Module 3--Benefits Flashcards
What are the two primary elements of benefits programs.
■ Income protection programs – designed to protect the standard of living of the employee and his/ her family as well as protect from catastrophic losses
■ Pay for time not worked programs – designed to protect the employee’s income during periods when the employee is not working
Identify and describe specific factors that influence benefits programs.
■ Competitive practices – All of the five total rewards elements are influenced by competitive practices and may be geographically or employer-based. Competitive practices may result in richer benefits programs in some regions. They may also cause employers to re-evaluate the level of benefits in other regions if the employer’s package is significantly more generous than that of its competitors.
■ Employee demands – Employees often request new or different benefits. Unions sometimes represent workers in negotiating with companies for benefits.
■ Regulatory/legal environment – In many countries, the government is the major factor influencing growth and change of employee benefits. It is also the main provider of employee benefit programs. In other countries, the government mandates or encourages employers to provide certain programs.
■ Taxation
* Benefits taxation affects:
– Benefits levels through the imposition of benefits limits
– The source of benefits (e.g., directly from company or through a pension fund)
– The employee/company cost-sharing basis
■ Corporate philosophy/business objectives – Influences outside the organization must be reconciled with the company’s philosophy and business objectives.
Factors Influencing Benefits
* Competitive practices
* Employee demands
* Regulatory and taxation
* Corporate philosophy
* Costs and perceived value
* Changing workforce demographics
■ Costs – Rising employee benefits costs are a substantial issue in many countries. Some organizations have tried to control their expenses by passing on more costs to employees through cost sharing and managing eligibility.
■ Perceived value – Employers sometimes reconsider offering benefits that are not perceived by the workforce to be of value.
■ Demographic changes – As the needs of a workforce change, employee benefits also need to change.
What are two of the Major Benefit Laws?
■ ERISA – The Employee Retirement Income Security Act is one of the most extensive pieces of
legislation that affects U.S. employee benefits plans. Responsibility for the interpretation and
enforcement is divided among the Department of Labor, the Department of the Treasury and the
Internal Revenue Service. The act is designed to:
* Protect the interests of participants and their beneficiaries in employee benefits plans
* Provide rules on the federal income tax effects of transactions associated with employee
benefits plans
* Create federal law for employers with multiple locations to provide one contract for the
same carrier instead of separate accounts
* Establish minimum standards for pension plans in private industry
■ PPACA – The Patient Protection and Affordable Care Act, commonly called the Affordable Care Act, is a comprehensive legislation that affects employers, individuals, health-care providers and insurance companies. It is enforced by Health and Human Services Department and Department of the Treasury and the Internal Revenue Service. Purposes include:
* Expand access to coverage to uninsured Americans
* Reform delivery system to improve quality * Lower overall costs of providing health care
What are 3 of the Income Protection Programs
■ Health care benefits
■ Welfare benefits
■ Retirement benefits
What are Common Health Care Benefits
- Dental plans
- Vision plans
- Prescription drug plans
- Behavioral health plans
What are the Common Medical Plans?
- Indemnity
- Managed indemnity
- HMO – health maintenance organization
- POS – point of service
- PPO – preferred provider organization
- CDHP – consumer driven health plan (in U.S.)
– HRA – Health reimbursement account
– HSA – Health saving account
What are the two main Welfare Benefits?
■ Death benefits – Company-provided death benefits are prevalent in most countries.
■ Disability insurance – This is also known globally as long-term disability, invalidity or permanent ill health. It typically refers to injuries or illnesses that are nonoccupational.
What are the sources of Retirement Benefits
Sources of retirement benefits
* Government programs
* Company-provided programs
What is the Defined Benefit plan?
generally provide better benefits to employees with longer service
What is the Defined Contribution Plan
Defined contribution (DC) plans – characterized by employee and employer contributions made to individual participant accounts
What are Pay for time not worked programs?
■ At work – For U.S. employers, many items are guided by the Fair Labor Standards Act (FLSA).
■ Not at work – often guided by company policy, practice or union contract. Practices vary regarding holiday and vacation entitlements across countries and regions. In addition, in many
countries the term “vacation” can also be referred to as “holiday.”
- Which of the following best describes the two primary elements of benefits programs?
A. Income protection and pay for time not worked
B. Health insurance and social security
C. Medical and dental plans
D. Income protection and retirement
A. Income protection and pay for time not worked
- Which of the following is a major factor influencing the growth and change of employee benefits?
A. The availability and quality of internal data
B. The recent market data
C. The government
D. Defined benefits retirement plans
C. The government
- Which of the following is typically considered a type of income protection program?
A. Vacation/holiday benefits
B. Retirement benefits
C. Sick leave
D. Variable pay
B. Retirement benefits
- Which of the following refers to a pay for time not worked program?
A. Merit-based pay
B. Holiday pay
C. Weekend differential pay
D. Commission pay
B. Holiday pay
