Chapter 9 Flashcards
1
Q
Research has found that employees consistently rate benefits as what when it comes to their employment decisions?
A
> Research has found that employees consistently rate benefits a key factor in job satisfaction and retention decisions.
2
Q
One study showed that work/life benefits such as childcare were positively related to what?
A
> were positively related to attracting employees, particularly female workers.
3
Q
A recent survey of 1,000 Canadians conducted by Ipsos Reid showed that what kind of benefits are important to employees?
A
> showed that pension benefits are important to employees.
4
Q
Has there been a rise in employee benefit costs?
A
> It is also clear that there has been a rapid rise in employee benefit costs, moving from about 15% of payroll costs in 1953 to the 35% to 40% range today.
5
Q
Why are organizations paying attention to employee benefits?
A
> Organizations pay attention to this reward component, not only because it is a significant part of labour cost, they also know that they must control the increasing cost of benefits, particularly with the aging baby boomer generation.
6
Q
What is compounding the concern of employee benefit pricing?
A
> Compounding this concern is the ever-present entitlement problem. Employees perceive benefits as a right, independent of how well they or the company perform.
> Efforts to reduce benefit levels or eliminate parts of the package altogether are often met with employee resistance and dissatisfaction.
> there is a mismatch between the cost to employer and the perceived value to employee: the cost is much higher than employees estimate.
7
Q
What are the three government-mandated employment-related benefits?
A
> Workers’ Compensation (provincial/territorial),
> Employment Insurance (federal),
> and the Canada/Quebec Pension Plan (federal and Quebec).
8
Q
Also, most other employee benefits are affected by what laws?
A
> are affected by such laws as the Employment Standards Act, theIncome Tax Act, human rights acts, pension benefits acts, and so on.
9
Q
Unions have fought for the introduction of new benefits and the improvement of existing benefits. Largely through the efforts of unions, most notably what two unions got benefits?
A
> most notably the auto and steelworkers unions, several benefits common today were given their initial impetus: pension plans, supplementary unemployment benefits, and retiree benefits.
10
Q
Many of the benefits in existence today were provided due to what initiative? What can this initiative be traced to?
A
> Many of the benefits in existence today were provided at employer initiative.
> Much of this initiative can be traced to pragmatic concerns about employee satisfaction and productivity.
> Rest breaks were often implemented in the belief that fatigue increased accidents and lowered productivity.
> Savings and profit-sharing plans (e.g., Procter & Gamble’s profit-sharing plan, initiated in 1885) were implemented to improve performance and provide increased security for workers’ retirement years.
> many employer-initiated benefits were designed to create a climate in which employees perceived that management was genuinely concerned for their welfare.
11
Q
How did benefits become a cost entitlement?
A
> supposed benefits were taken on faith - But their costs were quite real.
> absent hard data about payoffs, employee benefits slowly became a costly entitlement of the North American workforce.
12
Q
Another important and sound impetus for the growth of employee benefits is what?
A
> is their cost-effectiveness in three situations.
> The first cost advantage is that most employee benefits are not taxable.
> A second cost-effectiveness component of benefits arises because many group-based benefits (e.g., life and health insurance) can be obtained at a lower rate than could be obtained by employees acting on their own.
> Finally, benefit premiums and pension contributions are tax deductible up to limits specified in the Income Tax Act.
13
Q
Most studies of the relative importance employees attachto different types of benefits show fairly consistent results. Describe what this means:
A
> For example, medical coverage is regularly listed as one of the most important benefits that Canadian employees receive.
> These rankings have added significance when we note over the past two decades that healthcare costs are the most rapidly growing and most difficult to control of all the benefit options offered by employers.
14
Q
Are benefits undervalued by employees?
A
> Unfortunately, there is evidence that employees are frequently unaware of, or undervalue, the benefits provided by their organization.
> Benefits are taken for granted.
> Employees view them as a right, with little comprehension of, or concern for, employer costs.
15
Q
What is one positive salvation from the cost of benefits and the current entitlement attitude?
A
> One possible salvation from this money pit comes from recent reports that employees are not necessarily looking for more benefits, but rather greater choice in the benefits they receive.
