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