Chapter 10 Flashcards
All financial rewards not
included in direct financial compensation
Indirect financial compensation (employee benefits)
Provides workers whose jobs have been terminated through
no fault of their own monetary payments for up to 26 weeks or until they find a new job.
Unemployment insurance
Provides workers whose jobs have been terminated
through no fault of their own, monetary payments for up to 26 weeks or until they find a
new job
Unemployment compensation
Provides a degree of financial protection for employees who
incur expenses resulting from job-related accidents or illnesses.
Workers’ compensation
Insurance protection for three types of medical expenses:
hospital expenses, surgical expenses, and physician’s charges
Fee-for-service plans
Over a designated period, employees must pay for services before the
insurance plan begins to pay for services
Deductible
The maximum amount an employee pays for health care during
a calendar or plan year
Out-of-pocket expenses
The percentage of covered expenses paid by the insured. Most fee-for-
service plans stipulate 20 percent coinsurance. This means that the insured will pay 20
percent of covered expenses, whereas the insurance company pays the remaining 80
percent.
Coinsurance
Health care delivery that emphasizes cost control by limiting the
employee’s choice of doctors and hospitals. These plans also provide protection against
health care expenses in the form of prepayment to health care providers
Managed care plans
HMOs are sometimes described as providing prepaid medical
services because fixed periodic enrollment fees cover HMO members for all medically
necessary services only if the services are delivered or approved by the HMO.
Prepaid medical services
Fixed amount paid for medical services and the amount varies by type of
service
Copayments
Designated by HMOs to determine whether patients require the
care of a medical specialist. This functions to control costs by reducing the number of
medically unnecessary visits to expensive specialists.
Primary care physician
Refers to the objective of helping companies maintain
control over costs while also enabling employees to make greater choices about health
care
Consumer-driven health care
Plans that require substantially higher
deductibles compared to managed care plans and traditional fee-for-service plans.
High-deductible health insurance plans
Tax-free health spending and savings accounts available
to individuals and families who have qualified high-deductible health insurance policies
as determined by IRS regulation
Health savings account (HSA)
Benefit payments made because of unilateral management
decisions in nonunion firms and from labor/management negotiations in unionized firms.
Discretionary benefits
Welfare and pension plans that meet various requirements set forth by
the Employee Retirement Income Security Act of 1974; these plans entitle employees and
employers to favorable tax treatment by deducting the contributions from taxable income.
Qualified plan
Welfare and pension plans that do not meet various requirements set
forth by the Employee Retirement Income Security Act of 1974 (ERISA), disallowing
favorable tax treatment for employee and employer contributions
Nonqualified plan
An employee’s nonforfeitable rights to retirement plan benefits.
Vesting
Employers must grant employees 100 percent vesting after no
more than three service years
Cliff vesting schedule
Workers become 20 percent vested after 2 years and to vest
at a rate of 20 percent each year thereafter until they are 100 percent vested after 6 years
of service
6-year graduated schedule
Retirement plan that provides the participant with a fixed benefit
throughout retirement.
Defined benefit plan
Retirement plan that requires specific contributions by an
employer to a retirement or savings fund established for the employee.
Defined contribution plan
Defined contribution plan in which employees may defer income up to a
maximum amount allowed.
401(k) plan
Retirement plan with elements of both defined benefit plans and
defined contribution plans
Cash balance plan
Protection for providing monetary payments to an employee’s
beneficiaries upon the employee’s death, and offered only during a limited period based
on a specified number of years or maximum age.
Term life insurance
A type of life insurance that provides protection to employees’
beneficiaries during employee’s’ employment and into the retirement years
Whole life insurance
Means of dealing with the problem of unscheduled
absences by providing a certain number of days each year that employees can use for any
purpose.
Paid time off (PTO) banks
Temporary leaves of absence from an organization, usually at reduced pay.
Sabbaticals
