1. Chapter 12
Employee Benefits

2. Learning Objectives
Discuss the history and trends of employee benefits management
Explain the rationale and tax implications of offering benefits in addition to compensation and why benefits are critical to the recruitment and retention of healthcare workers
Describe a variety of benefits that may be offered with employment and relate the management implications of offering each
Relate the knowledge of employee benefits to selected human resources management issues and systems development
Make suggestions for design and communication of benefits plan

3. Brief Historical Background
Employee benefits can be traced back to 1636.
1800 – Employers started hiring physicians as a result of increase in worker injuries.
1929 – Baylor established the first pre-payment plan for Dallas area teachers.
1929 – The great Depression help to establish the Social Security Act.
A wage freeze during WWII prompted employers to offer healthcare benefits in lieu of pay increases.

4. Major Federal Legislation
Employee Retirement Income Security Act of (ERISA)
Consolidated Omnibus Budget Reconciliation Act of 1986
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
Employee Retirement Income Security Act of 1974 (ERISA)
Administered by the DOL
Establishes guidelines for the management of pensions and health plans
Consolidated Omnibus Budget Reconciliation Act of 1986
Allows qualified employees to continue their benefits after employment
Applies to any employer with 20 or more employees
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
Designed to assist employee with preexisting conditions
Does not allow waiting periods between employment
Imposes confidentiality rules

5. Overview of Employment Benifits
Mandatory Benefits
Social Security and Medicare Part A
Unemployment Compensation
Workers’ Compensation
Voluntary Benefits
Leave Benefits
Health and Welfare Benefits
Retirement Plans
Other
Mandatory Benefits
Social Security and Medicare Part A
FICA authorizes payroll tax deduction
Employers must match the deducted amounts
Unemployment Compensation
Amount varies by state
Voluntary separation or termination for cause is typically not covered
Workers’ Compensation
Implemented to protect employers from litigation
Many employers self insure to save on administrative cost.
Voluntary Benefits
Leave Benefits
Vacation
Sick Leave
FMLA – employers must offer 12 weeks of unpaid leave.
Health and Welfare Benefits
Health Insurance – comes in many forms (see page 328 Table 12.2)
Wellness and Fitness Programs – used to manage healthcare costs
Dental Insurance – Cost is rising. Some employers are contracting with dental schools directly
Hearing insurance – may be helpful depending on workforce demographics.
Prescription Drug Benefits – Very costly for both the employer and employee.
Flexible Spending Accounts- tax deferred amounts to be used to cover healthcare costs. IRS sets the standard for what is a covered expense.
Long Term Disability – provides income ins the event of a long term disability. This is valuable to healthcare workers who may sustain an injury that prevents them from practicing.
Short Term Disability – Covers a percentage of salary for the short term
Life Insurance – Covered only while employed in the organization. See Table 12.4
Retirement Plans
Qualified Retirement Plan – strict eligibility and vesting requirements. Receive more tax benefits.
Nonqualified Retirement Plans – Used to meet the need of executives. Less regulation.
Defined Contribution Plans – Employer determines the rate of contribution and has discretion of the methodology to calculate the rate.
Defined Benefit Plans – Group plans, not individual.
Tax Deferred Plans – Staff contribute to their own plan. Employers match the amount the employee puts in to the account.
Other

6. Designing a Benefits Plan
Demographics of the workforce should be considered.
Budgetary issues should be considered.
Cost shifting to the employee should be monitored.
Consider Section 125 Plans
Self Insurance may help reduce administrative costs.
Consult with a persons who are certified employee benefits specialist.