Administering Benefits (Chpt 9) Flashcards
what are the 3 functions of administering benefits?
(1) communicating the benefits program,
(2) claims processing, and
(3) cost containment
4 issues of communicating benefits
1 - What is communicated,
2- to whom,
3- how it’s communicated, and
4- how frequently.
Why is communicating benefits important?
employees’ awareness of
their right to information increases
Pension legislation
across Canada specifies the information that must be disclosed to plan members and their spouses/domestic partners
What is an employee benefits handbook?
most frequent method for communicating employee benefits
contains a 1- description of all benefits, including 2- levels of coverage and 3- eligibility requirements
supplemented with personalized benefits statements
What are 3 elements for an effective communications package?
IMPORTANT
- spell out its benefit objectives
and ensure that any communications achieve these objectives - message must be matched with the appropriate
medium (moving from an annual offering to timely, online statements with each payroll, providing an almost
up-to-the-minute value statement of compensation and benefits) - content of the communications package must be complete, clear, and free of complex jargon
- The amount of time/space devoted to each issue should vary with both the perceived importance of the benefit to employees
and the expected difficulty in communicating option alternatives.
What is still one of the root causes of employee dissatisfaction with a benefit packages?
failure to understand benefit
components and their value
less than 5 percent of employees fully understand their benefits package
perceived fairness of a plan was significantly higher when there was extensive
communications and employee participation in plan design
What % of all claims is denied payment?
10%. It is a major challenge.
If multiple insurance company liable for payment, 10-15% of claims cost can be paid jointly
What are 7 ways to contain costs?
- Probationary periods: New employees are excluded from benefits coverage until some term of employment (e.g., three
months) is completed. - Benefit maximums: 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. Lifetime maximum payouts are
sometimes used. - Coinsurance: Employees are required to pay a fixed amount or a percentage of the amount.
4. Deductible: A specified dollar amount of claims must be paid each year by the employee before the insurance plan begins paying (e.g., $25 deductible means that the employee pays the first $25 in claims submitted each year).
- Coordination of benefits: When two spouses both have employee benefits coverage, benefits are reduced by any
benefits payable under the spouse’s plan (i.e., both spouses cannot receive benefits to cover the same expenses). - Administrative cost containment: Seek competitive bids for program delivery, for example.
- Programs that encourage wellness: Establish a smoking cessation program, for example.
the biggest
cost-containment strategy in recent years is the movement to outsourcing
True
hiring vendors to administer their benefits
programs (including communication in some cases), many companies have achieved greater centralization, consistency, and
control of costs and benefits
Deductible
An employee claim for insurance coverage is preceded by the requirement that the
first $x claimed be paid by the claimant.
Coinsurance
A proportion of costs are paid for by the employee.
Benefit cutbacks
Some employers are negotiating wage concessions with employees to
eliminate or reduce employer contributions to selected options.
Defined contribution pension plans
Employers establish the limits of their responsibility for
employee pension benefits in terms of a dollar contribution maximum.
Defined benefit pension plans
Employers establish the limits of their responsibility for
employee benefits in terms of a specific benefit and the options included. As the cost of these
options rises in future years, the employer is obliged to provide the benefit as negotiated,
despite its increased cost.
Coordination of benefits
In families where both spouses work, benefits are reduced by any
amount payable under the spouse’s plan.
