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Healthcare Human Resource Management Healthcare Human Resource Management Flynn Mathis Jackson Langan The Management of Benefits and Variable Pay in Healthcare.

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Presentation on theme: "Healthcare Human Resource Management Healthcare Human Resource Management Flynn Mathis Jackson Langan The Management of Benefits and Variable Pay in Healthcare."— Presentation transcript:

1 Healthcare Human Resource Management Healthcare Human Resource Management Flynn Mathis Jackson Langan The Management of Benefits and Variable Pay in Healthcare Chapter 13 PowerPoint Presentation by Tonya L. Elliott, PHR

2 2 Learning Objectives After you have read this chapter, you should be able to:  Describe the challenges that confront healthcare employees in providing benefits and variable pay programs  Discuss why healthcare employers must offer competitive benefits programs to their employees  Identify various types of benefits  Explain the role that healthcare HR professionals must play in administering benefits  Compare and contrast individual and team-based incentives

3 3 Goals for Benefits Benefit –An indirect reward given to an employee as part of an organizational membership, regardless of performance Benefits Needs Analysis –A comprehensive look at all aspects of benefits in an organization  Should consider what the employees want  Should determine if the mix of benefits is accomplishing what it should

4 4 Typical Benefit Dollar Spending Figure 13-1

5 5 Types of Benefits Government-Mandated Benefits  Mandated benefits that employers in the United States must provide to employees by law Voluntary Benefits  Benefits that employers voluntarily offer to compete and retain employees

6 6 Types of Benefits Figure 13-2

7 7 Security Benefits Workers’ Compensation  Provides benefits to persons injured on the job Unemployment Compensation  A tax paid by the employer to state and federal unemployment compensation funds  Percentage paid by employers determined by experience rates (# claims filed by people who leave) Severance Pay  A benefit voluntarily offered by employers to some employees who lose their jobs

8 8 Retirement Benefits & Age Discrimination  Age Discrimination in Employment Act (ADEA) prohibits forcing employees to retire as a specific age Early Retirement  Older Workers Benefit Protection Act (OWBPA) requires early retirement be offered on voluntary basis only Phased Retirement  Program designed to help employees retire in stages  Options such as reduced work hours / a different job Retirement Security Benefits

9 9 The Social Security Act of 1935  Established a system providing: Old age benefits Survivor benefits Disability benefits Retirement benefits  Employers and employees share the cost through taxes on employees’ wages or salaries  Administrator Social Security Social Security Administration

10 10 Pension Plans  Retirement benefits established and funded by employers and employees  Not a required benefit Pension Plans Employee Retirement Income Security Act (ERISA) Passed in 1974, regulates private pension plans

11 11 Traditional Pension Plans  Defined-benefit plans – Employees’ contributions based on actuarial calculations that consider the benefits to be received, and the methods used to determine such benefits  Defined-contribution plans – Employer makes annual payment to employee’s pension account Cash Balance Plans – A hybrid based on ideas from both defined-benefit and defined-contributions plans; a hypothetical account balance Types of Pension Plans

12 12 Contributory Plan  Both employee and employer pay in money Non-Contributory Plan  Employer provides all the funds Vesting  Assurance that employees have worked the minimum number of years to qualify Portability  The ability to move pension benefits from one employer to another Pension Terms & Concepts

13 13 Individual Retirement Accounts (IRAs)  A special account in which an employee can set aside funds that will not be taxed until the employee retires 401(k), 403(b), and 457 Plans  Plans that allow the employee to reduce their current pay by a certain percentage, which is then used to fund a retirement plan  Available for both non-profit and for-profit organizations Individual Retirement Options

14 14 Common Plans Offered  Medical  Dental  Prescription drug  Vision Plans Offered to:  Employees  Dependents Healthcare Benefits

15 15 Co-Payment  Employees pay a portion of both insurance premiums and medical care Defined-Contribution Plans for Health Benefits  Employer provides a defined contribution for employees use in selecting offered benefit plans Controlling Healthcare Benefit Costs

