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2/22/2012 Copyright @SAIDATT SENAPATY

Benefit Services


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Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 132

TABLE 131 Some Required and Discretionary Benefits

* While not required under federal law, all these benefits are regulatedin some way by federal law, as explained in this chapter.

Benefits Required by Federalor Most State Law

Benefits Discretionaryon Part of Employer*

Social Security

Unemployment Insurance

Workers Compensation

Leaves under the Family Medical

Leave Act

Disability, Health, and Life Insurance

Pensions

Paid Time Off for Vacations, Holidays,Sick Leave, Personal Leave, Jury

Duty, etc.

Employee Assistance and CounselingPrograms

Family Friendly benefits for ChildCare, Elder Care, Flexible Work

Schedules, etc.

Executive Perquisites


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Policy Issues in Designing BenefitPolicy Issues in Designing BenefitPackagesPackages

Policy Issues

Who will be covered

Coverage during

probation

Degree of employee

choice

Which benefits to offer

Whether to include

retirees

How to finance benefits

Cost containment

procedures

Communicating

benefits options


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Pay For Time Not WorkedPay For Time Not Worked

Vacations and

holidays

Parental leave

Supplemental

unemployment

benefits

Supplemental

Pay Benefits

Unemployment

insurance

Sick leave

Severance pay


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Pay for Time Not WorkedPay for Time Not Worked

Unemployment InsuranceUnemployment Insurance

Provides for benefits if a person is unable toProvides for benefits if a person is unable to

work throughwork through

no fault of his or her own.no fault of his or her own.

Tax is collected and administered by theTax is collected and administered by the

state.state.

Vacations and HolidaysVacations and Holidays

Number of paid leave days and holidaysNumber of paid leave days and holidays

varies by employer.varies by employer.

Qualification for and calculation of holidayQualification for and calculation of holidayand leave a varies b em lo er.and leave a varies b em lo er.


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Pay for Time Not Worked (contPay for Time Not Worked (contd)d)

Sick LeaveSick Leave

Provides pay to an employee when he or she is out ofProvides pay to an employee when he or she is out ofwork because of illness.work because of illness.

Parental LeaveParental Leave

The Family Medical Leave Act of 1993 (FMLA)The Family Medical Leave Act of 1993 (FMLA) Up to 12 weeks of unpaid leave within a oneUp to 12 weeks of unpaid leave within a one--yearyear

period.period.

Employees must take unused paid leave first.Employees must take unused paid leave first.

Employees on leave retain their health benefits.Employees on leave retain their health benefits.

Employees have right to return to job or equivalentEmployees have right to return to job or equivalent

position.position.


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Severance PaySeverance Pay

A oneA one--time payment when terminating antime payment when terminating anemployee.employee.

Reasons for granting severance pay:Reasons for granting severance pay:

Acts as a humanitarian gesture and goodActs as a humanitarian gesture and good

public relations.public relations.

Mirrors employeeMirrors employees twos two--week quit notice.week quit notice. Avoids litigation from disgruntled formerAvoids litigation from disgruntled former

employees.employees.

Reassures employees who stay on after theReassures employees who stay on after the


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Supplemental Unemployment Benefits (SUB)Supplemental Unemployment Benefits (SUB)

The employer makes contributions to a SUBThe employer makes contributions to a SUB

reserve fund.reserve fund.

SUB payments are made to employees for theSUB payments are made to employees for the

time the employee is out of work due to layoffs,time the employee is out of work due to layoffs,

reduced workweeks, or relocations.reduced workweeks, or relocations.


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Insurance BenefitsInsurance Benefits

WorkersWorkers CompensationCompensation

Provides income and medical benefits toProvides income and medical benefits to

workwork--related accident victims or theirrelated accident victims or their

dependents, regardless of fault.dependents, regardless of fault.

Death or disability: a cash benefit based onDeath or disability: a cash benefit based onearnings per week of employment.earnings per week of employment.

Specific loss injuries: statutory list of losses.Specific loss injuries: statutory list of losses.

Controlling workersControlling workers compensation costscompensation costs Screen out accidentScreen out accident--prone workers.prone workers.

Make the workplace safer.Make the workplace safer.

Thoroughly investigate accident claims.Thoroughly investigate accident claims.


