Managing Employee Benefits Flashcards
Benefit
An indirect reward given to an employee or group of employees for organizational membership.
Gross-up
To increase the net amount of what the employee receives to include the taxes owed on the amount.
Flexible benefits plan
Program that allows employees to select the benefits they prefer from groups of benefits established by the employer.
Adverse selection
Situation in which only higher-risk employees select and use certain benefits.
Open enrollment
A time when employees can change their participation level in various benefit plans and switch between benefit options.
Third-party administrator
A vendor that provides administrative services to an organization.
Self-service
Technology that allows employees to change their benefit choices, track their benefits balances, and submit questions to HR staff members and external benefit providers.
Cafeteria benefit plan
Employees are given a budget and can purchase the bundle of benefits most important to them from the “menu” of options offered by the employer.
Workers’ compensation
Security benefits provided to workers who are injured on the job. Legally required.
No-fault insurance
Injured workers receive benefits even if the accident was their fault. Legally required.
Exclusive remedy
Workers’ compensation benefits are the only benefits injured workers may receive to compensate for a work-related injury. Legally required.
Three-legged stool
A model showing the three source of income to fund an employee’s retirement.
Vesting
Right of employees to receive certain benefits from their pension plans.
Portability
A pension plan feature that allows employees to move their pension benefits from one employer to another.
Retirement plan
Retirement program established and funded by the employer and the employees.
Defined benefit (DB) plan
Retirement program in which employees are promised a pension amount based on age and service.
Defined contribution (DC) plan
Retirement program in which the employer makes an annual payment to the employee’s pension account.
401(k) plan
Agreement in which a percentage of an employee’s pay is withheld and invested in a tax-deferred account.
Auto-enrollment
Employee contributions to a 401(k) plan are started automatically when an employee is eligible to join the plan.
Cash balance plan
Retirement program in which benefits are determined on the basis of accumulation of annual company contributions plus interest credited each year.
Deductible
Money paid by an insured individual before a health plan pay for any medical expenses.
Copayment
The portion of medical expenses paid by the insured individual.
Managed care
Approaches that monitor and reduce medical costs through restrictions and market system alternatives.
Consumer-driven health (CDH) plan
Health plan that provides employer financial contributions to employees to help cover their health-related expenses.
Qualifying event
An event that causes a plan participant to lose group health benefits.
Serious health condition
Health condition requiring in-patient, hospital, hospice, or residential medical care or continuing physician care.
Paid-time-off (PTO) plan
Plan that combines all sick leave, vacation time, and holidays into a total number of hours or days that employees can take off with pay.
