1. Chapter 12: Benefits and Safety

2. Objectives After reading this chapter, you should be able to:
Understand how a firm’s benefits and safety programs shape employee attitudes and behaviors.
Describe the major characteristics of each of the mandatory employee benefits that firms must provide to employees.
Discuss the different types and major characteristics of voluntary benefits.
Outline the key components of effective benefits administration.
Explain the key components of an effective safety program.
Discuss how a firm’s organizational demands affect its benefits and safety programs.
Identify the environmental factors that affect the benefits and safety programs firms implement.
Describe the regulatory issues related to benefits and safety.

4. Benefits and Safety Programs
Affect employee attitudes
Benefits focus on health and wellness
Safety programs important for employee and company well-being
Internal equity, external competitiveness, and proper administration of programs is important

5. Mandatory Benefits Social Security Unemployment Insurance
Workers Compensation
The Patient Protection and Affordable Care Act (ACA) Employer Shared Responsibility Provisions

6. Social Security Funded by employer and employee contributions
Provide old age, survivor, disability, and death benefits
Goal: help individuals and address societal issues; supplement but not replace retirement or disability income
Medicare – health insurance portion of Social Security for retirees 65 and older, and disabled workers

7. Unemployment Insurance (UI)
Partnership between states and federal government
Created by Social Security Act
Provides temporary financial assistance when workers involuntarily lose their jobs
Tax rates determined by each state

9. Workers’ Compensation Insurance
Provides cash benefits and medical care to workers with work-related injury or illness
Disability payments provided for workers with permanent disabilities
Employer pays insurance premiums and deductibles
Employer’s experience record impacts employer costs

10. The Patient Protection and Affordable Care Act (ACA) Employer Shared Responsibility Provisions
Employers with 50 full-time employees must offer affordable health coverage to those employees and their dependents OR be subject to Employer Shared Responsibility payment
Coverage:
Ended preexisting exclusions for children
Requires employer health plans to cover young adults up to age 26 on parent’s plan
Ends lifetime limits on coverage for all new health insurance plans
Provides certain types of preventive care at no cost
Limits administrative costs by insurance companies

11. Voluntary Benefits Focus on: Health, wellness, and welfare
Life management
Retirement

12. Health Care Plans Traditional health care plans: fee-for-service
employee pays deductible
employees choose doctors

13. Managed Care Plans Health cost containment plans
Differ on how payments are made and medical costs determined
Many require co-pays
Primary care physicians are gatekeepers

14. Types of Managed Care Plans
Health Maintenance Organization (HMO)
Preferred Provider Organization (PPO)
Point-of-Service (POS)
Consumer-Driven Health Plan (CDHP)
High-Deductible Health Plan (HDHP)
Health Savings Account (HSA)
Account-Based Health Plan (ABHP)

17. Other Health Options Health Reimbursement Account (HRA)
Self-funded plans
Prescription drug benefits
Vision and dental insurance

18. Wellness Programs
Designed to keep employees healthy through education and incentives
Goal: reduce health care costs
Examples: smoking cessation, weight loss management, fitness center memberships
May include health risk assessment

20. Employee Assistance Program (EAP)
Designed to help employees deal with personal problems that reduce work productivity
May include attorney consultation, child-care and elder-care options, budget information, addiction recovery, family counseling

22. Other Benefits Short- and long-term disability insurance
Accidental death and dismemberment (AD&D)
Life management benefits
Paid time off (PTO)
Educational assistance
Child care and elder care
Long-term care benefits (LTCI)
Life insurance
Financial planning
Legal services

23. Retirement Benefits
Employee Retirement Income and Security Act of 1974 (ERISA)
Vesting – cliff vesting and graded vesting
Contributory vs. noncontributory

24. Defined Benefit Pension Plans
Provides annuity to eligible employees upon retirement
Usually pays out on formula:
Benefit = company % x years worked x salary
Pension Benefit Guaranty Corporation (PBGC) insures defined benefit plans

25. Defined Contribution Plans
Employer specifies where money is deposited
Employee often has power to decide how to invest her/his funds within the employer’s plan
401(k) plans
Cash balance plans

26. Pension Protection Act (PPA)
Strengthened pension system
Tightened rules relative to employer responsibilities for funding pension accounts and administering and terminating pension funds

28. Safety Programs Occupational Safety and Health Act of 1971 (OSH Act)
Requires employers to provide safe workplace for all employees
Provides process for investigation of complaints of unfair practices
Provides process for workplace inspections

29. Safety Programs (continued)
Inspection priorities
Imminently dangerous situations
Fatalities and catastrophes resulting in three or more employees being hospitalized
Employee complaints about unsafe or unhealthy work conditions
Following up on referrals

30. Safety Programs (continued)
Partnership Programs
Strategic Partnership Programs
Voluntary Protection Programs
Consultation
Employers must report work-related injuries and illnesses promptly

33. Benefits and Safety Programs in Practice: Organizational Demands
Strategy
Role in compensation package
Funds available for programs
Company characteristics
Types of programs
Availability of programs

34. Benefits and Safety Programs in Practice: Organizational Demands (continued)
Culture
Attitudes toward benefits and safety
Who gets nonmandatory benefits
Employee concerns
Perceptions of the fairness of the firm’s benefits
Safety in the workplace

35. Benefits and Safety Programs in Practice: Environmental Demands
Labor force
What benefits need to be offered
What safety modifications and training need to occur
Technology
How benefits information is delivered
Concerns about safety for telecommuters

36. Benefits and Safety in Practice: Environmental Demands (continued)
Globalization
Types of benefits offered
Policies about benefits equalization
Norms relative to safety
Ethics/social responsibility
Management of benefits
Comprehensiveness of safety programs

37. Employee Benefits and Safety Programs in Practice: Regulatory Issues
What happens when workers change jobs
Consolidated Omnibus Reconciliation Act (COBRA)
Health Insurance Portability and Accountability Act (HIPAA)
Protection of employee information