EMPLOYMENT BENEFITS

1. EMPLOYMENTBENEFITS

2. Employee Benefit Programs • Part of Total Compensation • Some Government Mandated • Some Incentive Related • Part of Cost of Doing Business • Indirect Compensation

3. Factors Contributing toGrowth of Benefit • Discourage Unions • Benefits not Always Taxed • Easier to negotiate Than Wages • Attitude of General Public

4. Objectives of Benefit Programs • To Improve Morale • To Meet Health and Safety Needs • To Attract Good Employees • To Reduce Turnover • To Reduce Unionism • To Maintain a Competitive Position • To Enhance the Organization's Image

5. Basis for Employee Benefits Collective Bargaining Financial Resources Recruiting Competition Employee Participation Providing Individual Benefits Employee Needs Communicating Benefits Organizational Objectives Human Resources Objectives Employee Benefit Package Government Regulations EMPLOYEES

6. Employee Benefits Required by Law

7. Types of Benefits • Time-off (vacation, sickness, holidays, etc.) • Legal Social Security • Medical Payments • Retirement • Paid Rest Periods (breaks) • Life Insurance

8. Categories of Employee Benefits • BENEFITS REQUIRED BY LAW • Old age and survivors insurance (OASI) • Unemployment insurance • Workers’ compensation • Leaves without pay

9. Categories of Employee Benefits • PAYMENT FOR TIME NOT WORKED • Holidays • Vacations • Sick leave • Supplemental unemployment benefits (SUB) • Jury duty, military service, and bereavement leaves

10. Categories of Employee Benefits • INSURANCE • Group life insurance • Health care insurance • Legal insurance

11. Categories of Employee Benefits • RETIREMENT BENEFITS • Pension plans • Deferred compensation plans • Pre-retirement counseling

12. Categories of Employee Benefits • EMPLOYEE SERVICES • Employee assistance program • Counseling services • Educational assistance plans • Child care • Elder care • Food services • Health services • Legal services • Financial planning • Housing and moving expenses • Transportation pooling/parking • Purchasing assistance • Credit unions • Social and recreational services • Awards

13. Employee Benefit Costs • 30-40% of the Annual Wages • Fastest Growing Part of Total Compensation

14. Typical Cost of Benefits

15. Health Plan Costs Climb Higher AnnuallyAverage Annual Health Plan Costs Per Employee $4000 $1500 COST YEAR

16. Flexible Benefits Plan(Cafeteria Plans) • Benefit plan that enable individual employees to choose the benefits that are best suited to their particular needs.

17. Flexible Benefit Plans • Employees Choose • Cafeteria Plans • Cost Attached • Some Government Requirements

18. Major Concerns • Rising Costs • Controlling Costs • Legal Concern

19. Pension Plans: Provide for Retirement Income • Federal Regulation - Not Total Coverage • Reward for Long Service Originally • Now Based on Earnings Philosophy

20. Types of Pension Plans • Contributory (joint pay) • Non-Contributory (employer pays) • Classified by Amount of Benefits to be Paid

21. Noncontributory Plan • A pension plan where contributions are made solely by the employer.

22. Defined Benefit Plan • Amount is Specifically Defined • Years of Service Required • Average Earnings During Certain Years • Age at Retirement “Example: Average Annual Salary of Last 3-5 years x number of years of service”

23. Defined Contribution Plan • Basis Upon Which the Employer Pays • Paid to Thrift Plan, IRA, etc. • Benefits Depends Upon Accumulation

24. Federal Regulation (ERISA) • Employee Retirement Income Security Act • Informed About Facts • Benefits Defined • Complex Law

25. Vesting • A guarantee or accrued benefits to participants at retirement age, regardless of their employment status at that time.

26. Vesting • Guarantee of Benefits • Paid at Retirement • Regardless of Last Employment • Non-revokable by Employer • Vested After XX Years • Complex Rules (ERISA)

27. Vesting Provisions (General Plans) General Provisions* • 5-Year Vesting: An employee must receive nonforfeitable rights after five years of service to all accrued benefits derived from employer contributions. • 3- to 7-Year Vesting: An employee must receive nonforfeitable rights after three years of service to 20 percent of accrued benefits derived from employer contributions. Nonforfeitable rights increase 20 percent each year until the employee is 100 percent vested in the employer-derived accrued benefits after 7 years of service.

28. Social Security Insurance • Guarantee of Income • Retirement, Disability, Unemployment • Time Limits • Complex Rules • Dedicated Tax on Earnings

29. Pension Funds • Privately Managed • $3 Trillion in Assets • Invested in Stocks and Bonds

30. Unemployment Insurance • Defined Period (26 weeks) • Register for Work Requirement • Funded by Payroll Tax • Amount Based on Wages • Supplemental Unemployment Benefits (Private)

31. Worker’s Compensation Insurance • Federal-or-state-mandated insurance provided to workers to defray the loss of income and cost of treatment due to work-related injuries or illness.

32. Worker's Compensation • Work Related Accident • Compulsory • Complex Law • Based on Wages • Permanent or Partial Disability

33. Health Care Insurance • Partial Government Funded • Mostly Private Insurance

34. Why AreHealth Care CostsSkyrocketing? • Federal Regulation • Changes in Pricing • Advances in Medicine • Malpractice Insurance • Labor Costs • Over Utilization of Facilities • Elder Care • Transplants/AIDS/Other

35. Health Maintenance Organizations (HMOs) • Organizations of physicians and health care professional that provide a wide range of services to subscribers and dependents on a prepaid basis.

36. Cost Containment Vehicles • HMO (Health Maintenance Organization) • Group of Professionals • Services for Fixed Amounts • PPO (Preferred Provide Organization) • Group of Professionals • Guarantees Cost Efficiency for Groups • Employer Steers Employees to PPO

37. Retirement Planning Programs • Company Pension Plans • Social Security/Medicare • Health Care Insurance • Personal Financial Planning • Legal Concerns • Investments/Tax Planning • Volunteerism • Part-Time Employment • Housing Options • Relocation

38. Silver Handshake • An early-retirement incentive in the form of increased pension benefits for several years or a cash bonus.

39. Decisions Relating to Pensions

40. Benefit Links Hewitt Associates UCbencom