Communication an Employee Benefit Plan Bertha A. Navarro Roosevelt University HRM 430 – Online Employee Benefits Professor, Don Wlodarski April 29, 2013 Abstract A plan administrator for employee benefits has the task of assessing the needs of the employees of the organization. To do this, the administrator has the daunting task of identifying those needs in terms of internal and external factors, as well as comparing costs for the contemplated benefits so that they meet with the organization’s budget. Once all data is compiled it is then presented to upper management for approval.
The next step is to communicate the benefit package to the employees. An carefully designed benefit plan is a strategic plan in attracting and retaining talent, surprisingly a benefit plan that includes heath care and a retirement plan are first on the list of today’s workforce (Hall, 2013). To develop an effective benefit plan requires a strategic planning and communication (Thompson, 2013). Communication an Employee Benefit Plan Introduction Over the years employee benefits played an important role in the lives of the American worker.
However, the high cost of health insurance and prescriptions companies are finding it difficult keeping up with the constant rise of costs of these benefits and have opted to either stop offering top quality benefits and chose a plan with higher deductibles and or passing the majority of the cost to the employee (Hall, 2013). Employee benefits refers to compensation, not including wages (hourly or salaried), that include paid vacation, medical insurance coverage, dental insurance, profit-sharing plans, paid time off and tuition reimbursement.
Organizing and communicating these benefits to employees efficiently requires the right form of communication. Strategic Planning Many feel that employees have the right to these benefits and that companies are obligated to offer and pay for the benefit plan. The truth is that while there are some benefits that are mandated by law, standard benefits such as health care, sick pay and vacation pay are not governed by law (Hall, 2003). Companies see that providing employees with a benefit plan is a privilege and not a right.
An administrator with the task of putting together an employee benefit package must come up with a strategy that includes implementing the legal requirements, defining employee needs, and budgeting the cost to meet financial resources of the company. First, strategic step is to identify the external and internal environment that will help to determine Second is to identify the benefits required by law and those that the company plans to offer its current employees and new hires. I. Identifying types of benefits;
Benefits have two aspects and are identified by purpose – how the benefit serves the employee and the legal requirement of the benefit (McGraw Hill, 2013). Also, there are three roles that characterize a benefit program. The first of these characteristics include employee protection benefits. Some protection benefits are mandated by law such as; Social Security, Medicare, unemployment insurance, and workers’ compensation insurance and those designed to (Erickson, 2005). Social Security is a retirement program mandated by the federal government that requires matchng contributions at the rate of 6.
2% from the employer and employee (Social Security, 2013). Another mandated benefit is the health care program known as Medicare. For this program employees are required to contribute 1. 45% of their wages earned and the employer is required to match the amount (Steingold & Schroeder, 2009). Unlike the Social Security and Medicare program, the unemployment insurance benefit program, the rate is based on the wages earned by the employee and the state’s specific rate. The current Federal Unemployment Tax Amount or FUTA is 6. 2%.
In addition to the FUTA unemployment contribution, employers will also have to pay unemployment tax in the state where they do business and have employees (Steingold & Schroeder, 2009). At the law where I am employed, the rate paid by the employer is 0. 550% based on taxable wage base of $12,900. 00 as set by the State of Illinois (IDES). The final required employee benefit is workers’ compensation which protects the employee in the event that he or she sustain an injury on the job and are either temporarily or permanently unable to work.
The cost of the benefit is paid entirely by the employer (Steingold & Schroeder, 2009). Optional benefits Benefits promoting the health and welfare of the employees and their families are top on the list of potential employees in today’s workplace. A better sweetener is for the company to also provide employees with a retirement package, availability of obtaining life insurance or disability insurance. This type of protection in some cases tops the wage requirements, especially for employees who are starting a family or are reaching retirement age (xxxxxx).
