Benefits and Services: Part Four - Compensation

Chapter 13
Benefits
and Services
Part Four | Compensation

Copyright 2011 Pearson Education, Inc.
publishing as Prentice Hall
PowerPoint Presentation by Charlie Cook

The University of West Alabama
Policy Issues in Designing Benefit Packages

Which benefits to offer
Who will be covered
Whether to include
retirees
Coverage during
probation
Policy Issues
How to finance benefits
Degree of employee
choice
Cost containment
procedures
Communicating
benefits options
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
132
Benefits
Types of Employee Benefits
Pay for time

not worked
(Supplemental
pay benefits )
Insurance
benefits
Retirement
benefits
Personal
services
133
Pay For Time Not Worked

Vacations and
holidays
Unemployment
insurance
Sick leave
Supplemental
Pay Benefits
Severance pay
Parental leave
Supplemental
unemployment
benefits
134
Pay for Time Not Worked

Unemployment Insurance mcq
Provides benefits if a person is unable to work through
some fault other than his or her own.

The benefits derive from a tax on employers that can range
from 0.1% to 5% of taxable payroll

An employers unemployment tax rate reflects its rate of
employee terminations.
Vacations and Holidays

Number of paid leave days and holidays varies by employer.
Qualification for and calculation of holiday and leave pay
varies by employer.
Premium pay for those who work on holidays.
135
Pay for Time Not Worked (contd)

Sick Leave
Provides pay to an employee when he or she is out of work due
to illness.
Usually up to 12 days per year
Costs for misuse of sick leave
Parental Leave mcq

The Family Medical Leave Act of 1993 (FMLA)
Up to 12 weeks of unpaid leave within a one-year period.
Employees on leave retain their health benefits.
Employees have right to return to their previous job or

equivalent position.
The costs associated with hiring temporary replacements,

training them, and compensating for their lower productivity
can be considerable.
136

Severance Pay mcq
A one-time payment when terminating an employee.
Reasons for granting severance pay:

Acts as a humanitarian gesture and good public relations.
Mirrors employees two-week quit notice.
Avoids litigation from disgruntled former employees.
Reassures employees who stay on after the employer
downsizes its workforce of employers good intentions.
137

Supplemental Unemployment Benefits (SUB)
Payments that supplement the laid-off or furloughed employees
unemployment compensation to help the person maintain his or

her standard of living while out of work.
SUB payments are made to employees for the time the

employee is out of work due to layoffs, reduced workweeks,
or facility relocations.
138
Insurance Benefits
Workers Compensation
Provides income and medical benefits to work-related accident victims
or their dependents, regardless of fault.
In the event of a workers death or disability, the persons

dependents receive a cash benefit based on the workers earnings
per week of employment.
In addition to these cash benefits, employers must provide medical,

surgical and hospital services as required for the employee.
Controlling workers compensation costs
Screen out accident-prone workers.
Make the workplace safer by instituting effective safety and health

programs and complying with government safety standards.
Investigate accident claims thoroughly.
Use case management to return injured employees to work as soon

as possible.
139
Insurance Benefits (contd)

Hospitalization, Health, and Disability Insurance
Helps protect employees against hospitalization costs and the
loss of income arising from off-the-job accidents or illness.
Most employers health plan cover health-related expenses

like doctors visits, eye care and dental services.
Disability insurance provides income protection for salary

loss due to illness or accident.
1310

Health Maintenance Organization (HMO)
A medical organization consisting of specialists
(surgeons, psychiatrists etc.) operating out of a health

care center.
Provides routine medical services to employees

who pay a nominal fee.
Receives a fixed annual contract fee per employee

from the employer (or employer and employee),
regardless of whether it provides that person with
service.
1311

Preferred Provider Organizations (PPOs)
Groups of health care providers that contract with
employers, insurance companies or third-party payers to

provide medical care services at a reduced fee.
Employees can select from a list of preferred individual

health providers.
Providers agree to provide discounts.
1312
Trends in Employer Health Care Cost

Controls
Premiums and copayments from employees
Communication and
empowerment
Cost-Control
Trends
Wellness programs
Health savings accounts
Claim audits
1313
Other Benefits Issues

Long-Term Care
Long-term care insuranceto support things like nursing
assistance to former employees in their old ageis a key benefit.

