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Communication an Employee Benefit Plan

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Communication an Employee Benefit Plan

Bertha A. Navarro

Roosevelt University

HRM 430 - Online

Employee Benefits

Professor, Don Wlodarski

April 29, 2013


A plan administrator for employee benefits has the task of assessing the needs of the employees of the organization. To do this, the administrator has the daunting task of identifying those needs in terms of internal and external factors, as well as comparing costs for the contemplated benefits so that they meet with the organization's budget. Once all data is compiled it is then presented to upper management for approval. The next step is to communicate the benefit package to the employees. An carefully designed benefit plan is a strategic plan in attracting and retaining talent, surprisingly a benefit plan that includes heath care and a retirement plan are first on the list of today's workforce (Hall, 2013). To develop an effective benefit plan requires a strategic planning and communication (Thompson, 2013).

Communication an Employee Benefit Plan


Over the years employee benefits played an important role in the lives of the American worker. However, the high cost of health insurance and prescriptions companies are finding it difficult keeping up with the constant rise of costs of these benefits and have opted to either stop offering top quality benefits and chose a plan with higher deductibles and or passing the majority of the cost to the employee (Hall, 2013). Employee benefits refers to compensation, not including wages (hourly or salaried), that include paid vacation, medical insurance coverage, dental insurance, profit-sharing plans, paid time off and tuition reimbursement. Organizing and communicating these benefits to employees efficiently requires the right form of communication.

Strategic Planning

Many feel that employees have the right to these benefits and that companies are obligated to offer and pay for the benefit plan. The truth is that while there are some benefits that are mandated by law, standard benefits such as health care, sick pay and vacation pay are not governed by law (Hall, 2003). Companies see that providing employees with a benefit plan is a privilege and not a right. An administrator with the task of putting together an employee benefit package must come up with a strategy that includes implementing the legal requirements, defining employee needs, and budgeting the cost to meet financial resources of the company.

First, strategic step is to identify the external and internal environment that will help to determine

Second is to identify the benefits required by law and those that the company plans to offer its current employees and new hires.

I. Identifying types of benefits;

Benefits have two aspects and are identified by purpose - how the benefit serves the employee and the legal requirement of the benefit (McGraw Hill, 2013). Also, there are three roles that characterize a benefit program. The first of these characteristics include employee protection benefits. Some protection benefits are mandated by law such as; Social Security, Medicare, unemployment insurance, and workers' compensation insurance and those designed to (Erickson, 2005).

Social Security is a retirement program mandated by the federal government that requires matchng contributions at the rate of 6.2% from the employer and employee (Social Security, 2013). Another mandated benefit is the health care program known as Medicare. For this program employees are required to contribute 1.45% of their wages earned and the employer is required to match the amount (Steingold & Schroeder, 2009).

Unlike the Social Security and Medicare program, the unemployment insurance benefit program, the rate is based on the wages earned by the employee and the state's specific rate. The current Federal Unemployment Tax Amount or FUTA is 6.2%. In addition to the FUTA unemployment contribution, employers will also have to pay unemployment tax in the state where they do business and have employees (Steingold & Schroeder, 2009). At the law where I am employed, the rate paid by the employer is 0.550% based on taxable wage base of $12,900.00 as set by the State of Illinois (IDES).

The final required employee benefit is workers' compensation which protects the employee in the event that he or she sustain an injury on the job and are either temporarily or permanently unable to work. The cost of the benefit is paid entirely by the employer (Steingold & Schroeder, 2009).

Optional benefits

Benefits promoting the health and welfare of the employees and their families are top on the list of potential employees in today's workplace. A better sweetener is for the company to also provide employees with a retirement package, availability of obtaining life insurance or disability insurance. This type of protection in some cases tops the wage requirements, especially for employees who are starting a family or are reaching retirement age (xxxxxx).

Designing and offering an employee benefit package also serves as an incentive to hire and retain qualified workers for the purpose of having a competitive advantage over its competitors. It also motivates employees to perform at optimum and remain loyal to the company and in reaching its goals (Steingold & Schroeder, 2009).

Optional Benefits.

A comprehensive benefit plan can include health insurance, disability insurance, life insurance, a retirement plan, paid-leave that includes earned vacation time, personal days and sick days, and flexible compensation also known as a cafeteria plan (Employee Benefits, 2013). A benefit plan can also include bonuses, service awards and reimbursement of tuition expense.

Employers that offer optional benefits will need to do its due diligence and acquire as much information on the different types of medical plans available to purchase for the benefit of its employees. Employers might chose to go with the Traditional indemnity plan that allows the employee to choose their own physician, has a deductible, a coinsurance percentage, usually 80 paid by the



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