HR Management Ch 13

Social security

Provides income only when older than 62 and provides 3 types of benefits. 1) Retirement benefits provide an income if you retire at age 62 or thereafter. 2) Survivor's (death) benefits provide monthly payments to your dependents regardless of your age at death. 3) Disability payments provide monthly payments to employees who become totally disabled. The Social Security system also administers the Medicare program.

Challenges regarding employers about baby boomers

1. employers are taking steps to entice older workers to keep working in some capacity. 2. retirement funding is a big issue

In developing pension plans, employees must consider:

1. membership requirements 2. benefit formulas 3. plan funding 4. vesting- the money employer and employee have placed in the latter's pension fund that cannot be forfeited for any reason

Benefits can be classified as

1. pay for time not worked; 2. insurance benefits; 3. retirement benefits; and 4. services.

Hospitalization, health, and disability insurance benefits

Aimed at providing protection against hospitalization costs and loss of income arising from accidents or illness occurring from off-the-job causes. Accidental death and dismemberment coverage provides a lump-sum benefit while disability insurance provides income protection for loss of salary due to illness or accident.

Sick leave

Provides pay to employees when they're out of work due to illness. Most sick leave policies grant full pay for a specified number of permissible sick days. Some employers save expenses associated with employees using sick days to extend their vacations. They repurchase unused sick leave at the end of the year by paying their employees a daily equivalent sum for each sick leave day not used.

Employee Retirement Income Security Act of 1975 (ERISA)

Requires that employers have written pension plan documents and adhere to certain guidelines, protects employee pension or health plans' assets by requiring that those who control the plans act responsibly, and restricts what companies can, cannot, and must do in regards to pension plans.

Patient Protection and Affordable Care Act of 2010

Signed into law by President Obama in 2010, employers will face a number of deadlines under the new Patient Protection and Affordable Care Act, unless Congress changes the law. For example, in 2018 a 40% excise tax on high-cost health insurance plans goes into effect.

Work-life benefits

Subsidized child care is an increasingly desirable benefit, which tends to improve recruiting results, lower absenteeism, improve morale, garner favorable publicity, and lower turnover. Elder care programs are being offered to help employees who must care for the elderly who may need such assistance.

Pensions and early retirement

The company opens up (for a limited time only) the opportunity for employees to retire earlier than usual, with a financial incentive to do so. This allows the employer to realize cost reductions, the ability to hire new employees (perhaps with newer skills at lower salary levels) or both.

Mental health benefits

The costs of mental health treatment are rising because of widespread drug and alcohol problems. The Mental Health Parity Act of 1996 sets minimum mental health care benefits at the national level.

Vacations and holidays

The number of paid employee vacation days and holidays varies by employer. Firms have to address several holiday- and vacation-related policy issues. Although federal law does not require vacation benefits, the employer must still formulate vacation policy with care.

Health maintenance organization (HMO)

a medical organization consisting of several specialists operating out of a community-based health care center. Preferred provider organizations (PPOs), a cross between HMOs and the traditional doctor/patient arrangement, are groups of health care providers that contract to provide medical care services at a reduced fee.

Personal services

include credit unions, legal services, counseling, and social and recreational opportunities

Parental leave and the Family Medical Leave Act

provide equitable arrangements for employees who have legitimate needs to attend to family medical issues. Employers who have 50 or more employees must provide up to 12 weeks of unpaid leave for personal and family medical issues.

Other job related benefits

provide subsidized employee transportation, food services, and educational subsidies. The offer of time off as a performance reward, or increased vacation and holiday benefits can help employees with quality of life issues. Also, many companies are extending benefits coverage to same-sex domestic partners Executive perquisites (perks) include almost anything imaginable from a business perspective. It is thought such perks help maintain loyalty and commitment of top tier executives and managers and they have come to be expected. It includes: management loans, salary guarantees, protection if their firm becomes an acquisition target, financial counseling, relocation benefits, time off with pay, outplacement assistance, company cars, chauffeured limousines, security systems, and many others. .

Employee Assistance Program (EAP)

provides employees with counseling and/or treatment for problems such as alcoholism, gambling, or stress. Such treatment is totally confidential from the company. The company receives only general statistics, such as the number of employees who used the service annually, from the outside EAP firm.