Designing and offering an employee benefit package also serves as an incentive to hire and retain qualified workers for the purpose of having a competitive advantage over its competitors. It also motivates employees to perform at optimum and remain loyal to the company and in reaching its goals (Steingold & Schroeder, 2009). Optional Benefits. A comprehensive benefit plan can include health insurance, disability insurance, life insurance, a retirement plan, paid-leave that includes earned vacation time, personal days and sick days, and flexible compensation also known as a cafeteria plan (Employee Benefits, 2013).
A benefit plan can also include bonuses, service awards and reimbursement of tuition expense. Employers that offer optional benefits will need to do its due diligence and acquire as much information on the different types of medical plans available to purchase for the benefit of its employees. Employers might chose to go with the Traditional indemnity plan that allows the employee to choose their own physician, has a deductible, a coinsurance percentage, usually 80 paid by the medical plan and the employee paying the remaining 20%.
A health maintenance organization (HMO) plan provide health care for the member using a network of hospital and physicians. Comprehensive benefits include preventive care, well baby care and immunizations. This plan is less expensive, due to the fact that the employee must stay within the network, giving him a limited choice in the choice of physicians and treatment. The preferred provider organization (PPO) falls between conventional insurance and HMO’s. There is not network of physicians to choose from, you can see the doctor you prefer. PPO’s are more expensive than HMO’s.
A cafeteria plan is designed for the employee to choose the level of coverage that best meets the needs of the employee and his family and at the same have control over the overall benefit costs. Employees who choose the cafeteria plan do so because they want to meet their personal needs, such as medical cover for to include family, tax reduction or thrift plans and salary reduction, retirement/pension plans or specialized services that include day care, financial planning and legal services. This type of plan requires careful planning and communication if it is to be successful.
The employee must fully understand their options when making their choices and both the employee and employer must fully understand the tax consequences of those choices ( Benefit Handbook). When deciding on providing the employees with optional benefits, employers need to consider what it needs in a plan and the needs of the employees. That task falls on the Human Resource (HR) department, by its benefits administrator. The benefit administrator’s has the job of investigating the quality of potential insurance carriers, including the benefits and restrictions, such as hospital coverage, outpatient services, substance
abuse treatment and prescriptions. Checking with underwriting is a good way to determine what may be excluded from the plan. Check on the insurance company’s past history regarding its reputation for customer service, types of plans offered, enrollment and administration of the plan. Many companies choose to have an external plan administrator to handle the optional part of the benefit plan. If the administrator is in-house, the administrator will need to evaluate the plan’s effectiveness in general.
Because of the legal implications with pension plans and profit-sharing plans, and some health plans, it is important that the plan administrator stay current on changes in tax laws that will have an impact on the company and the employee. Paid-time off or Leave is the second characteristic of an employee benefit offered to employees as part of their compensation package. This benefit is popular because an employee can accumulate a certain amount of hours during the year and use that time for personal days, vacation, or sick leave (Schroeder 2009).
It pays the employees when they are not performing their regular work duties (Steingold & Schroeder, 2009). The final characteristic is known as the Accommodation and Enhancement benefits. These benefits are programs and opportunities available for employees and their families in a wide variety of programs, such as stress management classes, flexible work schedules and tuition reimbursement (Steingold & Schroeder, 2009). An employee assistance program (EAP) is such a program.
Many companies offer these programs to help families during times of trouble and uncertainty and with substance abuse (XXXX). II. Compiling and distribution of employee handbook The employee handbook is one of the best ways to communicate to the employees of what is expected of them during the course of their employment. The handbook outlines the company’s history, dress code, code of ethics, legal guidelines, corporate culture and especially employee benefits offered by the employer, such as health/life insurance, life insurance, retirement plan, and time-paid off (How to Create an Employee Handbook).
The employee handbook also defines the company’s, vision and mission statements along with its procedures and policies. It is an invaluable tool to the organization as a whole system and to each employee as an individual (How to Create an Employee Handbook). Compiling an employee handbook is time consuming because it needs to be drafted and reviewed by an attorney specializing in labor law to make sure that it does not contain anything which will violate any laws and that it is flexible to the needs of the workforce (How to Create an Employee Handbook).
