1 / 27

A Human Resource Management Approach

STRATEGIC COMPENSATION. A Human Resource Management Approach. Chapter 11 Discretionary Benefits. Prepared by David Oakes. Discretionary Costs. In 2004 $11,107 per employee 40% of total payroll costs $15,000 total with legally-required benefits . Benefit Types.

rico
Download Presentation

A Human Resource Management Approach

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. STRATEGIC COMPENSATION A Human Resource Management Approach Chapter 11 Discretionary Benefits Prepared by David Oakes

  2. Discretionary Costs In 2004 • $11,107 per employee • 40% of total payroll costs • $15,000 total with legally-required benefits

  3. Benefit Types • Protection programs • Pay for time-not-worked • Services

  4. Income Protection • Disability insurance • Life insurance • Pension programs

  5. Health Protection • Self - funded plans • Health maintenance organizations (HMOs) • Preferred provider organizations (PPOs) • Dental insurance • Vision insurance • Prescription drug plan

  6. Short-Term Disability • Less than 6 months duration • Unable to perform job • Benefit: 50% - 100% of pre-tax income

  7. Long-Term Disability • 6 months to life • Unable to perform any job qualified for • Benefit 50% - 70% of pre-tax pay • 6 - 12 month waiting period • Other benefits used first

  8. Pension Plan Financing Options • Noncontributory • Contributory • Employee-financed programs • A combination of the three

  9. Pension Plan Tax Treatment Options • Qualified • Employers get tax deductions for contributions • Employees taxed less at retirement • Nonqualified • Employers & employees receive few tax break

  10. Qualified Plans • Eligibility • Minimum age 21, & 1 year of service • Nondiscrimination • Limited preferential treatment • Vesting • Usually 3 - 6 years • Payout restrictions • Tax penalty if taken before age 59.5

  11. Defined Contribution Plans • Profit sharing plans • Employee stock ownership (ESOPs) • 401(k)s • Savings & thrift plans

  12. 401(k)s • Named after IRS code section • Employees invest pre-tax income • Plan limits • 2006 - $15,000 • 2007 - $15,500 • 2008 - $16,000 • $500 yearly increases

  13. ESOPs • The basis for 401 (k) plans • Contributions invested in company securities • Distributions made in company stock • Like stock bonus plans, except stock is purchased with borrowed funds

  14. Saving & Thrift Plans • Employers match employees’ contributions • Usually up to 50% of employees’ • Tax penalties for early withdrawals • Employees can select investment vehicle • Stocks • Bonds • Money market funds

  15. Defined Benefit Plans • Guarantees benefits amount • Amount expressed as a monthly sum • % of pre-retirement pay X years of service • Employers’ contributions can vary, but benefit at retirement cannot • Not widely used

  16. Health Care Programs • Fee-for-service • Managed care • Point of service • Consumer-driven health care

  17. Fee-For-Service Plans • Indemnity plans • Cover usual, customary, reasonable charges • Hospital expenses • Surgical expenses • Physicians’ fees • Deductibles & coinsurance • Out-of-pocket maximums • Individual or group coverage

  18. HMOs • Organize, deliver, & finance care • Provides prepaid medical services • May include co-payments • Regulated by Health Maintenance Organization Act of 1973 • Prepaid group practices • Individual practice associations

  19. PPOs • Select group of health care providers • Employees choose from a list • Financial incentives to use list • Physicians must • Meet quality standards • Abides by PPO cost-containment • Accepts PPO fee structure • Does not provide prepaid benefits

  20. Consumer-Driven Care • Flexible-spending accounts • Health reimbursement arrangements • Health savings accounts

  21. Flexible-Spending Accounts • Supplemental health coverage • Employee funds account with pre-tax income • Pays for qualified expenses • Unused funds forfeited

  22. Health Reimbursement Arrangements • Supplemental health coverage • Employees funded • Unused funds carried over

  23. Prescription Drug Plans • Medical reimbursement plans • Prescription card programs • Mail order prescription drug program

  24. RELEVANT LEGISLATION • ERISA • COBRA • FLSA • HIPPA

  25. ERISA • Regulates fringe compensation • Medical Disability • Life insurance Pension • Monitors • Reporting • Disclosure • Funding • Fiduciary & vesting responsibilities

  26. COBRA • Continues health care coverage to 36 months • Can cost up to 102% of premium • Employers penalized for noncompliance • Exempt employers • Those with less than 20 employees • Churches • Federal government

  27. HIPPA • Guarantees health coverage • Addresses preexisting conditions • Concerns access to health information • Transfer • Disclosure • Use

More Related