> In fact, up to 70% of employees in one study indicated they would be willing to pay more out of pocket for benefits if they were granted greater choice in designing their own benefit package.
16
Q
When does the perceived value of benefits rise?
A
> the perceived value of benefits rises when employers introduce choice through a flexible benefit package
17
Q
First and foremost, the benefits planning process must address what vital question?
A
> What is the role of benefits in a total compensation package?
18
Q
When is a benefits package that improves progressively with seniority actually preferred?
A
> It may be tempting to design a benefits package that improves progressively with seniority, thus providing a reward for continuing service and improved retention.
> This would only be the preferred option, though, if other compensation tools, such as increasing wages or introducing incentive compensation, were less effective.
19
Q
The planning process should also include strategies to ensure what about benefits?
A
> The planning process should also include strategies to ensure external competitiveness of benefits.
20
Q
What does benefit competitiveness ensure?
A
> Competitiveness requires an understanding of what competitor firms offer as benefits.
21
Q
How do employers ensure that there benefits are adequate? Is there one set way?
A
> Most organizations evaluating adequacy consider the financial liability of employees with and without a particular benefit (e.g., employee medical expenses with and without medical benefits).
> There is no magic formula for defining benefits adequacy.
22
Q
Four major administration issues arise in setting up a benefits package:
A
(1) Who should be protected or benefited?
(2) How much choice should employees have among an array of benefits?
(3) How should benefits be financed? and
(4) Are the benefits plans in compliance with the legislation?
23
Q
Who should be covered under an employee benefits plan and how do employers differentiate benefit status?
A
> employees
> Companies often differentiate treatment on the basis of employment status.
> often provide fewer benefits for their part-time employees.
24
Q
When covering employees under a benefits package, what elements should be considered?
A
- What probationary periods (for eligibility of benefits), if any, should be used for various types of benefits? or will they start immediately upon hire?
- Which dependants of active employees should be covered?
- Should retirees (as well as their spouses and perhaps other dependants) be covered, and for which benefits?
- Should survivors of deceased active employees (and/or retirees) be covered? If so, for which benefits? Are benefits for surviving spouses appropriate?
- What coverage, if any, should be extended to employees who are suffering from disabilities?
- What coverage, if any, should be extended to employees during layoff, leaves of absence, strikes, and so forth?
- Should coverage be limited to full-time employees?
25
The answers to the questions relating to which employees should be covered under a benefits package depends on what?
> depends on the policy decisions regarding competitiveness, adequacy, and cost-effectiveness discussed in the last section.
26
In the traditional benefits package, what is the common plan coverage?
> In the traditional benefits package, employees have typically not been offered a choice among employee benefits. Rather, a package is designed with the average employee in mind, and any deviation in needs simply goes unsatisfied.
27
What is an extreme to the traditional benefits plan?
> The other extreme (discussed in greater detail later) is represented by flexible benefit plans.
> Under this concept, employees are permitted great flexibility in choosing the benefit options of greatest value to them.
28
What are two advantages to flexible benefits plans?
> companies offering flexible plans can also respond to cost pressures related to the increasing diversity of the workforce.
> A flexible benefit plan, it is argued, increases employee awareness of the true costs of benefits and, therefore, increases employee recognition of the value of the benefits the company offers.
29
Even companies that are not considering a flexible benefit program are offering greater flexibility and choice. Such plans might provide what 3 elements?
(1) optional levels of group term life insurance,
(2) the availability of death or disability benefits under pension or profit-sharing plans, or
(3) choices of covering dependants under group medical expense coverage.
30
The third administrative issue involves the question of financing benefits plans. Alternatives include which 3 opitions?
1) Non-contributory (employer pays total costs);
2) Contributory (costs shared between employer and employee); or
3) Employee-financed (employee pays total costs for some benefits).
31
In general, organizations prefer to make benefits options what?
> In general, organizations prefer to make benefits options contributory, reasoning that anything free, no matter how valuable, is less valuable to an employee.
32
Do benefit plans require compliance?
