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Question: • Assume That You Recently Graduated From College And Are Just Starting A New Job At A Large Firm. You Will Be Receiving A Starting Net Pay (Net Of All Taxes And Mandatory Deductions) Of $30,000. Your Task Is To Read The Benefit Policy Described Below And Determine Which Benefits You Would Select. Keep In Mind That Any Money You Spend On Additional Benefits

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• Assume that you recently graduated from college and are just starting a new job at a large firm. You will be receiving a starting net pay (net of all taxes and mandatory deductions) of $30,000. Your task is to read the Benefit Policy described below and determine which benefits you would select. Keep in mind that any money you spend on additional benefits will reduce the $30,000 per year you can spend on other things such as housing, entertainment, and travel. After each student in the class has selected the benefits he or she would choose, the instructor will divide the class into groups of three to five. Then, each student will explain his/her selections to the rest of the group along with the rationale behind the decisions. After each student is finished, your group needs to prepare a list of criteria (reasons you would or would not want a benefit) that were used in making the benefit selections. These criteria will then be written on an overhead or blackboard for class discussion.

BENEFITS POLICY

Your company offers full-time employees the opportunity to participate in a broad range of programs to meet specific needs. Employees are responsible for selecting the benefits that best meet their needs.

PRE-TAX HEALTHCARE PREMIUM PAYMENTS

The firm offers employees a medical care program that includes doctor’s visits, hospital services, emergency room visits, and diagnostic laboratory tests. Our program allows employees to pay a portion of their health insurance premiums through payroll deduction to receive a tax break by having the premiums deducted from their paychecks before taxes are calculated. New employees must opt into pre-tax within 31 days of employment to receive the benefit. The firm pays the remainder of your healthcare fees. However, if you choose this benefit, you will need to pay $65 per month for an employee-only policy, $137 per month for an employee plus one more family member policy, and $185 per month for total family coverage.

FLEXIBLE REIMBURSEMENT ACCOUNTS

Section 125 of the Internal Revenue Service’s (IRS) Code allows employees to choose certain pre-tax benefits as an alternative to taxable monetary compensation. These include a medical and a dependent care reimbursement account.

MEDICAL REIMBURSEMENT ACCOUNT

This account allows an employee to set aside pre-tax dollars to pay for medical, dental, and vision care, or other eligible expenses not covered by the health plan. There is a $5,000 per plan year maximum and $10 is the minimum contribution per pay period. The employee must have maintained eligibility to participate in the healthcare plan described above for six or more continuous months to participate in the Medical Reimbursement Account. DEPENDENT CARE REIMBURSEMENT ACCOUNT

This account allows you to set aside pre-tax dollars to pay for eligible dependent care expenses such as child care. You are eligible to enroll within 31 days of employment. Maximum amount during a plan year is: $2,500–married and filing tax returns separately from spouse. $5,000–single, or married and filing jointly. $10 is the minimum contribution per pay period. RETIREMENT

You will be automatically enrolled in our firm’s retirement plan after 1,000 hours of service. Upon retirement or termination of service, you will receive 2 percent of your annual compensation for each year of service. Your pension is vested if you have three years of service with the firm. See your Benefits Office for more details.

EMPLOYEE STOCK PURCHASE PLAN

You are allowed to purchase common stock in this firm at a 15 percent discount off the fair market value through payroll deduction. Contributions are deducted on an after-tax basis. See the Benefits Office for details.

LIFE INSURANCE

Full-time employees of our firm have life insurance provided, effective the first day of employment, as a condition of employment. It provides two kinds of insurance—life and accidental death and dismemberment. The amount of insurance coverage is equal to the employee’s annual salary rounded to the next highest thousand, and then doubled. An amount equal to four times the employee’s salary is payable in the event of accidental death. Coverage is also provided for accidental blinding or dismemberment. Premiums are paid by the firm.

OPTIONAL LIFE INSURANCE

Additional optional life insurance is available and is administered by a large life insurance firm. It is available for employees and their spouses and dependents. Premiums are paid by the employee through payroll deduction. To receive up to $200,000 coverage without proving good health, you must request within 60 days of employment. Your cost will depend upon your age:

Under 25 25-29 30-34 35-39 40-44 45-49

$0.40 $0.50 $0.70 $0.80 $1.30 $2.20

Price quotes are also available for those over 50. Check with the Benefits Office.

OPTIONAL LONG-TERM CARE INSURANCE

Long-term care insurance is offered to full-time employees, their spouses, parents, and parents-in-law. Employees enrolling within 31 days of hire do not have to complete a health care questionnaire. Long-term care is the care you need when you require assistance with day-to-day functions like dressing, eating, and getting into and out of bed due to medical problems caused by illness or accident. The cost of this insurance is dependent upon one’s age and level of coverage. Check with the benefits office for specific costs.

OPTIONAL LONG-TERM DISABILITY

Long-term disability income insurance helps to protect your income when, due to a covered illness or injury, you are disabled. It has been designed to cover a disability sustained on or off the job. The plan provides up to 60 percent of your basic monthly earnings after 180 days of disability. The cost varies depending upon age and level of coverage. PERSONAL ACCIDENT INSURANCE

Personal accident insurance is available for the employee, spouse, and dependent children and helps protect against losses due to accidents. A full benefit is paid for accidental loss of life; loss of use of both upper and lower limbs; loss of both hands, feet, and eyes; loss of speech; or loss of hearing in both ears. Partial benefits are paid in the event of loss of any one hand, foot, eye, both legs, and both arms. The firm pays all costs.

TRANSPORTATION REIMBURSEMENT ACCOUNT

You may contribute to a parking reimbursement account and/or a transportation account, which covers mass transit or vanpooling. These are two separate accounts. Contributions are pre-tax, deducted from your paycheck. You can contribute up to $185 per month for the parking account and $100 per month for the transportation account.

OPTIONAL PRE-PAID LEGAL PLAN

A pre-paid legal plan which, for a monthly payroll deduction of $19.20, provides legal services such as traffic court representation, first offense DUI court representation, will preparation, credit/warranty disputes, financial contract or lease review, uncontested divorce, uncontested adoption, and purchasing or selling a primary residence.

TUITION ASSISTANCE

Educational assistance is available for full-time employees with at least one year of service. Our firm will pay for a maximum of 15 credit hours for the year—six credit hours in the fall, six credit hours in the spring, and three credit hours in the summer. Courses must be work-or degree-related and taken at a fully accredited college or university.

i. Based on the scenario (i.e., assumption of role and salary), determine from the various benefit plan choices which benefits you would select and provide the reasons you would want those benefits.

ii. Of the benefits you did not select, choose two (as applicable) and tell why they were not selected.

iii. Tell why this simple practice exercise is beneficial from the perspective of an HR professional. That is, what could an HR professional gain from doing a similar reflective exercise as applicable to various groups (e.g., differing generations) that are represented in the organization?

b. Benefits Communication:

i. Identify some ways to communicate and train the workforce in total rewards (i.e., compensation and benefits) programs and policies.

ii. What ways of communicating total rewards have been most beneficial in your workplace? Explain.

iii. Describe an instance from your own workplace experience where a total reward policy or program was not communicated very well or could have been improved upon. Based on what you have learned, what would you recommend to HR or the outsourced organization for improving the total rewards communication(s)?

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