Employers can provide insurance benefits for long-term care
such as adult day care.
Life Insurance mcq

Types
Group life insurance Offers lower rates

Accidental death and dismemberment coverage Provides
lump-sum benefit in addition to life insurance benefits in case
of accidental death, loss of limbs or sight.
Benefits for Part-Time and Contingent Workers

Leave and health care benefits available to part-time workers.
1314
Retirement Benefits
Social Security
A federal payroll tax paid by both the employee and the
employer on the employees wages.

Three types of benefits:
Retirement benefits at the age of 62
Survivors or death benefits paid

to the employees dependents
Disability payments to disabled employees

and their dependents
The Medicare program mcq
Health services to people age 65 or older
1315
Pensions and Early Retirement

Early Retirement Windows
Offer specific employees (often age 50-plus) an incentive
to voluntarily retire earlier than usual.

Offer a combination of improved or liberalized pension benefits
plus a cash payment.

Require careful program construction to avoid oversubscription.
1316
Personal Services
Credit Unions
Separate businesses established with the employers assistance
to help employees with their borrowing and saving needs.
Employee Assistance Programs (EAPs)

Provide counseling and advisory services:
Personal legal and financial services
Child and elder care referrals
Adoption assistance
Mental health counseling
Life event planning
1317
Family-Friendly (or WorkLife) Benefits

Subsidized child care
Sick child benefits
Elder care
Time off
Subsidized employee transportation
Food services
Educational subsidies
Fitness and medical facilities
Flexible work scheduling
1318
Flexible Benefits Programs

Cafeteria (Flexible Benefits) Approach
A cafeteria plan is one in which the employer gives each
employee a benefits fund budget and lets the person

spend it on the benefits he or she prefers, subject to two
constraints.
The employer must limit the total cost for each
employees benefits package.
Each employees benefits plan must include certain
required items such as Social Security, workers
compensation and unemployment insurance.
Employee Leasing
Employee leasing firms are also called Professional
employer organizations or staff leasing firms.

Handle human resources functions (such as recruiting,
hiring etc.) for leased employees of small firms.
1319
Flexible Work Schedules (I. Question)

Flextime
Compressed workweeks
Workplace flexibility
Job sharing
Work sharing
1320

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Chapter 13

Part Four | Compensation

PowerPoint Presentation by Charlie Cook

Policy Issues in Designing Benefit Packages

Who will be covered

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Types of Employee Benefits

Pay for time

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Pay For Time Not Worked

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Pay for Time Not Worked

some fault other than his or her own.

from 0.1% to 5% of taxable payroll

Vacations and Holidays

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Pay for Time Not Worked (contd)

Usually up to 12 days per year

Costs for misuse of sick leave

Parental Leave mcq

Up to 12 weeks of unpaid leave within a one-year period.

Employees on leave retain their health benefits.

Employees have right to return to their previous job or

The costs associated with hiring temporary replacements,

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Pay for Time Not Worked (contd)

Reasons for granting severance pay:

Reassures employees who stay on after the employer

downsizes its workforce of employers good intentions.

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Pay for Time Not Worked (contd)

unemployment compensation to help the person maintain his or

SUB payments are made to employees for the time the

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

or their dependents, regardless of fault.

In the event of a workers death or disability, the persons

In addition to these cash benefits, employers must provide medical,

Controlling workers compensation costs

Screen out accident-prone workers.

Make the workplace safer by instituting effective safety and health

Investigate accident claims thoroughly.

Use case management to return injured employees to work as soon

Insurance Benefits (contd)

loss of income arising from off-the-job accidents or illness.

Most employers health plan cover health-related expenses

Disability insurance provides income protection for salary

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Insurance Benefits (contd)

(surgeons, psychiatrists etc.) operating out of a health

Provides routine medical services to employees

Receives a fixed annual contract fee per employee

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Insurance Benefits (contd)

employers, insurance companies or third-party payers to

Employees can select from a list of preferred individual

Providers agree to provide discounts.

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Trends in Employer Health Care Cost

Health savings accounts

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Other Benefits Issues

assistance to former employees in their old ageis a key benefit.