Human Resoures Essays

Human Resoures Essays Human Resoures Essay Human Resoures Essay Providing medical and retirement benefits of some sort remains almost obligatory for many (e. G. , large) employers. (3) Benefits programs are much more complex than most compensation programs. Benefits rules and their advantages and disadvantages are very difficult to communicate and understand, particularly if an employee does not have experience with using their benefits. (Pages 562 563) Discuss the Social Security Act of 1935. The Social Security Act of 1935 was the establishment of old-age insurance and unemployment insurance. The act was later amended to add survivors insurance, disability Insurance. Hospital insurance, and supplemental medical insurance. Together, these provisions constitute the federal Old Age, Survivors, Disability, and Health Insurance (ASIDE) program. Over 90 percent of U. S. Workers are covered by this program. The mall exceptions being railroad, federal, state, and local government employees. An individual employee must meet certain eligibility requirements to be covered. To be fully Insured typically requires 40 quarters of covered employment and minimum earnings of $1 , 120 per quarter in 2011 Social Security retirement (old-age insurance) benefits for fully insured workers begin at age 65 years and 6 months (full benefits) r age 62 (at a permanent reduction In benefits) for those born In 1940. (Pages 567 568) Discuss defined benefit and defined contribution plans. A defined benefit plan guarantees a specified retirement benefit level to employees based typically on a combination of years of service and age as well as on the employees earnings level. The plan insulates employees from investment risk, which is borne by the company. In the event of severe financial difficulties that force a company to terminate or reduce employee pension benefits, the Pension Benefit Guaranty Corporation provides some protection of benefits. A defined contribution plan does not promise a specific benefit level for employees upon retirement. Rather, an Individual account Is set up for each employee with a guaranteed size of contribution. The advantage of such plans for employers is that they shift investment risks to employees and present fewer administrative challenges because there is no need to calculate payments based on age and service and no need to make payments to the BGP. While many companies have both types of plans, defined contributions re much more prevalent within small companies. Page 1 AT 1 (Pages 569 570) As a manager, what retirement plan will you incorporate in order to combine the advantages of defined benefit plans and defined contribution plans? One way to combine the advantages of defined benefit plans and defined contribution plans is to use a cash balance plan. This type of retirement plan consists of individual accounts, as in a 401(k) plan. But in contrast to a 401(k), all the contributions come from the employer. Usually, the employer contributes a percentage of the employees salary, say, 4% or 5%. The money in the cash balance plan earns interest according to a predetermined rate, such as the rate paid on U. S. Treasury bills. Employers guarantee this rate as in a defined benefit plan. This arrangement helps employers plan their contributions and helps employees predict their retirement benefits. If employees change Jobs, they generally can roll over the balance into an individual retirement account. (Pages 573 574) U. S. Companies increasingly provide some form of child care support to their employees. Discuss. U. S. Companies increasingly provide some form of child care support to their employees. This support comes in several forms that vary in their degree of organizational involvement. The lowest level of involvement, offered by 36% of companies, is when an organization supplies and helps employees collect information about the cost and quality of available child care. At the next level, organizations provide vouchers or discounts for employees to use at existing child care facilities (5% of companies). At the highest level, firms provide child care at or near their worksheet (9% of companies). (Pages 575 576) What advice would you give an employer who is about to make hanged to his benefits program in attempt to control costs? It is useful to consider three factors when thinking about cost control strategies: (1) The larger the cost of a benefit category, the greater the opportunity for savings. This explains why many employers have targeted medical benefits for restructuring. (2) The growth trajectory of the benefit is also important. Even if costs are currently acceptable, the rate of growth may result in serious future costs. (3) Cost containment efforts can only work to the extent that the employer has significant discretion in hosing how much to spend in a benefit category. For example, an employer cannot make changes to legally mandated benefit programs. (Pages 578 579) Discuss the concepts of Homos and POS. Health maintenance organizations (Homos) and preferred provider organizations Page 2 of 13 (POS) are alternative health-care providers to the traditional fee-for-service health care allover systems. Homos pay Neal-care workers on a Nat salary Dads. I nee focus on preventive care, encourage outpatient treatment, and require employees to use only HOMO services. Employers contract with Homos to provide benefits on a repaid basis. POS are essentially groups of health-care providers who contract with employers or insurance companies to provide health care at a reduced fee. They differ from Homos in that they do not provide benefits on a prepaid basis and employees often are not required to use preferred providers. Instead, employers may provide incentives for employees to choose, for example, a physician who participates in the plan. In general, POS seem to be less expensive than traditional delivery systems, but more expensive than Homos. Pages 586 588) What potential risks do employers run when they choose to offer a legible benefits (cafeteria-style) plan? (1) High