Benefits and Services
 What
Happened
The imposition of wage ceilings during
World War II
Decline of paternalism
Union pressure
Tax law
Public policy shifts of cost from
government to the private sector
1
Benefits and Services

Once upon a time "fringe benefits"
were of marginal importance. In 1929
benefits were approximately 3 percent
of wages and salaries.

By 1991 benefits had risen to be 38.2
percent of wages and salaries.

Between these two periods wages and
salaries rose by a factor of 55 while
benefits increased by a factor of 716.
2
Benefits And Services
 What
Do Employers Expect?
Improved productivity
Increased job satisfaction
Improved quality
Reduction in turn-over and
absenteeism
Enhanced sense of security
3
Benefits and Services

Benefits and services become
complicated very quickly because of
the number of available components,
the variety of optional features within
a component, and their legal and
financial interactions.
4
Benefits and Services
 Employee
Benefits
Those compensation components
made available to employees that
provide:
Protection in case of health and
accident-related problems, and
Income at some future date or
occasion.
5
Employee Services

Compensation components that
contribute to the welfare of the
employee by filling some kind of
demand.
Total employee benefits as a
percent of payroll
39.2
Legally required payments
8.9
Retirement and savings
6.0
6
Employee Services
Life and death insurance
0.5
Medical benefits
10.4
Paid rest periods
2.2
Pay for time not worked
10.4
Miscellaneous benefits
0.9
7
Benefits Planning And Design
Criteria

Minimum age and length of service.

Employee contributions an vesting
schedule for pension plan.

Coinsurance, deductible, ceiling
requirements, and dual coverage for
medical insurance.

Options to be included in the medical plan.

What employees will be covered, and what
about retirees and dependents.
8
Critical Issues In
Benefit Planning

Current and future role of governmentmandated benefits.

Employee demographics and employee
preferences.

Possible use of self-funding and thirdparty administrator.

Employer ability to pay and employee
contributions.

Monitoring and auditing programs.
9
Benefits Communication

Benefits became viewed as entitlement
and employers were loosing the
motivational value of their programs.

The response was the development of
sophisticated communication programs to
inform employees of how much they were
receiving through their benefits programs.
10
Basic Benefits Communication

New employees receive
oral and visual
presentations of the
benefit program, and an

Annual benefit statement
that provides a
description of the
employee's benefit
account.
11
Basic Benefits Communication

The employee has access to inhouse benefit consultant services.

Ad-hoc employee meetings to cover
new benefits, changes, and critical
issues.

On-going communication of benefit
info.
12
Employee Benefits
Employee Benefits Can Be Classified
As:
Disability Income Continuation
Loss-of-Job Income Continuation
Deferred Income
Spouse or Family Income Continuation
Health and Accident Protection
Property and Liability Protection
Perquisites
13
Disability Income
Short-Term Disability
 L-T Disability
 Worker's Compensation
 Sick Leave
 Non-Occupational Disability
 Travel Accident Insurance
 Supplemental Disability Insurance

14
Disability Income

Accidental
Death And
Dismemberment

Retirement
Plans

T-P Disability

Social Security
15
Loss-Of-Job Income

Unemployment Insurance (Ui)

Supplemental Unemployment Benefit
Insurance (Sub)

Guaranteed Annual Income (Gai)

Guaranteed Income Stream (Gis)

Severance Pay

Job Contract
16
Deferred Income

Social Security

Qualified Retirement
Plan

Pension / Profit
Sharing / Stock
Bonus

Simplified Employee
Pension Plans (Sep)
17
Deferred Income
Keogh Plans
 Supplemental
Executive
Retirement Plans
 Supplemental
and Executive
Group Life
Insurance Plans

18
Spouse and Family Income
Protection
Life Insurance
 Retirement Plans
 Social Security
 Workers Comp
 Tax-Sheltered Annuity
 AD & D
 Travel Accident Insurance
 Health Care Coverage

19
Health and Accident Protection






Basic Medical,
Hospital, and
Surgical
Major Medical
Dental
Visual
Comprehensive
Physical
Hearing Aid

In-House Medical
Services

HMO's

PPO's

Social Security
(Medicare)

Post-Retirement
Medical

Workers' Comp
20
Property and Liability
Protection

Group Auto / Home
/ Legal

Group Umbrella
Liability

Employee Liability

Fidelity Bond
Insurance
21
Employee Services

Pay For Time Not
Worked
Holidays / Vacations /
Jury Duty / Sick Leave
Election Official /
Witness In Court
Military Duty / Funeral
Leave / Marriage
Leave
22
Employee Services

Illness In Family /
Paternity Leave /

Wellness Leave /
Time Off To Vote /
Give Blood

Grievance And
Contract
Negotiations

Lunch, Rest, And
Wash-up Periods
23
Time Off From Work Without
Pay

The family and medical leave act
passed in 1993 granted up to 12
weeks of unpaid leave for a variety of
purposes, including a worker's own
illness or that of a spouse or a
parent.
24
Income Equivalent Payments and
Reimbursements

Elderly Care

Parking
Counseling (Legal,
Financial,
Psychiatric)

Subsidized Food Service

Travel Expenses

Education
Subsidies

Relocation Expense

Child Adoption

Emergency Loans

Child Care

Credit Union


Charitable
Contributions
25
Costing Benefits

Costing is an essential prerequisite to any
worthwhile benefits communication
program.

Four methods are available for costing
benefits and services:
Annual cost of benefits and services
for all employees.
Cost per employee per year.
Percentage of payroll
Cents per hour
26
Flexible Compensation / Benefits
(Cafeteria Plans)

Originally the flexible compensation /
benefits plan was designed to enable
senior executives, top professionals,
and managers to choose individually
many of their benefits and services.
27
Flexible Compensation / Benefits
(CafeteriaPlans)

However, organizations are
looking to the flex plans today as
an opportunity to:
Contain the cost of benefits
Satisfy employee preference
Provide choice
28
Flexible Compensation /
Benefits

Flex plans are designed to
accomplish four goals that are
considered fundamental to the
development of a successful
program. It increases or improves:
Appreciation of the interest and
desire of the employer to improve
the quality of life of each
employee.
29
Flexible Compensation /
Benefits
Loyalty and
Motivation.
Understanding
of Value of
Each Benefit.
Understanding
Of Value Of
Total Program
30
Establishing A Flex Plan

Three Major Groups
Must Participate In the
Design of a Flex Plan:
Senior
Management for
setting objectives
and determining
policy.
GOALS
31
Establishing A Flex Plan
Compensation and human
resource specialists for guiding the
development of and assisting in the
construction of a program that
meets organizational objectives
and demands of the employees.
Employees for providing initial
inputs about what should be
included in a benefits program.
32
Employee Spending Accounts

This is a tax-free reimbursement
account designed to moderate or
possibly reduce the rising cost of
benefits for the employee while at
the same time giving the employer
greater control over the benefit
expenditures.
33
Employee Spending Accounts

Employee are allowed to convert a
portion of taxable wages or salaries
into nontaxable dollars to be used to
pay for specific benefits.
34
Employee Spending Accounts

While reducing their taxable income,
they can use the funds to pay for:
Uncovered medical expenses.
Premiums for health, life, and
disability insurance.
Dependent care assistance.
Legal services.
Personal financial planning.
35
Benefits in the 90's
EAP’s
 Adoption
Expenses
 Child Care
Assistance
 Paternity Leave
 Long-Term Care
 Flex Hours
 Work-At-Home

36