Social Security of Employee

Social Security of Employee

The Affordable Care Act

 

-       Goal is to expand coverage, control health care costs, and improve the systems used to deliver health care

 

Employee Benefits

 

-       Compensation in forms other than cash

 

Employee benefit examples

 

-       employer paid health insurance
retirement savings plans
paid vacations

 

Benefits contribute to...

 

-       attracting, retaining, and motivating employees

variety of possible benefits also helps employers tailor their compensation the kinds of employees they need

 

Employers need to examine their ________ package regularly to see whether they meet the needs of today

 

-       benefits

 

Benefits are more _________ than pay

 

-       complex

harder for employees to understand and appreciate
(employers need to communicate effectively so benefits succeed in motivating employees)

 

Benefits required by law

 

-       Social Security
2. Unemployment insurance
3. Workers' compensation insurance
4. Family and medical leave
5. Health care

 

Social Security

 

-       The federal old age, survivors, disability and health insurance program, which combines old age insurance, survivors insurance, hospital insurance, and supplementary medical insurance for the elderly (if they begin receiving benefits at retirement age they get full amount, if they elect to begin at 62 will get benefits at permanently reduced rates)

 

What year was social security initially created?

 

-       1935

 

Social Security is also known as...

 

-       Old Age, Survivors, Disability, and Health Insurance (OASDHI) program

covers 90% of US employees
exceptions are railroad and federal, state, and local government employees, who often have their own plans.

 

How the heck social security actually works....

 

-       meet eligibility requirement according to age and earning history..
if elect to begin receiving benefits at full retirement age, they receive full benefits orrrr
if they elect to begin receiving benefits at age 62 they receive benefits at a permanently reduced level
full retirement is 67
government increases the payments each year according to the growth in the consumer price index

 

exempt amount

 

-       benefits may be reduced if the worker is still earning wages above the maximum

 

Unemployment Insurance

 

-       a federally mandated program to minimize the hardships of unemployed workers, help in finding new jobs, and incentives to stabilize employment

 

Along with OASDHI... the social security act of 1935 establish a program called

 

-       Unemployment Insurance

 

4 objectives to minimize the hardships of unemployment

-      
(Unemployment Insurance)

-       provides payments to offset lost income during involuntary unemployment
2. helps unemployed workers find new jobs
3. payment of unemployment insurance taxes gives employers an incentive to stabilize employment
4. providing workers with income during short term layoffs preserves investments in worker skills bc workers can afford to wait to return to their employer rather than start over with another org

 

Technically federal government left it to....

 

-       States discretion to establish h an unemployment insurance program

at same time social security act created tax incentive that quickly led every state to establish program

 

Experience Rating

 

-       The number of employees a company has laid off in the past and the cost of providing them with unemployment benefits

 

Workers' Compensation

 

-       State programs that provide benefits to workers who suffer work-realer injuries or illness, or to their survivors

 

Family and medical leave

 

-       Federal law requiring organizations with 50 or more employees to provide up to 12 weeks of unpaid leave after childbirth or adoption, to care for a seriously ill family member or for an employee's own serious illness; or to take care urgent needs that arise when a spouse, child, or parent in the national guard or reserve is called to active duty.

 

Patient Protection and affordable care act

 

-       Health care reform law passed in 2010 that includes incentives and penalties for employers providing health insurance as a benefit (require med. to large size company to offer health insurance or pay penalty starting 2015)

 

Consolidated Omnibus Buget Reconciliation Act (COBRA)

 

-       Federal law that requires employers to permit employees or their dependants to extend their health insurance coverage at group rates for up to 36 months following a qualifying event, such as a layoff, reduction in hours, or the employee's death

 

Health Maintenance Organization (HMO)

 

-       A health care plan that requires patients to receive their medical care form the HMO's health care professionals, who are often paid a flat salary, and provides all services on a prepaid basis

 

Preferred Provider Organization (PPO)

 

-       A health care plan that contracts with health care professionals to provide services at a reduced fee and gives patients financial incentives to use network providers

 

