gomez_mhr05_im_12 - Part Five Chapter 12 Designing and...

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
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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
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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.