6.4: EMPLOYEE BENEFITS OBJECTIVES

Transcription

1 Section 6.4: EMPLOYEE BENEFITS OBJECTIVES Understand and calculate the value of certain employee benefits. Key Terms employee benefits insurance paid vacation time paid holiday time retirement plans stock ownership plans childcare leave Family Medical Leave Act family health care individual health care pension Section 6.4: Employee Benefits 1

2 What are the benefits of a job? Aside from the monetary benefit of an income or an emotional benefit of job satisfaction, what are benefits of a job? Brainstorm some ideas! Employee benefits are value-added options that an employer may choose to offer employees. What are the benefits of a job? 1. Insurance benefits: a plan that provides medical care for participants (employees) or their dependents (spouse, children) directly or through insurance or reimbursement. (a) Individual health care plan: covers only the employee (b) Family health care plan: covers all members of the immediate family for health care bills as outlined in the health care coverage plan Graph shows the health insurance coverage of the non elderly population (2012) Section 6.4: Employee Benefits 2

3 Employee Benefits 2. Paid vacation time and Federal Law establishes the paid holiday time: following public holidays for Not required by law to provide Federal employees for 2018: employees with paid vacation or holidays 73% of all full-time employees (private sector) receive paid vacation (2016 BLS) Paid time off is usually apart of compensation and benefits packages offered by employers to help attract and retain employees. Average number of paid vacation days used by employees is 15 days, according to a 2016 BLS report. The United States is consider the NO Vacation Nation (2007) Section 6.4: Employee Benefits 3

4 Employee Benefits NBC Learn Bankruptcy in Detroit? Air Date: Retirement plans: Employee Retirement Income Security Act (ERISA) covers two types of retirement plans defined benefit plans and defined contribution plans. Quick overview (more to come in chapter 9 ) (a) Defined benefit plan: promises a specified monthly benefit at retirement. Examples: pension plans, cash balance plans, life annuity pension is compensation that an employee receives from an employer after retirement) (b) Defined contribution plan: does not promise a specific amount of benefits at retirement. Examples: 401(k), 403(b), employee stock ownership plans, profit-sharing plans 5. Employee Stock Ownership plans (ESOP): companies set up a trust fund for employees and contribute cash to buy company stock or contribute shares directly to the plan. Currently, the National Center for Employee Ownership (NECO) estimate that 7,000 ESOPs cover 13.5 million employees. Employee Benefits 6. Childcare leave: leave of absence taken by the employee to spend time with his/her child. Family Medical Care Leave (FMLA) of 1993 entitles eligible employees of covered employees to take unpaid, job protected leave for specified family and medical reasons with continuation of group health insurance Section 6.4: Employee Benefits 4

5 Example 1 It has been a little over four years since Chandler started at his new job. He currently makes $54,080 per year. When he was hired, he was told that he had five days of paid vacation time. For each year that he worked at the company, he would gain another two days of paid vacation time to a maximum of 20 days. How many paid vacation days does he now get at the end of four years of employment and how much will he make during the time he is on vacation? Section 6.4: Employee Benefits 5

6 Example 2 When Rachel started her job, her employer told her that she would receive one paid vacation day to begin and three additional paid vacation days for each six month period that she stayed with the job. Let represent the number of six month periods worked and represent the total number of paid vacation days. (a) Write an equation that models the situation. (b) How much vacation will Rachel have earned after working for 6.25 years? Example 3 The school district offers family health care to all full time employees. A new teacher must contribute 12% of the cost, and the district will cover the rest of the cost of the plan. A new teacher is paid on a biweekly basis, and notices that $88.50 is taken out of each paycheck for her portion of the contribution to the health care plan. How much does the district contribute to the plan? Section 6.4: Employee Benefits 6

7 Example 4 Misty works at a NYC Performing Arts Center. Her employer offers her a pension and uses a formula to calculate the amount. A retiring employee will receive 1.5% of their average salary for the last five years of employment for every year worked. Misty is planning on retiring at the end of this year after 25 years of employment. Misty would receive this amount each year until her death. Her salaries for the last five years are $88,900, $92,200, $96,000, $98,000, and $102,000. Calculate Misty s pension. Section 6.4: Employee Benefits 7