Professional Documents
Culture Documents
MANAGEMENT
Brief Notes for Students
HRSB 353
Unemployment
Insurance
Family and
Medical Leave Act
C.O.B.R.A.
Workers’ Compensation
Laws date back to 1911
Based on the principle of liability without
fault
Employer absolutely liable for providing
benefits to employees that result from
occupational disabilities or injuries
regardless of fault
Employers assume costs of
occupational injuries and accidents
Workers’ Compensation (continued)
Employers pay premium to insurance
company or state fund
Disability must be work related
Benefits include:
medical care
disability income
rehabilitation
death benefits
Commonalities in State Workers’
Compensation Laws
Social Security
The Social Security program provides
a basic foundation of security for
American workers and their families.
For tax purposes, the system is split
into two programs:
Social Security
Medicare
Social Security and Medicare
SOCIAL SECURITY MEDICARE
Retirement income Hospital insurance
Disability benefits (Medicare, Part A)
Death benefits Medical Insurance
Survivor’s benefits (Medicare, Part B)
6.2% of eligible 1.45% of eligible
earnings up to earnings (unlimited)
$76,200 (2000)
Employee and
$80,400 (2001)
Employee and
employer funded
employer funded
Unemployment Insurance
Unemployment insurance benefits are
financed by federal and state taxes levied
on employers under the Federal
Unemployment Tax Act (FUTA)
Employers pay 6.2% on first $7,000
earned by each employee ($434)
5.4% is disbursed to state
unemployment commissions ($378)
0.8% for federal admin costs ($56)
Unemployment Insurance (continued)
Each company pays an actual rate
depending on its prior experience with
unemployment (5 year period)
Money held in federal trust for each state
Each state pays benefits (SUTA)
Payments generally continue for 26
weeks
Supplemental unemployment benefits for
an additional 13 weeks
Unemployment Insurance (continued)
Eligibility in most states:
Be available and actively seeking work
Not refuse suitable employment
Not have left job voluntarily
Not be unemployed because of labor dispute
Not have been terminated for gross
misconduct
Have been previously employed in a covered
industry or occupation, earning a designated
minimum amount for a designated period of
time
Consolidated Omnibus Budget
Reconciliation Act (C.O.B.R.A.)
Family and Medical Leave Act
Coverage: Employers with 50 or more
employees
Eligibility: 12 months employment with
employer in which employee works 1,250
hrs
Qualifying events: Under four specific
circumstances
Conditions: Employee must be able to
return to same job or one with equal status
Family and Medical Leave Act (continued)
Salary continuation
Group life insurance
Dependent group life insurance
Split-dollar plans
Health and Medical Benefits
General Health
Care Cost Control
Strategies
Dental Insurance
Vision Care
Health and Medical Benefits:
Payment Mechanisms
Indemnity (fee for service)
You play - - you pay
Advantages
Greatest freedom of choice for individual
Fewer “middlemen”
Disadvantages
Greatest cost
Over-utilization
Health and Medical Benefits
Payment Mechanisms (continued)
Managed Care
Networks of Providers
Advantages
Less costly
Typically provide greater benefits (including
preventative)
Disadvantages
Under-utilization
Management (utilization review)
Health and Medical Benefits:
Managed Care
Health Maintenance Organizations
(HMO’s)
Two Models
Staff (or clinic) model
Individual provider association (IPA)
Gatekeeper
Primary care physician
Types of Health Care Funding
Fully Insured
Minimum Premium
Partially Self-Funded
Administrative Only
Third-Party Administrator
Self-Insured
Health Insurance Purchasing Cooperativ
Controlling Health Care Costs
Change the Delivery System
Let Employees Choose
Redesign the Policies
Promote Wellness
Conduct Careful Reviews
Undertake a Utilization Review
Miscellaneous Benefits
Paid Time Off Payment for Time
During Working Not Worked
Hours
Child Care
Elder Care
Domestic Partner
Benefits
Legal
VisionInsurance
Care
Payment for Time Not Worked
GONE
FISHING
Paid Time Off During Working Hours
Summary
Employee benefits are now a major
component of doing business.
Many believe the dramatic growth in benefits
is prohibitive.
Look for the start of the millennium to be
dominated by cost-saving efforts to improve
the competitive position of American industry.
A part of these cost savings will come from
tighter administrative controls on existing
benefit packages.
Another part of these savings will come from
reductions of existing benefits packages.
Review Questions
1. Your company has a serious turnover problem
among employees with fewer than five years’
seniority. The CEO wants to use employee
benefits to lessen this problem. What might you
do, specifically, in the areas of pension vesting,
vacation and holiday allocation, and life insurance
coverage in efforts to reduce turnover?
2. Re-examine your answer to question 1. Instead of
benefits, are there other compensation tools that
might be more effective in reducing turnover?
Review Questions (continued)
3. Why are defined contribution retirement plans
gaining in popularity in the U.S. and defined
benefits plans losing popularity?
4. Is there any validity to the argument that
workers’ compensation and unemployment
compensation create a disincentive to work.
Explain and justify.
5. Some have argued that spending more money
on employee benefits is like throwing dollars
down a black hole. What might be the basis of
this argument?