administrative costs, especially in the initial design and start-up stages. (2) Adverse selection. Employees are most likely to choose benefits they expect to use. As a result, employer costs can potentially increase significantly. Adverse selection also makes it difficult for the employer to estimate what benefits costs will be under the plan, e specially in small companies. (3) Employee dissatisfaction. Employers run the risk with flexible benefits plans that employees will select choices that will turn out poorly. As a result, employee dissatisfaction might increase. (Page 588) Discuss flexible spending accounts, citing their purpose, benefits, and drawbacks. A flexible spending account permits pretax contributions to an employee account that can be drawn on to pay for uncovered health care expenses (like deductible or coinsurance payments). A separate account of up to $5,000 per year is permitted for pretax contributions to cover dependent care expenses. The major benefit of such plans is the increase in take-home pay that results from pretax payment of health and dependent care expenses. The major drawbacks to such plans include the fact that funds must be earmarked in advance and spent during the plan year. Remaining funds revert to the employer; therefore, the accounts work best to the extent that employees have predictable expenses. (Pages 589 590) Discuss the Financial Accounting Statement (FAST) 106 rule. Financial Accounting Statement (FAST) 106, issued by the Financial Accounting Standards Board, became effective in 1993. This rule requires that any benefits (excluding pensions) provided after retirement (the major one being health care) can no longer be funded on a pay-as-you-go basis. Rather, they must be paid on an accrual basis, and companies must enter these future cost obligations on their financial Page 3 of 13 spring 2014 statements. The effect on financial statements can be substantial. Multiple Choice Questions (Page 558) Although direct compensation is subject to government regulation, the scope Ana Impact AT regulation on Dentists Is Tar greater. Organizations so typically offer them that they have come to be institutionalized. Providing medical and retirement benefits of some sort remains almost obligatory for many (e. G. , large) employers. A large employer that did not offer such benefits to its full-time employees would be highly unusual. Benefits programs are much more complex than most compensation programs. (Pages 558 559) One reason for giving more responsibility to employees for retirement planning and other benefits is to increase their understanding of the value of such benefits. Page 560) The tax treatment of benefits programs is often more favorable for employees than the tax treatment of wages and salaries, meaning that a dollar spent on benefits has the potential to generate more value for the employees than the name dollar spent on wages and salaries. The marginal tax rate is the percentage of additional earnings that goes to taxes. (Pages 560 561) A factor that has influenced benefits growth is the cost advantage that groups typically realize over individuals. Organizations that represent large groups of employees can purchase insurance (or self-insure) at a lower rate because of economies of scale, which spread fixed costs over more employees to reduce the cost per person. Insurance risks can be more easily pooled in large groups, and large groups can also achieve greater bargaining power in dealing with insurance carriers r medical providers. (Pages 561 562) Most benefits fall into one of the following categories: social insurance, private group insurance, retirement, pay for time not worked, and familiarity policies. The percentage of employees covered by benefits programs increases with establishment size. Among the largest employers, these percentages would be higher still. Benefits and total compensation costs also increase with establishment size. (Page 562) Among the most important provisions of the Social Security Act of 1935 was the establishment of old-age insurance and unemployment insurance. The act was later Page 4 of 13 mended to add survivors insurance (1939), disability insurance (1956), hospital insurance (Medicare Part A, 1965), and supplementary medical insurance (Medicare Part B, 1965) for the elderly. Pages 562 563) More than 90% of U. S. Employees are covered by the program, the main exceptions being railroad and federal, state, and local government employees, who often have their own plans. Note, however, that an individual employee must meet certain eligibility requirements to receive benefits. Social Security retirement (old-age insurance) benefits for fully insured worker s begin at age 65 years and 6 months (full benefits). Although the amount of the benefit depends on ones earnings history, benefits go up very little after a certain level; thus high earners help subsidize benefit payments to low earners. Page 563) Cost-of-living increases are provided each year that the consumer price Index Increases. (Page 563) An important attribute of the Social Security retirement benefit is that it is free from state tax in about half of the states and entirely free from federal tax. However, the federal tax code has an earnings test for those who are still earning wages (and not yet at full retirement age). The earnings test increases a persons incentive to retire (otherwise full Social Security benefits are not received), and if she continues to work, the incentive to work part-time rather than full-time increases. Page 563) Established by the 1935 Social Security Act, unemployment insurance program has four major objectives: (1) to offset lost income during involuntary unemployment, (2) to help unemployed workers find new Jobs, (3) to provide an incentive for employers to stabilize employment, and (4) to preserve investments in worker skills by providing income during short-term layoffs (which allows workers to turn to their employer rather than start over with another employer). (Page 564) The unemployment insurance program is