Module 9 Flashcards
(42 cards)
Employee Benefits are what kind of component to compensation?
> Employee Benefits are a component of total compensation on top of pay, provided to employees and paid whole or in part by the employer.
What benefits are typically included in benefits package?
> Life insurance, pension plans, workers compensation, vacations, etc. are examples of benefits typically included in the employee package.
Employee satisfaction with benefits is associated with what? What should we keep in mind when saying this?
> employee satisfaction with benefits is associated with job satisfaction there is not a lot of available data concerning specific payoffs.
Three benefits are mandated by the provincial or federal government:
1) Worker’s Compensation Provincial);
2) Employment Insurance (Federal); and
3) Canada/Quebec pension plans (Federal/Que).
What laws affect benefit plans?
> Other laws are affected by the above such as the Income Tax Act, Human Rights Acts, and Pension Benefits Acts.
Unions have fought for the introduction of new benefits and the improvement of current plans including:
> including pattern pension plans, supplementary unemployment compensation and extended vacation plans.
Employers have also increased benefits to try to improve what elements in the workplace?
> Employers have also increased benefits to try to improve satisfaction and productivity.
> Rest breaks were added to decrease mistakes and accidents in production.
> Many benefits were added to improve the perception of the employer by the employees.
Employee Benefits are cost effective in three situations:
1) Most benefits are not taxable to avoid tax implications;
2) Many group-based benefits, like health and life insurance can be purchased at lower rates for worker groups and for individuals;
3) Benefit premiums and pension contributions are tax deductible up to certain limits.
Employees do have preferences in what types of benefits they want BUT when asked what benefits they receive what happens?
> BUT when asked what benefits they receive they often can’t list them.
> When asked what the value of the benefits are, they often undervalue them.
Employees expect benefits as part of their total compensation, but do what?
> but take them for granted and do not know their true value.
Questions to ask during Benefit Planning and Design:
> What is the role that Benefits play in Total Compensation? Is it to attract employees or to reduce turnover?
> Are the benefits externally competitive and is the cost justified?
> Are the benefits adequate from a financial liability viewpoint?
Four Major Administration Issues arise in setting up a package:
1) Who should be covered?:
- Probationary employees?
- Dependents?
- Retirees?
- Survivor benefits?
- Disabilities?
- Should coverage continue during layoffs?
- Are benefits only for full-time employees?
2) How much choice should an employee be given? In Flexible Benefits Plans, the employee is able to choose benefits that are of most valuable to them.
3) How will the benefits plan be financed?
1) Non-contributory (employer pays cost);
2) Contributory (where costs are shared between employee and employer; where the employee pays the cost of some benefits or where the employer pays the cost of some benefits (such as LTD premiums);
3) Employee financed (The employee pays total cost for some benefits.
4) Finally, it is critical to ensure compliance with legislation and regulations where the company operates.
Factors Affecting Planning - Relationship to Total Compensation Cost:
> the company decides if the money spent on benefits could be better spent elsewhere
Factors Affecting Planning - Costs Relative to Benefits:
> evaluating present and future costs of benefits determines if the organization can afford to maintain the current level of that benefit.
> This is especially true of health insurance benefits that have been difficult to maintain without increasing premium costs (required contribution by employees)
Factors Affecting Planning - Competitor Offerings:
> benefits must be considered relative to the competition to maintain external equity and maintain the pay policy of leading, matching or lagging the market.
Factors Affecting Planning - Role of Benefits in Attraction, Retention and Motivation:
> There is little actual evidence that benefits attract, retain, motivate, or impact job satisfaction or productivity. The exception is stock options which do have retention value.
Factors Affecting Planning - Legal Requirements
> Employers must ensure their benefits meet legal requirements such as vesting (the waiting period for the employer paid portion of pension benefits to become available to an employee upon termination).
Factors Affecting Planning - Absolute and Relative Costs:
> The absolute and relative costs of an entire Benefits package must be determined in order to compare the costs of the total compensation plan with the competition.
Perceived unfairness can result from what?
> can result from an employee’s perception that his/her personal needs (such as age: pension plan) are not being met or that he/she is not receiving benefits competitors are offering.
There are three main functions in administering a benefits plan:
1) Communication
> Best Method is producing an Employee Benefits Handbook.
> The Handbook needs to be accompanied by group meetings and videos.
> One on one meetings with an administrator are also valuable, as are intranet and internet postings of the plan details.
> Details must be complete, clear and free of complex jargon.
There are three main functions in administering a benefits plan:
2) Claims Processing
> A Claims Processor determines if the claim is valid. Approximately 10% of claims are denied.
> When a determination is made concerning the employee eligibility;
> If eligibility requirements are approved, the payment level is determined.
There are three main functions in administering a benefits plan:
3) Employers are increasingly looking for Cost Containment opportunities including.
> Probationary periods (waiting a specified period of time to extend benefits to a new employee);
> Benefit maximums (for example: limiting disability income payment to a maximum percentage of income);
> Coinsurance (for example: premiums are shared by employer/ee;
> Deductibles (for example: a specified dollar amount paid by the employee before a claim is paid;
> Coordination of benefits; is the reduction of any claim amount paid by a spouse’s plan;
> Administering/Delivery cost containment(for example: seeking competitive bids for program delivery);
> Denying claims for pre-existing conditions;
> Creating programs that encourage wellness;
> Outsourcing benefits administration
What are the benefits that are legally required?
1) CPP/QPP
2) Employment Insurance
3) Workers’ Compensation
4) Government-sponsored healthcare plans
5) Breaks, vacations and leaves
What is the Canada/Quebec Pension Plan?
> is a government-sponsored plan designed to replace employment income in case of retirement, death, or disability. All employees and self-employed persons must contribute to the plan, and employers match their employees’ contributions equally.
