It's the end of the year and it is time to renew the company's health insurance plan, as well as look at the other benefits the company offers. While employee morale is not low, the owners feel that it could be improved if they offer better benefits. They also believe that they will be able to hire more competitively in the future if their benefits package is more up-to-date.
The company currently offers the following benefits package to its employees:
- HMO Health Insurance Plan for medical coverage (but not dental) paid in full by the employer.
- Vacation Plan. One week per year for employees with up to 5 years of service; two weeks per year for employees with service of 5 to 9 years, and 3 weeks for 10 years or more.
- Sick Time. 7 days of sick time per year per employee
- Paid Holidays. 4 paid holidays (New Years Day, July 4, Thanksgiving Day, and Christmas Day).
- Employee Bonus Plan; company pays a share of the profits once a year to each employee in the amount of $1500 per employee each year.
For each benefit that I propose, I need help with justifying its existence; what is it going to provide the company compared to what it will cost the company? How will you allocate the money across the widest array of benefits? Which benefits are most important to your employees? If you feel that you need more money for benefits, explain how much and justify why. Be thorough and convincing. The list below shows a variety of benefits and their costs that could be added if you desired.
Info You Need:
- Company's average revenue is $2,250,000 per year
- Profit averages about 10% per year
- Payroll is about $1,200,000 per year
- Benefits budget is $350,000 per year
Following is a list of costs for selected benefits that may or may not already be offered. Unless otherwise stated, to obtain the price listed for the specific benefit you must have a minimum group size of seven (7) employees. This means that unless you have seven people desiring that particular benefit you cannot offer it.
- Health Care (HMO): average of $9, 200/year per employee, average 10% annual increase
- PPO Health Plan: average of $10, 200/year per employee, average 10% annual increase MEDICAL SYSTEMS, INC.
- HSA Plan: average of $5200/year per employee for high deductible plan, plus
employer contribution of $1000/year to HSA account
- Dental Care: $1000/year per employee on average
- Vision Care: $750/year per employee on average
- Vacation, Sick, and Holidays: part of payroll expenses
- Life Insurance: 20 year term life plan of $50,000 costs $20.00/month
- Retirement Plan (401k): Administration costs, $5000/year; employer contribution is 3% of payroll per year
- Disability (Short and Long Term): Short term, $40/month per employee, Long Term, $20/month per employee
- Supplemental Unemployment Benefits: $25.00/per month per employee
- Employee Services: variable
- Bonus Plan: 12% of profits
The meaning of benefits has changed for both employer and employees. Employers around the world are increasing using benefits as means for recruitment and retention while employees seek employer's assistance towards their financial obligations. So far, the company has been offering a combination of basic benefits like medical coverage, sick time and paid holidays as well as benefits linked to employees' tenure with the company and profits which the company made during the year. Employees can enjoy vacation of one week if they been with the company for 5 years and two weeks of paid vacation per year if they have served the company for 5 to 9 years and 3 weeks for tenure of 10 years or more. However, with the growing competition there is a need to retain best talents for which I have proposed several additional benefits. These benefits are:
Employees now-a-days are not just concerned about everyday financial issues but also are deeply concerned about unforeseen life events such as premature death or being unable to work due to injury or illness. Income protection benefits such as life insurance and ...
The expert examines a companies health insurance plans.