1. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–1 Employer- Provided Benefits Absorb social costs for health care and retirement Influence employee decisions about employers Are increasingly seen as entitlements Average over 40% of total payroll costs Benefits and HR Strategy BenefitBenefit  An indirect reward given to an employee or group of employees for organizational membership.

2. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–2 FIGURE 13–1 Employer Compensation and Benefits Costs per Hour Source: U.S. Bureau of Labor Statistics, 2008.

3. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–3 Flexible Benefits Flexible Benefits PlanFlexible Benefits Plan  A program that allows employees to select the benefits they prefer from groups of benefits established by the employer. The Challenge of Providing ChoicesThe Challenge of Providing Choices  Inappropriate benefits package  Requiring selection of core benefits  Adverse selection  Situation in which only higher-risk employees select and use certain benefits  Administrative time and plan complexity

4. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–4 Benefits Cost Control Reducing or dropping benefits Cost sharing with employees Sponsoring wellness programs Fostering employee health education Direct purchase of benefits by employees Negotiating reduced-rate benefit contracts Consolidating of benefits packages

5. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–5 Benefits Communication Summary Plan DescriptionSummary Plan Description  Details the rights and benefits associated with a particular plan  Is required by the Employee Retirement Income Security Act (ERISA) Benefits StatementBenefits Statement  A “personal statement of benefits” that translates benefits into dollar amounts that is given to employees as part of a total rewards education and communication effort.  ERISA also requires that employees receive an annual pension-reporting statement.

6. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–6 FIGURE 13–6 How the Typical Benefits Dollar Is Spent

7. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–7 FIGURE 13–7 Types of Benefits

8. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–8 Security Benefits Types of Security Benefits Workers’ Compensation Unemployment Compensation Severance Pay

9. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–9 FIGURE 13–8 Private Industry Workers with Health Benefits Source: U.S. Bureau of Labor Statistics, www.bls.gov/ncs/home.htm.

10. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–10 Health-Care Benefits Controlling Health-Care Benefits Costs Co-Payments and Employee Contributions Managed Care ( PPOs and HMOs, Utilization Reviews) Mini-Medical Plans

11. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–11 FIGURE 13–10 Overview of COBRA Provisions

12. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–12 Health-Care Legislation Health Insurance Portability and Accountability Act (HIPAA) of 1996Health Insurance Portability and Accountability Act (HIPAA) of 1996  Allows employees to switch their health insurance plan from one company to another, regardless of pre- existing health conditions.  Requires employers to provide privacy notices to employees and to not disclose of health information without authorization. Flexible Spending AccountsFlexible Spending Accounts  Benefits plans that allow employees to contribute pre- tax dollars to fund certain additional benefits.

13. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–13 Retirement Benefits Social Security Act of 1935Social Security Act of 1935  Provides old age, survivor’s, disability, and retirement benefits.  Federal payroll tax (7.65%) on both the employer and the employee.  Medicare taxes are 2.9%.  Benefit payments are based on an employee’s lifetime earnings.  Administered by the Social Security Administration.

14. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–14 Pension Plans Types of Pension Plans Defined- Benefit Plan Defined- Contribution Plan Cash Balance Plan

15. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–15 FIGURE 13–11 Worker Participation in Pension Plans Source: U.S. Bureau of Labor Statistics, www.bls.gov

16. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–16 Individual Retirement Options Individual Retirement Account (IRA) 401(k) and Roth IRA 403(b) Keogh

17. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–17 Legal Requirements for Retirement Benefits Employee Retirement Security Employee Retirement Income Security Act (ERISA) 1974 Retirement Equity Act (amended ERISA in 1984) Qualified Domestic Relations Order (QDRO)

18. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–18 Protection of Retiree Benefits Older Worker Security Pension Protection Act of 2006 Age Discrimination in Employment Act (ADEA) Older Workers Benefit Protection Act (OWBPA)

19. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–19 Family Medical Leave Act (FMLA) CoverageCoverage  Employers with 50 or more employees  Employees who have worked at least 12 months and 1,250 hours in the previous year. RequirementsRequirements  Eligible employees can take up to a total of 12 weeks of unpaid leave in a 12-month period to attend to a family or serious medical condition.  Employees must exhaust all other forms of leave.  Employees have rights to continued health benefits and to return to their job.

20. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–20 Family-Care Benefits Family-Based Benefits Adoption Benefits Child-Care Assistance Elder-Care Benefits

21. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–21 Time-Off and Other Benefits Holiday Pay Vacation Pay Leaves of Absence Miscellaneous Benefits Paid-Time- Off (PTO) Plans Time-Off and Other Benefits

22. © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.13–22 FIGURE 13–13 Percentage of Companies with Various Paid-Time-Off Plans Source: U.S. Bureau of Labor Statistics, www.bls.gov.