Human Resource Management Chapter 13: Providing Employee Benefits

Characteristics of Group Retirement Plans

1. About half of employees in private business sector have employer-sponsored retirement plans

Things that are covered under the Family and Medical Leave Act of 1993 (3)

1. After childbirth or adoption 2. To care for a seriously ill family member 3. For an employee's own serious illness

What conditions are required to receive benefits of unemployment insurance (4)

1. Been employed for a pre-defined period of time 2. Available for work 3. Actively seeking work 4. Not discharged for cause, did not quit voluntarily, and are not out of work because of a labor dispute

Legal requirements for employee benefits (4)

1. Benefits required by law 2. Tax treatment of benefits 3. Anti-discrimination laws 4. Accounting requirements

Roles of Employee benefits (5)

1. Contribute to attracting, retaining, and motivating employees 2. Variety of possible benefits helps employers tailor compensation to employees 3. Employees have come to expect that benefits will help them maintain economic security 4. Benefits impose significant costs to employers but can provide tax advantages to employees because they don't have to pay income tax on it 5. Benefits packages are more complex than pay structures (hard for employees to understand value)

Contributory plan vs. Noncontributory plan

1. Contributory plan - Funded by contributions from employer and employee 2. Noncontributory plan- funded entirely by employer *Characteristic of Group Retirement Plans

Characteristics of selecting employee benefits (4)

1. Decisions about which benefits to offer should take into account 2. Organizational strategy, goals, and budget 3. Expectations of current employees and potential future recruits 4. Organizations not offering expected benefits will have difficulty attracting and keeping employees

Two types of defined plans for group retirement

1. Defined benefit plan - Guarantees specified level of retirement income; must meet funding requirements of ERISA - Employer must contribute enough to cover all benefits to be paid out to retirees - Not many companies do this anymore 2. Defined contribution plan - Amount of investment into each employee's retirement account is specified - Profit-sharing and employee stock ownership plans - Section 401(k) plans - See this a lot more now

Four major categories of benefits for Workers' Compensation

1. Disability income 2. Medical care 3. Death benefits 4. Rehabilitative benefits

Social security by the numbers

1. Employers and employees each paid tax of 6.2% on first $118,500 of employee's earnings 2. Employers pay an additional 1.45% of all an employee's earnings to medicare (Part A) 3. If self-employed, individual pays 15.3% on first $18,500, then pays 2.9% of any excess earnings earnings to Medicare (Part A) *One of the 5 benefits required by law

Characteristics of Group Life Insurance (3)

1. Employers may provide life insurance to employees or offer the opportunity to buy coverage at low group rates 2. If employee dies during term of policy, employee's beneficiaries receive a death benefit payment 3. Insurance ends when employee retires *Part of group insurance programs

Employee expectations and values (3)

1. Expect to receive legally required and widely available benefits 2. Value benefits they are likely to use 3. Vary in what they are looking for

Types of Family-friendly benefits (4)

1. Family leave 2. Child care benefits 3. College savings plans 4. Elder care *One of the 5 optional benefits programs

Characteristics of Social security (4)

1. Federal Old Age, Survivors, Disability and health Insurance 2. Benefit payments vary based on age at retirement and any income earned from other sources 3. Covers about 90% of US workers 4. Paid for through payroll tax, with percentage set by law *One of the 5 benefits required by law

Characteristics of communicating benefits to employees (3)

1. Good communication is critical because value of different benefits isn't always clear 2. Ultimate goal is to use benefit package to attract, motivate, and retain employees 3. Employees are interested in their benefits - but need a great deal of detailed information to take advantage of them

Ways employers have to try to control health care benefits costs (5)

1. Health Maintenance Organizations (HMO) 2. Preferred Provider Organizations (PPO) 3. Flexible Spending Accounts 4. Consumer-Driven Health Plans (CDHP) 5. Employee Wellness Programs (EWP)

What does the cost of workers' compensation insurance depend on? (3)

1. Kinds of occupations involved 2. State where company is located 3. Employer's experience rating - Unfavorable experience ratings lead to higher insurance premiums

Types of Group Insurance (4)

1. Medical Insurance 2. Life insurance 3. Disability Insurance 4. Long-term care insurance *One of the 5 optional benefits programs

Characteristics of domestic partners benefits (2)

1. More and more employers also cover domestic partners 2. Adult non relatives living with employee in a relationship defined as permanent and financially interdependent

Characteristics of Paid Time Off (PTO) Bank (2)

1. Most flexible approach 2. Employer pools *One of the 5 optional benefits programs

Characteristics of Unemployment insurance (3)

1. Most funding comes from federal and state taxes on employers 2. Size of tax imposed depends on the employer's experience rating 3. Qualified unemployed individuals receive benefits at the level set by the state - about half the persons' previous earnings for 26 weeks *One of the 5 benefits required by law

