CHAPTER 12: THE BENEFIT DETERMINATION PROCESS Factors influencing the choice of Benefit Package:

5 Factors that contributed to the Increase of Benefits: Employer Factors

 Wage and Price Control a. Relationship to total compensation costs
 Government Impetus- legally mandated benefits b. Cost relative to benefits
 Employer Impetus- company initiated benefits c. Role of Benefits in Attraction, Retention, Motivation
 Unions d. Legal Requirements
 Cost effectiveness of Benefits Employee Factors:
ECC- Employee Compensation Commission, work connected to injuries a. Equity: fairness
or illnesses b. Personal Needs as linked to age, sex, marital status, number
Company Initiated Benefits- company benefits given by the employer of dependents
out of generosity even if not mandated by law. Administering the Plan: FUNCTIONS:
BENEFIT ADMINISTRATION ISSUES: 1. Communicating about the benefits program
1. WHO ARE PROTECTED/COVERED BY THE BENEFITS *Method of Communicating Employee Benefits:
 Employee a. Employee Handbook
 Family/ dependents b. Employee Orientation
 Contractual c. Bulletin board
 Probationary d. Email
e. Intranet
 Retirees (2 yrs)
f. Memorandum to the employee
2. HOW MUCH CHOICE SHOULD EMPLOYEES HAVE AMONG AN
g. General Assembly
ARRAY OF BENEFITS
h. Collective Bargaining Agreement
 Flexible benefit
2. Claims Processing- you cannot avail for benefits without
 Standard benefit- benefit given by the company
asking for it.
3. METHODS OF FINANCING
CLAIM PROCESSOR:
 Non-contributory- employer shoulders the total cost of
 Determine whether the act has in fact occurred
benefits. EE doesn’t share
 Determine if the employee is eligible for the benefit
 Contributory- cost of benefits are shared between employee
3. Cost Containment
and employer.
Ways of Limiting Cost/ Cost Containment:
 Employee financed- employee pays the total cost for the
a. Probationary Period- they have limited benefits
benefit
b. Benefit Limitation
4. BENEFITS ARE LEGALLY DEFENSEABLE
c. Copay- Both ee-er contributes
COMPONENTS OF BENEFIT PLAN:
d. Administrative cost containment- bidding from different
1. Employee benefit communication
program/companies
 So they know the benefit e. Outsourcing
 They know how to make use of it