Benefits

MHR 3200 Dr. Larry Inks Department of Management and Human Resources Fisher College of Business The Ohio State University

BenefitsAn Overview
Benefits have grown in importance and variety
While benefits dont directly affect an employees performance, inadequate benefits can lead to dissatisfaction, disengagement, turnover, etc. Benefits add approximately 40% to an organizations payroll costs They can easily (and commonly) become the focus of negotiations when large wage/salary increases are not possible or feasible The nature of benefits here in the U.S. has changed significantly over the past 25+ years, with problematic consequences Progressive benefits programs reflect the diversity of the work force The challenge is designing flexible, attractive and legal benefits programs
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Legally-Required Benefits
Social Security: people are living longer than before so running out Unemployment Compensation: money company pays if you get fired when not your fault Workers Compensation Family and Medical Leave Act (FMLA)

Implementation of the Affordable Care Act will be making a change here

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The Affordable Care Act

Goal is to expand coverage, control health care costs, and improve the systems used to deliver health care Requires U.S. citizens and legal residents to have health coverage, with those not purchasing coverage to pay an escalating penalty Creates state-based Exchanges through which individuals can purchase health care insurance of varying costs and benefits Requires organizations with 50 or more full-time employees to offer health care coverage or pay a penalty based on number of employees (exempts employers with up to 50 full-time employees)

Rolling, phased implementation over time

A highly controversial and polarizing law; time will tell its effectiveness
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Health InsuranceDifferent Approaches

Premiums are pre-tax; subtracted from income Health Maintenance Organizations (HMOs): lower premiums but restrictive network

Preferred Provider Organizations (PPOs): similar; costs more but less broader network
State-specific Exchanges (via the Affordable Care Act) High Deductible Health Plan (HDHP) Consolidated Omnibus Budget Reconciliation Act (COBRA) Other coverage (dental, vision, etc.)

Catastrophic plan: tiny premium, limited coverage, comes in in case of emergency

Retirement Benefits
Employee Retirement Income Security Act (ERISA) Defined Benefits Plans: pension, social security (you know what youll receive) Defined Contribution Plans - Individual Retirement Accounts (IRAs) - Roth IRAs

- 401k (403b) Programs: company matches have a vesting period; only get to keep contributions if pd is over; benefit is untaxed if taken out while retired
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Other Types of Benefits

Vacation and Holiday Leave Military Leave Disability Insurance (short-term and long-term disability)

Group Term Life Insurance

Travel Insurance Services Flexible spending accounts: put in money pre-tax, draw out later but risk is if it goes unused
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Benefits and YOU

Understand what benefits your employer (or potential employer!) makes available, and their cost to you. Take the time to think through what benefits fit best with your current/ short-term needs and plan accordingly. Even though it may be painful and/or tedious, work through the costs of different benefits programs (e.g., cost of prescription drugs, etc.) Remember the difference between passive and active enrollmentvery important! Keep benefits conditions/deadlines in mind (e.g., for flexible spending accounts)

Do as much as you can to maximize the benefits of benefits!

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Summary Thoughts About Benefits

Benefits have become a very important (and contentious) topic in business today.

The rising cost of benefits has forced organizations to make changes in the nature and magnitude of benefits offerings. These costs are unlikely to fall.
Organizations need to find the right balance in offering competitive benefits while also adequately controlling costs. Benefits offerings vary tremendously around the world An organizations approach to benefits (e.g., flexibility, fit with member needs, costs, etc.) have strong implications for organizational behavior

What Questions Do You Have?