sc4 student ppt11
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A Human Resource Management Approach
STRATEGIC COMPENSATION
Prepared by David OakesChapter 11 Discretionary Benefits
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Discretionary Costs In 2004 $11,107 per employee
40% of total payroll costs
$15,000 total with legally-required benefits
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Benefit Types Protection programs
Pay for time-not-worked
Services
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Income Protection Disability insurance
Life insurance
Pension programs
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Health Protection Self - funded plans Health maintenance organizations (HMOs) Preferred provider organizations (PPOs) Dental insurance Vision insurance Prescription drug plan
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Short-Term Disability Less than 6 months duration
Unable to perform job
Benefit: 50% - 100% of pre-tax income
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Long-Term Disability 6 months to life Unable to perform any job qualified for Benefit 50% - 70% of pre-tax pay 6 - 12 month waiting period Other benefits used first
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Pension Plan Financing Options Noncontributory
Contributory
Employee-financed programs
A combination of the three
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Pension Plan Tax Treatment Options Qualified Employers get tax deductions for contributions Employees taxed less at retirement Nonqualified Employers & employees receive few tax break
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Qualified Plans Eligibility Minimum age 21, & 1 year of service Nondiscrimination Limited preferential treatment Vesting Usually 3 - 6 years Payout restrictions Tax penalty if taken before age 59.5
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Defined Contribution Plans Profit sharing plans Employee stock ownership (ESOPs) 401(k)s Savings & thrift plans
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401(k)s Named after IRS code section Employees invest pre-tax income Plan limits 2006 - $15,000 2007 - $15,500 2008 - $16,000 $500 yearly increases
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ESOPs The basis for 401 (k) plans Contributions invested in company securities Distributions made in company stock Like stock bonus plans, except stock is purchased with borrowed funds
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Saving & Thrift Plans Employers match employees contributions Usually up to 50% of employees Tax penalties for early withdrawals Employees can select investment vehicle Stocks Bonds Money market funds
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Defined Benefit Plans Guarantees benefits amount Amount expressed as a monthly sum % of pre-retirement pay X years of service Employers contributions can vary, but benefit at retirement cannot Not widely used
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Health Care Programs Fee-for-service Managed care Point of service Consumer-driven health care
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Fee-For-Service Plans Indemnity plans Cover usual, customary, reasonable charges Hospital expenses Surgical expenses Physicians fees Deductibles & coinsurance Out-of-pocket maximums Individual or group coverage
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HMOs Organize, deliver, & finance care Provides prepaid medical services May include co-payments Regulated by Health Maintenance Organization Act of 1973 Prepaid group practices Individual practice associations
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PPOs Select group of health care providers Employees choose from a list Financial incentives to use list Physicians must Meet quality standards Abides by PPO cost-containment Accepts PPO fee structure Does not provide prepaid benefits
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Consumer-Driven Care Flexible-spending accounts
Health reimbursement arrangements
Health savings accounts
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Flexible-Spending Accounts Supplemental health coverage Employee funds account with pre-tax income Pays for qualified expenses Unused funds forfeited
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Health Reimbursement Arrangements Supplemental health coverage
Employees funded
Unused funds carried over
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Prescription Drug Plans Medical reimbursement plans
Prescription card programs
Mail order prescription drug program
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RELEVANT LEGISLATION ERISA
COBRA
FLSA
HIPPA
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ERISA Regulates fringe compensation Medical Disability Life insurance Pension Monitors Reporting Disclosure Funding Fiduciary & vesting responsibilities
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COBRA Continues health care coverage to 36 months Can cost up to 102% of premium Employers penalized for noncompliance Exempt employers Those with less than 20 employees Churches Federal government
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HIPPA Guarantees health coverage Addresses preexisting conditions Concerns access to health information Transfer Disclosure Use