Total Rewards - Employee Benefits (SHRM AOL Study Guide)
What are the most common types of defined contribution plans?
1. 401(k) [corporations] 2. 403(b) [public education and non-profits] 3. 457 [state and municipal, qualified non-profits] 4. TSP [federal employees]
Educational Reimbursement Program (ERP)
1. An arrangement under which an employer provides education to an employee or pays the employee's educational expenses
Domestic partner benefits (2 answers)
1. Domestic partnership is a city-, county-, state-, or employer-recognized status that may be available to same-sex couples and, sometimes, opposite-sex couples 2. Domestic partnerships in the U.S. are determined by each state or local jurisdiction (there is no nationwide consistency on the rights, responsibilities, and benefits accorded domestic partners)
What doesn't ERISA cover re: retirement? (2 answers)
1. ERISA does not cover retirement plans established or maintained by governmental entities, churches, or plans which are maintained solely to comply with applicable workers compensation, unemployment or disability laws 2. ERISA does not cover plans maintained outside the U.S. primarily for the benefit of nonresident aliens or unfunded excess benefit plans
What are examples of family-oriented benefits? (3 answers)
1. Family and Medical Leave Act (FMLA) 2. Time-off Benefits 3. Dependent Care (encompasses employer support for the care of other dependents including elderly parents, elderly, ill, or disables spouses, and dependent adult children)
Which two federal laws regulate health insurance programs?
1. Health Insurance Portability and Accountability Act of 1996 (HIPAA) 2. Patient Protection and Affordable Care Act (PPACA)
What are three features of Accelerated Death Benefits? (3 answers)
1. Known as "living benefit" 2. Provides that a policyowner-insured may elect to receive all or part of the policy's death benefit before death if certain conditions called "insured events" are met 3. Usually paid in a lump sum
What are two features of Split-Dollar Life Insurance? (2 answers)
1. Premiums may be paid entirely by the employer or they can be split b/w the employer and executive 2. Death benefit is split b/w the employer and the executive's beneficiary
Workers' compensation (3 answers)
1. Program which provides cash benefits, medical care, and rehabilitation services to workers who experience work-related injuries 2. Oldest social insurance program in the U.S. 3. Provides wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence
All nonqualified plans must satisfy which three requirements?
1. The deferred compensation arrangement between the employer and the employee must be entered into before the compensation is earned by the employee. 2. The deferred compensation cannot be available to the employee until a previously agreed upon future date or event. 3. The amount of the deferred compensation cannot be secured (i.e. it must remain available to the employer's creditors).
Benefits Administration: What are the nine core competencies of benefits administration?
1. benefits plan design 2. benefits plan delivery 3. benefits policy formulation 4. communications 5. applying technology 6. cost management and resource controls 7. management reporting 8. legal and regulatory compliance 9. monitoring the external environment
Employee assistance/wellness programs activities (5 answers)
1. company-sponsored exercise 2. weight-loss competitions 3. educational seminars 4. tobacco-cessation programs 5. health screenings that are designed to help employees eat better, lose weight and improve their overall physical health
What are examples of wellness programs? (5 answers)
1. company-sponsored exercise 2. weight-loss competitions 3. educational seminars 4. tobacco-cessation programs 5. health screenings that are designed to help employees eat better, lose weight and improve their overall physical health
What advantages do employees have with voluntary benefits? (2 answers)
1. convenience of obtaining benefits through workplace 2. benefits are portable from one job to the next
How are Split-Dollar Life Insurance policies handled?
1. either the employer can own the policy and create the executive's interest by endorsement 2. the employee can own the policy and collaterally assign a portion of the proceeds to the employer
applying technology (4 answers)
1. informational architecture 2. data-accessing capabilities 3. security 4. unleashing information technology potential
What are examples of financial incentives re: wellness programs? (
1. lower health-insurance premiums 2. gift cards 3. monetary incentives (i.e. $50 for getting the flu shot)
What are the five (5) features of group life insurance?
