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CHAPTER 14: PROVIDING EMPLOYEE BENEFIT, Optional are personal days…
CHAPTER 14: PROVIDING EMPLOYEE BENEFIT
The Role of Employee Benefits
Compensation to employees in form other than cash
Help attract, retain & motivate employees
Employers
- help tailor their compensation with employees needs
Employees
- help to maintain economic security
Benefits impose significant cost
Certain benefits are required by law
Creative benefits packages make companies competitive
Benefits Required By Law
Social security
share cost through payroll tax
Benefits
Old age (retirement) insurance
Unemployment insurance
Survivor's insurance
Disability insurance
Hospital insurance
Medical insurance
Depend on person's age and earnings history
Malaysia - The Malaysia Social Security (SOCSO)
Unemployment insurance
Federal mandated program administered by states
Minimize unemployment hardship
Most funding comes from taxes on employers
To receive benefits, workers must meet four conditions
Can demonstrate they were employed
Be available at work
Actively seeking work
Were not discharge for cause, did not quit voluntarily, and are not out of work because of a labor dispute
Workers' compensation
provide benefits to workers who suffer work-related injuries/illness or to their survivors
Operate under principle of no-faulty liability:
Employee - does not need to show that employer was grossly negligent in order to receive compensation
Employer - protected from lawsuits
Generally 2/3 of workers' earnings and tax free
Four major categories of benefits
Disability income
Medical care
Death benefits
Rehabilitative benefits
Cost influenced by
type of occupation involved
state where company is located
employer's experience rating
Family & Medical Leave Act [FMLA]
Organisations with 50 or more employees must provide up to 12 weeks of unpaid leave:
After childbirth or adoption
To care for a seriously ill family member
For an employee's own serious illness
Same/comparable job guaranteed upon employee's return
Must comply with Pregnancy Discrimination Act
Patient Protection & Affordable Care Act
Employers - not required by law to provide health care
Small business can buy insurance from SHOP
Law is complex and changing
HR professionals - continue to educate themselves on the requirements
Selecting Employee Benefits.
The Organizational Objectives
Expectations of current employees and prospective recruits.
Organization’s goals, objectives, and budget.
Employees' Expectation and Values
Cafeteria-style plan: employees can choose the types and amounts of benefits they want from a set of alternatives.
Empowers employees.
Benefits' Costs
Approaches to saving money-Exclude or limit coverage for certain types of claims.
Shift more of the cost to employees.
Legal Requirements for Employee Benefits
Tax Treatment of Benefits
Employees may immediately take tax deduction on contributions to the plans.
No immediate tax on employee for amount employer contributes.
Tax-free earnings on money in retirement fund.
Antidiscrimination Laws
Pregnancy Discrimination Act.
Age Discrimination in Employment Act (ADEA).
• Older Workers Benefit Protection Act of 1990.
Accounting Requirements
Ensures that statements are true picture of financial status.
Employers must set aside funds they expect to need for benefits to be paid after retirement.
Statement must list funds for retirement as future cost obligations.
Communicating Benefits to Employees
Employees must be given information about benefits.
Benefits are necessary to attract, motivate, and retain talent.
It is difficult for employees and applicants to understand the value of benefits, so
companies must help.
Employers can use a variety of media to communicate.
Forms of Paid Leave
Paid Leave- Major categories: vacations, holidays, sick leaves
no legal requirement for paid leave in U.S.
Insurance Benefits
Group Insurance
1) Medical Insurance
Example: Hospital expenses, dental/ vision care, etc
Must meet the requirements of the Consolidated Omnibus Budget Reconciliation Act (COBRA).
3) Wellness programs- to encourage employees to reduce
health risks as insurance costs climb for both workers and employers
4) Disability Insurance- Short-term and long-term
5) Long-term Care Insurance- such as care in a nursing home.
Control of the cost for health coverage
Health maintenance organizations (HMO): requires patients to receive their medical care from the HMO's health care personal
Managed care: the insurer plays a role in decisions about health care, avoiding unnecessary
procedures.
Preferred provider organizations (PPO) ; contracts with health care professionals to provide services at a reduced fee
Flexible spending accounts: employees set aside a portion of pretax earnings to pay for eligible expenses.
High-deductible health plans: typically brings together insurance with a high deductible and
a medical savings account with a specified limit
Accountable care organizations (ACO): a network of health care providers that can practice value-based care
Employee wellness programs (EWP)Communications, activities, and facilities designed to change health-related behaviors
2) Life Insurance
Term-life insurance: if employee dies during term of policy, beneficiaries receive a death benefit payment.
Benefits for accidental death and dismemberment.
Optional Benefits Programs
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Retirement Plans
:
Cash balance plan
Defined-contribution plan
Defined-benefit plan
Meets requirements of Employee Retirement Income Security Act (ERISA).
Aided by the Pension Benefit Guarantee Corporation (PBGC).
Noncontributory plan
Contributory plan
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Government Requirements for Vesting and Communication
Vesting rights
Summary plan description (SPD)
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Family-Friendly" Benefits
Family leave
Child care
College savings
Elder care
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Other Benefits
Subsidized cafeterias.
On-site health care services, fitness centers, dry cleaning.
Moving and relocation.
Employee discounts.
Tuition reimbursement.
On and off-site company recreation.
Sabbaticals.
Optional are personal days accumulate with length of service.