Indirect Compensation: Benefits
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Transcript of Indirect Compensation: Benefits
Indirect Compensation: Benefits
Human Resource ManagementHuman Resource Management
Benefits: Indirect Compensation
Health care insuranceHealth care insurance MedicalMedical DentalDental VisionVision
Life insuranceLife insurance Disability insuranceDisability insurance
Retirement plansRetirement plans Defined benefitDefined benefit Defined contributionDefined contribution
Protection ProgramsProtection Programs
Government Mandated Benefits
Social Security Social Security RetirementRetirement SurvivorSurvivor Disability benefitsDisability benefits
Unemployment compensation Unemployment compensation Workers CompensationWorkers Compensation
No fault conceptNo fault concept
"Health and Welfare" Plans
Health careHealth care Medical careMedical care
Costs controlled through controlling utilizationCosts controlled through controlling utilization• This is what “managed health care” doesThis is what “managed health care” does
Also include dental, vision care and Also include dental, vision care and prescription drugs prescription drugs
Disability insuranceDisability insurance Survivor benefitsSurvivor benefits
Basic Major Medical Model
These plans have significantly decreased in These plans have significantly decreased in numbernumber
Also known as “indemnity plans”Also known as “indemnity plans” Full coverage on first dollar spentFull coverage on first dollar spent Deductible typically $100Deductible typically $100 Co-pay (co-insurance) 80-20Co-pay (co-insurance) 80-20
Managed Care Continuum
Basic Medical Basic Medical PPOPPO POSPOS HMOHMO
ModelModel
Freedom of choiceFreedom of choice Limited choice Limited choice
High CostHigh Cost Lower cost Lower cost
Managed Care Plans
PPO (Preferred provider organization)PPO (Preferred provider organization) Choose health care providers from a “network”Choose health care providers from a “network” Cheaper for patient if health care provider is in Cheaper for patient if health care provider is in
the networkthe network Can go outside the network, but it will cost Can go outside the network, but it will cost
them morethem more
Managed Care Plans
POS (Point of service plan)POS (Point of service plan) Very similar to preferred provider plans, but Very similar to preferred provider plans, but
must choose a primary care physician for a must choose a primary care physician for a “gatekeeper” within the network“gatekeeper” within the network
Patient makes choice at the “point of service”Patient makes choice at the “point of service” More limited choice within the network More limited choice within the network
because of PCPbecause of PCP
Managed Care Plans
HMO: (Health maintenance organization)HMO: (Health maintenance organization) Limited choice; network onlyLimited choice; network only Doctor is "primary gatekeeper" Doctor is "primary gatekeeper" HMO's lower costs by negotiating with HMO's lower costs by negotiating with
providers providers Capitalizes on volumeCapitalizes on volume
Retirement: Defined Benefit Plan Benefit is defined; cost is unknownBenefit is defined; cost is unknown Company pays whatever it takes to provide Company pays whatever it takes to provide
the benefitthe benefit Requires actuarial serviceRequires actuarial service Financial risk is on the employerFinancial risk is on the employer General higher benefits for career General higher benefits for career
employeesemployees
Retirement: Defined Contribution Plan Employee and company contributions are Employee and company contributions are
defined/known; benefit is unknowndefined/known; benefit is unknown Pension equals whatever the total amount in Pension equals whatever the total amount in
the fund will providethe fund will provide Financial risk is on the employee Financial risk is on the employee Can provide substantial benefit to shorter Can provide substantial benefit to shorter
career employeescareer employees Does not require actuarial servicesDoes not require actuarial services
Regulation of Pension Plans
ERISAERISA Plan participation rulesPlan participation rules VestingVesting Nondiscrimination RulesNondiscrimination Rules Fiduciary standardsFiduciary standards Reporting and disclosureReporting and disclosure Plan termination insurance (PBGC)Plan termination insurance (PBGC)
Benefits: Indirect Compensation
At workAt work Changing timeChanging time BreaksBreaks
Not at workNot at work Vacation Vacation HolidaysHolidays Personal daysPersonal days
Pay for Time Not WorkedPay for Time Not Worked
Benefits:Indirect Compensation
GeneralGeneral Subsidized parkingSubsidized parking Subsidized lunch roomSubsidized lunch room
LimitedLimited ExecutiveExecutive
Company carCompany car Country club membershipCountry club membership Company-paid physicalCompany-paid physical First-class flights First-class flights
PerformancePerformance Employee of the month Employee of the month
parkingparking
Employee PerquisitesEmployee Perquisites
Flexible Benefits?
Each employee's needs are Each employee's needs are uniqueunique
Changing employee Changing employee demographics:demographics: More womenMore women More "two pay-check" More "two pay-check"
householdshouseholds Increased number of Increased number of
younger workersyounger workers Growth of age 65-69 and Growth of age 65-69 and
older populationolder population More single parentsMore single parents
Maximize employee Maximize employee perception of benefits perception of benefits programprogram
Better manage employee Better manage employee expensesexpenses
Tax effective (Section Tax effective (Section 125)125)
Provide additional Provide additional benefitsbenefits
Encourage employee Encourage employee long-term savingslong-term savings