Benefits Flashcards
Importance of benefits
- have grown in importance and variety
- don’t affect performance but no benefits lead to dissatisfaction and turnover
- add 40% to org payroll costs
- progressive benefits programs reflect diversity
- serve as differentiator between companies
- required benefits: SS, unemployed compensation, worker’s compensation, FMLA
Social Security
federal program of disability and retirement benefits that covers most working people
Unemployment compensation
a system of government payments to people who are out of work and looking for a job
Workers’ Compensation
a form of insurance paid by the employer providing cash benefits to workers injured or disabled in the course of employment
FMLA (family medical leave act)
federal law requiring organizations with 50 or more employees to provide up to 12 weeks of unpaid leave after childbirth or adoption;
to care for a seriously ill family member or for an employee’s own serious illness; or to take care of urgent needs that arise when a spouse, child, or parent in the National Guard or Reserve is called to active duty.
Affordable Care Act
health care reform law passed in 2010 that includes incentives and penalties for employers providing health insurance as a benefit
HMOs, PPOs, etc.
- Health Maintenance Orgs: A health care plan that re- quires patients to receive their medical care from the HMO’s health care professionals, who are often paid a flat salary, and provides all services on a prepaid basis
- Preferred Provider Orgs: a health care plan that contracts with health care professionals to provide services at a reduced fee and gives patients financial incentives to use network provider
- Consumer-Driven Health Plan (CDHP): a high deductible, paired with a tax-advantages health spending account, or HAS, to increase the amount of accountability that is in place for personalized health care spending
- High Deductive Health Plan (HDHP): health plan that combines high deductible insurance and a funding option to pay for patients out of pocket expenses up to the deductible
COBRA
Consolidated Omnibus Budget Reconciliation, a federal law that requires employers to permit
employees or their de-
pendents to extend their
health insurance cover-
age at group rates for up
to 36 months following
a qualifying event, such
as a layoff, reduction in
hours, or the employee’s death
ERISA
Employee Retirement Income Security Act, a federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation
Defined contribution plans vs. defined benefit plans
defined benefit plan is a retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account VS defined contribution plans (like 401(k)s) offer a retirement benefit based on contributions and investment performance, with the employee bearing more risk and responsibility
IRAs, Roth IRAs, 401ks, etc. (different approaches to retirement benefits)
- Individual Retirement Accounts: an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis
- Roth IRAS: you make contributions with money you’ve already paid taxes on (after-tax), and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met
- 401ks: an employer-sponsored retirement savings plan that allows employees to contribute a portion of their salary, often on a pre-tax basis, which can grow tax-deferred until retirement
- ERISA
Other types of benefits (military leave, disability insurance, travel insurance, etc.)
vacation and holiday leave PTO, military leave, disability insurance (short-term: pays a percentage of a disabled employee’s salary as benefits to the employee for six months or less and long-term: pays a percentage of a disabled employee’s salary after an initial period and potentially for the rest of the employee’s life), group term life insurance, travel insurance, services, unconventional/novel benefits, flexible spending account FSA
Flexible spending accounts (types, conditions, etc.)
employee-controlled pretax earnings set aside to pay for certain eligible expenses, such as health care expenses, during the same year (Health Care FSAs (HCFSAs) for eligible medical expenses and Dependent Care FSAs (DCFSAs) for childcare or adult dependent care, both allowing pre-tax contributions for these expenses)
Vesting Right
guarantee that when employees become participants in a pension plan and work a specified number of years, they will receive a pension at retirement age, regardless of whether they remained with the employer
