HR Exam 3

FMLA- Family medical leave act (legally required benefit)

12 weeks of unpaid leave within a 12-month period (ex- adoption, birth of a new child, serious medical condition) Family and medical reasons: *yourself, parents, spouse, children Eligibility rules: *Company must have 50+ employees *employee must have worked 1250 Hours within last 12 months Benefits: *Employer can make employee are unused PTO before FMLA or concurrently with FMLA Major revisions to FMLA instituted in January of 2009 included: *extended for military purposes- family members (up to 26 weeks)

Protection Programs (Discretionary benefits)

income health income protection (various types of insurances) disability insurance (injuries and illnesses outside of work) Life insurance Retirement programs Health protection programs Paid time off Services

Specialized Insurance Benefits-Carve out plans

Vision Dental Mental health (depression, anxiety, drug/alcohol addiction) Prescription Drug Plans three kinds of prescription drug programs: Medical reimbursement plans *get the meds first and then get billed Prescription card programs *Show the card at the pharmacy & pay a copay *Generic v. brand charges Mail order prescription drug programs *3 months for the price of 2 months

State Compulsory Disability Laws- workers' Compensation (legally required benefits)

compensating an employee for an injury or illness arising out of employment Based on the principle of "liability without fault"- doesn't matter who is at fault for the injury or illness; if it happens at work then it's under worker's compensation (exceptions: alcohol/drugs, self-inflicted, "gross misconduct"- obvious danger) Programs run by states-every state except Texas has a state Workers Compensation Office Maritime, federal civilian, agricultural, small businesses(less than twelve employees) are not covered *have their own programs Worker's compensation objective and obligations: *approximately 2/3rd pay while recovering *covers medical expenses for rehab Financing the program: *most companies have worker's compensation insurance (experience-rated) *some companies are self-funded Recent trends in workers' compensation: *repetitive stress disorders are growing the fastest *Fraud is growing as well Employers' rights under workers' compensation programs: *Employees receiving worker's comp relinquish their right to sue the organization for liability *can sue if you can prove the employer intended to harm the employee An employer's intentional acts: *Employer purposely risked an employee's life (fails to reveal a known danger) Retaliation against workers who filed claims: *can't fire, demote, give undesirable tasks/shifts to an employee Employer and employee tax obligations: *payouts are not taxed to the employee and employer

Qualified Plans (retirement program)

way for the employer & the employee to get tax advantage Minimum standards for qualified plans (13 fundamental characteristics): *participation requirements- must allow all employees 21+ & worked over 1,000 in the last 12 month to be in the plan *coverage requirements- can't exclude employees based on job category (can't give special benefits to highly compensated employees) *Vesting rules- when an employee is entitled to all employer contributions in the retirement plan Two schedules: Cliff vesting schedules- after 3 years you are able to take companies contribution but not before those three years The six-year graduate schdule-once you get passed a 2 years you get 20% and then 3 years is 40% and so on and so on *plan distribution rules- two options Lump-sum payout- get all the money at once Annuity- guaranteed amount for as long as you live

Legally required benefits

established to protect individuals from catastrophic events (job loss and or injury/illness) Protection programs to: *reduce poverty *keep people safe *allow them time to recover from injuries/illnesses Apply to virtually all U.S. Companies *level playing field *doesn't apply for international companies Legally required benefits *SSA (social security act) *State Compulsory Disability laws (workers' compensation) *FMLA (family medical leave act) *HIPAA *COBRA

Retirement programs (protection programs)

(look at handout) individuals may receive retirement benefits from as many at three sources: *social security *employer-sponsored retirement benefits (401k account) *personal retirement investments Companies establish retirement or pension plans following one of three design configurations: *Qualified Plans *Defined-benefit plans *Defined-contribution plans *hybrid plans Tax incentives encourage companies to offer pension programs (plan must be considered a "qualified plan" Employee retirement income Security Act of 1974 *key law related to employer-sponsored retirement plans *describes the requirements for a qualified plan * defines "fiduciary responsibilities" Trends in regiment plan coverage and costs *shift in labor force- unions were primary drive of pensions plans (most likely defined-contribution plan *Cost- cost to employer is much higher in pension plans. The Pension Benefit Guaranty Corporation (PBGC)- oversee employee pension plans

Defined Contribution plans (retirement program)

