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Benefits PowerPoint Presentation

Benefits

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Benefits

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  1. Benefits

  2. Why Offer Benefits? • Benefits are approx 40% of compensation • Costs have risen more than 20% since 1990

  3. Why Offer Benefits?

  4. Why Offer Benefits? • Some are legally required • Improve employee work satisfaction • Meet employee health and security requirements • Attract and motivate employees • Reduce turnover • Maintain a favorable competitive position

  5. Strategic Benefits Planning Communicating Employee Benefits Information Allowing for Employee Involvement Providing for Flexibility Benefits for a Diverse Workforce Requirements for a Sound Benefits Program

  6. Form groups and develop a list of the benefits that you would be interested in receiving from an employer after finishing your degree. • Also share a good or bad experience that you may have had with an employer’s benefits program during internships, summer job, or full-time position.

  7. Providing for Flexibility • Flexible Benefits Plans (Cafeteria Plans) • Benefit plans that enable individual employees to choose the benefits that are best suited to their particular needs. • A basic or core benefits package of life and health insurance, sick leave, and vacation ensures that employees have a minimum level of coverage. • Employees use “credits” to “buy” whatever other benefits they need.

  8. Communicating Benefits Information

  9. Communicating Benefits Information • In-house publications (employee handbooks and organizational newsletters) • Group meeting and training classes • Audiocassettes/videotapes • Bulletin boards • Payroll inserts/pay stub messages • Specialty brochures • Employee self-service systems (ESS)

  10. Concerns of Management • The High Cost of Providing Benefits • According to a 2007 U.S. Chamber of Commerce study, the cost of employee benefits averaged 42.7 percent of payroll. • The average distribution of these benefits was $21,527 per employee per year. • Shifting Benefit Costs to Employees • Shared Responsibility • Employers to require employees to pay part of the costs of certain benefits (e.g., copayments or higher deductibles), especially medical coverage. • Employees are paying a larger part of their retirement programs through contributory pension plans or 401(k) saving plans.

  11. Types of Employee Benefits Required By Law Discretionary Social Security Payment for time not worked Unemployment Insurance Supplemental Unemployment Benefits Workers’ Compensation Life and LT care insurance Unpaid leave (FMLA) Retirements and pensions Health care

  12. Social Security Insurance • Social Security Act (1935)A payroll tax on both employees and employers • 15.3% tax split between employer & employee Old Age and Survivors Insurance (OASI) Provides long-term disability benefits Must work 40 quarters in an occupation covered by Act to qualify for benefits Benefits paid are determined by an individual’s life-time earnings

  13. Unemployment Insurance • Federal payroll tax on employer and employee • Tax is refunded to states which individually administer unemployment compensation programs. • Benefit weekly amounts vary from state to state. • Involuntarily unemployed workers are eligible for up to 26 weeks of unemployment benefits. • Benefit is based on an employee’s recent earnings. • Unemployed workers are required to seek “suitable employment.”

  14. Worker’s Compensation • Workers’ Compensation – Disability benefits paid for workplace accidents • Claims and premiums steadily rising • Employers “fighting back” • Role of HR: • Stress safe work procedures • Audit workers’ compensation claims • Coordinate workers’ comp and health insurance benefits • Encourage those partially disabled to return under a modified duty plan

  15. Extension and Portability of Health Coverage • The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) • Mandates that employers make health coverage—at the same rate the employer would pay—available to employees, their spouses, and their dependents on termination of employment, death, or divorce. • The coverage must be offered for between 18 and 36 months depending on qualifying guidelines. • Health Insurance Portability and Accountability Act (HIPAA) of 1996 • Grants employees the right to switch medical insurance between former and present employers with no gap in coverage regardless of preexisting health condition once the employees have earned twelve service credits at the former employee

  16. The Family and Medical Leave Act (FMLA) • Provisions: • An employer must grant an eligible employee up to 12 workweeks of unpaid leave in a 12-month period for the following reasons: • Birth of and care for a newborn child. • Adoption or foster care placement of a child. • Care for an immediate family member • Serious health condition of the employee. • Employees retain their health benefits and have the right to return to their job or an “equivalent job.” • Those caring for service members are entitled to up to 26 weeks of leave,

  17. Previously Voluntary Benefits • Health Insurance • Traditional Health Insurance • Health Maintenance Organizations (HMOs) • Preferred Provider Organizations (PPOs) • Consumer-Driven Health Plan (CDHP) • Health Savings Accounts etc.

