This document discusses employee benefits and related topics including: - The average cost of benefits is 37% of payroll costs and benefits comprise 27% of total compensation. - Reasons for the growth of benefits include wage controls during WWII, tax benefits, organized labor, and laws mandating benefits. - Major benefit programs discussed include private group insurance, retirement plans, paid time off, workers' compensation, and healthcare benefits/costs. - Managing benefits involves cost control, communication strategies, and regulatory compliance. Employers aim to control costs while attracting high quality employees.

1. ANDIKA ADE SETIAWAN
1711011092
NANDA DESYANTI
1711011088
HUMAN
RESOURCE
MANAGEMENT
CHAPTER 13
EMPLOYE BENEFITS

2. LEARNING OBJECTIVES
Discuss growth and its reasons in benefits
costs.
Explain provisions of employee benefits p
rograms.
Compare U.S. and other countries’ employ
ee benefits.
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02
03
.

3. LEARNING OBJECTIVES
Describe effects of benefits managemen
t on cost and work-force quality.
Explain importance of effectively
communicating nature and value of benefits
to employees.
Describe regulatory constraints that affect t
he way employee benefits are designed and ad
ministered.
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05
06
.

4. INTRODUCTION
 Average cost of benefits is about 37%
for every payroll dollar.
 about 27% of total compensation
package.
 Benefits are unique because:
 more regulation of benefits
than direct pay.
 almost obligatory for employers
to provide.
 complex for employees to
understand.

5. REASONS FOR BENEFITS GROWTH
Wage and price controls
instituted during WWII and
labor shortages
Large group V. individual i
nsurance
Organized labor
Laws mandating benefits
passed during and after
Great Depression
Tax treatment of benefits programs
-Marginal tax rate is % of an
additional dollar of earnings that
goes to taxes
Employer differentiation

6. BENEFIT PROGRAMS
Private Group Insurance
Pay For Time Not
Worked
Retirement
Social Insurance
Family-Friendly
Policies

7. “
”
OUR SERVICES
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NEUTRAL DESIGN THAT CAN BE ADAPTED TO
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ABLE TO MAKE A COMPLETE POWERPOINT
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help unemployed
workers find new
jobs
offset lost income
during involuntary
unemployment
provide an
incentive for
employers to
stabilize
employment
preserve investments
in worker skills by
providing workers
with income during
short-term layoffs
Unemployment Insurance
4 Objectives of Unemployment Insurance

8. Workers' compensation laws cover job-related injurie
s and death.
 System is based on no-fault liability.
 Covers 90 %of U.S. workers.
 4 Categories of Benefits:
1. disability income
2. medical care
3. death benefits
4. rehabilitative services.
Workers’ Compensation

9. Private Group I
nsurance
Offered at
employer’s
discretion;
Plans not
legally required
2 major types: medic
al
insurance and disabil
ity
insurance

10. • Guarantees a specified retirement be
nefit
level to employees.
• Insulates employees from investment
risk, which is borne by the company.
• PBGC guarantees basic retirement
benefit in case of financial difficulties.
• ERISA increased fiduciary
responsibilities of pension plan
trustees, established vesting rights
and portability provisions and
established PBGC.
Defined Benefit
• Does not promise employees
a specific benefit level upon
retirement.
• Employers shift investment risk to
the employee.
• No need to calculate payments
based on age and service.
• Most prevalent in small companies.
Defined Contribution
RETIREMENT PLANS

11. PAY FOR TIME NOT WORKED
•Vacation:
-Europe- 30 days of mandated vacation is common.
-U. S.- no legal minimum 10 days is common.
•Sick Leave Programs:
-provide full salary replacement for a limited period of
time,
usually not exceeding 26 weeks
-amount based on length of service, accumulating with
service.

12. Managing Benefits:
Employer Objectives and Strategies
•Surveys and Benchmarking
Company should know what competition is
doing.
Surveys information is available from private consultants, Bureau of
Labor Statistics (BLS)
and Chamber of Commerce.
•Cost control
Larger the benefit cost, greater the
savings possibility.
Growth rate of may result in serious
future costs.
Cost containment efforts work to extent
that the employee has significant
direction in choosing how much to
spend in a benefit category.

13. In U. S. spends more on health care than any other country
Health-care expenditures have risen from 5.3 % of GNP in 1960 to 15.3% today.
Cost control attempts – by employers such as managed care, fall into six major categories
•plan design
•use of alternative providers
•use of alternative funding methods
•claims review
•education and prevention
•external cost control systems
Trend - to shift costs to employees through use of deductibles, coinsurance, exclusions
and limitations and maximum benefits.
HEALTHCARE:
CONTROLLING COSTS AND IMPROVING QUALITY

14. Health Maintenance Organizati
ons (HMO)
• focus on preventive care and
outpatient treatment.
• require employees to use onl
HMO services and provide
benefits on a prepaid basis.
• physicians and health-care
workers paid a flat salary to
reduce incentive of raising
costs.
Preferred Provider Organizations
(PPOs)
• contract with employers and in
surance companies to
provide care at reduced
fees.
• do not provide benefits on a p
repaid basis.
• employees often are not
required to use justPPOs.
• less expensive than
traditional health care but
more expensive than HMOs
HEALTHCARE:
CONTROLLING COSTS AND IMPROVING QUALITY

15. EMPLOYEE WELLNESS PROGRAMS
 Focus on changing behaviors on and off work time that
could lead to future health problems.
 2 Classes of EWP’s:
1. Passive -use little or no outreach to individuals and
provide no ongoing motivational support.
2. Active- assume that behavior change requires not onl
y awareness and opportunity, but also support and
reinforcement.
 3 Types of Employee Wellness Designs
1. Health education
2. Physical fitness fitness facilities
3. Follow-up model

16. STAFFING RESPONSES
TO CONTROL BENEFITS COST GROWTH
Because benefit costs a
re fixed, benefits
cost per hour can be re
duced by having
employees work
more hours.
01
Classify employees as e
xempt, since they
can reduce their
benefit costs per hour
without having to
pay overtime.
.
02
Classify workers as independent co
ntractors rather than
employees, eliminating the
employer's obligation to
provide legally required
benefits
03

17. NATURE OF THE WORKPLACE
Assessing
employee benefits p
references is
essential.
01
Use market research
methods to assess
employees’ preferences
same way consumers’
demand for products and
services are assessed.
02
Care must be taken not to
raise employee
expectations regarding
future changes.
03

18. COMMUNICATING WITH EMPLOYEES

19. GENERAL REGULATORY ISSUES
Benefit plans must
meet nondiscrimination
rules and qualified
plans.
Sex, Age, and
Disability
Monitoring Future
Benefits Obligation–
Financial Accounting
Statement (FAS)
106
Need to balance
interest of shareholders, cu
rrent employees , and retire
es.