PowerPoint PresentationIntroductionBenefits ProgramsSocial SecurityUnemployment InsuranceWorker’s CompensationPrivate Group InsuranceEmployer-Sponsored Retirement PlansDefined Benefit Pension PlanSlide 10401(k) PlanSlide 12403(b) PlanPay For Time Not WorkedSlide 15Family-Friendly PoliciesSlide 17Managing BenefitsSlide 19Breakdown of Total CompensationHealthcareEmployee Wellness ProgramsFlexible Spending AccountsStaffing Changes to Reduce Benefits CostSlide 25Affordable Care Act: Impact on EmployersAffordable Care Act: Impact on EmployeesAssessing Employee’s Benefit NeedsCommunicating BenefitsHow Companies Increase Total Compensation Employee BenefitsAverage cost of benefits is about 31.3% of total compensation packageBenefits are unique because:omore regulation of benefits than direct payoalmost obligatory for employers to provideocomplex for employees to understandoEmployers pass health care cost increases on to employees13-2Introduction13-3Benefits ProgramsSocial Security provides old-age insurance, unemployment insurance, survivors' insurance, disability insurance, hospital insurance and supplementary medical insuranceoSocial Security retirement benefits free from federal tax and state tax in all but 13 states (CO, CT, KS, MN, MO, MT, NE, NM, ND, RI, UT, VT, WV)oFull benefits begin at age 66 or reduced benefit at 62Social Security provides old-age insurance, unemployment insurance, survivors13-4Social SecurityObjectivesoOffset lost income during involuntary unemployment oHelp unemployed workers find new jobs oProvide incentive for employers to stabilize employmentoPreserve investments in skills by providing workers with income during short-term layoffsUnemployed workers eligibleoWorked steadily in past (usually 52 weeks)oAvailable and actively seeking workoWere not discharged for causeoDid not quit voluntarilyoNot out of work because of a labor dispute13-5Unemployment InsuranceCovers job-related injuries and deathCovers families of workers who accidentally die on jobCovers 90% of U.S. workersCategories of BenefitsoDisability income, medical care, death benefits, rehabReducing claimsoImprove safety, hold managers accountable, monitor employee treatment13-6Worker’s CompensationOffered at employer’s discretion; not legally requiredTypes: medical and disability insuranceoMedical is most important so most orgs offer to FT employeesoDisability includes short-term and long-term plans Group rates lower because of economies of scale, ability to pool risks and greater bargaining power of a groupConsolidated Omnibus Budget Reconciliation Act (COBRA) requires employers to permit employees to extend health insurance coverage at group rates for up to 36 months following a “qualifying event”13-7Private Group Insurance13-8Possible benefits of plans include:osavings directly deducted from your paycheckotax breaks oin some cases, an employer matching of your contributions (aka free money!)Most common includeo401(k) planoDefined benefit pension plano403(b) plan13-8Employer-Sponsored Retirement Plans13-9Known as traditional retirement plansMost common type of employer-sponsored retirement plan, until 1970s but today is rare; replaced by defined contribution plansEmployee receives fixed monthly benefit at retirement and will not be responsible to make any contributions to the planAll contributions supplied by the employer, who bases the monthly benefit on employee’s income and years of serviceAll investment decisions made by the employer, not employeePlan is entirely administered by employer, so employee has no control over the funds upon reaching retirement age13-9Defined Benefit Pension Plan13-10Known as traditional retirement plansMost common type of employer-sponsored retirement plan, until 1970s but today is rare; replaced by defined contribution plansEmployee receives fixed monthly benefit at retirement and will not be responsible to make any contributions to the planAll contributions supplied by the employer, who bases the monthly benefit on employee’s income and years of serviceAll investment decisions made by the employer, not employeePlan is entirely administered by employer, so employee has no control over the funds upon reaching retirement age13-10Defined Benefit Pension Plan13-11Most common employer-sponsored retirement plan today primarily offered by large, for-profit businessesIs a defined contribution plan funded primarily by employee but often includes at least partial employer matchEmployee chooses which investments to put funds into and has complete control over the money when reach retirementEmployee contributions are tax deductible in the year they are made and investment earnings accumulate on tax-deferred basis Once employee retires and begins taking distributions, those distributions are taxable as ordinary income13-11401(k) Plan13-12Should the employee withdraw the funds prior to retirement, funds can be rolled over either into a traditional IRA or into 401(k) plan of another employer — without incurring taxes or early withdrawal penaltiesAny funds withdrawn, but not rolled over into another qualified plan, will be subject to ordinary income taxes as well as 10% early withdrawal penalty Annual contributions limited to $18,000 for 2016If employee is age 50 or older, there is a catch-up provision allowing additional contributions of $6,000 for 201613-12401(k) Plan13-13Virtually identical to 401(k) plan, except designed for nonprofit organizationsIncludes public schools systems, hospitals, home health service agencies, welfare service agencies, churches, and conventions and associations of churchesThe plans funded primarily by employees, and contributions are tax deductible when made Employers can match contributions up to a certain percentageInvestment earnings accumulate on a tax-deferred basis, and contribution limits are identical to those of 401(k) plans13-13403(b) PlanVacation:oUS has no legal minimum; 10 days is commonoEurope, 20 days minimum vacation mandatedSick Leave programs provide full salary replacement for limited period of time, usually not exceeding 26 weeks, based on length of service, accumulating with servicePaid public holidaysoUS has no legal minimum; 8 days is commonMany companies moving to Paid Time Off (PTO) of bundling vacation and sick time as one13-14Pay For Time Not Worked13-15To ease