COBRA (Comprehensive Omnibus Budget Reconciliation Act)

requires most private employers to make continued health benefits available to terminated or retired employees and their families. The coverage is for the group program offered by the former employer but at a higher cost. That is, the terminated or retired employee may pay up to 102% of the total cost for benefits. The total cost is what the former employee and employer both paid plus up to 2% additional for administrative fees. The coverage is good for a period of time, generally 18 months.

Supplemental unemployment benefits

supplement the employee's unemployment compensation and help the person maintain his or her standard of living for a time

Other laws

the Employee Retirement Income Security Act (ERISA) sets minimum standards for health and pension plans. Employers who provide health care services must follow the privacy rules of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Policy issues

what benefits to offer and who receives coverage. Decisions also must be made regarding whether to include retirees in the plan and whether to deny benefits to employees during initial "probationary" periods. Employers must plan for how to finance benefits, cost-containment procedures, and how to communicate benefits options to employees.

Severance pay

One time separation payment when terminating an employee. considered a humanitarian gesture and good public relations

BENELOGIC

BENELOGIC is called the "Employee Benefit Electronic Service Tool." It lets users manage all aspects of benefits administration, including enrollment, plan descriptions, eligibility, and premium reconciliation, via their browsers.

Pension plans

Defined benefit plans- employee's pension is defined ahead of time. Defined contribution plans-specify what contributions the employer will make to the employee's retirement or savings fund. 401(k) Plans are popular defined contribution plans in which the employee can have pre-tax payments deducted from his or her paycheck and deposited in the account. Other defined contribution plans include a savings thrift plan, a deferred profit sharing plan, and an employee stock ownership plan (ESOP) which is a tax-deductible stock bonus plan. Cash balance pension plans- defined benefit plans for federal tax purposes, but have the portability advantages of defined contribution plans.

Employee leasing

Employee leasing allows a given employer to hire some or all of its employees from a leasing firm. The employer benefits by having the work done without potential complications from having to perform all the HR functions needed. The leasing firm maintains control of its leased employees and has responsibility for all traditional HR functions such as payroll, benefits, taxes and the like.

Flexible work schedule

Flextime- arrangement allowing employees to have flexibility in scheduling their workday around core hours. Compressed workweeks- may consist of four 10-hour days, three 12-hour days, or other such combinations. Workplace flexibility- means providing employees with technology so work can be accomplished wherever they are located. The effectiveness of flexible work schedule arrangements may be questionable. Reviews indicate that they increase employee satisfaction and productivity. However, some critics are concerned that fatigue and accidents may increase. Ongoing measurement and tracking is the key here.

Benefits

Indirect financial and nonfinancial payments employees receive for continuing their employment with the company

Other flexible work schedules

Job-sharing occurs when two people share one full-time job. Such a program can be useful for retirement-aged employees, allowing the company to retain the experienced employee while allowing him or her to have reduced work hours. Work-sharing results when a group of employees reduce their hours to prevent layoffs. Finally, telecommuters work at home and use phones, computer software, and the Internet to conduct business.

Insurance benefits (long term care, life insurance, benefits for part time and contingent workers

Long-term care is a new benefit aimed at supporting people in their old age. The Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996. It lets employers and employees deduct the cost of long-term care insurance premiums from their annual income taxes. Most employers provide group life insurance plans, which usually accept all employees, regardless of health or physical condition. Finally, some firms provide holiday, sick leave, vacation, and health care benefits for employees who work fewer than 35 hours a week.

The cafeteria benefits plan (flexible benefits plan or cafeteria benefits plan)

One in which the employer gives each employee a benefits fund budget, and lets the person spend it on the benefits they prefer subject to 2 constraints. 1) employer must limit the total cost for each employee's benefits package 2) each employee's benefit plan must include certain required items

The Pension Benefit Guarantee Corporation (PBGC)

Oversees and insures pensions should a plan terminate without sufficient funds.

Supplemental pay benefits

Pay for time not worked is the most costly benefit, because of the large amount of time off that most employees receive

Unemployment insurance (compensation)

Provide benefits if a person is unable to work through no fault of their own.

Workers' compensation

the income and medical benefits provided in work-related accidents to the victims or their dependents, regardless of fault. Workers' compensation can be monetary or medical or a combination. Monetary awards are based on a formula regarding the disability involved and the worker's average weekly wages. . Some ways to reduce such claims is to screen out accident-prone workers, reduce accident-causing conditions, and institute effective safety and health programs