Benefits Day 25 Flashcards
Non-wage/salary goods and services provided to employees
Employee benefits
Compensation in forms other than cash, considered to be part of employees total compensation
Employee benefits
Why are benefits packages harder for employees to understand and appreciate?
They are more complex than pay structures
These contribute to attracting, retaining, and motivating employees
Benefits
On average, out of every dollar spent on compensation, how much goes towards benefits
30 cents
Federal and state governments require what 5 benefits?
Social security Unemployment insurance Workers compensation Family and medical leave Healthcare
A federally mandated program administered by the states focused on minimizing the hardship of unemployment though payments, help finding new jobs, and incentives to stabilize employment
Unemployment insurance
Where does most funding for unemployment insurance come from
Federal and state taxes on employers
The size of the unemployment tax imposed on each employer depends on
The employer’s experience rating, based on the number of employees a company has laid off in the past
To receive unemployment insurance benefits, workers must meet what four conditions
They demonstrate they were employed
They are available for work
They are actively seeking work
They were not discharged for cause, did not quit voluntarily, and are not out of work because of a labor dispute
State programs that provide benefits to workers who suffer work-related injuries or illnesses, or to their survivors
Workers compensation insurance
No-fault liability
An employee does not need to show that the employer was grossly negligent in order to receive compensation
The employer is protected from lawsuits
This requires 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
For an employee’s own serious illness
Family and Medical Leave Act (FMLA)
Family and Medical Leave Act (FMLA) requires organizations with 50 or more employees to provide up to 12 weeks of unpaid leave when (3)
After childbirth or adoption
To care for a seriously ill family member
For an employee’s own serious illness
This outline requirements for insurance companies, incentives/penalties for employers, and public funding of health care
Patient Protection and Affordable Care Act (2010)
As of 2014, all organizations with over 200 employees must offer ______; organizations with 50 or more employees will face a penalty for not providing it.
Health insurance
Employers pay employees for the time spent not working; receive nothing in return
Paid leave
Why is unpaid leave an employee benefit?
Because the employee usually retains seniority and other benefits during the leave
A flexible approach that establishes pools of personal, sick, and vacation days for employees to use as the need arises
Paid Time Off (PTO) Bank
Optional health insurance: traditional coverage
Patients choose their doctors and facilities
Advantage is maximum choice and no third party to pay for administration purposes
Optional health insurance: health maintenance organizations (HMOs)
Must use doctors within the HMO coverage
Advantage is the emphasis on prevention and early treatment
Optional health insurance: preferred provider organization (PPOs)
Coverage is similar to HMOs for preferred providers, with large copayments and deductibles for moving outside the plan.
Advantage is a direct contractual relationship from employers, healthcare providers, and employees
According to this, if an employee terminates employment, then the employee is entitled to continue participating in the plan for up to 36 months
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985
Purpose of COBRA
Mostly to smooth over transitions between job changed and for those with ore-existing conditions
3 reasons employee health and wellness is important to companies
Decreased number of sick days
Lower employee stress
Increased concentration at work
3 examples of policies to achieve employee health and wellness
Health insurance
Exercise clubs/gym membership discounts
Specific wellness programs (e.g., smoking cessation, chemical dependency counseling, exercise trainers, meditation centers)
6 optional insurance benefits
Health insurance Life insurance Short-term disability insurance Long-term disability insurance Long-term care insurance Retirement plan
If the employee died during the term of the policy, then the employee’s beneficiaries receive a death benefit payment
Term life insurance
Insurance that pays a percentage of a disabled employee’s salary as benefits to the employee for 6 months or less
Short term disability insurance
Insurance that pays a percentage of a disabled employee’s salary after an initial period and potentially for the rest of the employee’s life
Long-term disability insurance
Provide benefits toward long-term care and related medical expenses
Long-term care insurance
Employers have no obligation to offer retirement plans beyond what
Social security
This type of retirement plan is funded by contributions from the employer and employee
Contributory plan
This type of retirement plan is funded entirely by contributions from the employer
Noncontributory plan
Pension plan that guarantees a specified level of retirement income
The employer sets up a pension fund to invest the contributions
Defined benefit plan
Retirement plans must meet the funding requirements of what Act
the Employee Retirement Income Security Act (ERISA) of 1974
ERISA establishes this, a federal agency that insures retirement benefits and guarantees retirees a basic benefit if the employer experiences financial difficulties
The Pension Benefit Guaranty Corporation (PBGC)
Retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account
Money purchase plans, profit sharing and employee stock ownership plans, section 491(k) plans
Defined contribution plan
These plans free employers from the risks that investments will not perform as well as expected
Defined contribution plan
Retirement plan in which the employer sets up an individual account for each employee and contributes a percentage of the employee’s salary
The account earns interest at a predefined rate
Cash balance plan
This arrangement helps employers plan their contributions and helps employees predict their retirement benefits
Cash balance plan
This guarantees employees that become participants in a pension plan, and work a specified number of years, earn the right to a pension upon retirement
ERISA of 1974
Known as vesting rights
Goal of vesting requirements
To protect employees from organization termination to avoid pension obligations
3 legal issues with benefits
Tax
Antidiscrimination
Accounting
Qualified plans, which require vesting and nondiscrimination rules, allow employees to take
Multiple tax advantages
A benefits plan that offers employees a set of alternatives from which they can choose the types and amounts of benefits they want
Cafeteria-style plan
Why must organizations communicate benefits information to employees?
So that they will appreciate the value of their benefits
3 objectives of benefits
Attracting, motivating, and retaining employees
This program combines old age (retirement) insurance, survivors insurance, disability insurance, hospital insurance, supplementary medical insurance
The Federal Old Age, Survivors, Disability, and Health Insurance (OASDHI)
Workers who meet eligibility requirements for social security receive the retirement benefits according to
Their age and earnings history
Unemployment insurance focused on minimizing get the hardship of unemployment through (3)
Payments to unemployed workers
Help in finding new jobs
Incentives to stabilize employment
