Module 6

Employee Benefit and Services

Alden Nelson, S.T., M.M

 Learning Objectives
• Name and define each of the main pay for time not
worked benefits
• Describe each of the main insurance benefits
• Discuss the main retirement benefits
• Outline the main employees’ services benefits
• Explain the main flexible benefit programs
 Materials
• Pay for time not worked – UU No 13 Tahun 2003
• Insurance benefit
• BPJS ( Ketenagakerjaan and Kesehatan )
• Retirement benefits
• Personal services and family friendly benefits
• Flexible benefits programs
 Benefits
Benefits : Indirect financial and nonfinancial payments
employees receive for continuing their employment with
the company.

Types of Employee Benefits

Supplemental Insurance Retirement Executive

pay benefits benefits services

sick leave and workers’ Pensions child-care facilities

vacation pay compensation
 Strategic Benefits

Strategic Benefits
Considerations

Workforce
Competitive Retirement Benefits
Attraction and
Advantage benefits Communications
Retention
 U.S. Health Care Cost Increases*

Total Spending on Health Care 2004 2009 2015

Dollars $1.9 trillion $2.9 trillion $4 trillion

% of GNP 16% 18% 20%

*Note: Figures for 2009 and 2015 estimated. Health care costs rose 7.9% in 2004,
about twice the rate of inflation, and are expected to rise at that rate through 2015.

Private-Sector Employer Benefits Costs

by Category, March 2009
 Some Required and Discretionary Benefits
Benefits Required by Federal Benefits Discretionary
or Most State Law on Part of Employer*

Social Security Disability, Health, and Life Insurance

Unemployment Insurance Pensions
Workers’ Compensation Paid Time Off for Vacations, Holidays, Sick
Leave, Personal Leave, Jury Duty, etc.
Leaves under the Family Medical
Leave Act Employee Assistance and Counseling
Programs
“Family Friendly” benefits for Child Care,
Elder Care, Flexible Work Schedules, etc.
Executive Perquisites

* While not required under federal law, all these benefits are regulated
in some way by federal law, as explained in this chapter.
 Policy Issues in Designing Benefits
Package

Which benefits to offer Who will be covered

Whether to include Coverage during

retirees probation
Policy Issues
Degree of employee
How to finance benefits
choice

Cost containment Communicating

procedures benefits options
 Pay for Time not Worked

Unemployment Vacations and

insurance holidays

Supplemental
Sick leave Parental leave
Pay Benefits

Supplemental
Severance pay unemployment
benefits
 Pay for Time not Worked
 Unemployment Insurance
 Provides for benefits if a person is unable to work through
no fault of his or her own.
 Is an employer payroll tax that is determined by an
employer’s rate of personnel terminations.
 Tax is collected and administered by the state.
 Vacations and Holidays
 Number of paid leave days and holidays varies by employer.
 Qualification for and calculation of holiday and leave pay
varies by employer.
 Premium pay for those who work on holidays.
 Pay for Time not Worked
 Sick Leave
 Provides pay to an employee when he or she is out of work
because of illness.
 Costs for misuse of sick leave
 Pooled paid leave plans
 Parental Leave
 The Family Medical Leave Act of 1993 (FMLA)
 Up to 12 weeks of unpaid leave within a one-year period.
 Employees must take unused paid leave first.
 Employees on leave retain their health benefits.
 Employees have right to return to job or equivalent position.
Online Request
for Leave Form
 Pay for Time not Worked
 Severance Pay
 A one-time payment when terminating an employee.
 Reasons for granting severance pay:

 Acts as a humanitarian gesture and good public relations.

 Mirrors employee’s two-week quit notice.
 Avoids litigation from disgruntled former employees.
 Reassures employees who stay on after the employer
downsizes its workforce of employer’s good intentions.
 Pay for Time not Worked
 Supplemental Unemployment Benefits (SUB)

 Payments that supplement the laid-off or furloughed

employee’s unemployment compensation.
 The employer makes contributions to a SUB reserve
fund.
 SUB payments are made to employees for the time the
employee is out of work due to layoffs, reduced
workweeks, or relocations.
 SUB payments are considered previously earned
compensation for unemployment calculation purposes.
 Insurance Benefits
 Workers’ Compensation
 Provides income and medical benefits to work-related accident
victims or their dependents, regardless of fault.
 Death or disability: a cash benefit based on earnings per week of
employment.
 Specific loss injuries: statutory list of losses.
 Injured workers are protected by ADA provisions.
 Controlling workers’ compensation costs
 Screen out accident-prone workers.
 Make the workplace safer.
 Thoroughly investigate accident claims.
 Use case management to return injured employees to work as soon
as possible.
 Insurance Benefits (Cont’d)
 Hospitalization, Health, and Disability Insurance
 Provide for loss of income protection and group-rate
coverage of basic and major medical expenses for off-the-
job accidents and illnesses.
 Accidental death and dismemberment
 Disability insurance
 Mental health benefits
Laws Influencing Health Care Benefits
 Health Services and Insurance
 COBRA notification and insurance continuance requirements
 Health Insurance Portability and Accountability Act of 1996
(HIPAA)
 Retirement and Pension Plans
 Employee Retirement Income Security Act of 1974 (ERISA)