> Finally, companies need to make sure that their benefits plans and programs are in compliance with the requirements of the legislation and regulations where it operates.
33
What are employer factors that are Influencing Choice of Benefits Package?
> Relationship to total compensation costs
> Costs relative to benefits
> competitor offerings
> Role of benefits in attraction, retention, and motivation
> Legal requirements
34
What are employee factors that are Influencing Choice of Benefits Package?
> Fairness in relationship to what others recieve
> personal needs as linked to age, gender, marital status, and number of dependants
35
A good compensation manager considers employee benefit costs as part of what?
> considers employee benefit costs as part of a total package of compensation costs.
> Benefit costs are only one part of a total compensation package
36
A major reason for the proliferating cost of benefits programs is what kind of focus?
> is the narrow focus of benefits administrators.
37
To control spiralling benefits costs, administrators use what kind of approach?
> To control spiralling benefits costs, administrators should adopt a broader, cost-centred approach.
> As a first step, this approach would require policy decisions on the level of benefit expenditures that are acceptable both in the short and in the long run.
38
What does a broad cost-centered approach require?
> A cost-centred approach would require benefits administrators, in cooperation with insurance carriers and armed with published forecasts of anticipated costs for particular benefits, to determine the cost commitments for the existing benefits package.
39
If a benefit forecast suggests that future cost containment may be difficult, the benefit should be offered on what basis?
> should be offered to employees on a cost-sharing basis only.
> Management determines what percentage of cost it can afford to bear within budget projections, and the option is offered to employees on a cost-sharing basis, with projected increases in both employer and employee costs communicated openly.
40
One of the best strategies to determine external equity (because they should have that) is what?
> is to conduct a benefits survey.
41
There is some research to support this common assumption that benefits increase retention. Describe this research:
> Two studies found that higher levels of benefits reduced mobility.
> Others found that only two specific benefits curtailed employee turnover: pensions and medical coverage
42
How has benefits satisfaction been negatively impacted?
> However, benefits satisfaction has been negatively impacted as cost-cutting companies attempt to reduce coverage and to shift more of the costs to employees.
43
Companies must realize that declining satisfaction with benefits may also result from what?
> may also result from demographic changes in the workforce, especially as the baby boomers retire and Generation Y employees enter the workforce over the next decade or two.
44
How do employee benefits impact the bottom line?
> owning stock motivates employees to be more productive
> Similar productivity improvements are reported for employee assistance programs (for addiction, mental health, and family problems), with reports of up to 25% jumps in productivity after their implementation.
45
When does vesting of employee benefits occur?
> vesting of pension benefits, which occurs when employees become entitled to the employer-paid portion of pension benefits upon termination of employment
46
When is vesting of employee benefits required?
> vesting is required by Canadian law after no more than two years of employment.
47
What benefits are most desired?
> Benefits perceived to best satisfy individual needs are most highly desired
48
A major assumption in empirical efforts to determine employee preferences is that preferences are somehow systematically related to what?
> systematically related to what are termed demographic differences.
> The demographic approach assumes that demographic groups (e.g., young versus old, married versus unmarried) can be identified for which benefits preferences are fairly consistent across members of the group.
> Furthermore, this approach assumes that meaningful differences exist between groups in terms of benefit preferences.
49
Some organizations undertake a second and more expensive empirical method of determining employee preferences: what is it?
> surveying individuals about needs
50
Benefits administration involves three main functions:
(1) communicating the benefits program,
(2) claims processing, and
(3) cost containment
51
Benefits communications revolve around four issues:
1) what is communicated,
2) to whom,
3) how it’s communicated,
4) and how frequently.
52
The most commonly used method for communicating employee benefits is what?
> is still the employee benefits handbook, usually available in both paper and online versions.
53
An effective communications package must have three elements - what are they?
1) an organization must spell out its benefit objectives and ensure that any communications achieve these objectives
2) the message must be matched with the appropriate medium.
3) The content of the communications package must be complete, clear, and free of complex jargon.
54
What is a typical root cause to employee dissatisfaction with employee benefit packages?
> failure to understand benefit components and their value is still one of the root causes of employee dissatisfaction with a benefit package and/or a low return on investment for employers.