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Insurance Benefits (contInsurance Benefits (contd)d)

Hospitalization, Health, and DisabilityHospitalization, Health, and Disability

InsuranceInsurance

Accidental death and dismembermentAccidental death and dismemberment

Disability insuranceDisability insurance Mental health benefitsMental health benefits


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2/22/2012 Copyright @SAIDATT SENAPATYCopyright 2011 Pearson Education, Inc. publishing as Prentice Hall 1311

Insurance Benefits (contInsurance Benefits (contd)d)

Health Maintenance OrganizationHealth Maintenance Organization

(HMO)(HMO) A medical organization consisting ofA medical organization consisting of

specialists operating out of a healthspecialists operating out of a health

care center.care center. Provides routine medical services toProvides routine medical services to

employees who pay a nominal fee.employees who pay a nominal fee.

Receives a fixed annual contract fee perReceives a fixed annual contract fee per

employee from the employer (or employeremployee from the employer (or employerand employee), regardless of whether itand employee), regardless of whether itprovides that person with service.provides that person with service.


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Laws Influencing Health CareLaws Influencing Health CareBenefitsBenefitsRetirement and Pension PlansRetirement and Pension Plans

Employee Retirement Income Security Act ofEmployee Retirement Income Security Act of1974 (ERISA)1974 (ERISA)

Mental Health BenefitsMental Health Benefits

Mental Health Parity Act of 1996Mental Health Parity Act of 1996

Family LeaveFamily Leave

Pregnancy Discrimination ActPregnancy Discrimination Act

Family Medical Leave ActFamily Medical Leave Act

The Newborn MotherThe Newborn Mothers Protection Act of 1996s Protection Act of 1996


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Trends in Health Care CostTrends in Health Care CostControlsControlsPremiums and co-pays

Reduced retireehealth care coverage

Health savings accounts

Outsourced health care planadministration

Wellness programsCost-ControlTrends


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Other Benefits IssuesOther Benefits Issues

LongLong--Term CareTerm Care

Insurance for older workers is a growing issue.Insurance for older workers is a growing issue.

Benefits for PartBenefits for Part--Time and ContingentTime and Contingent

WorkersWorkers

Leave and health benefits available to partLeave and health benefits available to part--timetime

workers.workers.

Benefits for longBenefits for long--term independent contractors.term independent contractors.


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Retirement BenefitsRetirement Benefits

Social SecuritySocial Security

(Federal Old Age and Survivor(Federal Old Age and SurvivorssInsurance)Insurance)

Retirement benefits at the age of 62Retirement benefits at the age of 62

SurvivorSurvivors or death benefits paids or death benefits paidto the employeeto the employees dependentss dependents

Disability payments to disabled employeesDisability payments to disabled employeesand their dependentsand their dependents

The Medicare programThe Medicare program

Health services to people age 65 or olderHealth services to people age 65 or older


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Retirement Benefits (contRetirement Benefits (cont

d)d)

Employee Retirement Income Security ActEmployee Retirement Income Security Act

(ERISA) of 1974(ERISA) of 1974 Established guidelines forEstablished guidelines for qualifiedqualified

pension plans.pension plans.

Requires fiduciary responsibility.Requires fiduciary responsibility.

Pension Benefits Guarantee CorporationPension Benefits Guarantee Corporation

(PBGC)(PBGC)

Insures plans that terminate withoutInsures plans that terminate without

sufficient fundssufficient funds

to meet obligations.to meet obligations.

Guarantees only defined benefit plans.Guarantees only defined benefit plans.


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Pensions and Early RetirementPensions and Early Retirement

Early Retirement WindowsEarly Retirement Windows

Offer specific employees (often age 50Offer specific employees (often age 50--plus)plus)an incentivean incentive

to voluntarily retire earlier than usual.to voluntarily retire earlier than usual.

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

Require careful program construction to avoidRequire careful program construction to avoid

oversubscription and timely delivery to avoidoversubscription and timely delivery to avoidpotential age discrimination claims.potential age discrimination claims.

Older WorkersOlder Workers Benefit Protection ActBenefit Protection Act

(OWBPA)(OWBPA)


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FamilyFamily

--Friendly (WorkFriendly (Work

Life)Life)

BenefitsBenefitsSubsidized child careSubsidized child care

Sick child benefitsSick child benefits

Elder careElder care

Time offTime off

Subsidized employee transportationSubsidized employee transportation

Food servicesFood servicesEducational subsidiesEducational subsidies

Fitness and medical facilitiesFitness and medical facilities

Flexible work schedulinFlexible work scheduling


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Flexible Work SchedulesFlexible Work Schedules

FlextimeFlextime

Compressed workweek schedulesCompressed workweek schedules

Workplace flexibilityWorkplace flexibility

Job sharingJob sharing

Work sharingWork sharing

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