Indirect Compensation: Benefits

1. Indirect Compensation: Benefits Human Resource Management

2. Health care insurance Medical Dental Vision Life insurance Disability insurance Retirement plans Defined benefit Defined contribution Benefits: Indirect Compensation Protection Programs

3. Government Mandated Benefits • Social Security • Retirement • Survivor • Disability benefits • Unemployment compensation • Workers Compensation • No fault concept

4. "Health and Welfare" Plans • Health care • Medical care • Costs controlled through controlling utilization • This is what “managed health care” does • Also include dental, vision care and prescription drugs • Disability insurance • Survivor benefits

5. Basic Major Medical Model • These plans have significantly decreased in number • Also known as “indemnity plans” • Full coverage on first dollar spent • Deductible typically $100 • Co-pay (co-insurance) 80-20

6. Managed Care Continuum Basic Medical PPO POS HMO Model Freedom of choice Limited choice High Cost Lower cost

7. Managed Care Plans • PPO (Preferred provider organization) • Choose health care providers from a “network” • Cheaper for patient if health care provider is in the network • Can go outside the network, but it will cost them more

8. Managed Care Plans • POS (Point of service plan) • Very similar to preferred provider plans, but must choose a primary care physician for a “gatekeeper” within the network • Patient makes choice at the “point of service” • More limited choice within the network because of PCP

9. Managed Care Plans • HMO: (Health maintenance organization) • Limited choice; network only • Doctor is "primary gatekeeper" • HMO's lower costs by negotiating with providers • Capitalizes on volume

10. Retirement: Defined Benefit Plan • Benefit is defined; cost is unknown • Company pays whatever it takes to provide the benefit • Requires actuarial service • Financial risk is on the employer • General higher benefits for career employees

11. Retirement: Defined Contribution Plan • Employee and company contributions are defined/known; benefit is unknown • Pension equals whatever the total amount in the fund will provide • Financial risk is on the employee • Can provide substantial benefit to shorter career employees • Does not require actuarial services

12. Regulation of Pension Plans • ERISA • Plan participation rules • Vesting • Nondiscrimination Rules • Fiduciary standards • Reporting and disclosure • Plan termination insurance (PBGC)

13. At work Changing time Breaks Not at work Vacation Holidays Personal days Benefits: Indirect Compensation Pay for Time Not Worked

14. General Subsidized parking Subsidized lunch room Limited Executive Company car Country club membership Company-paid physical First-class flights Performance Employee of the month parking Benefits:Indirect Compensation Employee Perquisites

15. Each employee's needs are unique Changing employee demographics: More women More "two pay-check" households Increased number of younger workers Growth of age 65-69 and older population More single parents Maximize employee perception of benefits program Better manage employee expenses Tax effective (Section 125) Provide additional benefits Encourage employee long-term savings Flexible Benefits?