Flexible Spending Account

 

-       Employee-controlled pretax earnings set aside to pay for certain eligible expenses, such as health care expenses, during the same year

 

Employee Wellness Program (EWP)

 

-       A set of communications, activities, and facilities designed to change health-related behaviors in ways that reduce health risks

 

Short-term disability Insurance

 

-       Insurance that pays a percentage of a disabled employee's salary as benefits to the employee for six months or less

 

Long-term disability insurance

 

-       Insurance that pays a percentage of a disabled employee's salary after an initial period and potentially for the rest of the employee's life

 

Contributory Plan

 

-       Retirement plan funded by contributions form the employer and employee

 

Noncontributory Plan

 

-       Retirement plan funded entirely by contributions from the employer

 

Defined-Benefit Plan

 

-       Pension plan that guarantees a specified level of retirement income (amt. usually calculated by years of service, age, and earning level)

 

Employee Retirement Income Security Act (ERISA)

 

-       Federal law that increases the responsibility of pension plan trustees to protect retires, established certain rights related to vesting(earing a right to receive the pension) and portability (being able to move retirement savings after changing employers), an created the Pension Benefit Guarantee Corporation

 

Pension Benefit Guarantee Corporation (PBGC)

 

-       Federal agency that insures retirement benefits and guarantees retirees a basic benefit if the employer experiences fiscal difficulties

 

Defined-Contrbution Plan

 

-       Retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account

 

Cash Balance Plan

 

-       Retirement plan in which the employer sets up an individual account for each employee and contributes a percentage of the employee's salary; the account earns interest at a predefined rate

 

Vesting Rights

 

-       Guarantee that when employees become participants in a pension plan and work a specified number of years, they will receive a pension at retirement age, regardless of whether they remained with the employer

 

Summary Plan Description (SPD)

 

-       Report that describes a pension plan's funding, eligibility requirements, risks, and other details

 

Cafetaria-Style Plan

 

-       A benefits plan that offers employees set of alternatives from which they can choose the types and amounts of benefits they want

 

Benefits

 

-       attract, retain and motivate employees

 

4 requirements for receiving unemployment insurance

 

-       proof of employment (usually work more than 52 weeks)
2) they are available for work
3)actively seeking work
4) not discharged for a cause, did not quit, not out of work due to labor dispute

 

worker's comp. benefits 4 categories

 

-       1)disability income
2) medical care
3) death benefits
4) rehabilitation

 

Optional Benefits

 

-       Medical Care
2) Life Insurance
3) Retirement Plans
4) Paid Leave (Vacations, holidays, sick leave)

 

Insurance benefit

 

-       No income tax, so ppl get more "bang for their buck"

 

Consumer-driven Health Plan (CDHP)

 

-       provide health coverage in a way that gets employees involved as consumers making decision to lower costs.
1) insurance w/ high deductible
2)medical savings account in which employer contributes to employee controlled accounts for paying expenses below the deductible
3) health care education to help improve health

 

Define contribution plans include

-       -money purchase plan
-profit sharing and employee stock ownership plan
-section 401 (k) plan

 

money purchase plan

 

-       -employer specifies a level of annual contributions, contributions is invested, when employee retires receive amt of contribution plus investment earnings

 

401 (k)

 

-       employees contribute a percentage of their earnings, employers may make a matching contribution. (earnings contributed to plan is not taxed- gov't puts a limit on how much you can contribute per year)

 

Age Discrimination in Employment Act (ADEA)

 

-       employer must take care not to discriminate against those that are over 40

 

Americans w/ Disability Act ( ADA)

 

-       employees w/ disabilities must have "equal access to whatever health insurance coverage the employer provides other employees)

 

IRAs (Individual Retirement Accounts)

 

-       An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis

 

Traditional IRA

 

 

-       contributions are tax deductible on both state and federal tax returns for the year you make the contribution, while withdrawals in retirement are taxed at ordinary income tax rates.

 

Roth IRA

 

-       provide no tax break for contributions, but earnings and withdrawals are generally tax-free.