Ch.9 Flashcards
Why the growth in employee benefits?
Cost effectiveness of benefits, Employer impetus, unions, Government impetus
What are the key issues in Benefits Planning
Establish plan objectives, Integrate benefits with other compensation components, ensure external competitiveness.
What are the key issues in benefits planning design and administration?
Ensure adequacy of benefits, Benefits administration:
- who should be covered?
- How much choice for employees?
- How should benefits be financed?
Financing Benefits Plans: Alternatives
non-contributory (employer pays total costs)
Contributory (costs shared between employer and employee)
Employee-financed (Employee pays total costs for some benefits)
Employer Factors influencing choice of benefits package
- Relationship to total compensation costs
- Costs relative to benefits
- Competitor offerings
- Role of benefits in attraction, retention, and motivation
- Legal requirements
- Absolute and relative compensation costs
Employee Factors influencing choice of benefits package
- Fairness in relationship to what others receive
2. Personal needs as linked to demographic characteristics such as age.
5 plan types
- One size fits all
- Modular
- Core plus options
- Cafeteria
- HCSA
Advantages of Flexible benefits
- employees choose packages that best satisfy their unique needs.
- help firms meet the changing needs of a changing workforce
- increased involvement of employees and families improves understanding of benefits
- Flexible plans make introduction of new benefits less costly.
- Cost containment- Org sets $$$ amount
Flexible Benefits Disadvantages
- employees make bad choices and find themselves not covered for predictable emergencies
- administrative burdens and expenses increase
- adverse selection- employees pick only the benefits they will use- subsequent high benefit usage increases cost.
Administering the benefits program
- communicating the benefits program
- claims processing
- cost containment
Cost Containment
- probationary periods
- benefit maximums
- coinsurance
- deductibles
- coordination of spousal benefits
- administrative cost containment
Categorization of employee benefits
- legally required payments
- retirement and savings plan
- life insurance benefits
- medical insurance
- income security benefits
- pay for time not worked
- miscellaneous benefits
Workers’ compensation
- a mandatory, gov sponsored, employer-paid no fault insurance plan that provides compensation for injuries and diseases that arise out of, and while in the course of, employment.
Workers Comp provides benefits for:
- Lost earnings due to temporary disability
- lost earnings due to permanent disability
- health care expenses
- survivor benefits after fatalities
Workers compensation is completely employer funded T or F?
True
Compensation varies from ___ to ___ % of net earnings
75% to 90%
Cost control is an ongoing concern for WCB?
Yes
What is the Canada/Quebec Pension Plan
- A mandatory government sponsored pension plan for all employed Canadians
- Funded equally by employers and employees
- provides benefits upon retirement, disability and death
Employment Insurance
- A mandatory government-sponsored plan for all employed Canadians that provides workers with temporary income replacement as a result of employment interruptions due to circumstances beyond their control
- funded by employer and employee contributions
- basic benefit is 55 percent of average insurable earnings
Employer-sponsored Pension Plans
- Plans that provide income to an employee at retirement as compensation for work performed now.
Defined Benefit plans
Employer agrees to provide a specific level of retirement pension, the exact cost of which is unknown.
Defined contribution plans
Employer agrees to provide specific contributions but the final benefit is unknown
