Benefits lecutre 9 chapter 10

Legally Required Benefits

Benefits that are mandated by law, such as social security and worker’s compensation.

Discretionary Benefits

Benefits that employers choose to provide, such as health care, retirement plans, and paid time off.

Total Compensation Components

Includes both financial and non-financial compensation such as wages, benefits, job environment, and job satisfaction.

Employee Benefits

Indirect financial compensation provided to employees, which may include legally required and discretionary benefits.

Health Maintenance Organizations (HMOs)

Managed care plans that cover services for a fixed fee, controlling which doctors and facilities can be used.

Preferred Provider Organizations (PPOs)

Managed care health organizations that offer incentives to use in-network services but allow out-of-network care at a higher cost.

Consumer-Driven Health Care Plans

Plans that combine high-deductible insurance with tax-advantaged accounts to encourage employees to choose healthcare options wisely.

Health Savings Account (HSA)

A tax-free account for eligible employees that allows savings for qualified medical expenses with a high-deductible insurance policy.

Flexible Spending Accounts (FSA)

Accounts established by employers allowing employees to use pre-tax salary for eligible medical expenses.

Retirement Plans

Financial arrangements that provide income to individuals after they stop working, often including defined benefit and defined contribution plans.

Social Security

A federal program that provides a source of income for retired individuals, funded through payroll taxes.

Defined Benefit Plans

Retirement plans that guarantee a specified monthly benefit upon retirement based on salary and years of service.

Defined Contribution Plans

Retirement plans where the employee and employer contribute to an individual account for the employee.

Work Loss Protection

Insurance benefits that provide coverage for life and disability, helping employees maintain income in case of illness or injury.

Workers' Compensation

A system that provides benefits to employees who suffer job-related injuries or illnesses.

Unemployment Insurance

A government program that provides financial assistance to individuals who have lost their job through no fault of their own.

Family and Medical Leave Act (FMLA)

A law that allows eligible employees to take unpaid leave for specific family and medical reasons.

Affordable Care Act (ACA)

Healthcare reform legislation aimed at increasing health insurance coverage and reducing costs.

Employee Retirement Income Security Act (ERISA)

A federal law that sets standards for pension and health plans, protecting the rights of employees.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

A law allowing employees to continue their health insurance after leaving employment, under certain conditions.

Flex-Time

A flexible work schedule allowing employees to choose their working hours within certain limits.

Telecommuting

Working from home or remote locations using technology to perform job tasks.

Compressed Work Week

An alternative work schedule that allows employees to complete their workweek in fewer days.

Job Sharing

A flexible work arrangement where two part-time employees share the responsibilities of one full-time position.

Paid Time Off (PTO)

A policy that allows employees to take leave for any reason, including vacation, personal time, or illness.

Work-Life Balance

The equilibrium between personal life and work responsibilities, often promoted through flexible work policies.

Wellness Programs

Employer-sponsored initiatives designed to improve employee health and well-being.

Catastrophic Care

Health insurance coverage for severe health events that result in high costs, protecting against financial loss.

Employee Assistance Programs (EAP)

Programs that provide support services to help employees with personal or work-related problems.

Premium Pay

Additional compensation provided to employees for working under certain conditions, such as overtime or hazardous duties.

Part-Time Work

Employment where an individual works fewer hours than the standard full-time threshold, often chosen for flexibility.

Employee Services

Additional benefits provided to employees, such as childcare assistance, educational funding, and food services.

Cash balance plan 

Retirement plan with elements of both defined benefit and defined contribution plans.

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Cliff vesting schedule 

Employers must grant employees 100 percent vesting after no more than three service years. That is, after three years of participation in the retirement plan, an employee has the right to receive all the accrued employer’s contributions made on the employee’s behalf.

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Coinsurance 

The percentage of covered expenses paid by the insured. Most fee-for-service plans stipulate 20 percent coinsurance. This means that the insured will pay 20 percent of covered expenses, whereas the insurance company pays the remaining 80 percent.

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Copayments 

The fixed amounts that vary by the service. For example, the copayment to visit the primary care physician tends to be lowest (e.g., $20) and emergency room visits are usually most expensive (e.g., $250).

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Discretionary benefits 

Benefit payments made as a result of unilateral management decisions in nonunion firms and from labor/management negotiations in unionized firms.

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Fee-for-service plans 

Provide protection against health care expenses in the form of a cash benefit paid to the insured or directly to the health care provider after the employee has received health care services. These plans pay benefits on a reimbursement basis. Three types of eligible health expenses are hospital expenses, surgical expenses, and physician charges.

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401(k) plan 

Defined contribution plan in which employees may defer income up to a maximum amount allowed.

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Managed care plans 

Health care delivery that emphasizes cost control by limiting an employee’s choice of doctors and hospitals. These plans also provide protection against health care expenses in the form of prepayment to health care providers.

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Nonqualified plans 

Welfare and pension plans that do not meet at least one requirement set forth by the Employee Retirement Income Security Act of 1974 (ERISA), disallowing favorable tax treatment for employee and employer contributions.

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Qualified plans 

Welfare and pension plans that meet various requirements set forth by the Employee Retirement Income Security Act of 1974; these plans entitle employees and employers to favorable tax treatment by deducting the contributions from taxable income. Qualified plans do not disproportionately favor highly compensated employees.

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Sabbaticals 

Temporary leaves of absence from an organization, usually at reduced pay.

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6-year graduated schedule 

Allows workers to become 20 percent vested after two years and to vest at a rate of 20 percent each year thereafter until they are 100 percent vested after six years of service.

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Telecommuting 

Work arrangement whereby employees, called “teleworkers” or “telecommuters,” are able to remain at home (or otherwise away from the office) and perform their work using computers and other electronic devices that connect them with their offices.

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Term life insurance 

Protection for providing monetary payments to an employee’s beneficiaries upon the employee’s death, and offered only during a limited period based on a specified number of years or maximum age.

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Vesting 

An employee’s acquired non-forfeitable rights to pension benefits.

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Whole life insurance 

A type of life insurance that provides protection to employees’ beneficiaries during employees’ employment and into the retirement years.

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