Designing and Planning Benefit Program

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Designing and Planning Benefit Program

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Designing and Planning Benefit Program:

Designing and Planning Benefit Program Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt) Professor Al-Qurmoshi Institute of Business Management Hyderabad

Designing and Planning Benefit Program:

Designing and Planning Benefit Program Determining the goals and objectives Assessing and/or selecting benefits Designing the benefits Package Monitoring the plan

Determining Goals & Objectives of Benefit Plan :

Determining Goals & Objectives of Benefit Plan

Selecting Benefits :

Selecting Benefits Assess current benefits to see where improvements needed or new ones need to be added Selecting & evaluating benefits is the 1 st step in translating goals and objectives of a benefit program Organizations have some choices in benefits they offer There are benefits as required by legislation There are customary benefits common to almost all organization and There are benefits those can make benefit package unique

Selecting Benefits - Legislation:

Selecting Benefits - Legislation Social legislation requires that employer make expenditures for health & safety of employees Insurance to be made to indemnify employee’s loss of income from illness, injury, unemployment & old age Law also requires how organization will develop & operate specific benefits, like retirement plans These expenditures are to be incurred, whether employer wants to incur it or not and whether employee desires the benefit or not Legally required benefits currently cost employers in excess of 10% of payroll cost

Selecting Benefits :

Selecting Benefits Assessing Competition knowing what benefits other employers are offering Organizational Benefit Plan Analysis comparison of benefits offered currently with needs & preferences of employees Organizational Financial Analysis comparison between direct wages & benefits including its cost and employee need and employer's ability to pay

Selecting Benefits:

Selecting Benefits Collective Bargaining and Benefits through collective bargaining employees receive the benefits they want and unions are motivated to convince employees about the value of benefits bargained for Who Should Receive Benefits Whether part time employees/dependents of employees/retired employees/survivors of deceased employees can receive benefits? Employee Choice in Benefits each person to decide what benefits to include & how much to allocate for each, as per flexible benefit plans

Flexible Benefit Plans:

Flexible Benefit Plans Mix and Match Plans employee is offered an amount based on salary, seniority & age and he can choose from various benefit options Modular Plans Organization offers various optional benefit programs and employee can choose those which best fits his needs Core-Plus-Option Plans have two parts core part provides health and retirement benefits to all employees & Optional part provides various benefits - employee can choose from

Flexible Benefit Plans:

Flexible Benefit Plans Pre-tax Salary Reduction Plans Permits employees to set aside a portion of wages each year on a pre-tax basis to pay for qualified expenses There are two major types of plans: Flexible spending Accounts allows employee to pay for expenses, such as, medical expenses, reducing employee's gross income Premium-Only Plans - allows employee to pay for insurance premiums

Reducing Costs of Benefits:

Reducing Costs of Benefits Health Plans Changing an insurance plan to a Preferred Provider can reduce costs Time Off holidays can be adjusted if organization grants holidays those are not required by law Retirement changing defined benefit plans to defined contribution plans

Cost Sharing :

Cost Sharing Health Plans employees to pay a part of their monthly health insurance premiums Time Off pay only a portion of salary for certain types of time off or share costs with an insurance plan, as in disability Retirement all types of retirement plans can be made contributory on the part of the employee

Reducing Administrative Cost:

Reducing Administrative Cost Health plans can contain 3 features that help in controlling costs Wellness Programs - programs are intended to reduce future medical claims by keeping employees healthy Utilization Reviews reviews evaluate frequency of employee usage and quality of service received Case Management Overseeing the expenses of illnesses which add up very rapidly and balancing care and cost Outsourcing the Benefits Function to reduce and control operating costs

Monitoring Benefits :

Monitoring Benefits Organization keeps careful track of what is happening both externally & internally Needs & preferences of employees likely to change due to change in organization's work force Surveying employee needs and preferences should be a continuing exercise and not a one-time project Organization can not monitor change in costs of benefits provided by outside Insurance Companies Hence, organizations are developing alternative ways of providing the benefits to employees at lower/stable cost

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