financed largely through federal and state taxes on employers. Page 564) Unemployed workers are eligible for benefits if they (1) have a prior attachment to the workforce (often 52 weeks or four quarters of work at a minimum level of pay); (2) are available for work; (3) are actively seeking work (including registering at the local unemployment office); and (4) were not discharged for cause (such as willful Page 5 of 13 misconduct), did not quit voluntarily, and are not out of work because of a labor spite. (Page 564) Workers compensation benefits fall into four major categories: (1) disability income, (2) medi cal care, (3) death benefits, and (4) rehabilitative services. Page 564) Employees are not covered when injuries are self-inflicted or stem from intoxication or willful disregard of safety rules. Approximately 90% of all U. S. Workers are covered by state workers compensation laws. Workers compensation benefits fall into four major categories: (1) disability income, (2) medical care, (3) death benefits, and (4) rehabilitative services. The system is financed differently by efferent states, some having a single state fund, most allowing employers to purchase coverage from private insurance companies. Self-funding by employers is also permitted in most states. (Page 565) The cost to the employer is based on three factors. The first factor is the nature of the occupations and the risk attached to each. The second factor is the state where work is located. The third factor is the employers experience rating. (Page 565) Group insurance rates are typically lower than individual rates because of economies of scale, the ability to pool risks, and the rater bargaining power of a group. This cost advantage, together with tax considerations and a concern for employee security, helps explain the prevalence of employer-sponsored insurance plans. (Page 565) The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 requires employers to permit employees to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff. (Page 1) Social security remains ten largest single component AT ten elderly overall retirement income (39 percent), while private pensions constitute 18 percent, and earnings from assets constitution percent. The remainder of the elderly income comes from earnings (24 percent) and other sources (3 percent). (Page 567) The Employee Retirement Income Security Act (ARISE) of 1974 increased the fiduciary responsibilities of pension plan trustees, established vesting rights and portability provisions, and established the Pension Benefit Guaranty Corporation Page 6 of 13 (BGP). (Page 567) A defined benefit plan guarantees a specified retirement benefit level to employees based typically on a combination of years of service and age as well as on the employees earnings level. Pages 567 568) Established by the Employee Retirement Income Security Act (ARISE) of 1974, the BGP guarantees a basic benefit, not necessarily complete pension benefit replacement. Payouts are not adjusted for cost-of-living changes. The BGP is funded by an annual contribution of $35 per (single-employer) plan participant, plus an additional variable rate premium for underfeed plans. The BGP does not guarantee health care benefits. (Page 568) Profit sharing plans and employee stock ownership plans are also often used as retirement vehicles. Both permit contributions (cash and stock, respectively) o vary from year to year, thus allowing employers to avoid fixed obligations that may be burdensome in difficult financial times. (Page 568) Defined contribution plans shift the investment risk to employees, have fewer administrative challenges and do not require payments to the BGP. They are preferred in smaller companies, perhaps because of small employers desire to avoid long-term obligations or perhaps because small companies tend to be younger, often being founded since the trend toward defined contribution plans. Defined contribution plans continue to grow in importance, while, defined benefit plans have come less common. (Page 568) Defined contribution plans do not promise a specific benefit level for employees upon retirement. Rather, an individual account is set up for each employee with a guaranteed size of contribution. (Page 568) Section 401 (k) plans (named after the tax code section) permit employees to defer compensation on a pretax basis. (Page 568) Defined contribution plans put the responsibility for wise investing squarely Page 7 of 13 on the shoulders of the employee. Page 568) The age at which investments are made, the different historical rates of turn AT Deterrent Investments, Ana ten need Tort Elaborations In order to counteract investment risk, affect the amount of income a person will receive upon retirement. (Page 569) The Pension Protection Act of 2006 requires defined contribution plans holding publicly traded securities to provide employees with (1) the opportunity to divest employer securities and (2) at least three investment options other than employer securities. Page 570) A cash balance requires contributions from the employer only and is most generous to young employees who have many years ahead in which to earn interest. If employees change Jobs, they generally can roll over the balance into an individual retirement account. (Page 570) ARISE guarantees employees that when they become participants in a pension plan and work a specified minimum number of years, they earn a right to a pension upon retirement. These are referred to as vesting rights. Page 570) A summary plan description (SPED) describes the plans funding, eligibility requirements, and risks. (Page 570) Vested employees have the right to their pension at retirement age, regardless of whether they remain with the employer until that time. Employee intuitions to their own plans are always completely vested. The vesting of moneylender pension benefits must take place under one of two schedules. (Page 571) If more mobility across employers becomes necessary or desirable, the current pension systems incentives against (or penalties for) mobility may