  18. How Would You Try to Keep Costs Down?

  19. Vacations with pay Severance pay Paid holidays Sick leave Payment for Time Not Worked Time Not Worked

  20. Retirement Benefits • Retiree Health Care • Pensions: • Defined Benefits Plans • Defined Contribution Plans • Cash Balance Plan (Hybrid) • 401k and 403b • IRA and SEP IRA

  21. Trends Affecting Retirement • The number of people age 65 and older tripled to about 34 million between 1940 and 1995. • According to U.S. census projections, people age 65 and older are expected to number 86 million by 2050, an increase of 51 million since 2000. • In 1960, 45.4 percent of male workers over age 65 were still in the labor force; in 1990, only 27.4 percent were still working. While the labor force participation rates of women between ages 55 and 64 have been rising, further increases are not expected. • Eight baby boomers turn 50 every ten minutes. • The U.S. net national savings rate was relatively stable at about 7 percent of GDP from 1951 to 1980. It has collapsed since 1980, most recently dropping to less than 1 percent of GDP. • In 1900, the average life expectancy in the U.S. was 48; today, it is 80 for women and 75 for men. Virtually all of these gains can be attributed to improvements in public health and safety, such as clean water, refrigeration, seat belts, and routine vaccinations.

  22. 401(k) Savings Plans Defined Contribution A tax-deferred savings plan. Employees save through payroll deductions. Employers may match a portion of employee savings. Cash-Balance Pension Plans Employer contributes a percentage of employee’s pay each year. Account balance earns interest each year. Experts predict it will replace traditional pension plans. Contemporary Pension Plan Options

  23. Federal Regulation of Pension Plans • Employee Retirement Income Security Act (ERISA) • Private pension plans are subject to ERISA regulations that provides standards and controls for pension plans: • Plans must comply IRS tax standards to qualify. • Plans must meet actuarial standards to qualify for Pension Benefit Guarantee (PBGC) insurance. • Plans must meet Department of Labor standards for treatment of plan participants.

  24. Retiree Health Benefits • Future retirees should expect to cover the costs of their health care not covered by Medicare. • By 2031, companies are expected to pay less than 10 percent of total medical expenses for retirees as part of actions already taken. • About 20 percent of employers studied have eliminated retiree medical plans for new hires, and 17 percent will require new hires to pay the full premium for coverage. • Watson Wyatt Worldwide 2002

  25. Employee Services • Employee Assistance Programs (EAPs) • Services provided by employers to help workers cope with a wide variety of problems that interfere with the way they perform their jobs. • Typically provide diagnosis, counseling, and referral for advice or treatment for problems related to alcohol or drug abuse, emotional difficulties, and financial or family difficulties. • Child and Elder Care • Care provided to a child or an elderly relative by an employee who remains actively at work.

  26. Work/Life Benefits: Balancing Work and Home Needs • Child care/elder care referral services • Time off for children’s school activities • Employer-paid on-site or near-site child care facilities • Flexible work hours scheduling • Health club and wellness programs • Employer-accumulated leave days for dependent care • Subsidized temporary or emergency dependent care costs • Extended leave policies for child/elder care • Educational reimbursement • Sick-child programs (caregiver on call) • Work-at-home arrangements/telecommuting • Partial funding of child care costs • Part-time work schedules

  27. Perks to Attract and Retain • In North Texas, the Container Store – which ranked No. 4 in Fortune magazine's list of best places to work – offers employees on-site carwashes, dry cleaning and free yoga classes. • Texas Instruments Inc. provides on-site concierge service for its Dallas employees. • At Dallas-based Half Price Books, employees are allowed to borrow any of the books, music or movies in stock. • And employees at T. Boone Pickens' BP Capital LLC can use the office fitness room and book appointments with a personal trainer. • Dallas Morning News 2.21.07

  28. Game room Home computers Stock for spouse Pet friendly Pet day care Health club Chef – take home meals Nap room Sabbaticals Beer on Friday Concierge service Wash gym clothes Oil change in parking lot Dental service in parking lot Dry cleaning No dress code 42 kinds of drinks Game tickets Credit union Discount club membership Special Extras

  29. Summary and Conclusions • Design benefits to align with overall compensation strategy • Benefits provide security for employees and their families • It is important to: • Provide benefits employees value and appreciate • Communicate value of benefits to employees