1. Employee Benefits Definitions IRS Guide for Employers Self Employment Legal Issues ????? SSI IRA COBRA COLA FICASSIIRACOBRACOLAFICA HIPAAHIPAA PPA/PPO TSA ERISA HMO ?????PPAPPO TSAERISAHMO ????? MSA 401K 403B TPA SPDMSA401K403BTPASPD HSAHSA SAR FMLA ?????SARFMLA

2. Most Offered Employee Benefits Offered by Employers Benefit Type Employers Offering Life Insurance 90% Vacation Pay 77% Holiday Pay 76% Medical Care 71% Retirement Plans 60% Education Assistance Programs 49% Non-Production Bonuses 46% Employee Assistance Programs 40% Healthcare Reimbursement Accounts 32% Dependent Care Reimbursement Accounts 30% Wellness Programs 23% Job-Related Travel And Accident Insurance 22% Employer Assistance For Childcare 15% Fitness Centers 13% Long Term Care Insurance 12% Adoption Assistance 10% Stock Options 8% Subsidized Commuting 5% Flexible Workplace 4% Employer Provided Personal Computer 2% 2 CSIS-415 Employee Benefits Tim Lederman

3. Most Desired Employee Benefits Desired by Employees Benefit Type Desirability Retirement Annuity (Pension Plan) 91% Thrift / Savings Plan (401k / 403b) 89% Employee Healthcare Benefits 89% Retiree Healthcare Benefits 87% Life Insurance 71% Long-Term Care Insurance 63% Health / Wellness Programs 53% Flexible Spending Accounts 45% Tele-work / Telecommuting 40% Child Care Subsidies 31% 3 CSIS-415 Employee Benefits Tim Lederman

4. Most Common Employee Benefits Desired by Employees and Offered by Employers Benefit Type Desirability Offered Retirement Annuity (Pension Plan) 91%60% Thrift / Savings Plan (401k / 403b) 89% Employee Healthcare Benefits 89%71% Retiree Healthcare Benefits 87% Life Insurance 71%90% Long-Term Care Insurance 63%12% Health / Wellness Programs 53%23% Flexible Spending Accounts 45%31% Tele-work / Telecommuting 40%4% Child Care Subsidies 31%15% 4 CSIS-415 Employee Benefits Tim Lederman

5. Mandated Benefits/Taxes these have to be paid as “payroll taxes” (almost) Either the Employer and Employee pay for these; or, the self-employed person pays for these 15.3% FICA (Federal Insurance Contributions Act) – 12.4% Social Security paid only on earnings up to $113,700 6.2% paid by Employer 6.2% paid by Employee – 2.9% Medicare paid on all earnings 1.45% paid by Employer 1.45% paid by Employee (increases to 2.35% for high salaries) $420 Federal Unemployment Taxes - 6% of first $7,000 NYS Unemployment - 1.5% to 9.9% Workers Compensation - based on type of job, salary, prior claims 5 CSIS-415 Employee Benefits Tim Lederman

6. Your Take-Home Pay After Mandated Taxes & Income Tax Withholdings SUBTRACT: 7.65% FICA (50% of Soc Sec & Medicare Taxes) 25.00% Federal Income Tax withholding 9.77% NYS Income Tax withholding 42.42% of income is “withheld” as taxes Your Take-Home Pay 58% of what you earn 6 CSIS-415 Employee Benefits Tim Lederman

7. Health & Medical Insurance Health (Medical) Insurance – $16,000/$5,615 Family/Individual (up 4%/3% 2012) Dental Insurance $300-$400/$123-$253 Vision Care Health Savings Accounts (Medicare Bill 2003) Mental Health Insurance Disability Insurance – Long-Term & Short-Term Health & Dental Insurance During Retirement 7 CSIS-415 Employee Benefits Tim Lederman

8. Costs of Health Insurance Year Single Family % Increase 2000 $2,471 $6,438 2001 $2,689 $7,061 9.6% 2002 $3,083 $8,003 13.3% 2003 $3,383 $9,068 13.3% 2004 $3,695 $9,950 9.7% 2005 $4,024 $10,880 9.3% 2006 $4,242 $11,480 5.5% 2007 $4,479 $12,106 5.5% 2008 $4,704 $12,680 4.7 % 2009 $4,824 $13,375 5.1% increase 131% increase in Family Health Insurance cost 2000-2009 28% general economic inflation 2000-2009 2002-2007 & 2007-2012 Source: Kaiser Family Foundation; Health Research & Educational Trust 8 CSIS-415 Employee Benefits Tim Lederman