1. makes use of group selection; an entire group can be insured w/o medical exam 2. premiums on a plan are often subject to experience rating 3. group mechanism calls for economics of administration 4. master contract which contains all conditions concerning the coverage 5. the plan may last long beyond the lifetime of any one individual, although the contract may be cancelled by the employer or plan sponsor, or the insurance carrier
What are the eligibility requirements for unemployment insurance? (4 answers)
1. must demonstrate workforce attachment 2. must be able and available for work 3. must meet the State requirements for wages earned or time worked during an established period of time referred to as a "base period" 4. must be determined to be unemployed through no fault of your own (determined under State law)
Paid leave time (5 answers)
1. non-production time 2. holidays 3. sick days 4. personal days 5. vacation days
What advantages do employers have using voluntary benefits? (4 answers)
1. offer more benefits without added costs to bottom lines 2. use to supplement or replace employer-sponsored benefits that have been reduced or eliminated 3. act as an employee recruitment or retention tool 4. make benefits available to employees that meet performance targets
HIPAA divides wellness programs into two types of programs: _________ and _________.
1. participation - only 2. standards - based
cost management and resource controls
1. plan costs 2. compliance issues 3. failure to comply with the nondiscrimination tests of the Tax Reform Act of 1986 4. knowledge of insurance pricing 5. labor shortages
What are five (5) examples of financial benefits?
1. retirement plans (401(k), TSP, 403(b), 457), IRAs 2. shares of stock 3. bonus 4. salary increase/promotion 5. paid time off
The three (3) types of death benefits are _________, __________, and _________.
1. terminal illness benefits - insurance company pays a portion of the death benefit to a policyowner-insured who suffers from a terminal illness with life expectancy of 12 months or less 2. dread disease benefit - critical illness benefit, insurer pays a portion of the policy's face amount to the policyowner if the insured experienced an insured event 3. long-term care benefit - insurer pays a monthly benefit if the insured required constant care for a medical condition
Disability Insurance (DI)
A form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work
Wellness programs
An employer approach to improving employees' health
Employee assistance/wellness programs
Employer approach to improving employees' health
Voluntary benefits
Employers shift some of their benefits costs to employees by eliminating coverage of non-core benefits (i.e. dental and vision) from their plans and giving employees a choice or which ancillary benefits want and would be willing to purchase through the employer
Retirement Regulation: Employee Retirement Income Security Act (ERISA)
Federal law that sets standards of protection for individuals in most voluntarily established, private-sector retirement plans
Educational benefits are separated into two categories:
Job-related Nonjob-related
Unemployment insurance
Provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined under State law), and meet other eligibility requirements
Federal insurance programs
The Federal Employees Health Benefits (FEHB) Program is a system of "managed competition" through which employee health benefits are provided to civilian government employees and annuitants of the U.S. government
Benefits for Retirees: True or False? Retirement renders a retiree ineligible to participate in employee life insurance benefits?
True
True or False? A nonqualified plan can be used to provide additional long-term savings or retirement benefits to an executive or highly compensated employee.