6 Generally Paid Holidays

1. New Years Day 2. Memorial Day 3. 4th of July 4. Labor Day 5. Thanksgiving Day 6. Christmas Day

What does Federal Old Age, Survivors, Disability and Health Insurance Program (social security) combine? (5)

1. Old age retirement insurance 2. Survivor's insurance 3. Disability insurance 4. Hospital insurance (Medicare Part A) 5. Supplementary medical insurance (Medicare Part B)

5 optional benefits program

1. Paid Leave 2. Group insurance 3. Retirement plans 4. Family-friendly benefits 5. Other quality of work-life benefits

Employee retirement income security act (ERISA) Characteristics (2)

1. Pension plan trustees protect retirees through rights related to vesting and portability 2. Created pension benefit guarantee corporation (PBGC) - insures retirement benefits and guarantees a basic benefit wifi employer can't pay *One of the 5 optional benefits programs

No-fault liability (3)

1. Principle that workers' compensation operates under 2. No need to show employer was grossly negligent 3. Employer is protected from lawsuits

Characteristics of Unpaid Family and Medical Leave (3)

1. Requires organizations with 50 or more employees to provide up to 12 weeks of unpaid leave 2. When pregnancy and childbirth are involved, must also comply with the Pregnancy Discrimination Act 3. Employers must guarantee same or comparable job when employees return *One of the 5 benefits required by law

Two types of group disability insurance

1. Short-term disability insurance - Pays percentage of disabled employee's salary for 6 months or less (50-70%) 2. Long-term disability insurance - Pays percentage of disabled employee's salary after waiting period (potentially for rest of employee's life)

Benefits required by law (5)

1. Social security 2. Unemployment insurance 3. Workers' compensation insurance 4. Family and medical leave 5. Health care

Sources of income for people 65 and older

1. Social security- 39% 2. Pension plan- 20% 3. Earnings- 27% 4. Investments- 12% 5. Other- 2%

Characteristics of Workers' Compensation (4)

1. State programs providing benefits to workers who suffer work-related injuries or illnesses, or to their survivors 2. Operates under a principle of no-fault liability 3. Covers about 90% of US workers 4. Benefit amounts vary by state *One of the 5 benefits required by law

Other quality of work-life benefits (11)

1. Subsidized cafeterias 2. On-site health care services 3. Moving and relocation expenses 4. Employee discounts on products 5. Employee buying service 6. Tuition reimbursement 7. On-site fitness center 8. On-site dry cleaning services 9. Dues for professional organizations 10. Off-site company recreation area 11. Pet services

Types of Paid Time Off (9)

1. Vacation 2. Holidays 3. Sick leave 4. Personal days 5. Floating holidays 6. Jury duty 7. Funerals 8. Military Duty 9. Time off to vote *One of the 5 optional benefits programs

How much do employers put into benefits? (money wise)

30-40% of salary

Characteristics of group medical insurance

70% of all full time employees in US receive medical benefits - covers physical, hospital, and surgical costs - maybe dental, vision, and prescriptions *One of the types of group insurances

Organizations expectations of benefits

Address differences in needs by offering flexible benefits plans in place of a single benefits

Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985

Federal law allowing employees or their dependents to extend health insurance coverage at group rates for up to 36 months following a qualifying event *Characteristic of Group Medical Insurance

Definition of unemployment insurance and how it does it

Federally mandated program administered by states to minimize unemployment 1. Providing payments and helping find new jobs 2. Providing incentives to employers to stabilize employment

Definition of social security

Flat payroll tax on employees and employers *One of the 5 benefits required by law

Cafeteria-style plan

Offers employees a set of alternatives from which to choose types and amounts of benefits they want

Definition of unemployment insurance

Payroll tax on employers that depends on state requirements and experience rating *One of the 5 benefits required by law

Workers' compensation insurance definition

Provide coverage according to state requirements - premiums depend on experience rating *One of the 5 benefits required by law

definition of health care

Provisions of 2010 law phased in through 2014 *One of the 5 benefits required by law

Family medical leave definition

Up to 12 weeks of unpaid leave for childbirth, adoption, or serious illness *One of the 5 benefits required by law

XYZ company has determined that they will have to reduce their benefits costs to stay competitive. Which of the following solution is NOT a choice for XYZ?

a. Eliminate health coverage? --> They can do it *b. Reduce percentage of employee's social security? --> no. this is required* c. Reduce unemployment insurance costs by managing their workforce to avoid layoffs --> Yes they can do it but it is long term d. Institute a safety program to minimize worker's compensation costs? --> Yes you can do it

Vesting Definition

ownership of employer contributions - how much of the money in retirement plans do you have right to?