Question

Subject: Human Resource Management

Main question: Which benefit plans would you choose, and which wouldn't you choose and give reasons why you would or would not want a benefit that were used in making the benefit selections (specially at at entry level making $30000).

PROCEDURES: 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 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-lax 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:

MONTHLY RATE PER $10,000 COVERAGE

Under 25= $0.40 25—29=$0.50    30—34=$0.70    35—39=$0.80 40—44=$1.30    45—49= $2.20 (Price quote: are also available for those over 50).

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 Part 4 - Implementing Compensation and Security 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 Lt) c. 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, or 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, or 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 7 such as traffic court representation, first offense DUI court representation, will preparation, I 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.

Answer 1

I am being a fresher who just came out of college and pick a job will choose other compensation benefit after analyzing my needs and disposable income. It is my first job and starting of career hence I will not take financial burden and will not deduct anything from my salary. In this base salary level, I will save less hence will fully enjoy the initial years of my job. I will choose all those plans where I do not have to pay any single penny and my employer will pay on my behalf. For medical plan I will choose” PRE-TAX HEALTHCARE PREMIUM PAYMENTS” because I can afford $65 deduction per month for my health care. I do not have any dependent and I can also claim tax rebate from IRS through this plan.