1. Designing and Administering Benefits Chapter 12 MGT 3513 Chance favors the prepared mind. Louis Pasteur Please turn off and put away electronic devices.

2. announcements

3. Unique Benefits & Services Many companies voluntarily provide benefits beyond what is legally mandated Reasons to Offer Unique Benefits & Services Generate Interest from Prospective Employees Reward Current Employees Reduce Stress

4. Benefits at Zappos http://www.youtube.com/watch?v=A0uGSIuq-LU http://www.youtube.com/watch?v=A0uGSIuq-LU 1. Write down as many of the Zappos benefits mentioned in the clip as possible. 2. After watching the clip, circle the most surprising benefits on your list.

5. Benefits at Zappos http://www.youtube.com/watch?v=XEp A2HrxN2Q http://www.youtube.com/watch?v=XEp A2HrxN2Q What does Zappos employee Chris find motivating about his company & his job?

6. Questions on Basic Benefits Terminology What are contributions? What is coinsurance? What is a copayment? What is a deductible? What is a flexible benefits program?

7. Examples - - basic terminology Louis receives health insurance from his organization. However, he must also pay $18 each month to receive this benefit. His payment is a ________. In January, Louis gets sick and must go to the doctor. He pays $100 because it is the beginning of a new year, and he must meet his ________ before insurance will pay for any medical expenses. Louis pays only $15 for the $50 medication he has been prescribed. The amount he pays is his _______.

8. Cost of Benefits Changes in cost of benefits for U.S. employers Influences on the cost of benefits: Federal tax policy Federal legislation Union influence Cost savings of group plans

9. Questions on the Benefits Strategy What is the benefits mix? What influences the benefits mix of a particular company?

10. Questions on Legally Required Benefits What four things does Social Security provide? What is the basic concept of workers’ compensation? What is the basic concept of unemployment insurance? Who is not eligible for unemployment insurance?

11. Questions on Legally Required Benefits For what reasons can a person take leave? How much leave may a person take in one year? Which employers must follow this law? Which employees are eligible for FMLA leave? Which employees are not?

12. 4 Legally Required Benefits _______________________

13. Questions on Health Insurance Explain the basics about COBRA Explain the basics about HIPAA

14. Questions on Health Insurance Describe each of the following types of health insurance plans: Traditional health insurance Health maintenance organization (HMO) Health Savings Accounts

15. Questions on Retirement Benefits What does protection does ERISA provide? What is vesting? What does it mean if benefits are portable?

16. Questions on Retirement Benefits Defined benefit plan (pension) Defined contribution plan What is always portable? What is portable after vesting?

17. Retirement Plans Amount of retirement benefit known? Who bears the risk? Funding Defined Benefit Plan (pension) Defined Contribution

18. Example - - Retirement Benefits – Defined Contribution Employee contributions Company contributions What amount is portable? Year 12,0001,500 Year 22,0001,500 Year 32,0001,500 Year 42,0001,500 Year 5*2,0001,500 10,0007,500 * Assume vesting occurs at the end of year 5

19. Example - - retirement benefits Josh’s company informs him that they will contribute 8% of his salary to a retirement fund and that he must also match that contribution. Defined benefit or defined contribution Ellen’s company informs her that she will receive $3,000 every month after she retires. Defined benefit or defined contribution

20. Example - - retirement benefits Hunter has worked for LTD for 20 years. His retirement fund totals $40,000. His company contributed $20,000, and he also contributed $20,000. Is Hunter vested? How much of Hunter’s retirement funds are portable? Do you think this is this an example of defined benefit or defined contribution?

21. Example - - retirement benefits Hunter has worked for LTD for 2 years. His retirement fund totals $40,000. His company contributed $20,000, and he also contributed $20,000. Is Hunter vested? How much of Hunter’s retirement funds are portable?

22. Retirement What should I know about retirement plans? http://www.dol.gov/ebsa/Publications/ wyskapr.html http://www.dol.gov/ebsa/Publications/ wyskapr.html What happens to my retirement if my company goes bankrupt? http://www.dol.gov/ebsa/pdf/bankruptc y.pdf http://www.dol.gov/ebsa/pdf/bankruptc y.pdf