Planning the Benefits:
- How to Use Effective Benefits:
- The Benefits you offer should accomplish the strategic purposes of attracting, motivating, and retaining good employees in a competitive environment.
- Having your employees get involved in selecting the benefits can lead to greater satisfaction.
- Offering the Right Benefits:
- When you have a diverse workforce it creates that demand for diverse benefit packages.
- Domestic Partner benefits are one thing you can have to help accommodate those diverse employee needs.
- A diverse Partner Benefits plan are benefits that are offered to an employee's live-in partner.
- Communicating benefits to Employees:
- a large percentage of employees aware of the content of their benefit packages.
- communication is an important part of helping employees to understand the importance of benefits, Types of communication that can be used: emails, social media, employee handbooks, newsletters, lunch and learn sessions, online benefits information
- Legally Required Benefits:
- Social Security:
- retirement, disability, and survivor benefits paid by the government to the aged, former members of the labor forces. the disabled, or their survivors.
- Workers must earn 40 credits to be eligible for Social Security.
- Click here to be directed to the Social Security Administration website.
- Unemployment Compensation:
- Employee insurance that provides some income continuation in the event an employee is laid off.
- This is funded by employers who pay combined federal and state tax imposed on taxable wage base.
- Tax varies based on organization's unemployment experience: the more layoffs, the higher the rate. State unemployment compensation tax depends upon a company's unemployment experience. The more often an organization lays off employees the higher the rates.
- Requirements for receiving unemployment:
- involuntary loss of job (but not having been fired).
- Must have worked a minimum number of weeks.
- Have applied to a state agency for unemployment.
- Have registered for available work.
- Willing to accept any suitable job offered through the state agency.
- Requirements for receiving unemployment:
- Workers Compensation:
- Employees insurance that provides income continuation if a worker is injured on the job.
- Protects employees' salaries and to shift the cost of workers' occupational accidents and rehabilitation to employers.
- Rates are based on the actual history of company accidents, the type of industry and business operation, and the likelihood of accidents occurring.
- These risks can be covered through insurance, or they can be covered by self-ensuring.
- Most workers' compensation plans allow employers to choose the medical care provided for injuries, but allow workers to request alternate care.
- Family and Medical Leave Act (FMLA):
- The FMLA was passed to provide employees the opportunity to take up to 12 weeks of unpaid leave each year for family or medical reasons.
- Health Insurance Continuation:
- The consolidated Omnibus budget Reconciliation Act (COBRA) provides for continued employee benefits up to 3 years after an employee leaves a job.
- The cost of COBRA is paid solely by the employee can be quite expensive because the employee must pay their premium in addition to any share that the employer previously paid.
- The HIPAA Requirement:
- The Health Insurance Portability and Accountability Act of 1996 (HIPAA) ensures confidentiality of employee health information.
- This gives individuals over how health-related information is communicated and with whom. This includes any protected health information that involves the health of an individual, health care claims, payment for health care, and insurance information.
- This only applies to employers if it administer it administers employee health insurance.
- for more information on this topic from the U.S. Department of Health and Human Services click here.
- Patient Protection and Affordable Care Act (PPACA, ACA, or Obamacare):
- Reforms the health care insurance system in the United States by expanding the availability and regulation of health insurance coverage and making significant changes to how health insurance coverage is provided and paid for.
- Individual responsibility:
- Individuals must purchase minimum coverage or pay fine.
- Health Insurance Exchanges:
- Created by states for individuals and small businesses to buy insurance.
- Employer responsibility:
- Penalties for employers with over 50 employees who do not provide coverage.
- Employers with more than 200 employees must provide coverage.
- Penalties for coverage that is inadequate too expensive.
- Insurance Industry responsibility:
- Ends restrictions on pre-existing coverage and lifetime limits.
- Must provide coverage for employee's children up to age 26.
Voluntary Benefits:
- Health Insurance:
- Types of health of insurance to offer: Medical, Prescription medications, Dental, vision, Orthodontics.
- Increases in healthcare costs have made health insurance a critical benefit. the purpose of healthcare is to protect employee from catastrophic loss should a serious illness occur.
- Typically covers major medical expenses such as prescriptions, medical supplies, and equipment necessary for treatment and recovery.
- Popular coverage options are:
- Health Maintenance Organizations (HMOs) which provide comprehensive health services fro a flat fee.