 Mental Health Benefits

 Mental Health Parity Act of 1996

 Family Leave
 Pregnancy Discrimination Act
 Family Medical Leave Act
 The Newborn Mother’s Protection Act of 1996
Trends in Health Care Cost Controls

Premiums and co-pays

Communication and
empowerment

Cost-Control
Wellness programs
Trends

Health savings accounts

Claim audits
Other Cost-Control Options
Mandatory online plan
enrollment

Defined contribution
health care plans
Controlling
Outsourced health care
Health Care plan administration
Costs
Reduced retiree
health care coverage

Benefits purchasing
alliances
 Other Benefits Issues
 Long-Term Care
 Insurance for older workers is a growing issue.

 Life Insurance
 Types
 Group life insurance
 Accidental death and dismemberment
 Personnel policy considerations
 Benefits-paid schedule
 Supplemental benefits
 Financing (employee contribution)

 Benefits for Part-Time and Contingent Workers

 Leave and health benefits available to part-time workers.
 Benefits for long-term independent contractors.
 Retirement Benefits
 Social Security
(Federal Old Age and Survivor’s Insurance)
 A federal payroll tax (7.65%) paid by both the employee
and the employer on the employee’s wages
 Retirement benefits at the age of 62
 Survivor’s or death benefits paid
to the employee’s dependents
 Disability payments to disabled employees
and their dependents
 The Medicare program
 Health services to people age 65 or older
Retirement Benefits (Cont’d)

Types of Pension Plans

Defined Non
Qualified Nonqualified
benefit contribution
plans plans
plans plans
Retirement Benefits (Cont’d)
401(k) plans

Savings and thrift plans

Types of Defined Deferred profit-sharing plans

Contribution Plans
Employee stock
ownership plans

Cash balance pension plans

 Pension Plan

Policy Issues in
Pension Planning

Membership Plan Vesting

Benefit formula
requirements funding schedule
 Pensions and Early Retirement
 Early Retirement Windows
 Offer specific employees (often age 50-plus) an incentive
to voluntarily retire earlier than usual.
 Offer a combination of improved or liberalized pension benefits
plus a cash payment.
 Require careful program construction to avoid oversubscription
and timely delivery to avoid potential age discrimination claims.

 Older Workers’ Benefit Protection Act (OWBPA)

 Imposes limitations on waivers that purport to release a
terminating employee’s potential claims against the employer
based on age discrimination.
 Personal Services
 Credit Unions
 Separate businesses established with the employer’s
assistance to help employees with their borrowing and saving
needs.
 Employee Assistance Programs (EAPs)
 Provide counseling and advisory services:
 Personal legal and financial services
 Child and elder care referrals
 Adoption assistance
 Mental health counseling
 Life event planning
 Employee Assistance Programs
Steps for Launching an EAP Program

1 Develop a policy statement.

2 Ensure professional staffing.

3 Maintain confidential record-keeping systems.

4 Be aware of legal issues.

 Work-Life Benefits
 Subsidized child care
 Sick child benefits
 Elder care
 Time off
 Subsidized employee transportation
 Food services
 Educational subsidies
 Fitness and medical facilities
 Flexible work scheduling
 Flexible Benefits Programs
 Cafeteria (Flexible Benefits) Approach
 Each employee is given a limited benefits fund budget
to spend on preferred benefits.
 Types of plans

 Flexible spending accounts

 Core plus option plans
 Employee Leasing
 Professional employer organizations or staff leasing firms

 Handle human resources functions for leased employees of small

firms
 Can provide benefits by aggregating employees into larger
insurable groups
 Can raise worker commitment, co-employment, and workers’
compensation issues
 Flexible Work Schedules
 Flextime
 Compressed workweek schedules
 Workplace flexibility
 Job sharing
 Work sharing
 Insurance in Indonesia
• Insurance BPJS Ketenagakerjaan
✓ JKK ( Jaminan Kecelakaan Kerja/ Insurance for Work Accident) : 0,24% to
1,74% Employer
✓ JK (Jaminan Kecelakaan Kerja/ Insurance for the death) : 0.3 % Employer
✓ JHT ( Jaminan Hari Tua/ Insurance for future life) : 2% Employee + 3.7 %
Employer
✓ JP ( Jaminan Pensiun/ Insurance for Pensiun ) : 1% Employee + 2 % Employer

• Insurance BPJS Kesehatan ( Health Insurance ) :1% Employee +

4 % Employer
 Benefit in Indonesia
• Insurance BPJS Ketenagakerjaan
• Religious Bonus ( THR )
• Allowance ( Meal, Housing, Position, Transportation,
shift, attendance etc)
• COP ( Car Ownership Program)/ Housing Program
• Paid leave
• Bonus
• Flexible working hours
• Profit sharing
• Flight ticket etc
THANK YOU