55
one study of 500 employees in seven Canadian organizations found that the perceived fairness of a plan was significantly higher when what occured?
> hen there was extensive communications and employee participation in the plan's design.
56
Claims processing arises when what occurs?
> arises when an employee asserts that a specific event (such as disability or hospitalization) has occurred and requests that the employer fulfill a promise of payment
> As such, a claims processor must first determine whether the act has, in fact, occurred. If the event did occur, the second step involves determining if the employee is eligible for the benefit. If payment is not denied at this state, the claims processor calculates the payment level.
57
a good claims processor can save 10% to 15% of claims cost by ensuring that the liability is paid in what way?
> paid jointly
58
Increasingly, employers are auditing their benefits options for cost containment opportunities. The most prevalent practices are as follows:
1) Probationary periods: New employees are excluded from benefits coverage until some term of employment (e.g., three months) is completed.
2) Benefit maximums: It is not uncommon to limit disability income payments to some maximum percentage of income, and to limit medical/dental coverage for specific procedures to a certain fixed amount. Lifetime maximum payouts are sometimes used.
3) Coinsurance: Employees are required to pay a fixed amount or a percentage of the amount.Page 170
4) Deductible: A specified dollar amount of claims must be paid each year by the employee before the insurance plan begins paying (e.g., $25 deductible means that the employee pays the first $25 in claims submitted each year).
5) Coordination of benefits: When two spouses both have employee benefits coverage, benefits are reduced by any benefits payable under the spouse’s plan (i.e., both spouses cannot receive benefits to cover the same expenses).
6) Administrative cost containment: Seek competitive bids for program delivery, for example.
7) Denying coverage for pre-existing conditions.
8) Programs that encourage wellness: Establish a smoking cessation program, for example.
9) Outsource benefits administration.
59
Probably the biggest cost-containment strategy in recent years is the movement to what?
> is the movement to outsourcing.
> By hiring vendors to administer their benefits programs (including communication in some cases), many companies have achieved greater centralization, consistency, and control of costs and benefits.
60
What are Legally required benefits?
1) Canada/Quebec Pension Plan (C/QPP)
2) Employment Insurance (EI)
3) Workers’ Compensation
4) Government-sponsored healthcare plans
5) Breaks, vacation, and leaves
61
what are retirement and saving plan benefits?
1) Defined benefit pension plan
2) Defined contribution pension plan
3) RRSP and TFSA
62
What is another categorization of benefits? HINT: related to living.
> Life insurance and accidental death benefits
63
What are Medical insurance benefits?
> Employer-sponsored medical plans
> Dental insurance
> Vision care
64
What are income security benefits?
> Sick leave
> Short-term disability
> Long-term disability
65
What are payments for time not worked benefits?
> Paid rest periods, coffee breaks, lunch periods, wash-up time, travel time, clothes-change time, get-ready time, etc.
> Payments for vacations
> Payments for holidays
66
What benefits are in the "other benefits category"
> Employee assistance plans (EAP)
> Childcare services
> Eldercare services
67
What is worker's compensation?
> Workers’ Compensation is a form of no-fault insurance (employees are eligible even if their actions caused the accident) that covers injuries and diseases that arise out of, and while in the course of, employment.
68
What is the focus of a worker's comp benefits plan?
> The focus of the plan has been shifting from the provision of compensation to injured workers to the prevention of accidents through promoting occupational health and safety and facilitating the recovery and return to work for injured workers.
69
Under workers comp, All jurisdictions provide benefits for what?
> Loss of earnings due to temporary disability (total or partial);
> Loss of earnings due to permanent disability (total or partial);
> Healthcare expenses (including those normally paid under provincial healthcare plans); and
> Survivor benefits for fatal injuries.
70
How are workers comp paid?
> Workers’ Compensation benefits are non-taxable. The complete cost of administering and paying out compensation for work-related injuries and illnesses is borne by employers under a collective liability fund.
> Employers are put in different rate groups, or classes, according to the nature of their business, and all members of the class pay the same assessment rates, based on a percentage of payroll, into the fund.