- Preferred provider organizations (PPOs) are organizations that requires using specific physicians and health care facilities to contain the rising costs of health care.
- Point-of-service (POS) is a health care plan that includes primary care physicians but allows greater flexibility for using services out of the network.
- High Deductible health plan (HDHP) are health plans with low premiums and high deductibles.
- Consumer-driven health plan (CDHP) combines a health with a high deductible with a health savings account that the insured used to pay for deductibles and medical care. which also includes three parts:
- a high deductible health plan with low premiums an high deductibles for employees
- a health savings account (HSA) which is a savings account with tax advantages used to pay out-of-pocket medical expenses and deductibles.
- Disability Insurance:
- short-term and long-term disability insurance programs allow employers to provide some income security when employees exhaust their earned sick leave.
- this type of insurance Provides salary continuation for:
- short-term disability plans that provide anywhere from 50 to 100 % of an employee's salary if illness or injury require time away from work beyond a specified time commonly 1-2 weeks. these plans usually provide coverage up to 6 months.
- long term Disability Plans are programs that provide replacement income for an employee who cannot return to work and whose short-term has expired.
- usually becomes effective after 6 months, typically replacing 60% of the employees salary.
- Plans may provide coverage for 2-5 years but may continue until retirement age.
- Group Term Life Insurance:
- Benefit is usually based on employee's annual rate of pay.
- Supplemental insurance increases coverage to 2-to-5 times the employee's salary.
- Other Popular Benefits:
- Employee Assistance Programs (EAPs):
- provides confidential counseling and referral services for a wide range of employees issues.
- Wellness Programs:
- Organizational programs designed to keep employees healthy
- Travel insurance
- dental and vision insurance
- Tuition Reimbursement
- Employee Assistance Programs
- Wellness Programs
- Employee Assistance Programs (EAPs):
- Offering Choices to employees:
- Giving the employees a choice in what benefits will fit their needs this is called flexible benefits.
- Flex spending accounts are similar in the way that it allows employees to set aside money before payroll taxes to pay for health care or dependent care
- Employees can set aside a designated dollar amount before federal, state, and social security taxes for specified services such as:
- health-care premiums
- medical expenses
- dependent child or elder care
- group legal services
- Employees can set aside a designated dollar amount before federal, state, and social security taxes for specified services such as:
Retirement Benefits:
- Employee Retirement Income Security Act (ERISA):
- A law passed in 1974 designed to protect employee retirement benefits.
- Requires employers to keep pension plan assets separate from the business assets and outlines a number of other safeguards to prevent abuse of pension funds and defaulting on pension obligations.
- Requires that a summary plan description (SPD), explains to employees their pension program and rights, to be provided to qualifying employees within 90 days to inform employees about retirement plans in plain language the employee can understand.
- Vesting rights are the permanent right to pension benefits.
- Created the Pension Benefit Guaranty Corporation (PBGC) to administer pension plans that are terminated or abandoned by employers.
- Defined Benefit Plans:
- Plan that pays retiring employees a fixed retirement income based on average earnings over a period of time.
- Defined Contribution Plans:
- No specific benefit payout is promised because the value of the retirement account depends on the growth of contributions of employee and employer.
- The amount of benefits depends on success of account investments.
- Employee and employer may contribute to account based on rules established for contributions.
- Defined contribution plans include:
- money purchase pension plans:
- organization commits to depositing fixed amount of money or percentage of employee's pay annually
- profit-sharing plans:
- Variations of defined contribution
- company amount contributed depends on profit level in the organization
- contribution is optional, not required
- individual retirement accounts (IRAs):
- Employer makes contributions
- can defer taxes on amount deposited and interest earned in retirement account
- two types exist for small businesses and self-employed
- 401 (k)s:
- Permit workers to set aside specified amount of income on tax-deferred basis
- employers may match employee contribution
- money purchase pension plans:
- click here for more on retirement benefits
Leave Benefits:
- Paid Time Off:
- PTO is vacation, sick leave, personal days, and holidays combined into one account managed by employees
- This is not required in the U.S.
- Many employers offer it in order to attract the best talent
- Vacation and Holiday Leave:
- Employees become eligible for this after a period of time with the organization.
- Paid holiday time off is offered in the United States for a variety of federal, state, local, and religious holidays.
- Sick Leave:
- Accumulated at a specific number of days for each year of service.
- Regardless if it is used, it continues to accumulate up to a maximum number of days.