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Designing and Administering Benefits

Designing and Administering Benefits. Chapter 12. Chapter 12 Overview. Explain the significance of employee benefits to both employers and employees Design a benefits package that supports the firm’s overall compensation strategy and other HRM policies

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Designing and Administering Benefits

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  1. Designing andAdministering Benefits Chapter 12 (c) 2007 by Prentice Hall

  2. Chapter 12 Overview • Explain the significance of employee benefits to both employers and employees • Design a benefits package that supports the firm’s overall compensation strategy and other HRM policies • Distinguish between a defined benefit retirement plan & a defined contribution retirement plan and recognize the situations in which each is most appropriate • Discuss how traditional health insurance plans and managed-care health insurance plans work and the advantages and disadvantages of each (c) 2007 by Prentice Hall

  3. Chapter 12 Overview (cont’d) • Develop cost-containment strategies for the different types of employee benefits • Understand the administrative complexities of providing a full array of benefits to the work force and suggest ways to deliver benefits effectively • Recognize the HR department’s key role in keeping accurate records of employee benefits and informing employees about their benefits (c) 2007 by Prentice Hall

  4. The Managerial Perspective to Benefits • Benefits issues are important to employees • Benefits are a powerful recruiting tool • Benefits help retain talented employees • Certain benefits play a part in managerial decisions • Benefits are important to managers (c) 2007 by Prentice Hall

  5. An Overview of Benefits • Employee benefits or indirect compensation – Group membership rewards that provide security for employees and their family members (c) 2007 by Prentice Hall

  6. How the Benefits Dollar Is Spent (c) 2007 by Prentice Hall

  7. Benefits – Basic Terminology • Contributions • Coinsurance • Copayment • Deductible • Flex/cafeteria benefits program (c) 2007 by Prentice Hall

  8. The Cost of Benefits in the U.S. • Federal tax policy • Federal legislation • Union influence • Cost saving of group plans (c) 2007 by Prentice Hall

  9. Types of Benefits • Legally Required Benefits • Health Insurance • Retirement • Insurance • Paid Time Off • Employee Services (c) 2007 by Prentice Hall

  10. The Benefits Strategy • The Benefits Mix • Benefits Amount • Flexibility of Benefits (c) 2007 by Prentice Hall

  11. Legally Required Benefits Social Security • Retirement Income • Disability Income • Medicare • Survivor Benefits (c) 2007 by Prentice Hall

  12. Legally Required Benefits • Workers’ Compensation • Unemployment Insurance – SUB • Unpaid Leave – FMLA of 1993 (c) 2007 by Prentice Hall

  13. Voluntary Benefits Health Insurance • COBRA of 1985 • HIPAA • Preexisting Condition Traditional Health Insurance • Premium (c) 2007 by Prentice Hall

  14. Health Spending in Various Countries 2003 (c) 2007 by Prentice Hall

  15. Voluntary Benefits • Health Maintenance Organizations (HMOs) • Preferred Provider Organizations (PPOs) • Health Insurance Coverage of Employees’ Partners • Health-care Cost Containment (c) 2007 by Prentice Hall

  16. Customer-Driven HR • Tips for obtaining your own health insurance • Form your own small group • Join an association that has group coverage • Check out prices on the Web • Take advantage of COBRA provisions (c) 2007 by Prentice Hall

  17. Retirement Benefits • ERISA – vesting • Defined Benefits Plan – pensions • Defined Contribution Plans • 401k • IRA • SEP • Keogh Plan • Hybrid (c) 2007 by Prentice Hall

  18. Insurance Plans • Life Insurance • Long-term disability insurance • Paid Time Off • Sick leave • Vacations • Severance pay • Holiday and other paid time off • Employee Services (c) 2007 by Prentice Hall

  19. Administering Benefits Flexible Benefits • Types of flexible benefits plans • Modular • Core-plus options • Flexible spending accounts • Challenges with flexible benefits • Adverse selection • Employees who make poor choices • Administrative complexity (c) 2007 by Prentice Hall

  20. Administering Benefits Benefits Communication • Increasing complexity of programs • Companies do not devote resources to explain programs to employees (c) 2007 by Prentice Hall

  21. Summary and Conclusions • An Overview of Benefits • The Benefits Strategy • Legally Required Benefits • Voluntary Benefits • Administering Benefits (c) 2007 by Prentice Hall

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