Module 1 - Employee Benefits: The Environment Flashcards
The broad view of employee benefits
Considers employee benefits to be virtually any form of compensation other than direct wages paid to employees.
The broad view of employee benefits includes both _____ and_____.
Government-mandated benefits and private plans
Examples of benefits that would be included in the broad view
Employer’s shares of social security tax paid on behalf of an employee; paid vacations; pension plans
Benefits that would be included in the narrow view of employee benefits
Any type of plan sponsored or initiated unilaterally or jointly by employers and employees and engages in providing benefits that result from the employment relationship and that are not underwritten or paid directly by government.
List the categories of benefits that generally are considered to fall under a broad
view of employee benefits.
(a) Legally required benefits—employer’s share of funding for Social Security
benefits for the elderly and disabled and their dependents that includes
retirement income, survivor and disability insurance, and hospital and medical
insurance (Old-Age, Survivors, Disability, and Insurance (OASDI)); workers’
compensation (WC); unemployment insurance (UI); and state temporary
disability income insurance
(b) Payments for time not worked, e.g., rest periods, lunch periods, vacations and holidays
(c) Employer’s share of medical and medically related benefits
(d) Employer’s share of retirement and savings plan payments
(e) Miscellaneous benefits, e.g., employee discounts, severance pay, education expenditures and child care, etc.
Legally required benefits included in the broad view of employee benefits
Employer’s share of funding for Social Security benefits for the elderly and disabled and their dependents that includes retirement income, survivor and disability insurance, and hospital and medical insurance (Old-Age, Survivors, Disability, and insurance (OASDI); workers’ compensation (WC); unemployment insurance (UI); and state temporary disability income insurance
Examples of payments for time not worked included in the broad view of employee benefits
rest periods, lunch periods, vacations, and holidays
3 What benefits are typically excluded when the term “employee benefits” is viewed
and defined in a narrow sense?
Those that are legally mandated, notably the employer
funding for Social Security benefits and workers’ compensation.
Explain the types of business- or human resource-related reasons for firms
establishing employee benefit plans.
Attract and retain capable employees.
Employers hope that good benefit plans will foster corporate efficiency, productivity and improved employee morale.
Concerns for employees’ welfare and social objectives.
2.2 What impact have labor unions historically had in employee benefits? (Text, p. 4)
They have impacted the growth of employee benefit plans.
In what year did the National Labor Relations Board rule that the duty to bargain in good faith over wages also included insurance and fringes such as pension benefits?
1948
What case decided that insurance and fringes such as pension benefits would be included in bargaining over wages?
Inland Steel in 1948
What case decided that wages also included a health an accident plan when it came to bargaining?
W.W. Cross & Co. soon after the Inland Steel case of 1948.
What does NLRB stand for?
National Labor Relations Board
How did the case of Inland Steel impact employee benefits programs?
The NLRB ruled in 1948 that insurance and fringe benefits like pensions would be included in wages when it came to bargaining.
How did the case of W.W. Cross & Co. impact employee benefits?
NLRB decided soon after the Inland Steel case that health and accident policies would also be considered in wage bargaining.
2.3 Explain the significance of the Taft-Hartley Act in employee benefit planning.
(Text, p. 4)
Sets forth the framework for good-faith collective bargaining over wages, hours, conditions and terms of employment and employee benefits.
Established distinction between retirement benefits and welfare benefits.
Provides regulatory framework for administration of these benefits in a collective bargaining agreement.
Is legislative basis on which jointly trusteed benefit plans are founded.
Labor-Management Relations Act is also known as
Taft-Hartley Act
- Summarize three major federal tax advantages associated with employee benefit
plans. (Text, p. 5)
- Summarize three major federal tax advantages associated with employee benefit
- Most contributions to ee benefit plans by employers are deductible as long as they are reasonable business expenses.
- These employer contributions are generally not considered income to employees.
- In certain types of retirement and capital accumulation plans, benefits accumulate tax-free to the employee until distributed.
2.5. Why is the employee benefit mechanism an effective and efficient way of providing
insurance coverage? (Text, p. 5)
Employment-based insurance is convenient for employees.
EEs don’t need to search for individual coverage.
Often less expensive for EEs.
Providers and suppliers find it more convenient and simpler to communicate and market EE benefits through an employer.
Overall questions that are generally necessary to evaluate either an existing or a newly created EE benefit plan.
What benefits should be provided?
Who should be covered by the benefit plan?
Should employees have benefit options?
How should the benefit plan be financed?
How should the benefit plan be administered?
How should the benefit plan be communicated?
3.1 What is the starting point in the design of any employee benefit plan? (Text, p. 8)
Setting overall objectives from the standpoints of both the employer and the EEs.
What groups or categories of individuals should be considered?
Full-time EEs, part-time, retirees, dependents of EEs, survivors of deceased EEs,
What are the possibilities for plan financing?
Financed entirely by the employer (noncontributory), on some shared basis between EE and employer (contributory).
