Part 2

What is ERISA's Dual Jurisdictional Scheme?

All qualified benefit programs are overseen by: 1. Department of Labor - ensure employees and beneficiaries are treated fairly. Ensure plan rules and provisions are fair. Claim appeals and resolution. 2. IRS - Incent employers to provide coverage. Most pension and capital accumulation programs are tax deductible, tax exempt and tax deferred. Non-qualified plans mean that they do not receive special tax treatment.

What is tax deferred?

Amounts contributed by an employee or an employer (on behalf of the employee) are not currently taxed until distributed to the employee at a later date. - Employee's 401k contribution - an employer match to a 401k plan -

Tax deferred means...

Amounts contributed by an employee or an employer are not currently taxed until distributed.

These two regions lead the world in population...

Asia and Africa

It is estsimated that by 2050, the fastest growing group in the workforce will be...

Asians.

How many programs do you need to be viewed as excellent by employees?

At least 11 benefit programs. Having less than 5 is very unappealing.

What is tax exempt?

At the time the benefit is provided by the employer, there is "no current taxation" to the employee. - The "value" of health insurance coverage, contributions to retirement plans, tuition reimbursement, child care subsidies.

Tax exempt means...

At the time the benefit is provided by the employer, there is no current taxation to the employee.

Certain forms of compensation are exempt from constructive receipt. One is...

Benefits that are within a qualified plan.

What is tax free?

Benefits when actually received by the employee are "free from taxation." - Health care reinbursement for a provider service. life insturance death benefit, workers compensation,

What are some of the important benefits that employees seek?

Better health, dental, and vision insurance More flexible hours More vacation time Chance to work from home Surprisingly, retirement isn't even considered...

Labor cost differentials (what different countries pay for labor) has resulted in about 2.5 million US jobs to being offshored. Which of these jobs is most likely to be offshored?

Call- center Software development Back-office accounting

What is constructive receipt?

Cash or property received for a service is immediately taxed.

To an individual what does tax deductible mean?

Certain benefits are deducted from their income or their taxes.

By 2050, these three countries will see a decline in their populations.

China, Russia and Japan.

What are some of today's employer objectives for benefits?

Control health care costs (37%) - expensive. Up to 18,000 per year, per person. Retain employees (41%) Help employees make better financial decisions (21%) - fairly new and most difficult.

By 2050 it is estimated that whites will..

Decrease from 73% to 53%

When you think of demographics and its impact on benefits, what should a business professional with a specialty in HR do?

Design products and services that satisy corporation and employee needs Ensure programs are flexible enough to react to changing environments Plan strategically and then execute flawlessly

What is ERISA?

Employee Retirement Income Security Act of 1974. Applies to all qualified pension benefit plans an welfare benefit plans. One program to cover every state. Requires reporting and disclosure to federal government and participants. Must file 5500 to IRS> SPD (Summary plan Descriptions) SARs (Summary Annual Reports)

From an employer's perspective, what are the top objectives for a benefit program?

Employee retention and control of health care costs Increase morale and productivity Attract new employees.

Benefit and tax breakdown for Health Care Plans...

Employer payments are tax deductible to employer, tax exempt to employee and tax free when received.

Benefit and tax breakdown for Retirement programs...

Employer payments are tax deductible, tax exempt and tax deferred for employees until received. Taxed when the money is being distributed.

What role does the dept of labor play in employee benefit plans?

Ensure participants and beneficaries are treated fairly in qualified plans.

Tax deductible means...

For a company, the expense for providing a benefit is treated as a deduction to their income (get taxed less).

Millenials worry about which financial pressure?

Having progress towards future financial security.

Employer payments are tax deductible, tax exempt and tax free when received. What benefit plan has these tax advantages?

Health care

Under the US tax code, what are the two biggest tax exclusions?

Health insurance and retirement plans

Of legal immigrants in the U.S., which two groups have the highest percentage of immigrants?

Hispanic and Asian

When were 401ks introduced?

In 1978 by the Revenue Act of 1978.

What role does the IRS play in employee benefit plans?

Incent employers to provide plans through special tax treatment.

Which of these is not an employer approach to diversity in the workplace?

Incorporating bias based recruiting practices to secure talent.

By 2050, African Americans in the workforce will...

Increase from 12% to 14%.

Employee choice within an employer benefit program...

Increases loyalty and engagement

From an employee's perspective, which is considered to be most important regarding an employer benefit program?

It understands the personal financial pressure on me and my colleagues.

Employers are beginning to recognize that wellness is important not only in health but also in...

Managing finances.

Of the four generation groups currently in the workforce, this is the largest....

Millennials (Baby boomers are retiring)

How do financial pressures vary by birth groups?

Millennials - worry about making progress towards future financial security Gen x - worry about financial decisions and resources for family Boomers - worry about meeting current obligations while spending less. Silent - worry about outliving their assets.

Gen x and Millenials will contribute ____ to meet the security and access needs of baby boomers.