16 16 Increases in Healthcare Benefits Costs to Employers Figure 13-3

17 17 Managed Care  Approaches that monitor and reduce medical costs through restrictions and market-system alternatives Preferred Provider Organization (PPO)  A healthcare provider that contracts with an employer or an employer group to provide healthcare services to employees at a competitive rate Health Maintenance Organizations (HMO)  Provides services for a fixed period on a prepaid basis  Emphasizes both prevention and correction Controlling Healthcare Benefits Costs (cont’d)

18 18 Utilization Review –A review and audit of medical work, possibly including a second option, review of procedures used, or review of charges for procedures done Wellness Programs –Programs designed to maintain or improve employee health before problems arise by encouraging personal lifestyle changes Controlling Healthcare Benefits Costs (cont’d)

19 19 Consolidated Omnibus Budget Reconciliation Act (COBRA)  Former employees and/or their spouses and qualified dependents eligible for continuing coverage for 18 to 36 months  Employer may charge no more than 102% of the premium costs to insure a similarly covered employee Healthcare Legislation Health Insurance Portability & Accountability Act (HIPAA) Allows employees to switch their health insurance plan from one employer to another, regardless of pre-existing health conditions

20 20 Financial, Insurance, & Other Benefits Life/Disability Insurance Educational Benefits Social & Recreational Benefits Family-Oriented Benefits Other Benefits

21 21 Covered Employees: Those that worked at least 12 months and 1,250 hours in the previous year Eligibility: Employees allowed 12 weeks’ leave per year for: 1.Birth adoption, or foster-care placement of a child 2.Caring for a spouse, child, or parent with a serious health condition 3.Serious health condition of the employee Employees must be able to return to the same job or a job of equivalent status or pay Family and Medical Leave Act (FMLA)

22 22 Family Care Benefits Family Care Benefits Adoption Benefits Child CareElder Care

23 23 Domestic Partners & Spousal Equivalents Data shows:  Increasing number of non-traditional families  Significant percentage of domestic partners live together before marriage  Gays and lesbians are more open about their lifestyle Benefits for Domestic Partners & Spousal Equivalents

24 24 Holiday Pay Vacation Pay Paid Time-Off (PTO) Leaves of Absence Personal Medical (FMLA) Military leave Election leave Jury leave Funeral/bereavement leave Time-Off Benefits

25 25 Benefits Communication Benefits Statements  A personal statement of benefits that translates benefits into dollar amounts HRIS and Benefits Communication  Employee self-service kiosks allow employees to obtain benefits information online Benefits Administration

26 26 Flexible Benefits Plan  “flex” or “cafeteria plan”  Allows employees to select benefits they prefer from groups of benefits established by the employer Flexible Spending Accounts  Allows employees to contribute pretax dollars to buy additional benefits 1.Additional health care (including deductibles) 2.Life insurance 3.Disability insurance 4.Dependent care benefits Flexible Benefits

27 27 Continuing change More complex More outsourced Internet-based Benefits in the Future

28 28 Types of Variable Pay Plans in Healthcare Figure 13-5

29 29 Bonus  A one-time payment  Does not become part of the employee’s base pay Special Incentive Programs  Special awards  Recognition awards  Service awards Individual Incentives

30 30 Award Distribution Same size award for each team member (equally) -- vs. -- Difference size award for each team member (equitable) Problems With Team-Based Incentives  Distributed equally -- perceived as unfair to those who work harder, have more capabilities, or perform more difficult jobs  Distributed equitably -- relatively low level of satisfaction with rewards that are same for all Successful Team Incentives  Consider history of the group/team  Consider size of team Group/Team-Based Variable Pay

31 31 Basic Concept  Overall results depend on organizational cooperation Purpose  To produce better results be rewarding cooperation throughout the organization Effectiveness  Should include all employees (non-exempt employees, managers, and executives) Organizational Incentives


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