Discretionary Employee Benefits Karen S. Markel,

Transcript:Discretionary Employee Benefits Karen S. Markel,:
Discretionary Employee Benefits Karen S. Markel, Ph.D., SPHR 2010 Learning Objectives At the completion of this section of the module, students will be able to: Identify the issues in discretionary benefits design and implementation. Define the types of discretionary benefits. Identify the relationship between various discretionary benefits programs and relevant federal law. 2 SHRM© 2010 Design and Implementation Considerations Session 1 Session 1 Learning Objectives After completing this session, students will be able to: Define discretionary benefits. Understand what benefits should be offered in most organizations. Understand benefits administration. Know how to communicate benefits offerings to employees. Determine if a benefits program is accomplishing its purpose. 4 SHRM© 2010 Benefits Examples Vacation leave Sick leave Social Security Dental insurance 401(K) plans Vision insurance Pensions Health insurance Prescription drug insurance Medicare 5 SHRM© 2010 Discretionary Benefits Defined Discretionary benefits are those benefits that are not mandated by law. 6 SHRM© 2010 What Benefits to Offer? To determine which benefits to offer, the following must be considered: Alignment with the organization’s total rewards strategy. 7 SHRM© 2010 What Benefits to Offer? To determine which benefits to offer, the following must be considered: The financial imperative: Real cost of the benefit. Tax incentives. Cafeteria plans. 8 SHRM© 2010 What Benefits to Offer? To determine which benefits to offer, the following must be considered: Employee characteristics: Demographics. Union status. 9 SHRM© 2010 What Benefits to Offer? To determine which benefits to offer, the following must be considered: Benchmarking: What benefits do our competitors offer? Line of sight: Employee perceptions about the value of the benefit. Return on investment (ROI). 10 SHRM© 2010 Benefits Administration Four basic principles apply to good benefits plan administration (Murphy, 2009): Plans should be simple and easy to understand. Sponsors (employer or benefit provider) should control the administration expense of plans. Where possible, allow employee choice to be part of the overall plan. Sponsors should allow employees to administer their own plans by introducing information systems that enable benefit selection, provide information and enrollment. Source: Murphy, T.E. (2009). Benefits and Beyond: A Comprehensive and Strategic Approach to Retirement, Health Care, and More. Thousand Oaks, CA: Sage Publications. 11 SHRM© 2010 Outsourcing Administration An employer may determine that benefits administration should be handled (all or in part) by a third-party administrator. The decision may be based on: Subject matter expertise. Economies of scale. 12 SHRM© 2010 Communicating Benefits Information Legal provision