True
benefits plan design
a benefits program addresses the needs of the organization and can be effectively administered and communicated to employees; continual process
High Deductible Health Plan (HDHP)
a health insurance plan with lower premiums and higher deductibles than a traditional health plan; being covered by an HDHP is also a requirement for having a health savings account
Preferred Provider Organization (PPO)
a managed care organization of medical doctors, hospitals, and other health care providers who have agreed with an insurer or a third-party administrator to provide health care at reduced rates to the insurer's or administrator's clients
Health Savings Account (HSA)
a tax-advantaged medical savings account available to taxpayers in the US who are enrolled in a high-deductible health plan; funds contributed to an account are not subject to federal income tax at the time of deposit
Defined benefit plan
a type of pension plan in which an employer/sponsor promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns
Defined contribution plan
a type of retirement plan in which the employer, employee or both make contributions on a regular basis
Life insurance
a way to restore a family to their normal standard of living (in financial terms) in the event of premature death of the breadwinner
summary of material modification (SMM)
a written document that describes any "material" changes that has occurred in the plan; prescribed time frame (issued within 210 days after plan material was modified; HIPPA reduced 210 to 60 days for group health plans
Group Carve-Out Plans
all or part of a noncontributory group term benefit may be carved out and a variety of permanent insurance substituted (coverage amounts in excess of $50,000)
Insurance for Business Continuation Arrangements
an insurance plan designed to enable a business owner (or owners) to provide for the continued operation of the business if the owner or key person dies
Health Maintenance Organization (HMO)
an organization that provides managed care for health insurance, self-funded health care benefit plans, individuals, and other entities in the US; acts as a liaison with health care providers (hospitals, doctors, etc.) on a prepaid basis
Key person
any person or employee whose continued participation in the business is necessary to the success of the business and whose death would cause the business a significant financial loss (i.e. an owner, partner, or employee of the business)
Health Reimbursement Account (HRA)
are health care plans paid for by an employer to reimburse the medical expenses of its employees, their spouses, and dependents; HRAs are designed to give employees more choice and greater control over their health care coverage
legal and regulatory compliance
compliance requirements include reporting and disclosure requirements, performance requirements, and fiduciary, funding, and other requirements
Life Insurance for Executives: Corporate-owned life insurance (COLI)
corporation is full owner and sole beneficiary of the insurance policy on the life of an employee
benefits plan delivery
critical activities, which vary depending on scope of benefits program, the nature of the organization, and characteristics of the employee workforce
communications
effectively communicate employee benefit programs, their plan provisions, and proper procedures to access these programs
Dependent Life Insurance Benefits
employees are able to add optional life insurance coverage for their dependents: the spouse or second insured only, the spouse and children, or the children only
Supplemental or Voluntary Life Insurance Benefits Permanent life insurance plans sold on a supplemental basis can be as ________, ________, or ________.
group insurance, individual insurance, or worksite insurance
monitoring the external environment
includes general business and competitive conditions, governmental policy, workforce demographic shifts, new product development, new organizational structures, and technological enhancement and innovation
Key Person Insurance
insurance that a business purchases on the life of a person whose continued participation in the business is necessary to its success and whose death would cause financial loss to the business
Deficit Reduction Act of 1984 (DEFRA)
limits the favorable tax aspects of retired lives reserve plans
benefits policy formulation
management may take a proactive or reactive role in formulating policies related to the benefit plans
Buy-Sell Agreements
one party agrees to purchase the financial interest that a second party has in a business following the second party's death, and in reciprocal fashion, the second party agrees to direct his/her estate to sell the interest in the business to the purchasing party
summary plan descriptions (SPDs)
provide a summary of the benefit plan's provisions in an understandable language; specific time frames for making SPDs available to employees (90 days for new employees, SPDs must be revised every 5 years if plan has changed, otherwise SPD must be reissued every 10 years
Paid time-off (PTO) plans
provides a bank of hours that allows employees to use as the need or desire arises
Consumer Driven Health Plan (CDHP)
refers to third tier health insurance plans that allow members to use health savings accounts, Health Reimbursement Accounts, or similar medical payment products to pay routine health care expenses directly
summary annual report (SAR)
summary of the latest annual report for a benefit plan; must be distributed by the last day of the 9th month after the end of the plan year
management reporting
systems in place to monitor financial results, track program utilization, assess risk exposures, not deviations from compliance targets, and measure progress toward HR objectives
Point-of-Service (POS)
the plan sponsor contracts either with a number of health care providers or with a managed care company to provide cost-effective medical care through a preferred provider organization of health care providers
What are some examples of statutory benefits?
workers compensation, disability insurance, social security, and unemployment compensation
