Questionnaire: Human Resources the Main Basis for Discretionary

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Human Resources

The main basis for discretionary benefits, as the name suggests, is that employers are not legally required to provide these. It is something that is offered as a service to employees. Such benefits include leave, retirement savings, investment plans, and group health coverage. Although not legally required, government regulations do provide a guideline for the fir, non-discriminatory provision of these benefits. Leave, for example, is subject to the Fair Labor Standards Act. The Act determines that the employer is not required to pay for time away from work. Paid leave, therefore, is a discretionary benefit that is agreed between the employer and employee. On the other hand, the Davis-Bacon Act and the McNamara-O'Hara Service Contract Act do require workers in service under government contracts to be paid for their leave.

Retirement benefits are subject to the Employment Retirement Income Security Act (ERISA), which holds employers and companies that provide retirement plan management under fiduciary responsibility.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) determines that group medical and dental schemes can continue after a person's termination of employment. The fees involved are determined by whether a person was voluntarily or involuntarily terminated from the position.

2.

The HIPAA Standards for Privacy of Individually Identifiable Health Information protects, on a national scale, certain health information by means of a set of national standards. In other words, the use and disclosure of health information is addressed in terms of a person's privacy rights. By extension, this also means that an individual can control how his or her health information is used. The Privacy Rule is implemented and enforced by the Office for Civil Rights.

The main purpose of the Rule is ensure the proper protection of individuals' health information while also allowing the flow of health information in such a way that high quality health care can be provided to all citizens, for optimum protection and well being. There is therefore a balance between important uses of information and the protection of information that can be held private at the request of individuals seeking healing from doctors and medical establishments. The rule is therefore flexible and applies to a wide variety of uses, providing a platform for disclosure where this is necessary.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA), was brought into being on August 21, 1996. Under the Act, the Secretary of HHS is required to provide publicized standards for the use and distribution of health information, which includes its electronic exchange, privacy and security. The Secretary was then also required to provide privacy regulations regarding health information that is individually identifiable. The rule was proposed on November 3, 1996 for public comment and was published as the Privacy Rule on December 28, 2000.

3.

The two forms of employer-sponsored disability coverage include short-term and long-term disability coverage. Non-work related disabilities generally fall under short-term disability coverage. This covers the likelihood that employees might become temporarily disabled for a short period of time and offers partial income protection. The advantage for employers is that employees protected in this way remain as valuable assets to the company, without the costs involved in recruiting and training new personnel.

Long-term disability plans cover those disabilities occurring as a result of physical illness, injury, pregnancy, or mental disorder. This type of plan offers up to 70% salary replacement and can also include provisions that encourage the employee to return to work. Permanent disabilities are also included here, although the advantage for employers is that, again, valuable workers can return to work despite injury or disability as far as reasonable accommodations can be made.

4.

The three types of dental insurance plans include: discount dental plans, indemnity insurance plans, and supplemental dental insurance plans. The discount dental plan provides the individual with discounts for a wide range of products and services at the dental office. These plans are specifically meant for those who are not members of an exclusive organization, don't have employer access to a dental plan, and have prior dental conditions.

An indemnity dental plan, on the other hand, pays a portion of the individual's dental fee while the patient adds the difference from his or her own funding. This is a more common plan provided by employers and offers the advantage of a fixed percentage fee while the employee makes up the rest of the account.

Supplemental dental insurance is offered for employees whose employee dental plans do not provide enough for their requirements. This is also a plan that can be entered into on an individual, non-work related way.

Since the indemnity plan is most common among workplaces, I would recommend that this be used for our organization.

5

FASB Statement No. 106; came into effect in 1993 in response to concerns about the private sector employers and their ability to provide retirees with the health care benefits promised at the start of their employment. One of the reasons for the ruling is the rapidly increasing life expectancy of individuals as a result of improved medical technology and better individual knowledge about maintaining long-term health. This has created a substantial increase in the health care costs of retirees, since these benefits need to be paid in a longer term for people who live longer. In most cases, this was unanticipated and significant difficulties have been created for the health care funding of both private and public sector employers. Rulings such as FASB has created a sitation in which many private sector employees no longer offer health care benefits for their retirees. Under the Seniors Choice Program, however, private sector employees are required only to pre-fund monthly premiums, since this is a fully insured program.

6.

A defined benefit pension plan is calculated according to a fixed formula. Generally, this includes the years of service multiplied by a percentage of the average salary over the last years of service. The main advantages of this are that it is independent of market performance and adjusted for inflation. It is a relatively high in relation to employee contributions. On the other hand, employers suffer the disadvantage of expense. This plan is extremely expensive and could also be funded improperly, which means that employees may not receive the full benefit anticipated.

A defined contribution pension plan, on the other hand, has a fixed contribution rather than a fixed benefit. The benefit is dependent on portfolio performance, while also allowing the investor full control of the portfolio. There are various choices within the plan, making it flexible. The disadvantage is mainly that retirement income is dependent upon market performance.

For the company involved, the latter is recommended, especially for its ability to save the employer money. The fact that most employees are young also provides a platform for long-term investment. Furthermore, such long-term involvement in a benefit plan would also encourage long-term service. The types of benefits to be provided also allow an accumulation type of funding towards the end of the term of service and investment.

7.

When an employee starts at a company, benefits are one of the primary motivating factors to accept the salary and other negotiation factors. It is also important to communicate these benefits in such a way to ensure employee loyalty and long-term service. Good business sense means not only saving money, but also retaining valuable employees. In fact, communicating benefits to staff in an effective way can mean happier staff without having to increase the costs of these benefits. One important component to effective benefits communication is to understand the audience that receives such communication. A young staff member, for example, is likely to be relatively uninterested in retirement benefits and more interested in training and development opportunities. Staff with families is likely to be interested in family healthcare. Hence, employers should make sure that they… [END OF PREVIEW]

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