Chpt 9 summary Flashcards
Employee benefits have been increasing in cost for the past 50 years and now constitute a significant amount of
compensation expense in all Canadian organizations, on the order of 40 percent of payroll.
T
Key issues in benefits planning and design are
(1) the role of benefits in a compensation package, such as attracting and/or retaining employees;
(2) external competitiveness with benefits offered by other organizations;
(3) benefits adequacy to meet the needs of employees and their families when facing serious medical problems, retirement, or other life issues; and
(4) cost-effectiveness.
Key administrative issues include
(1) who should be included in these plans,
(2) the level of flexibility in employee choice regarding their benefits, and
(3) employee–employer costsharing
Three important functions in benefits administration are
benefit communication, claims processing, and cost
containment.
There are three legally required benefits in Canada, in addition to government-sponsored healthcare plans:
Workers’ Compensation, Canada/Quebec Pension Plan, and Employment Insurance. Workers’ Compensation
provides compensation for injuries and diseases that arise out of, and while in the course of, employment. The
Canada/Quebec Pension Plan is a pension plan for all employed Canadians. Employment Insurance provides
workers with temporary income replacement as a result of employment interruptions due to circumstances such as
work shortages, sickness, maternity leave, and so on.
In a defined benefit pension plan, the employer agrees to provide a specific level of retirement pension, the
exact cost of which is unknown. In a defined contribution pension plan, the employer agrees to provide specific
contributions, but the final benefit is unknown.
True
The two general strategies for controlling medical benefit costs are
(1) motivating employees to change their demand for healthcare through changes in the design or administration of the plan, and
(2) the promotion of preventive health programs.
