Employee Benefits and Health Insurance - Research Paper Example

Employee Benefits Introduction “Employee benefits are going to be crucial to ensure staff are engaged and motivated in tough economic times, according to research released by Employee Benefits and YouGov” (Sullivan, 2012, p.xiii). Today, employees are very much aware of their rights and the benefits they stand eligible for, and they know that benefits are crucial to give them some extra support in the tough financial times. ‘Employee benefits’ is a field that has developed drastically in the last two decades. Today, employers are spending thousands of compensation dollars to devise and implement benefit plans because they know that if labor morale is high, that means the company is going to enjoy improved performance, high productivity, and more positive reputation in the competitive market. Employee satisfaction is the key to success for such employers because they perceive employees as the second most important asset for the company, customers being the first. However, historical trends show that benefit costs has become a main concern for the employers because the cost of certain benefits even surpasses the wages, like the medical expense coverage. This paper will discuss some very important employee benefits with a focus on historic trends and recent developments. Concession Bargaining Rasmus (2011) states that “the history of collective bargaining since the Second World War has consisted of several stages or phases.” According to him, 1947-1979 was the first phase in which collective bargaining expanded its scope (cost of living adjustments, supplemental joblessness benefits, pensions, and health care) and magnitude (i.e., the dollar value of benefits). Both scope and magnitude of benefits continued to increase till 1979. From there on, the second phase started that lasted in 2007 and during which, concession bargaining had been widely practiced. However, the truth is that the practice of concession bargaining has given rise to more demands of concession, whether at industrial level or shop-floor level. Ramsus (1011) is not satisfied with the concept and states that, “Nothing positive whatsoever has come from concession bargaining the past three decades in the private sector”, because state workers are not satisfied with their reduced bargaining rights. For example, state workers protested against “Gov. Scott Walker’s proposals to reduce the bargaining rights of state workers and increase benefit and retirement contributions”, according to a report by Marley in the Journal Sentinel (2011). Negotiated Benefits Negotiated benefits include those benefits which collective bargaining covers, like healthcare, flexible spending accounts (FSAs), pensions, personal days, paid vacations, holidays, reduced tuition for children under 26 and spouse, and tuition assistance. Healthcare and Health Insurance Organizations employ group health plans to provide medical care to the employees and their families through insurance or reimbursement. A company providing health care benefits also pays for health insurance premiums which makes health insurance an employee welfare benefit, maintained by the employer or the union (Doyle, 2012). Employee Retirement Income Security Act (ERISA) covers most of the private sector health care plans and provides medical protection to employees and beneficiaries. The individuals who are assigned to manage these plans are required to meet certain standards or the code of conduct that is specified by the law. ERISA is administered and enforced by The Department of Labors Employee Benefits Security Administration (EBSA), which provides information on health plans for the employees, and also compliance assistance information for the employers. An ERC Survey (2009) shows the recent trends in health insurance premiums. According to the survey: Most employers have maintained employee health insurance premiums, though 39% have increased employee premiums. Across all employers, the average premium is 80% paid by the employer and 20% paid by the employees. Among those employers that have increased employee premiums, the average premium is 77% paid by the employer and 22% paid by the employees. Retirement Benefits Retirement benefits are negotiated benefits which are actually employee defined contribution plans. Pensions are the greatest employee benefit for the retirees. History has it that the pension system started in the U.S. during the Civil War as a system of compensation. The practice gained serious popularity during the late 19th and early 20th centuries’ and WWII’s pay freezes. Talking about recent developments, the Employees’ Pension Scheme of 1995 provides long term financial assistance to the retirees in the form of lifelong pension. Benefits are also provided to the members of the retirees’ families upon their deaths, for example pension for the widow or widower, benefits for the orphans, and facility to