Employee Benefits. McGraw-Hill Irwin. Professionals. Joseph J. Martocchio. Me Grauu Hill. University of Illinois

Transcription

1 Employee Benefits A Primer for Human Resource Professionals Fourth Edition Joseph J. Martocchio University of Illinois Me Grauu Hill McGraw-Hill Irwin

2 PART ONE INTRODUCTION TO EMPLOYEE BENEFITS 1 Chapter 1 Introducing Employee Benefits 3 Defining and Exploring Employee Benefits 4 Defining Employee Benefits 5 Employee Benefits in the Total Compensation Scheme 6 The Field of Employee Benefits Practice Legally Required Benefits 9 Discretionary Benefits 10 Origins of Employee Benefits 14 Legal and Regulatory Influences on Discretionary Benefits Practices 15 Strategic Planning for the Benefits Program 17 Basic Strategic Planning Concepts 17 Approaches to Strategic Benefit Planning 19 Information Used in Strategic Benefit Planning 22 External Environment 22 / Internal Environment 27 Plan for the Book 29 Chapter 2 The Psychology of Employee Benefits 31 Employment Relationship as Social Exchange 33 How Employee Benefits Constitute Social Exchange 33 Workforce Changes and the Employment Relationship 34 Psychological Contracts 36 Psychological Contract Development 38 Psychological Contract Violation 39 Employee Benefits as Constituting Psychological Contracts 40 Employee Attitudes and Employee Benefits 41 Justice and Perceived Organizational Support 41 Organizational Citizenship Behavior 43 Summary 44 Chapter 3 The Economics of Employee Benefits 49 Why Do Employers Offer Benefits? 50 Cost Advantage 51 Recruiting Certain Types of Workers 54 Tax Incentives 55 Who Pays for Benefits? 56 Two Extensions 62 Government Mandates 62 Differences in Benefit Cost Increases across Groups of Workers 64 Summary 65 Chapter 4 Regulating Employee Benefits 67 Labor Unions and Employee Benefits: The National Labor Relations Act of The Internal Revenue Code 72 The Fair Labor Standards Act of The Employee Retirement Income Security Act of Defining Pension Plans and Welfare Plans 77 Scope of Coverage for Pension Plans and Welfare Plans 78 Title I: Protection of Employee Rights 78 Title II: Amendments to the Internal Revenue Code, Relating to Retirement Plans 82 Title III: Jurisdiction, Administration, Enforcement, Joint Pension Task Force, and Other Issues 82 Title IV: Plan Termination Insurance 83

3 xii The Consolidated Omnibus Budget Reconciliation Act of The Health Insurance Portability and Accountability Act of The Pension Protection Act of Federal Equal Employment Opportunity Laws 91 The Equal Pay Act of Title VII of the Civil Rights Act of The Age Discrimination in Employment Act of 1967 (ADEA) 93 The Pregnancy Discrimination Act of The Americans with Disabilities Act of The Civil Rights Act of Genetic Information Nondiscrimination Act of Summary 99 PART TWO RETIREMENT, HEALTH, AND LIFE INSURANCE 103 Chapter 5 Employer-Sponsored Retirement Plans 105 Defined Retirement Plans 107 Origins of Employer-Sponsored Retirement Benefits 107 Trends in Retirement Plan Coverage and Costs 108 Minimum Standards for Qualified Plans 109 Qualified Plans 109 Defined Benefit Plans 113 Benefit Formulas 113 Nondiscrimination Rules: Testing 114 Accrual Rules 115 Minimum Funding Standards 117 Benefit Limits and Tax Deductions 118 Defined Contribution Plans 118 Individual Accounts 118 Investments of Contributions 118 Employee Participation in Investments 119 Nondiscrimination Rules: Testing 119 Accrual Rules 120 Minimum Funding Standards 120 Contribution Limits and Tax Deductions 120 Types of Defined Contribution Plans 120 Section 401(k) Plans 120 Profit-Sharing Plans 121 Stock Bonus Plans 122 Employee Stock Option Plans (ESOPs) 122 Savings Incentive Match Plans for Employees (SIMPLEs) 123 Section 403(b) Tax-Deferred Annuity Plans 123 Section 457 Plans 125 Hybrid Plans 125 Cash Balance Plans and Pension Equity Plans 125 Target Benefit Plans 130 Money Purchase Plans 131 Age-Weighted Profit-Sharing Plans 131 Summary 132 Chapter 6 Employer-Sponsored Health Insurance Programs 135 Defining and Exploring Health Insurance Programs 136 Origins of Health Insurance Benefits 137 Health Insurance Coverage and Costs 138 Individual versus Group Insurance Coverage 143 Regulation of Health Insurance Programs 143 Federal Regulation 143 Tax Regulations 146 State Regulation 146 Fee-for-Service Plans 148 Types of Medical Expense Benefits 148 Features of Fee-for-Service Plans 149 Major Medical Insurance Plans: Supplemental and Comprehensive 152 Managed Care Plans 153 Health Maintenance Organizations 153 Types of Health Maintenance Organizations 153 Features of Health Maintenance Organizations 154 Preferred Provider Organizations 156 Features of Preferred Provider Organizations 156 Point-of-Service Plans 157 Specialized Insurance Benefits 158 Dental Insurance 159 Vision Insurance 160

