and avoid a pattern of hasty hiring and morale-breaking terminations

cash balance plans

a benefit plan that looks like a defined contribution plan. employees have a hypothetical account, such as a 401k, into which is deposited what is typically a percentage of annual compensation.(has interest rate)

Family and Medical leave act (FMLA)

a federal law governing minimum wage, overtime pay, equal pay for men and women in the same types of jobs, child labor, and record-keeping requirements

Health savings acounts

a fund is created by the employer, employee, or jointly that is used to pay the first x dollars of health-care expenses

health maintenance organization (HMO)

a nontraditional health-care delivery system. offer comprehensive benefits and outpatient services, as well as hospital coverage, for a fixed monthly prepaid fee

Point-of-service plan (POS)

a point-of-service plan is a hybrid plan combining health maintenance organization (HMO) and preferred provider organization (PPO) benefits

coinsurance

a proportion of insurance premiums are paid by the employee

Health savings accounts (HSAs)

a tax exempt account built up through contributions of the employee or the employer, or both, that can be used to pay for health care

personal care accounts (PCA)

a tool used by employer to gain some control over health-care costs while still providing health security to workers.

Pension benefit guaranty corporation (PBGC)

agency to which employers are required to pay insurance premiums to protect individuals from bankrupt companies (and pension plans!)

Deductibles

an employee claim for insurance coverage is preceded by the requirement that the firs t$x be paid by the claimant

long-term disability plans

an insurance plan that provides payments to replace income lost through an inability to work that is not covered by other legally required disability income plans

salary continuation plans

benefit options that provide some form of protection for disability. (some legally required)

administrative cost containment

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

Benefit cutbacks

corresponding to wage concessions, some employers are negotiating with employees to eliminate employer contributions or reduce them to selected options

benefit ceiling

employers establish a maximum payout for specific claims

Menu-driven

employers provide online information to help employees customize their own benefit plan by selecting co-plays, deductibles, and so forth

workers' compensation

enforced by the state: employer has to pay for injuries that happen on the job

probationary periods

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

employee retirement income security act (ERISA)

for employers who choose to have a retirement plan, this act sets some formidable rules that must be followed to be in compliance

pension plan

form of deferred compensation that involves deferred payments to former employee, specify a normal retirement age, specify a formula for calculating benefits, and provide for integration with social security benefits

wage and price controls

government regulations that aim at maintaining low inflation and low levels of unemployment

Preferred provider organization (PPO)

health care delivery system in which there is a direct contractual relationship between and among employers, health-care providers, and third- party payers

Benefit limitations

it is not uncommon 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

experience rating

lower percentages are charged to employers who have terminated fewer employees

market-based/ customer-driven health care

medical care package where the employer finances the cost up to a dollar maximum and the employees search for options that best fit their specific needs

401k

named for the section of the internal revenue code describing the requirements, is a savings plan in which employees are allowed to defer pretax income

Traditional time-off plans (TTO)

paid vacations, holidays (or pay if worked), sick leave, and personal leave, tacked separately

employee benefits

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

deferred compensation

pay approach that provides income to an employee at some future time as compensation for work performed now. (stock option plans, and pension plans)

direct compensation

pay received directly in the form of cash

experience rating

rating system in which insurance premiums vary directly with the number of claims filed. applied to unemployment insurance and workers' compensation and may be applied to commercial health insurance premiums.

Vesting

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

Copay

requiring the employees pay a fixed or percentage amount for coverage

full-defined contribution

the employee is responsible for finding and purchasing individual medical coverage

Tiered Networks

the employer offers employees a choice of medical plans, which include medical systems of varying costs

Managed competition

the employer provides a subsidized basic medical plan with buy-up options

Portability

transfer-ability of pension benefits for employees moving to a new organization

Community rating

when insurance rates are based on the medical experience of the entire community. Higher use of medial facilities and services results in higher premiums