Designing and Administering Benefits

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• Designing and Administering Benefits

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How the Benefit Dollar Is Spent
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Contributions
Payments made for benefits coverage.
Contributions for a specific benefit may come
from the employer, employee, or both.
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Cost of Employee Benefits in the United States,
1929-1993
1993
41.0
33.8
1984
1975
30.0
21.5
1965
Year
17.0
1955
3.0
1929
0
5
10
15
20
25
30
35
40
45
Percent of Employer Payroll
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Percentage of Employers Providing Selected
Benefit Plans
Medium and Large Private Firms
Small Private Firms
State and Local Governments
76 50 57 87 43 95 89 56 13
64 15 38 62 22 86 80 50 4
87 91 9 87 30 66 73 94 5
Health Insurance Retirement Plans Defined
Benefit Plans Defined Contribution
Plans Insurance Plans Life Insurance Long-term
Disability Insurance Time-off Plans Paid
Vacations Paid Holidays Paid Sick
Leave Flexible Benefits Plans
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Companies with the Best Benefits
1. Xerox 2. Quaker Oats 3. John Hancock 4.
Chrysler 5. Merck 6. Bell Atlantic 7. ATT 8.
Citibank 9. Johnson Johnson 10.
Hewlett-Packard
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Legally Required Benefits

• Social Security
• Retirement Income
• Disability Income
• Medicare
• Survivor Benefits
• Workers Compensation
• Unemployment Insurance
• Unpaid Leave

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Social Security Benefits
Eligibility
Provisions
Benefit
Retirement income Disability income Medicare
Survivor benefits

• Age 65 (full benefits)
• or
• Age 62-64 (benefits reduced
• up to 20)
• Totally and continuously
• disabled for 5 months.
• Disability should be expected
• to last at least 12 months or
• result in death.
• Age 65
• or
• Receiving Social Security
• disability payments for
• 24 months.
• Family members of the
• deceased person, including
• widow or widower age 60
• or over, child or grandchild
• under age 18, or dependent

Monthly payments for life beginning at
retirement. Average benefit provides about 30
of earnings prior to retirement. Monthly
payments comparable to retirement benefits as
long as totally disabled. Provisions for
payments to dependents. Covers hospital
expenses, nursing home and home health agency
ex- penses, subject to a deductible payment.
Medical expenses are covered, subject to monthly
premium. Monthly payments related to the
deceased workers primary Social Security
retirement benefit.
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Voluntary Benefits

• Health Insurance
• Traditional Health Insurance
• Health Maintenance Organizations (HMOs)
• Preferred Provider Organizations (PPOs)
• Health Insurance Coverage of Employees Partners
• Retirement Benefits
• Defined Benefit Plans
• Defined Contribution Plans
• 401(k) Plan
• IRA
• SEP

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Domestic Partnerships

• State of NM
• legal spouse
• UNM (over 10 years)
• two (2) individuals who live together in a
  long-term relationship of indefinite duration.
  There must be an exclusive mutual commitment
  similar to that of marriage, in which the
  partners agree to be financially responsible for
  each other's welfare and share financial
  obligations.
• NMSU (within the past year)
• 2.1.1. Both domestic partners must be unmarried.
• 2.1.2. Domestic partners must have been in a
  mutually exclusive relationship for the last
  twelve (12) months, intending to do so
  indefinitely, and must share the same primary
  residence.
• 2.1.3. Domestic partners must meet the age
  requirements for marriage in New Mexico and be
  mentally competent to consent to contract.
• 2.1.4. Domestic partners must not be related by
  blood to the degree prohibited in a legal
  marriage in the State of New Mexico.
• 2.1.5. Domestic partners must be jointly
  responsible for the common welfare of each other
  and share financial obligations.

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Voluntary Benefits (cont.)

• Insurance Plans
• Life Insurance
• Long-Term Disability Insurance
• Paid Time Off
• Sick Leave
• Vacations
• Severance Pay
• Holidays and Other Paid Time Off
• Employee Services

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A Comparison of Defined Contribution Retirement
Plans
Tax Break on Contributions/ Earnings
Maximum Contribution
Plan
Available to
Appropriate for
401(k) IRA (Roth IRA) SEP
Employees of for-profit businesses Anyone
with earned income The self-employed and
employees of small businesses
Everyone who qualifies Those without company
pension plans or who have put max. into co.
plan Self-employed person who is a sole
proprietor
15 of salary up to 10,500 in 2000 100 of
salary up to 3,500 (depending on
age/income) 7,000 if joint with spouse 15 of
gross self- employment in- come or 30,000,
whichever is less
Yes/Yes Sometimes/ Yes Yes/Yes
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Personal Account versus Deferred Compensation Plan
Deferred Compensation Plan
Personal Account
Salary Set Aside Annually (100/mo.) Less Taxes
(28) Net Amount Invested Annually
1,200 336 864
1,200 0 1,200
141,761
67,514
57,266
31,933
18,128
11,609
1,251
891
Account Value at the end of
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Annual Number of Vacation Days in Various
Countries for Employees with One Year of Service
Austria
Canada
France
Japan
Netherlands
Spain
United Kingdom
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Selected Tax-Free or Tax-Preferred Employee
Benefits or Services
1. Charitable contributions 2. Counseling
Financial Legal Psychiatric/psychological 3.
Tax preparation 4. Education subsidies 5. Child
adoption 6. Child care 7. Elder
care 8. Subsidized food service 9. Discounts on
merchandise 10. Physical awareness and fitness
programs 11. Social and recreational
opportunities 12. Parking
13. Transportation to and from work 14. Travel
expenses Car reimbursement Tolls and
parking Food and entertainment
reimbursement 15. Clothing reimbursement/ allowan
ce 16. Tool reimbursement/allowance 17. Relocation
expenses 18. Emergency loans 19. Credit
union 20. Housing 21. Employee assistance
programs 22. On-site health services 23. Credit
unions