71
The Canada/Quebec Pension Plan (C/QPP) is designed to do what?
> is designed to replace employment income in case of retirement, death, or disability.
> With the recent enhancements to the plan, the CPP will aim to replace one-third of average pensionable earnings
72
How is the C/QPP calculated?
> Both contributions and benefits are calculated on earnings between the Year’s Basic Exemption (YBE), now fixed at $3,500, and the Year’s Maximum Pensionable Earnings (YMPE), set at $58,700 in 2020, approximately the average Canadian wage.
73
What is EI?
> Employment Insurance (EI) provides workers with temporary income replacement as a result of employment interruptions due to work shortages, sickness, non-occupational accidents, pregnancy, parental or adoption leave, or family care-giver or compassionate care leave.
74
when does someone get paid under EI?
> Workers receive EI benefits only if they have paid premiums in the past year and meet qualifying and entitlement conditions.
75
What is the basic benefit of EI?
> The basic benefit is 55% of the individual’s average insured earnings and is included as taxable income. A waiting period of one week applies before the first benefit payment is made.
> Employment Insurance benefits are payable for a maximum of 45 weeks, depending on the unemployment rate in your region at the time of filing your claim and the amount of insurable hours you have accumulated in the last 52 weeks or since your last claim, whichever is shorter, and up to 69 weeks for combined pregnancy and parental leave.
76
What are Supplementary Unemployment Benefit (SUB) plans?
> Supplementary Unemployment Benefit (SUB) plans are voluntary, self-insured employer plans to supplement benefits received under the EI plan.
> Pregnancy, parental, family care-giver, and compassionate care SUB plans can supplement up to 100% of earnings.
77
Provide a brief overview of government sponsored health care plans:
> All provinces and territories sponsor healthcare plans that provide basic medical and hospital services, with no direct fee to patients.
> These plans are financed through premiums (paid by residents), health payroll taxes (paid by employers), general tax revenues, or some combination of the three to partially fund the cost of their plans.
78
All provinces and territories sponsor what kind of plans?
> All provinces and territories sponsor healthcare plans that provide basic medical and hospital services, with no direct fee to patients
79
What other benefit (think employment standards) does each jurisdiction require?
> Each jurisdiction also requires employers to provide their employees with breaks (can be paid or unpaid), vacation days, and leaves under their respective employment standards acts or codes.
80
There is a strong relationship between employee age and preference for what kind of plan?
> There is a strong relationship between employee age and preference for a pension plan.
> Although this need for retirement security may become more pronounced as workers age, it is evident among younger workers as well. In 2018, approximately 34% of paid workers in Canada are covered by an employer-provided pension plan.
81
The importance of employer-provided retirement plans is demonstrated by one recent study, which showed what?
> which showed that employees with employer-provided retirement plans are more likely to have sufficient savings for a comfortable retirement than are others who do not have these plans.
82
What are the two types of pension plans? Is there a third?
> (1) defined benefit and (2) defined contribution plans. A third type of plan is a hybrid, which is a combination of the two.
83
What does a defined benefit plan cover?
> In a defined benefit plan, an employer agrees to provide a specific level of retirement income that may vary (increase) with years of seniority in the company.
> The firm finances this obligation by following an actuarially determined benefits formula and making current payments that will yield the future pension benefit for a retiring employee.
84
What is the most common approach to the defined benefit plan? What are the other two alternative ways?
> The most common approach is to calculate average earnings over the last (or best) three to five years of service for a prospective retiree and to offer a pension of about one-half this amount, adjusted for years of seniority.
> Alternatively, a defined benefit plan may use average career earnings rather than earnings from the last few years: other things being equal, this would reduce the level of benefit for pensioners.
> The final formula commits an employer to a fixed (flat) dollar amount that does not depend on earnings data. This figure generally rises with seniority level.
85
The level of pension a company chooses to offer depends on the answer to several questions. What are the 4 questions?
> First, what level of retirement compensation would a company like to set as a target, expressed in relation to pre-retirement earnings, for example, 70% of pre-retirement earnings?
> Second, should C/QPP payments be considered when planning the level of income an employee should have during retirement?
