The document discusses the process of designing and planning benefit programs. It outlines the key steps as determining goals and objectives, assessing and selecting benefits, designing the benefits package, and monitoring the plan. It provides details on selecting benefits such as assessing legal requirements, competition, employee needs, and costs. Flexible benefit plans that allow employees to choose options are also covered. The document discusses ways to reduce costs such as cost sharing, changing health plans, adjusting time off policies, and outsourcing benefits administration. Overall monitoring of benefits and responsiveness to changing needs is emphasized.

1. Designing and Planning Benefit
Program
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor

2. Process of Benefit Planning
Determining the goals and objectives
Assessing and/or selecting benefits
Designing the benefits Package
Monitoring the plan

3. Determining Goals & Objectives of Benefit Plan

4. Selecting Benefits
Assess current benefits to see where improvements
needed or new ones need to be added
Selecting & evaluating benefits is the 1st step in
translating goals and objectives of a benefit program
Organizations have some choices in benefits they offer
There are benefits as required by legislation
There are customary benefits common to almost all
organization and
There are benefits those can make benefit package
unique

5. Selecting Benefits -
Legislation
Social legislation requires that employer make
expenditures for health & safety of employees
Insurance to be made to indemnify employee’s loss of
income from illness, injury, unemployment & old age
Law also requires how organization will develop &
operate specific benefits, like retirement plans
These expenditures are to be incurred, whether
employer wants to incur it or not and whether employee
desires the benefit or not
Legally required benefits currently cost employers in
excess of 10% of payroll cost

6. Selecting Benefits
Assessing Competition
• knowing what benefits other employers are offering
Organizational Benefit Plan Analysis
• comparison of benefits offered currently with needs &
preferences of employees
Organizational Financial Analysis
• comparison between direct wages & benefits including
its cost and employee need and
• employer's ability to pay

8. Selecting Benefits
Collective Bargaining and Benefits
• through collective bargaining employees receive the
benefits they want and
• unions are motivated to convince employees about the
value of benefits bargained for
Who Should Receive Benefits
• part time employees/dependents of employees/retired
employees/survivors of deceased employees
Employee Choice in Benefits
• each person to decide what benefits to include & how
much to allocate for each, as per flexible benefit plans

9. Flexible Benefit Plans
Mix and Match Plans
• employee is offered an amount based on salary, seniority
& age and he can choose from various benefit options
Modular Plans
• Organization offers various optional benefit programs
and employee can choose those which best fits his needs
Core-Plus-Option Plans have two parts
• core part provides health and retirement benefits to all
employees &
• Optional part provides various benefits - employee can
choose from

10. Flexible Benefit Plans
Pre-tax Salary Reduction Plans
Permits employees to set aside a portion of wages each
year on a pre-tax basis to pay for qualified expenses
There are two major types of plans:
• Flexible spending Accounts
- allows employee to pay for expenses, such as, medical
expenses, reducing employee's gross income
• Premium-Only Plans
- allows employee to pay for insurance premiums

11. Reducing Costs of Benefits
Health Plans
• Changing an insurance plan to a Preferred Provider
can reduce costs
Time Off
• holidays can be adjusted if organization grants holidays
those are not required by law
Retirement
• changing defined benefit plans to defined contribution
plans

12. Cost Sharing
Health Plans
• employees to pay a part of their monthly health
insurance premiums
Time Off
• pay only a portion of salary for certain types of time
off or share costs with an insurance plan, as in
disability
Retirement
• all types of retirement plans can be made
contributory on the part of the employee

13. Reducing Administrative Cost
Health plans can contain 3 features that help in controlling
costs
• Wellness Programs
- programs are intended to reduce future medical claims by
keeping employees healthy
• Utilization Reviews
- reviews evaluate frequency of employee usage and quality of
service received
• Case Management
• Overseeing the expenses of illnesses which add up very rapidly
and balancing care and cost
Outsourcing the Benefits Function to reduce and control
operating costs

14. Monitoring Benefits
Organization keeps careful track of what is happening
both externally & internally
Needs & preferences of employees likely to change due
to change in organization's work force
 Surveying employee needs and preferences should be a
continuing exercise and not a one-time project
Organization can not monitor change in costs of benefits
provided by outside Insurance Companies
Hence, organizations are developing alternative ways of
providing the benefits to employees at lower/stable cost