*more common choice today *employee contributes to a retirement account *employer contributes to that employee's account *typically a % of an employee's salary Individuals accounts- employee controls his/her account Investments of contributions- employee decides how to invest the $ in his/her accounts *many choices to invest *can you choices Employee participation in investments- adjust % of salary is invested *index fund, mutual fund, bonds, real estate account, savings, money market, international accounts *spread out your investments *typically 3rd party to manage these accounts and provide education to employees Contribution limits and tax deductions- pretax contributions *IRS doesn't have limit on your pretax contributions Types of defined contribution plans: Section 401(k) plans *most common defined- contribution plan *comes from IRA tax code *403(b)- nonprofit organization Roth 401(K) plans *tax is paid initially, but no tax on when employees "cashes in" Deferred Profit-sharing plans *employer puts a portion of profits into an employee account *Accounts are invested Employee Stock Ownership plans (ESOPs) *employees acquire company stock *Portfolio grows and then they can sell the stock to fund their retirement Hybrid plans: cash balance plans *company moves form defined benefit to a hybrid plan *company put money into an employee retirement account *account is interest bearing *Longer you are with the organization, the more $ is in your account *Lump sum payment to employee upon retirement

Benefits and Cost of Legally Required Benefits

Benefits- protects American citizens from significant loss Cost- costly to employers

Health Insurance Coverage and Cost

Employer pay about 80% of employee coverage and 70% of family coverage

Services(Discretionary benefits)

Everything else that is considered a benefit: *employee assistance programs(EAPs)- helps employees deal with personal issues such as Martial problems, alcohol/drug abuse, domestic violence, mental health *Family assistance programs- adoption services, daycare services, elder care services *Flexible scheduling and leave- flextime, compressed workweeks, telecommuting (online some days and not on others), leave of absence *daycare- onsite and subsidizes daycare expenses *tuition reimbursement- for employees to complete a certain degree *transportation services- incentives to take public transpiration (clean air act) *outplacement assistance- help employees that are about to be let go find new jobs (ex. resume, interview, practice, searching for jobs, teach certain skills) *Wellness programs- gym membership, onsite gym, eating well *smoking cessation-get people to stop smoking *stress management- help people identify their stressors, help with time management, and easy to manage stress *financial education-educating employees on personal finance

Key terms related to health insurance

Fee-for-service: health care is used and then a bill is generated Prepaid plans: Health care providers receive $ based upon # of subscribers managed care: there's a defined network of health care providers that have to be used Self-funded: employer pays the cost out their budget for health care services rather than an insurance company Premiums: monthly fee for insurance Deductible: amount the employee pay before the coinsurance Coinsurance: split of the remaining health care costs above the deductible (80/20), (90/10), (100/0) Copay: flat dollar amount you pay for services Network: defined list of health care providers Out-of-pocket maximum: most an employee will pay for health care costs in a given year

HIPAA and COBRA

HIPAA- protected health information and makes it easy to switch healthcare providers COBRA- Allows a person to stay on employer's health insurance for 18 to 36 months based on certain qualifying conditions (divorce, death, fired)

Types of Health insurance plans

HMO (Health maintenance organization) *primary care physicians (family doctor) *has a network (pick doctors in that network) *need referrals to see a specialist *Lower premium costs *prepaid plan *copays Open-access HMO *allows you to go to out of network ER for nonemergency care PPO (preferred provider organization) *Fee-for-service *network *deductible *coinsurance *out-of-pocket max EPO (exclusive provider organization) *PPO but doesn't allow you to leave the network for nonemergency POS (point-of-service) *combination of a HMO & PPO *network *copays *deductibles CDHP (consumer-driven health care plans) *AKA High-deductible health insurance plans (HDHP) *over $1,000 deductible *out-of-pocket maximum

Health spending accounts

Health saving account (HSA) *employee & employer can contribute *must have CDHP *pretax *Carry it over Health reimbursement accounts (HRA) *Employer Contributes *Can carry over Flexible spending accounts (FSA) *employee & employer can contribute *pretax *use-it-or-lose-it

Health Insurance Programs

PPACA (Patient Protection & Affordable Care Act) Goal: have every American have health insurance Employer mandate: any employer with more than 50 full time employees must provide health insurance to full time employees or pay a fine Full-time employee: 30 hours or more per week Fine= (Full time-30)x $2570 Full time employee= full time + (full time employee of Part timers= all Part time hours for a month/120) Small business tax credit: under 25 employees Dependent coverage: up to are 26 you can stay on parents Health insurance Prohibits use of pre-existing conditions: health insurance would deny people due to their illnesses Prohibits lifetime limits Prohibits annual limits: the health insurance won't cover past a certain point