> Third, should other, post-retirement income sources (e.g., savings plans partially funded by employer contributions) be integrated with the payment?
> Fourth, a company must decide how to factor seniority into the payout formula.
86
What are two issues of the defined benefit plan?
> The larger the role played by seniority, the more important pensions will be in retaining employees. The traditional approach has been that the maximum pension payout for a particular level of earnings should be achieved only by employees who have spent an entire career with the company (employees who change jobs more often are hurt financially by this type of strategy. In this example—a very plausible scenario—frequent job changes cut final pension amounts in half.)
> Another issue that arises in defined benefit plans, because the costs fluctuate over time due to fluctuating investment returns, is that of pension fund surpluses (when investment returns exceed projections) and deficits or unfunded liabilities (when investment returns are below those expected).
87
A defined contribution plan requires what?
> A defined contribution plan requires specific contributions by an employer. Contributions may also be required from employees or the contributions may be optional.
88
What are the relative advantages of a defined benefit plan?
1) Provides an explicit benefit that is easily communicated.
2) Company absorbs risk associated with changes in interest rates and investment returns, which affect cost.
3) More favourable to long-service employees.
4) Employer costs unknown.
5) Pension fund surplus, but not deficit, must be shared with employees if plan is wound up.
89
What are the relative advantages of Defined Contribution Plan?
1) Unknown benefit level is difficult to communicate.
2) Employees assume risks from changes in interest rates and investment returns, which affect benefits.
3) More favourable to short-term employees.
4) Employer costs known up front.
5) No surplus or deficit in pension fund to manage.
90
Each province across Canada (except Prince Edward Island), as well as the federal government, has legislation regarding what?
> has legislation regarding pension benefits. In addition, the Income Tax Act has detailed requirements regarding pension plans that must be met for employer and employee contributions to be tax-deductible up to the limits provided in the Act.
91
What is portability?
> Portability refers to the possibility of transferring one’s pension from one employer to another. Not many pension plans have a provision for portability. However, if an employer’s plan permits portability, it will only apply to pension rights that are vested.
92
Plans covering employees in more than one jurisdiction must do what?
> must comply with the legal requirements of the jurisdiction of registration but must also apply the rules of each other jurisdiction for employees working in that jurisdiction.
93
One of the most common employee benefits offered by organizations is some form of what?
> One of the most common employee benefits offered by organizations is some form of life insurance
94
Two other common forms of life insurance are:
> are dependant life insurance and accidental death and dismemberment insurance.
> Dependant life insurance provides benefits in the event of the death of the spouse or child of an employee.
> Accidental death and dismemberment insurance pays double the regular life insurance benefit if the employee dies in an accident, and also pays a percentage of the death benefit for accidental paralysis or loss of limbs, eyesight, speech, or hearing.
95
The main reasons for these increases in healthcare costs are:
> The main reasons for these increases in healthcare costs are the increased use of expensive new biologic drugs, rising drug utilization by an aging population, and reductions in coverage under provincial/territorial healthcare plans.
96
There are two general strategies available to benefits managers for controlling the rapidly escalating costs of healthcare. what are they?
1) First, organizations can motivate employees to change their demand for healthcare through changes in either the design or the administration of health insurance policies.
2) The second cost strategy involves the promotion of preventive health, or wellness, programs. Incentives for quitting smoking are popular inclusions here, but there is also increased interest in healthier food in cafeterias and vending machines, on-site physical fitness facilities, and early screening to identify possible health problems before they become serious.
97
What is included in the administration of health insurance policies control strategy?
Included in this category of control strategies are:
(1) deductibles (the first x dollars of healthcare cost are paid by the employee),
(2) coinsurance rates (the percentage of premium payments paid by the company versus the employee),
(3) maximum benefits (defining a maximum payout schedule for specific health problems), and
(4) coordination of benefits (ensuring no double payment when coverage exists under the employee’s plan and a spouse’s plan).
98
Vision care dates back only to what and why?
> Vision care dates back only to the 1976 contract between the Auto Workers and the Big Three automakers.
99
What are sick leave plans?