Each new employee should receive a handbook upon hiring. Human Resources should alert all department heads when changes are made to the handbook by so that they can meet with their groups and explain the changes. If the handbook is revised to include the change, it should be redistributed to all employees. Including a brief summary of the EEOC guidelines and the current labor laws at the end of the handbook will also be beneficial to both management and employees.
The cost of legal review, editing and printing outweighs any potential misunderstandings and legal implications that can lead to possible lawsuits that can cost the company much more in legal representation, settlement and a damaged reputation than the cost of putting together an employee handbook (How to Create an Employee Handbook). The estimated time in formatting, legal review and printing the handbooks will be between three to four months before the final products goes to print and distributed to current employees and future hires.
The Human Resource department should re-evaluate the employee handbook at the minimum every 12 months or as the laws are added or amended and company policies change. Legal Implications To be within legal compliance requires very little cost to the company. The law requirements employers to display Labor Compliance Posters listing employee’s rights in the workplace as well as local, state and federal laws that prohibit discrimination based on race, sex, religion and other factors are free by contacting the U. S. Department of Labor (U. S. Department of Labor).
Breaking these laws is costly to the company in terms of attorney fees, court costs, penalties and fines (Pollar & Gonzalez, pp. 13-14). The Equal Employment Opportunity Commission (EEOC) oversees the filing of complaints from employees claiming to be victims of discrimination in the workplace (Bell, p. 40). According to Bell, the EEOC receives over 80,000 complaints each year. Even though few claims result in going through the litigation process, the EEOC is vital in enforcing various laws, assisting employers with compliance and interpretation of the laws, and providing individuals with available resources (Bell, p.
40). A tie in to the company handbook is for the company to address sexual harassment in the workplace. The Human Resource department should make available to all department heads video programs and pamphlets that deal with sexual harassment and discrimination on all levels within the organization. The use of the internet as a resource for gathering information or obtaining brochures regarding sexual harassment and discrimination in the workplace can be ordered from the government at little or no cost (U. S. Department of Labor).
This action is more of a protection type benefit that does not require contributions on a weekly, monthly or quarterly basis. Yet, it is a valuable tool for the benefit of the safety and protection of the employees. III. Communicating using technology Once the employee benefit plan has been reviewed, approved the task of communicating the benefit plan to the employee’s now rests with the in-house plan administrator. As mentioned above, the employee handbook is an excellent medium to inform employees of the employee benefit plan.
Another medium to communicate with employee about the benefit plan is the use of the company intranet to create a link on the organization’s intranet where employees will have access to the employee handbook for reference. Many companies use a bulletin board to post notices of changes to employee benefits, either in-house or governmental. Creating a link on the company’s website to give the employees an alternate way to obtain information on where to get help with Employee Assistance Programs (EAP) and other programs that might be of benefit to the employees.
Of course, the most used form of technology at the workplace is the use of electronic mail (e-mail). Sending e-mails to employees whenever there is a change to benefits, laws and any other information that will affect employees’ benefits is easy and quick. In addition, for a company that has more than one office in other states, this form of communication is quick and allows for the information to be relayed quickly giving the HR department time to put together a more detailed summary of the changes, additions and deletions to employees’ benefits and ultimately making its way into the employee handbook.
IV. Conclusion: An effective employee benefit plan must be in place if an organization wants to attract and recruit the best talent. Today more than ever, employees are more concerned with the level of benefits an organization has to offer than wages. As with all things, changes in the environment affect the organization and those changes . References Entrepreneur Media, Inc. (2013). Employee Handbook Template. Enterpreneur. com. Retrieved August 22, 2013, from http://www. entrepreneur. com/formnet/form/612 Erikson, R. (2009). How to Create an Attractive Employee Benefit Plan That You Can Afford.
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