Paid time off (Discretionary benefits)

Paying an employee for not working (vacation days, sick days, bereavement leave, maternity leave, holidays, personal days) Advantages for employee: free money, reduces burnout, family-work balance Advantages for employer: affects employee attraction, improve employee attitudes (workplace culture), improves employee retention Integrated time off policies: Creating PTO banks= vacation + Sick + personal days Advantages: flexibility for employees; allows for employees to "bank" PTO for serious events, allows employees to "cash in" unused PTO, Simplier for HR Issue: limit of how many PTO days carry over to the next fiscal year? Sabbatical Leave: *common in academia *semester or possible a year *projects expected to be completed in that time *in some companies, high-level managers can take them (complete an MBA or work for another company) Volunteerism: *growing trend *paying employees to perform community service *full day to a few hours to a couple of days

Defined benefit plans (retirement program)

Pension plan: *employee pays nothing and employer pays everything *pension amount is based on formula *two key variables= years of service & last year's salary Minimum Funding standards: *employers' obligation to fund the pension *calculate future pension obligation *Actuarial science Benefit Limits and Tax Deductions *Maximum pension according to the IRS is either 100% of average salary of last years or $205,000/year (whichever is lower(

SSA- social security act (legally required benefits)

Programs: *unemployment compensation *OASDI *Medicare Unemployment compensation: *Provides income to people who lose their job "through no fault of their own" *Federally mandated but run by the states Criteria to qualify for benefits: *need to work for a specified period before you lose the job * "willful misconduct" makes you ineligible *typically quitting a job also makes you ineligible Benefits: *vary by the state *Approximately 50% of your wages * Maximum of 26 weeks provided that you sincerely try to find another job Federal Unemployment Tax Act (FUTA) : *Mostly paid by the employer *Experienced rated: the more people leave the higher you pay for FUTA * Employees may pay a small amount of FUTA (.09% in PA) OASDI- old age, survivor, & disability insurance Amendments- original intent: reduce poverty among the elderly *Survivor benefits added in 1939 *Disability benefits adde in 1956 *Medicare was added in 1965 Three classes of workers exempt from Social Security Adminstation: *State & local government employees *Certain federal workers *under 21 Old age (retirement benefits) *at least 10 years on contributing to the system (employment) *two factors that affect the size of your old age benefits: age at which you start collecting (62 up to 70) the more FICA tax you paid (the more you earned) Survivor benefits- to your spouse & your dependents Disability benefits- only if you could no longer work (fully disabled) Medicare- health insurance for people eligible for social security Five separate plans: Medicare Part A- hospital insurance Medicare Part B- Medical insurance Medigap- voluntary supplemental insurance to pay for services not covered in Parts A and B Medicare Part C: medicare Advantage-choices in health care providers, such as through HMOs and PPOs Medicare Part D: Medicare Prescription Drug Benefit- prescription drug coverage Financing OASDI and Medicare programs: FICA- payroll tax *6.2% of OASDI up to gross income of $142,800 *1.45% for Medicare (no ceiling) *employer has to match your contribution *self-employed: you pay double

Benefits and costs of discretionary benefits

Pros: tax advantages, attraction & retention, Improve the company image Cons: costly, seen as entitlements by employees, unrelated to organizational goals

Disability insurance (protection programs)

Two forms: short-term and long-term Short term: *up to 6 months *can't work *around 50-70% of your income while recovering *can be reduced if pre-existing conditions *pre-eligibility period: time before you start collecting (exclusions: self-inflicted injury, drug/alcohol abuse, mental illness) Long term: *over 6 months *can't work *pre-eligibility period *partial disability benefits may be possible *about 50-70% of pre-injury income *can buy you out so that they don't have to keep paying you and making rates go down

Discretionary Benefits

optional (not legal required) Three types of discretionary benefits: *protection programs- injury/illness/job loss *Paid time off- many types (holidays, vacation, sick days) *Services- everything else (discounts, tuition reimbursement, and free food)

Life insurance (protection programs)

provide income to a beneficiary in case of an employee death Three kinds: *Term life insurance *Whole life insurance *Universal insurance Term life insurance: *most common *cheapest *no cash value if you cancel it *age limit *premiums go up with age Whole life insurance: *cash value * Higher premiums than term life *set premiums & set payout *money is invested *doesn't expire Universal life insurance: *Cash value *higher premiums than term life *adjust your premiums which adjust the payout