Benefits Day 25 Flashcards Preview

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Flashcards in Benefits Day 25 Deck (51):

Non-wage/salary goods and services provided to employees

Employee benefits


Compensation in forms other than cash, considered to be part of employees total compensation

Employee benefits


Why are benefits packages harder for employees to understand and appreciate?

They are more complex than pay structures


These contribute to attracting, retaining, and motivating employees



On average, out of every dollar spent on compensation, how much goes towards benefits

30 cents


Federal and state governments require what 5 benefits?

Social security
Unemployment insurance
Workers compensation
Family and medical leave


A federally mandated program administered by the states focused on minimizing the hardship of unemployment though payments, help finding new jobs, and incentives to stabilize employment

Unemployment insurance


Where does most funding for unemployment insurance come from

Federal and state taxes on employers


The size of the unemployment tax imposed on each employer depends on

The employer's experience rating, based on the number of employees a company has laid off in the past


To receive unemployment insurance benefits, workers must meet what four conditions

They demonstrate they were employed
They are available for work
They are actively seeking work
They were not discharged for cause, did not quit voluntarily, and are not out of work because of a labor dispute


State programs that provide benefits to workers who suffer work-related injuries or illnesses, or to their survivors

Workers compensation insurance


No-fault liability

An employee does not need to show that the employer was grossly negligent in order to receive compensation
The employer is protected from lawsuits


This requires organizations with 50 or more employees to provide up to 12 weeks of unpaid leave:
After childbirth or adoption
To care for a seriously ill family member
For an employee's own serious illness

Family and Medical Leave Act (FMLA)


Family and Medical Leave Act (FMLA) requires organizations with 50 or more employees to provide up to 12 weeks of unpaid leave when (3)

After childbirth or adoption
To care for a seriously ill family member
For an employee's own serious illness


This outline requirements for insurance companies, incentives/penalties for employers, and public funding of health care

Patient Protection and Affordable Care Act (2010)


As of 2014, all organizations with over 200 employees must offer ______; organizations with 50 or more employees will face a penalty for not providing it.

Health insurance


Employers pay employees for the time spent not working; receive nothing in return

Paid leave


Why is unpaid leave an employee benefit?

Because the employee usually retains seniority and other benefits during the leave


A flexible approach that establishes pools of personal, sick, and vacation days for employees to use as the need arises

Paid Time Off (PTO) Bank


Optional health insurance: traditional coverage

Patients choose their doctors and facilities
Advantage is maximum choice and no third party to pay for administration purposes


Optional health insurance: health maintenance organizations (HMOs)

Must use doctors within the HMO coverage
Advantage is the emphasis on prevention and early treatment


Optional health insurance: preferred provider organization (PPOs)

Coverage is similar to HMOs for preferred providers, with large copayments and deductibles for moving outside the plan.
Advantage is a direct contractual relationship from employers, healthcare providers, and employees


According to this, if an employee terminates employment, then the employee is entitled to continue participating in the plan for up to 36 months

Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985


Purpose of COBRA

Mostly to smooth over transitions between job changed and for those with ore-existing conditions


3 reasons employee health and wellness is important to companies

Decreased number of sick days
Lower employee stress
Increased concentration at work


3 examples of policies to achieve employee health and wellness

Health insurance
Exercise clubs/gym membership discounts
Specific wellness programs (e.g., smoking cessation, chemical dependency counseling, exercise trainers, meditation centers)


6 optional insurance benefits

Health insurance
Life insurance
Short-term disability insurance
Long-term disability insurance
Long-term care insurance
Retirement plan


If the employee died during the term of the policy, then the employee's beneficiaries receive a death benefit payment

Term life insurance


Insurance that pays a percentage of a disabled employee's salary as benefits to the employee for 6 months or less

Short term disability insurance


Insurance that pays a percentage of a disabled employee's salary after an initial period and potentially for the rest of the employee's life

Long-term disability insurance


Provide benefits toward long-term care and related medical expenses

Long-term care insurance


Employers have no obligation to offer retirement plans beyond what

Social security


This type of retirement plan is funded by contributions from the employer and employee

Contributory plan


This type of retirement plan is funded entirely by contributions from the employer

Noncontributory plan


Pension plan that guarantees a specified level of retirement income
The employer sets up a pension fund to invest the contributions

Defined benefit plan


Retirement plans must meet the funding requirements of what Act

the Employee Retirement Income Security Act (ERISA) of 1974


ERISA establishes this, a federal agency that insures retirement benefits and guarantees retirees a basic benefit if the employer experiences financial difficulties

The Pension Benefit Guaranty Corporation (PBGC)


Retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account
Money purchase plans, profit sharing and employee stock ownership plans, section 491(k) plans

Defined contribution plan


These plans free employers from the risks that investments will not perform as well as expected

Defined contribution plan


Retirement plan in which the employer sets up an individual account for each employee and contributes a percentage of the employee's salary
The account earns interest at a predefined rate

Cash balance plan


This arrangement helps employers plan their contributions and helps employees predict their retirement benefits

Cash balance plan


This guarantees employees that become participants in a pension plan, and work a specified number of years, earn the right to a pension upon retirement

ERISA of 1974
Known as vesting rights


Goal of vesting requirements

To protect employees from organization termination to avoid pension obligations


3 legal issues with benefits



Qualified plans, which require vesting and nondiscrimination rules, allow employees to take

Multiple tax advantages


A benefits plan that offers employees a set of alternatives from which they can choose the types and amounts of benefits they want

Cafeteria-style plan


Why must organizations communicate benefits information to employees?

So that they will appreciate the value of their benefits


3 objectives of benefits

Attracting, motivating, and retaining employees


This program combines old age (retirement) insurance, survivors insurance, disability insurance, hospital insurance, supplementary medical insurance

The Federal Old Age, Survivors, Disability, and Health Insurance (OASDHI)


Workers who meet eligibility requirements for social security receive the retirement benefits according to

Their age and earnings history


Unemployment insurance focused on minimizing get the hardship of unemployment through (3)

Payments to unemployed workers
Help in finding new jobs
Incentives to stabilize employment