4 xiii Prescription Drug Benefits 160 Mental Health and Substance Abuse 162 Maternity Care 163 Consumer-Driven Health Care 164 Retiree Health Care Benefits 166 Summary 169 Chapter 7 Employer-Sponsored Disability Insurance and Life Insurance 171 Disability Insurance 172 Origins of Disability Insurance 173 Short-Term Disability Insurance Programs 174 Long-Term Disability Insurance Programs 175 Funding Disability Insurance Programs 176 Employee and Employer Tax Obligations 176 Relationships between Company-Sponsored Disability Plans and Benefits Laws 177 Life Insurance 179 Origins of Life Insurance 179 Coverage and Costs of Life Insurance 179 Types of Life Insurance Programs 180 Group Term Life Insurance 180 Tax Treatment of Group Term Life Insurance 183 Universal Life Insurance 185 Accidental Death and Dismemberment Insurance 185 Summary 185 Chapter Eight Government-Mandated Social Security and Workers' Compensation Programs 189 Origins of Social Security and Workers' Compensation Programs 190 Introduction to the Social Security Programs 191 Employers Required to Participate in Social Security Programs 192 Administration of Social Security Programs 196 Social Security Numbers 197 Old-Age, Survivor, and Disability Insurance (OASDI) 197 Qualifying for OASDI Benefits 197 Determining Benefit Amounts 197 Old-Age Benefits 198 Survivor Benefits 202 Disability Benefits 204 Medicare 205 Eligibility Criteria for Medicare Benefits 205 Medicare Part A Coverage 207 Medicare Part B Coverage 207 Medigap Insurance 207 Medicare Part C: Medicare Advantage 208 Medicare Prescription Drug Benefit 209 Medicare as the Primary or Secondary Payer 209 Financing OASDI and Medicare Programs 210 Unemployment Insurance 212 Eligibility Criteria for Unemployment Insurance Benefits 212 Unemployment Insurance Benefit Amounts 213 State Compulsory Disability Laws (Workers' Compensation) 215 Coverage of Workers' Compensation Programs 216 Cost of Workers' Compensation Insurance 217 Workers'Compensation Claims 217 Types and Amounts of Workers' Compensation Benefits 218 Employers' Rights under Workers' Compensation Programs 220 Financing Workers' Compensation Programs 222 Employer and Employee Tax Obligations 223 Relationship between Workers' Compensation and Benefits Laws 224 Summary 225 PART THREE SERVICES 229 Chapter 9 Paid Time-Off and Flexible Work Schedules 231 Defining and Exploring Paid Time-Off Programs 232

5 xiv Paid Time-Off Practices 234 Holidays 235 Vacation 236 Sick Leave 239 Personal Leave 239 Integrated Paid Time-Off Policies or Paid Time-Off Banks 240 Bereavement or Funeral Leave 241 Jury Duty and Witness Duty Leaves 241 Military Leave 242 Nonproduction Time 243 On-Call Time 243 Sabbatical Leave 244 Volunteerism 245 Leave under the Family and Medical Leave Act of Flexible Scheduling 249 Flextime Schedules 249 Compressed Workweek Schedules 250 Telecommuting 251 Summary 252 Chapter 10 Accommodation and Enhancement Benefits 255 Defining Accommodation and Enhancement Benefits 256 Rationale for Accommodation and Enhancement Benefits 256 Tax Benefits for Employers and Employees 257 The Mental and Physical Well-Being of Employees and Family Members 257 Employee Assistance Programs 257 Wellness Programs 263 Family Assistance Programs 266 Adoption Assistance Programs 267 Educational Benefits for Employees 268 Educational Assistance Programs 268 Tuition Reimbursement Programs 269 Scholarship Programs 269 Support Programs for Daily Living 271 Transportation Services 271 Physical Fitness 272 Summary 272 PART FOUR EXTENDING EMPLOYEE BENEFITS: DESIGN AND GLOBAL ISSUES 275 Chapter 11 Managing the Employee Benefits System 277 A Comparison of Traditional Benefits Plans and Flexible Benefits Plans 278 A One-Size-Fits-All Approach 278 Employer Choice to Customize Benefits 279 Cafeteria Plans under Section Types of Flexible Benefit Plan Arrangements 282 Communicating the Employee Benefits Program 286 Legal Considerations in Benefits Communication 286 The "Good Business Sense" of Benefits Communication 288 Managing the Costs of Employee Benefits. 292 Cost-Control Methods 293 Employee Education 294 Utilization Reviews 294 Case Management 295 Provider Payment Systems 296 Lifestyle Interventions 296 Outsourcing the Benefits Function 297 The Future of Employee Benefits 298 Changing Employment Contract 298 Accountability to Shareholders 299 Recent and Proposed Legislation 299 Domestic Partner Benefits and Same-Sex Marriage Issues 300 Generational Diversity and Workplace Conflict 302 Presidential-Year Politics 303 Summary 305 Chapter 12 Global Employee Benefits at a Glance 307 Not All Employee Benefits Are Alike 308 North America 308 Canada 309 Mexico 312

6 XV South America 313 Brazil 313 Argentina 315 Europe 316 France 317 Germany 318 Spain 320 United Kingdom 321 The Netherlands 322 Italy * 324 Poland 325 Sweden 326 Russia 328 Asia 329 The People's Republic of China 329 Hong Kong 331 Japan 332 South Korea 334 India 335 Saudi Arabia 337 Africa 338 South Africa 338 Australia 339 Summary 340 Glossary 347 Index 371