pay the pension to parents or other dependent significant others in case there are no immediate family members. Paid Vacations According to the Fair Labor Standards Act (FLSA), it is purely the employer’s decision to decide whether he is going to give the employee paid vacations or he is going to deduct the wages for the number of vacations. The employee can negotiate with the employer about paid or unpaid vacations. “Paid holidays may also be negotiated by employees who have a contract with employers; these are often senior level employees”, writes Heathfield (2012). However, paid holidays are a means of maintaining employees’ morale and increases job persistence. Common paid holidays include New Year Day, Christmas, Independence Day and Easter. Despite being optional, paid leaves are a very popular employ benefit, “with paid vacations available to 91 percent of full-time workers in private industry in March 2011” (Bureau of Labor Statistics, qtd. in Economic News Release, 2011). Private industry initially offered only paid vacation benefits to only 37% of part-time workers and 75% percent of full-time workers, according to the same news release. One of the recent developments include the National Compensation Survey producing data on paid vacations benefit available to unmarried domestic partners. Unpaid Vacations Nathan (2012) writes about the Family Medical Leave Act (FMLA) of 1993 in her article. This Act “was passed to allow employees to take a leave from work, if necessary, and create a better balance between the work environment and personal life” (Nathan, 2012). The reasons that hold employees eligible for Family Medical Leave may include birth of a child or critical health condition of a member of the family or the employee himself. Although employers are not required under this Act to pay the employees for the leave; yet, they can pay the employees for the time off to keep up their morale and job satisfaction, and the employees too can enjoy all their employee benefits like maternity benefit, old-age benefit, child allowance, work injury benefit, and maintenance benefit/ alimony. Income Maintenance Plans Income maintenance plans include social security, disability insurance, survivor’s benefits, Supplemental Security Income Program (SSI), private pensions, and other welfare plans. To discuss the history of social security, the Social Security Act was presented by President Franklin D. Roosevelt in 1935. “Taxes were collected for the first time in January 1937 and the first one-time, lump-sum payments were made that same month. Regular ongoing monthly benefits started in January 1940” (Social Security Online, 2011). Social security system is administered by the U.S. Social Security Administration and intends to provide protection to the insured employees and their dependents during the time of loss of employee’s income due to retirement, disability, or demise. Conclusion Employee benefits are an important means to boost employees’ performance and increase productivity. This paper discussed some of the very important employee benefits along with some focus on their history and recent updates. The bottom line is that employee benefits have been there since decades, and historical trends show that employ benefits have become a part and parcel of today’s employment schemes due to increasing recession and downward economic shift in the industry. References Doyle, A. (2012). Health Insurance. About.com. Retrieved February 23, 2012, from http://jobsearch.about.com/od/employeebenefits/g/healthinsurance.htm Economic News Release. (2011). Employee Benefits in the United States news release text. Retrieved February 23, 2012, from http://www.bls.gov/news.release/ebs2.nr0.htm ERC Survey. (2009). Health insurance benefits. Trends in Employee Benefits. Retrieved February 24, 2012, from http://www.ercnet.org/research/studies/Trends%20in%20Employee%20Benefits%20Survey%20Results.pdf Heathfield, S. (2012). Paid Holidays. About.com. Retrieved February 24, 2012, from http://humanresources.about.com/od/glossaryh/g/paid_holidays.htm Marley, P. (2011). State workers willing to bend on concessions, not bargaining rights. JSOnline Journal Sentinel. Retrieved February 23, 2011, from http://www.jsonline.com/news/statepolitics/116162704.html Nathan, S. (2012). What You Need to Know About FMLA. About.com. Retrieved February 23, 2012, from http://employeebenefits.about.com/od/familybenefits/a/FMLA.htm Rasmus, J. (2011). Concession bargaining at the crossroads. Jack Ramsus. Retrieved February 23, 2012, from http://jackrasmus.com/2011/09/04/concession-bargaining-at-historical-crossroads/ Social Security Online. (2011). History. Retrieved February 23, 2012, from http://www.ssa.gov/history/hfaq.html Sullivan, N. (2012). Employee Benefits Connect: Benefits are key to motivating staff in tough times. Employee Benefits. Retrieved February 23, 2012, from http://www.employeebenefits.co.uk/item/14477/23/5/3 Read More