gomez_mhr05_im_12 - Part Five Chapter 12 Designing and...

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Part Five Chapter 12 Designing and Administering Benefits CHAPTER OVERVIEW (PPT 12.1- 12.3) The chapter begins with a broad view of the importance of employee benefits and how they are associated with the total compensation package. The two categories of employee benefits programs (i.e., legally required benefits and voluntary benefits) are described in detail. Lastly, this chapter presents some key issues in benefits administration. ANNOTATED OUTLINE I. An Overview of Benefits (PPT 12.4- 12.9) Employee benefits are referred to as indirect compensation. They are group membership rewards and complement the base pay (compensation) and pay-incentive components of total compensation. They provide services or facilities that many employees value and protect employees from risks that could jeopardize their health and financial security. A. Basic Terminology The following terms are defined 1. Contributions 2. Co-insurance 3. Deductible 4. Flexible benefit programs B. The Cost of Benefits in the United States 1. Federal tax policy 2. Federal legislation 3. Union influence 4. Cost savings of group plans C. Types of Benefits 1. Legally required benefits 2. Health insurance 3. Retirement 168
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Part Five 4. Insurance 5. Paid time off 6. Employee services II. The Benefits Strategy (PPT 12.10) An effective benefits package (strategy) needs to be aligned with the company's overall compensation strategy. The benefits mix, amount, and flexibility provide a blueprint for designing the benefits package. The benefits mix is the complete package of benefits that a company chooses to offer to its employees. The benefits _ amount choice governs the percentage of the total compensation package that will be allocated to benefits compared to the other components of the package (base salary and pay incentives). Flexibility of benefits choice is concerned with the degree of freedom employers give employees to tailor the benefits package to their personal needs. A. The Benefits Mix B. Benefits Amount C. Flexibility of Benefits III. Legally Required Benefits (PPT 12.11- 12.12) With only a few exceptions, all U.S. employers are legally required to provide social security, workers' compensation, and unemployment insurance. A fourth legally required benefit has been added in recent years. Now, employers must offer unpaid leave to employees in certain family and medical circumstances. A. Social Security Social security provides (1) income for retirees, the disabled, and survivors of deceased workers and (2) health care for the aged through the Medicare program. The components of social security are 1. Retirement income 2. Disability Income 3. Medicare 4. Survivor benefits B. Workers’ Compensation 169
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Chapter 12 Workers' compensation provides medical care, income continuation, and rehabilitation expenses for people who sustain job-related injuries or sickness. Workers' compensation also provides income to the survivors of an employee whose death is job-related. C.
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This note was uploaded on 03/22/2009 for the course MANAGEMENT 5689-9856 taught by Professor Nialamnu during the Fall '08 term at Indiana State University .

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gomez_mhr05_im_12 - Part Five Chapter 12 Designing and...

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