require modification. Increased employee mobility will reinforce the continued trend toward defined contribution plans [like 401 (k)s], which have greater portability (ease of transfer of funds) across employers. Page 8 of 13 (Page 572) Sick leave programs often provide full salary replacement for a limited erred of time, usually not exceeding 26 weeks. The amount of sick leave is often based on length of service, accumulating with service (one day per month, for example). Sick leave policies need to be carefully structured to avoid providing employees with the wrong incentives. (Page 572) The employer pays the employee for time not spent working, receiving no tangible production value in return. Therefore, some employers may see little direct advantage. There is no legal minimum in the United States, but 10 days is typical for large companies. Sick leave programs often provide full salary replacement. Vacation and other paid leave practices differ across countries and thus contributes to the differences in labor costs. Page 572) To ease employees conflicts between work and non-work, organizations may use family-friendly policies such as family leave policies and child care. These programs often have spillover effects on other employees, who see them as symbolizing a general corporate concern for human resources, thus promoting loyalty even among employee groups Tanat AAA not use ten programs possibly resulting in improved organizational performance. E vidence suggests that firms using family- roundly policies have better quality management practices overall that are positively associated with organization performance. Pages 572 573) Since 1993 the Family and Medical Leave Act requires organizations with 50 or more employees within a 75-mile radius to provide as much as 12 weeks of unpaid leave after childbirth or adoption; to care for a seriously ill child, spouse, or parent; or for an employees own serious illness. Employees are guaranteed the same or a comparable Job on their return to work. Employees with less than one year of service or who work under 25 hours per week or who are among the 10% highest aid are not covered. Pages 572 573) Since 1993, the Family and Medical Leave Act requires organizations parent; or for an employees own serious illness. Employees with less than one year of service or who work under 25 hours per week or who are among the 10% highest Page 9 of 13 (Page 573) The Pregnancy Discrimination Act of 1 978 requires employers that offer disability plans to treat pregnancy as they would any other disability. (Page 574) The lowest level of involvement is when an organization supplies and helps employees collect information about the cost and quality of available child care. At the next level, care facilities. At the highest level, firms provide child care at or near their worksheet. (Page 575) Survey information on benefits packages is available from private consultants, the U. S. Chamber of Commerce, and the Bureau of Labor Statistics (BLESS). (Page 576) One benefit-?medical and other insurance-?stands out as a target for cost control for two reasons. Its costs are substantial; they have, except for the 1994 to 1999 period, grown at a significant pace, and this growth is expected to continue. Second, employers have many options for attacking costs and improving quality. Page 578) Homos differ from more traditional providers by focusing on preventive care and outpatient treatment, requiring employees to use only HOMO services, and providing benefits on a prepaid basis. Many Homos pay physicians and other health care workers a flat salary instead of using the traditional fee-for-service system, under which a physicians pay may depend on the number of patients seen. (Pages 578 579) Plan design has been used to shift costs to employees through the use of deductibles, coinsurance, exclusions and limitations, and maximum benefits. Refer To: Table 13. 7 Page 579) POS differ from Homos in that they do not provide benefits on a prepaid basis and employees often are not required to use the preferred providers. Instead, employers may provoke Incentives Tort employees to condos, Tort example, a Pensacola who participates in the plan. In general, POS seem to be less expensive than traditional delivery systems but more expensive than Homos. (Page 579) Employee wellness programs (Peps) focus on changing behaviors both on Page 10 of 13 and off work time that could eventually lead to future health problems. Page 580) Active wellness centers assume that behavior change requires not only awareness ND opportunity but support and reinforcement. (Page 580) One kind of active wellness center is the outreach and follow-up model. This type of wellness center contains all the features of a passive model, but it also has counselors who handle one-on-one outreach and provide tailored, individualized programs for employees. (Page 58 1) All models are effective in reducing the risk factors associated with cardiovascular disease (obesity, high blood pressure, smoking, and lack of exercise). However, the follow-up model is significantly better than the rest in reducing the risk factors. Page 582) Piecemeal programs may not work well because steps to control one aspect (such as medical cost shifting) may lead employees to migrate to other programs that provide medical treatment at no cost to them (like workers compensation). (Page 583) Employers may be more likely to classify workers as independent contractors rather than employees, which eliminates the employers obligation to provide legally required employee benefits. Page 583) A workforce with a high percentage of women of childbearing age may care more about disability leave. (Page 585) Organizations are increasingly using web-based tools to personalize and aileron communications to individual employees. In addition, effective use of traditional approaches (e. G. , booklets) can have a large effect on employee awareness. (Page 58) Teleconference messaging is used to provide information on benefits and changes. Meeting s are used for local employees.