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Benefits Quiz #1 Review

by: Rachel Hedrick

Benefits Quiz #1 Review MGMT 8080

Rachel Hedrick
GPA 3.8

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About this Document

These notes pertain to Quiz #1.
Catherine Dunwoodie
Benefits, Management, human resources
75 ?




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This 3 page Bundle was uploaded by Rachel Hedrick on Tuesday February 9, 2016. The Bundle belongs to MGMT 8080 at University of Cincinnati taught by Catherine Dunwoodie in Spring 2016. Since its upload, it has received 43 views. For similar materials see Benefits in Business, management at University of Cincinnati.

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Date Created: 02/09/16
1.) When more than one party is responsible for covering the cost of health care, including the  government, employers, labor unions, employees, or individuals, this is called a  .  If  Multiple Payer System the government regulated the health care system and used tax dollars to fund all costs, it would  be called a  . Single Payer or Universal Health Care 2.) What are psychological contracts?  Discuss the main features and how they develop. A psychological contract is the relationship between an employer and its employees, and it has a specific concern with mutual expectations of inputs and outcomes. "I'll give you benefits if you work for me". Psychological contracts start developing in the pre-employment phase or recruitment phase. This is when the organization sets their standards and the candidate/future employee set his/her and decides if they are a good fit. But these contracts are flexible, and they evolve as the employee develops seniority and the business conditions change overtime. Employers need to try to be transparent to help increase the employee's flexibility to these contracts. There is a large amount of negotiation involved with these contracts.There are two types of psychological contracts: Transactional psychological contracts and Relational psychological contracts. Transactional means economic, intrinsic, close-ended, specific, static, narrow, public, and observable. Transactional aspects can be legally required, such as medical benefits. Relational means noneconomic, open-ended, indefinite, dynamic, pervasive, subjective, and understood. Relational aspects are not legal required, such as paid vacation. If either party breaks their promise or their end of the contract is is called reneging or the contract has then been violated. If the actual experience is different than either parties' expectations is is called incongruence and again the contract has been violated. Clear communication and education can help keep contracts intact and prevent violation. If a contract is violated is can be very costly! Violations can lead to high turnover, reduced engagement/productivity, and even lawsuits. 3.) Describe the difference between defined benefit and defined contribution retirement plans? Defined benefit retirement plans are often known as Pensions. The income for defined benefit plans is fixed by formula and it’s usually expressed in specific monthly sums. For example: % of pre-retirement pay * years of services = monthly payment. There are two types of formulas to calculate these benefits – flat benefit formula and unit benefit formula. The annuity on these plans are payable until the employee’s death. In addition, these types of retirement plans are declining because of the shift in full-time employees to part-time employees and the decline in union affiliations. The employer’s costs is much higher for defined benefit plans compared to contribution benefit plans because the employer makes all of the contributions. The employee does not contribute to defined benefit plans. The employer’s contributions fluctuate each year depending on the amount that is needed to ensure the money that was promised is available when the employee is eligible to receive the benefit. The employee’s life expectancy plans a large role in this. Another difference, is that all funds for defined benefit plans are kept in one pool and paid out. Defined benefit plans are subject to non-discriminatory testing to help ensure uniformity for the employees. The PBGC determines the premiums for these plans. ERISA mandates these plans and the IRC set the limits. Defined contribution plans are often known as 401ks. There are two main kinds – 401(k) or Roth 401(k). The difference is pre-tax versus post-tax deferrals. The funds for a contribution plan are kept in individual accounts. Employees and employers contribute to these plans using deferrals, matches, and discretionary matches. It is possible for these benefits to be forfeited; if the employee is unvested their employer match maybe be returned to the employer. Employers then use that money to pay for the plan costs and to help offset future match costs. ERISA requires that investment options for these plans are managed by a fiduciary. Employees have the option to choose from at least 3 different investment alternatives depending on the degree of risk they want to take. These plans have non- discrimination rules. 4.) Describe the differences between strategic benefit planning and benefits tactics. Should one come before the other? Explain your answer. Strategic benefits planning supports business objectives. Employers use external sources, such as industry data, projections, federal regulations, their cost, and demographic changes to help with strategic planning. They also use internal sources, such as their workforce demographics, and collective bargaining agreements to plan strategically. Tactical decisions support the fulfillment of strategic decisions. Therefore, strategic benefit planning should come first. Once the factors above are considered and a strategic plan is created, then an organization should start supporting the strategic decisions with tactical decisions. In addition, organizations should view benefits with a top-down approach. This means they are proactive and evaluating their offerings before problems occur. Working with a backing-in approach is not the goal. This means an organization is reactive and only revaluates their program when a problem arises. 5.) The main goal of the Pension Protection Act of 2006 was to strengthen protections for  employees’ company sponsored retirement plans.  It did this in two ways.  For defined benefit  plans, the act  .  For defined contribution plans, the act  set higher p allowed em 6.) Total Compensation is an umbrella term that encompasses  ,  ,    Core Comp Adjustmen Legally Req and  Discretiona 7.) What choices could an employer make to help control health care costs? 8.) Explain the differences between COBRA and HIPAA. COBRA only applies to employer with at least 20 employees. COBRA allows  employees to continue medical coverage if they lost coverage because of a ‘qualify  event”. A ‘qualifying event’ can be birth of a child, marriage, termination, turning 26, and  many others. The employees has 60 from the qualifying event to elect COBRA. The  offering party/employer are allowed to charge 102% of the plan premium for COBRA  participants. COBRA typically allows coverage for 18 months. HIPAA guarantees that an employee and their dependents that leave a group health  plan have access to a new employer’s plan regardless of their previous health or claims  history. The Affordable Care act (ACA) recently amended the rules regarding pre­ existing condition exclusions in HIPAA.HIPAA also protects the transfer, disclosure and  use of health care information. 9.) Employers can buy medical coverage at a lower cost than an individual could on the private market. This is due to (choose all that apply): Avoiding adverse selection Economies of scale Recruiting healthier employees Less risk to cover large groups of people Geographic location 10.) The decline in defined benefit plans can be attributed to   and  . the shift in full­time employees to te eecsl ine in union affiliations


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