Managing Employee Benefits
¡ Define a benefit and identify four strategic benefits considerations.
¡ Summarize why benefits management and communications efforts are important.
¡ Distinguish between mandated and voluntary benefits and list three examples of each.
¡ Explain the importance of managing the costs of health benefits and identify some methods of doing so.
¡ Discuss the shift of retirement plans from defined-benefit to defined-contribution and cash balance programs.
¡ Describe the growth of financial, family-oriented, and time-off benefits and their importance to many employees.
Benefits and HR Strategy
Ø An indirect reward given to an employee or group of employees for organizational membership
FIGURE 14-1 Employer Compensation and Benefits Costs per Hour, Private Industry
Strategic Benefits Considerations
Benefits Management Components
• Decisions Affecting Benefit Design:
Ø How much total compensation?
Ø What part of total compensation should benefits comprise?
Ø What expense levels are acceptable for each benefit?
Ø Which employees should get which benefits?
Ø What are we getting in return for the benefit?
Ø How will offering benefits affect turnover, recruiting, and retention of employees?
Ø How flexible should the benefits package be?
FIGURE 14-4 Typical Division of HR Responsibilities: Benefits Administration
HR and Benefits Administration
FIGURE 14-5 Common Benefits Metrics
FIGURE 14-6 How the Typical Benefits Dollar Is Spent
FIGURE 14-7 Types of Mandated and Voluntary Benefits
FIGURE 14-8 Private Industry Workers with Health Benefits
Consumer-Driven Health (CDH) Plans
FIGURE 14-9 Components of Consumer-Driven Health Plans
FIGURE 14-10 Overview of Consolidated Omnibus Budget Reconciliation Act (COBRA) Provisions
• Health Insurance Portability and Accountability Act (HIPAA) of 1996
Ø Allows employees to switch their health insurance plan from one company to another, regardless of pre-existing health conditions.
Ø Requires employers to provide privacy notices to employees and to not disclose of health information without authorization.
• Flexible Spending Accounts
Ø Benefits plans that allow employees to contribute pre-tax dollars to fund certain additional benefits.
• Social Security Act of 1935
Ø Provides old age, survivor’s, disability, and retirement benefits.
v Federal payroll tax (7.65%) on both
the employer and the employee.
v Medicare taxes are 2.9%.
v Benefit payments are based on
an employee’s lifetime earnings.
Ø Administered by the Social
FIGURE 14-11 Median Age at Retirement by Gender
Worker Participation in Pension Plans
Pension Plan Concepts
Individual Retirement Options
Protection of Retirement Benefits
Retirement Benefits and Legal Requirements
FIGURE 14-13 Common Types of Financial Benefits
Family Medical Leave Act (FMLA)
Ø Employers with 50 or more employees
Ø Employees who have worked at least 12 months and 1,250 hours in the previous year.
Ø Eligible employees can take up to a total of 12 weeks of unpaid leave in a 12-month period to attend to a family or serious medical condition.
Ø Employees must exhaust all other forms of leave.
Ø Employees have rights to continued health benefits and to return to their job.
FIGURE 14-14 Percentages of Employees Taking Family or Medical Leave
Benefits for Domestic Partners
• Domestic Partners or Spousal Equivalents
Ø Unmarried employees who are living with individuals of the opposite sex
Ø Gay and lesbian employees who have partners
• Affidavit of Spousal Equivalence
Time-Off and Other Benefits
FIGURE 14-15 Percentage of Companies with Various Paid-Time-Off Plans