9. Employer/Employee Contribution to Health Insurance Costs No contribution – no insurance plan No contribution – but, insurance plan is available 100% coverage of the cost for employee % of cost for employee, two-people, family % for employee & different % for two-people/family Different “threshold” (deduction) and co-pays – No standard deduction – Standard deduction – employee pays first $$$ – Co-pay – Annual or Life maximum 9 CSIS-415 Employee Benefits Tim Lederman

10. Other Insurance Life Insurance Long-Term Care Insurance Job-Related Travel & Accident Insurance CSIS-415 Employee Benefits Tim Lederman 10

11. Retirement - Pension Social Security - based on lifetime earnings – May start at age 62, 65, 67,.... ?? – You may be able to delay start for higher payment – If you work another job, SS is taxable Defined Benefits - % of income at/over a time – Work a minimum number of years, such as 20 years – Retire after a certain age or age+tenure, such as 55 – Income based on formula, such as: 2% of highest 3 years Defined Contributions – 401K (pre-tax - you pay taxes when withdrawn during retirement) – 403B (pre-tax - you pay taxes when withdrawn during retirement) – IRA (professionally-managed or self-directed/self-managed) Regular (pre-tax - no taxes until withdrawn during retirement) Roth (“bought” after taxes - no taxes when withdrawn during retirement) Conversions (tax implications based on type of IRA) 11 CSIS-415 Employee Benefits Tim Lederman

12. Strategy for Retirement - Pension  Start saving for retirement when you start working.  Put away as much as possible.  Look at this as a tax on yourself by yourself.  Look at this as a gift to yourself.  You (your retirement) comes first.  Follow a “painless” strategy for saving for retirement.  Painless Strategy = put it away before you ever see it in any paycheck. The Strategy Above Is A Minimum-Strategy DO THIS AND REMEMBER ME WHEN YOU ARE 40 12 CSIS-415 Employee Benefits Tim Lederman

13. Strategy for Retirement - Painless  Follow a “painless” strategy for saving for retirement.  Start at the maximum of your employer’s matching-contribution.  At a minimum, put away 5% of pre-tax income.  If your employer does not provide match, use Roth IRA.  Add at least 1% of your income per year; or,  Add at least 25% of each annual pay-increase; until you reach the max ($16,500).  Once you are above your employer’s match, max out Roth first then use IRA until the max is reached.  Painless Strategy = put it away before you ever see it in any paycheck. The Strategy Above Is A Minimum-Strategy DO THIS AND REMEMBER ME WHEN YOU ARE 40 13 CSIS-415 Employee Benefits Tim Lederman

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15. SRAs & FSAs & HSAs Health Savings Accounts in Medicare Bill of 2003 Salary Reduction Arrangements - FSAs – Health Savings Accounts - Flexible Spending Account – Dependent Care Account - Flexible Spending Account CSIS-415 Employee Benefits Tim Lederman 15

16. Vacation, Holidays, Leaves Vacation (paid and unpaid) Average Vacation Benefit (days) Length of Service (years) 1 3 5 10 15 20 25 (years) Paid Days 8.9 11.1 13.6 16.2 17.8 18.6 19.3 (days) Paid Holidays Paid Personal Leave (Mental Health Days) Paid Sick Leave Paid Bereavement Leave Paid Maternity Leave Family Medical Leave Act of 1993 (FMLA) CSIS-415 Employee Benefits Tim Lederman 16

17. Travel & Professional Activity Business Travel & Expenses Reimbursement Travel Insurance - business & personal? Membership in Professional Organization(s) Membership in Community Organization(s) Attendance at Professional Conference(s() CSIS-415 Employee Benefits Tim Lederman 17

18. Miscellaneous Benefits 1 Educational Benefits and Career Planning Scholarships for children Relocation Expenses Legal Services Gym/Exercise/Spa membership Profit-Sharing and/or discount stock purchase CSIS-415 Employee Benefits Tim Lederman 18

19. Miscellaneous Benefits 2 Cafeteria System Cash Payout for not using a benefit Career Advancement Planning Performance Evaluations - Pay Increases Defined Career Paths & Counseling/Mentoring CSIS-415 Employee Benefits Tim Lederman 19

20. Miscellaneous Benefits 3 Direct Deposit Wellness Program Company Discounts Parking Privileges Business Cards & Title Computer Loan (of money or equipment) Hours off for Community Service Healthy Physical Exam bonus CSIS-415 Employee Benefits Tim Lederman 20

21. Pay/Benefit Laws Consolidated Omnibus Budget Reconciliation Act Consolidated Omnibus Budget Reconciliation Act COBRA - continuation of health benefits Employment Retirement Income Security Act Employment Retirement Income Security Act ERISA Overtime Pay CSIS-415 Employee Benefits Tim Lederman 21