More

What is the PBGC?

Pension Benefit Guarantee Corporation. Created from ERISA. Annual Premium. Steps in to pay benefits if the company is having troubles. Can seize company assets and use it to pay benefits.

The labour force is a product of which trend or attribute?

Population increase or decrease Workfroce participation rates Immigration trends

When thinking of benefits in society, what do they do?

Promote economic security Raise living standards by providing access to services Add to economic stability by helping to secure the income of families.

A very real HR opportunity and impact can be realized by...

Providing financial education

HIPPA ( Health Insurance Portability and Accountability Act) pf 1996...

REstricted health insurance plans from refusing to cover some pre-existing conditions. Developed privacy and information security rules...

The driver of change in the current business environment include.

REstructuring of the economy and global competition. Changing labor force demographics. Federal and state legislation, regulation and mandates.

Retirement Equity Act in 1984 (ERISA)...

Reduced age for participation and vesting. Participation = 21 years old Vesting = 7 years at most Improved treatment and guaranteed pensions for widows and divorced spouses.

What did ERISA, the foundation of all benefit legislation, not do?

Required employers to establish and administer plans fairly for all employees.

Employer payments are tax deductible, tax exempt and tax deferred for employees until received. Which program is this?

Retirement plans

By 2020 it is projected that 80% of U.S. jobs will be...

Service based

What is not a primary demographic of the labor market?

Technology?

When you think of demographics and its impact on companies, what demographic factors are not causing such an impact?

Unlimited supply of workers with right skills and experiences.

These benefits are fully taxable when received.

Vacations and Holidays

COBRA (Consolidated Omnibus Budget Reconciliation Act) of 1987...

group health plans must provide continuation of health coverage even in the event of separation of service.

It is estimated that by 2015, Hispanics and Latinos...

will double from 11% to 24%.

What percent of employees who are happy with their benefits are also happy with their job?

81%

In 2015, the population of the world was 7.2 billion people. By 2050 it is projected to grow to...

9.2 billion

Employee benefit programs represent...

A strategic necessity for business and HR

Aside from economic security, benefits also provide...

Access to Services such as health care. In 2014, half of the U.S. population under age 65 was covered by their employer's health insurance plan. Other services are... education reimbursement, dependent care, legal and commuter assistance.

When thinking about older employees, what is the primary reason why older workers stay in the work force?

Access to income and healthcare

Revenue act of 1978 (ERISA)...

Added tax incentives for... Section 401k plans flexible benefit plans paying for benefits dependent care assistance.

When it comes to government program, medicare has experienced a significant hit from these two factors...

Age longevity an health care inflation.

In 2014, there were 2.8 active workers for every retiree receiving social security benefits. By 2085 that number of active workers to retirees will be...

1.9

How many baby boomers are retiring daily?

10,000 per day. Employers have responded by decreasing defined benefit plans and increasing contribution plans. In 1950 the ratio of workers to retirees was 16.5 to 1 in 2025 the ratio will be 2.8 to 1

Of the total US workforce in 2014, what percentage is represented by a union?

12.3%

Immigrants as a percentage of the workforce reached what level in 2010?

13%

Immigrants comprise 16% of the workforce and contribute what percentage to U.S. economic output?

15%

In 1950, health care represented 5% of the Gross Domestic Product. In 2015, that percentage was...

18%

By 2020 it is estimated that over age 55 employees will make up this percentage of the work force...

25%

What percentage of the U.S. labor force has a bachelors degree?

28.5%

What percent of employees believe it is up to their employers to provide financial wellness and security.

50% look to their employer for help in achieving financial security.

By 2050, women's participation in the total workforce is projected to reach what percentage?

52%

In 1950, 37% of all women were working. By 2050 that number is projected to be...

58%

What is the max taxable amount in 2017?

6.2% UP TO $127,200 in 2017.

In 2014, how many employees worked for an employer who provided benefits?

76 Million people. 80% of them participated in an employer sponsored retirement program.

If born in 2010, a male could expect to live until ____ and a female until ____

76 male and 81 female

What percent of employees say that benefit programs have an impact on job satisfaction?

81%

Tax free means...

The benefit is free from taxation when it is actually received by the employee.

The fastest growing segment of the population is what age category?

Those over age 85 (baby boomers)

What is tax deductible?

To companies, the expense for providing a benefit is treated as a "deduction" to their income. To the individual, certain benefits can be deducted from their income or their taxes.

Which of the following is not likely to be important to employers regarding benefit programs?

Transactional administration

Constructive receipt...

a taxpayer is liable for income which has been received plus income not year received but that has become available to them. If a medical plan is offered to you and you choose not to participate you are still taxed on it because it is available to you. However, benefits enjoy a special waiver from constructive receipt and current taxation if it is within a "qualified plan". This includes health care, retirement, insurance, child care, etc. The waiver allows the employee the choice between cash compensation and non-cash benefits (which are made available to the employee) w/o constructive receipt.