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CEBS GBA 1 - Employee Benefits: The Environment Exam- Q’s and A’s
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CEBS GBA 1 - Employee Benefits: TheEnvironment Exam- Q’s and A’s
Employee Benefits - -All forms of financial returns and tangible services and
benefits employees receive as part of an employment relationship
-Broad View of Employee Benefits - -Employee benefits are virtually any
form of compensation other than direct wages
-What benefits are included in the broad view of employee benefits? - -1.
Employers' share of legally required payments (Social Security, Medicare,
unemployment insurance, and workers' comp benefits)
2. Payments for time not worked (e.g., paid rest periods, paid sick leave, paid
vacations, holidays, parental leave, etc.)
3. Employer's share of medical and medically related payments.
4. Employers' share of retirement and savings plan payments.
5. Miscellaneous benefit payments (including employee discounts, severance
pay, educational expenditures, and child care, among others).
-Narrow View of Employee Benefits - -Any type of plan sponsored or
initiated unilaterally or jointly by employers and employees and engaged in
providing benefits that result from the employment relationship and are not
underwritten or paid directly by the government
-Tripod of Economic Security - -Governmental benefit programs, benefits
supplied to employees by their employers through the employment
relationship, and benefits provided by an individual for their own welfare and
for the welfare of their dependents.
-What benefits are typically excluded when the term employee benefits is
viewed and defined in a narrow sense? - -Those benefits that are legally
mandated, notably employer funding for Social Security and Medicare,
unemployment insurance, and workers' compensation benefits.
-Explain the types of business or human resource-related reasons for firms
establishing employee benefit plans. - -Employers want to attract and retain
capable employees; having employee benefit plans in place fosters this
objective. In many cases, plans are necessary to retain current employees.
Employers hope tht good benefit plans will foster corporate efficiency,
productivity, and improved employee morale. Concerns for employees'
welfare and social objectives are also reasons for providing benefits.
-What impact have labor unions historically had in employee benefits? - -
Notably, the NLRB ruled in 1948 in the Inland Steel case that the duty to
, bargain in good faith over wages also included insurance and fringes such as
pension benefits. Shortly thereafter, in the W.W. Cross & Co. case, NLRB
ruled that wages included a health and accident plan.
-Explain the significance of the Taft-Hartley Act in employee benefit
planning. - -The Labor-Management Relations Act, or Taft-Hartley Act, sets
forth the framework for good-faith collective bargaining over wages, hours,
conditions, and terms of employment and employee benefits. The act, along
with the Internal Revenue Code, established the distinction between
retirement benefits and welfare benefits. It also provides the regulatory
framework for administration of these benefits in a collective bargaining
agreement. It is the legislative basis on which jointly trusteed benefit plans
are founded.
-Summarize three major federal tax advantages associated with employee
benefit plans. - -1. Most contributions to employee benefit plans by
employers are deductible as long as they are reasonable business expenses.
2. Within certain limits, these employer contributions are generally not
considered income to employees.
3. In certain types of retirement and capital accumulation plans, benefits
accumulate tax-free to the employee until distributed.
-Why is the employee benefits mechanism an effective and efficient way of
providing insurance coverage? - -Employment-based insurance is convenient
for employees. They don't need to search for individual coverage, and it is
often less expensive. Providers and suppliers find it more convenient and
simpler to communicate and market employee benefits through an
employer.
-What are some other factors that have enhanced the appeal of employee
benefits? - -Price controls imposed during WWII and the Korean War froze
wage increases but allowed additions or enhancements to certain employee
benefits. The idea that the government might mandate certain benefits in
the absence of private employer action served as "moral suasion" to spawn
private employer action. Such discussion surrounds some of the provisions of
the ACA and its encouragement for private employers to provide health care
benefits. Equally important are legislative and regulatory measures allowing
employers to integrate private plans with governmental programs, thus
building comprehensive benefit plans through a public/private partnership.
-What is the starting point in the design of any employee benefit plan? - -
Setting overall objectives from the standpoints of both the employer and the
employees. There should be a meaningful and well-reasoned rationale for
any and every employee benefit plan. The rationale and sustainability of an
employee benefit plan should take into account the present time as well as
look strategically toward the future.
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