> Sick leave plans grant full pay for a specified number of paid or sick days per month or per year. Usually a medical certificate is required.
100
Short-term disability plans (also known as salary continuation plans) provide what?
> provide a continuation of all or part of an employee’s earnings when the employee is unable to get to work for a prolonged period of time, in most cases up to 26 weeks.
101
Long-term disability plans provide what?
> income protection due to long-term illness or injury that is not work related (work-related injuries are covered by Workers’ Compensation benefits).
> The payments typically begin after 26 weeks of short-term disability and continue to age 65 (when pension plan benefits begin) or for life.
> Benefits usually range from 50% to 75% of the employee’s base pay and are not taxable if the employee pays the full cost of the plan (any employer contributions result in taxable benefits for the disabled employee).
102
For pay for time not worked benefits includes:
> Included within this category are several self-explanatory benefits:
1) Paid rest periods, lunch periods, wash-up time, travel time, clothes-change time, and get-ready time benefits;
2) Paid vacations (in addition to what is legally required);
3) Paid holidays (statutory and other); and
4) Other (jury duty allowances, bereavement pay, paid personal leave, paid time for community volunteer work).
103
What is an employee assistance program?
> An employee assistance plan (EAP) is a formal employer program that provides employees with confidential counselling and/or treatment programs for problems such as mental health issues, marital/family problems, work/career stress, legal problems, and substance abuse.
104
The number of EAPs in Canada is growing - why?
> The number of EAPs in Canada is growing because they are a proactive way to reduce absenteeism and disability costs.
> The percentage of employees using EAPs is difficult to determine due to confidentiality, but it is estimated to be in the range of 6% to 7%
105
What is the largest EAP provider in Canada?
> The largest EAP provider in Canada, Shepell-FGI, has called for tax credits for EAP providers because they are increasingly shouldering the burden of mental health treatment for employees
106
One fast-growing employee benefit is what (in relation to childcare services):
> One fast-growing employee benefit is emergency childcare. Companies can lose significant working hours as a result of last-minute childcare problems, and, therefore, more and more companies are offering this low-cost benefit.
> Emergency childcare services are generally offered either at onsite centres or centres near the workplace, or through company-paid babysitters.
> Overall, Companies are increasingly offering childcare services to their employees as a paid benefit.
107
Given longer life expectancy than ever before and the aging of the baby-boom generation, one benefit that will become increasingly important is:
> is eldercare assistance.
> Members of the aging workforce are increasingly assuming caregiver roles for their elderly parents.
> This trend is likely to continue: the number of Canadians age 65 and over would represent between 23% and 25% of the population by 2036 and between 24% and 28% by 2061
108
In a flexible benefit plan, employees are allotted what?
> In a flexible benefit plan, employees are allotted a fixed amount of money—called flex dollars or flex credits. They then have the flexibility to spend that amount in choosing the benefit options that are of greatest value to them. They are also sometimes called "cafeteria" plans.
109
Some plans are completely flexible, but others require what?
> but others require that “core” benefits (such as basic life insurance) be included, with the remainder being the employee’s choice.
> A third approach is to offer different modules (packages) of benefits that employees choose from.
110
What are advantages to flexible benefit programs?
1) Employees choose packages that best satisfy their unique needs.
2) Flexible benefits help firms meet the changing needs of a changing workforce.
3) Increased involvement of employees and families improves understanding of benefits.
4) Flexible plans make introduction of new benefits less costly. The new option is added merely as one among a wide variety of elements from which to choose.
5) Cost containment: The employer sets a dollar maximum, and the employee chooses within that constraint.
111
What are disadvantages to flexible benefit programs?
1) Employees make bad choices and find themselves not covered for predictable emergencies.
2) Administrative burdens and expenses increase.
3) Adverse selection: Employees pick only benefits they will use. The subsequent high benefit utilization increases its costs.
112
What benefit package is ideal?
> From a theoretical perspective, the flexible approach to benefits packaging is ideal.
> Employees directly identify the benefits of greatest value to them, and, by constraining the dollars employees have to spend, benefits managers control benefits costs.
