final exam notes - Topic 12 Employee Benefit Any form of...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Topic 12 Employee Benefit Any form of compensation other than direct current wages or salary to the employees. Management of employee benefits in a company is important because employee benefits are expensive. In general employee benefits average 40% of payroll and the most expensive employee benefit is Health Insurance. Purpose of Employee Benefit Plans Everybody has economic capital. Therefore we all face personal pure risk! Loss exposures in employee benefit plans Loss of Income for employees due to (death, disability, illness, injury, sickness, unemployment, retirement) Medical Expenses for employee Loss of productivity for employers Cost of employee benefits An employer spends 40% for every $1 of salary on employee benefits General Motors spends 60-70% on employee benefits because a company like General Motors has three times as many retirees as active workers and as a retirement benefit, General Motors continues to provide many of the former employees or retirees with benefits that were negotiated during their employment period. The cost of employee benefits contributes $1,800 to each car that General Motors manufactures. Every car that is sold, $1,800 of that price has gone to pay the employee benefits of General Motors. Types of Employee Benefits Health Insurance Retirement Benefits Death Benefits Disability Benefits Unemployment Benefits Health Insurance Every employee and employee’s family may suffer medical expenses. The purpose of health insurance is to help lessen the losses due to these Health care expenses or medical expenses. Traditional indemnity plans (3%) Managed care plans HMO – Health Maintenance Organizations PPO – Preferred Provider Organizations POS – Point of Service (type of HMO) Consumer Driven Health Plans (CDHPs) HRA – Healthcare Reimbursement Accounts HSA – Healthcare Savings Accounts Specialty Coverages for “Narrowly Defined Perils” Dental Insurance Vision Insurance Prescription Drug Insurance Long term care insurance – “In Law” insurance Retirement Benefits Loss of income due to retirement “Pension Plan”
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Defined Benefit Plans (401K for profit corporation 403B nonprofit corporation (IRS)). Defined contribution plans Cash balance plans Social security retirement benefits Formal name- OASDI – OA= old age S=Survivor benefits D= disability Death Benefits Loss of income due to death Life insurance Group term life insurance Workers compensation death benefits Loss of income due to death may affect social security survivor benefits. In the event of the death of an employee, the spouse of the employee may be eligible to receive social security survivor benefits.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern