Employee Health and Life Insurance Benefits Term Paper

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Employee Health and Life Insurance Benefits

What is the footing of private businesses owned by families when confronted with the issue of providing employee health benefits while we surmount the millennium threshold? What is methodology employed for optimizing the benefits while at the same time putting a check spending on employees? In what way do they draw and prevent attrition of valuable professional in a competitive workforce market? In which way do they take the better of amendments of legal rules in competent strategies since the past several years? The appropriateness of these aspects and other issues will continue to challenge family managed business owners. Since the last several years remarkable governmental amendments have equipped the owners of family run businesses opportunities for planning that would by no means have been considered probable. There are no more restrictions on the quantity a company can make a payment for a staff that joins in company's defined benefits and defined contribution schemes. This will enable a lot of family run private business owners the chance to significantly boost making payments in approved benefit schemes. (Quinn, 2000)

Discussion:

As the spending in health care is rising at an increasing pace compared to the economy, companies and health insurers whose schemes are being procured by the companies, are executing novel methods to resolve the robust requirement for medical services with the resources to make payment for them. The modifications fail to meet the expectations of a large-scale policy; however, they emphasize the surfacing of a set of values which is going to impact the profile of insurance in the private sector for the expected future. Their focus is a confidence that individual customers of health care must accept increased pecuniary accountability for the choice they make while choosing the advantages of insurance and looking for clinical treatment. (Iglehart, 2002) By the use of the data of employer surveys from the years 1993 and 1997, Susan Marquis and Stephen Long revealed that 43% of employees throughout the country had the liberty to make a selection from two or multiple plans in 1997. The individuals who have alternatives of health schemes to choose from are more prone to have a choice of a plan which presents a bigger choice of suppliers. (Marquis; Long, 2000)

Fundamental to this opinion is a conviction among companies that in case their employees are able to handle the insurance necessity of their own and assume higher accountability as regards their health; they will come to be a greater aggressive strength against too much investment in health care. Companies favor this method dependent on market forces to restricting expenses over the interference of government, which a majority of the companies do not believe. Even though a limited but an increasing number of analysts and policymakers reason that the insurance model based on job is unbalanced due to the benefit of tax breaks it gives and it is an insufficient basis on which to increase coverage, this method has been widely chosen by a majority of companies and personnel according to a latest study. (Iglehart, 2002)

In the year 2000, insurance coverage sponsored by the company insured around 171 million individuals, inclusive of 11 million people who have retired having coverage with additives like Medicare, and around 16 million individuals bought insurance for their own needs. Another 80 million additional individuals were covered through Medicare, Medicaid and other added public programs. In spite of the strong economic progression which characterized the years from 1994 to 2000, by the end of this time frame, the number of individuals not having health insurance coverage stayed unaltered which is around 17% of the total population. Even though the amount of individuals who received insurance through their companies went up by 15.9 million, insurance coverage through Medicaid and additional public scheme dropped, counteracting this development totally. (Iglehart, 2002)

Crafting the appropriate benefit scheme in favor of your staff is an intricate job. The task becomes slightly complicated while selecting a particular scheme taking into account the various types of policies and different stages of coverage. It is indispensable to know the facts regarding getting the appropriate plan at the appropriate price suitable to your business. (Rice; Gabel; Levitt; Hawkins, 2002) There are a lot of matters to ponder, with tax payments and law issues, financing, and looking out for the appropriate seller or dealers. A lot of different methods are available to explain a personnel benefit scheme. It secures the workers and their dependents from the eventuality of a financial adversity as a result of illness, impairment, demise or joblessness; Gives earnings to the workers and their dependents following retirement; helps with a provision of leave or a brief respite from daily job. (Gabel; Long; Marquis, 2002)

A lot of causes are there for which companies extend these facilities: To draw and prevent attrition of skilled personnel; To be abreast of the market rivalry; To encourage excellent self-esteem; To ensure that their intake position is welcome by extending benefit schemes for the progression and promoting employing when the senior workers are due for retirement. A unique blend of benefit schemes is the most useful and capable way of fulfilling financial protection requirements. In case of a lot of companies, a benefit scheme remains an important constituent of the entire reward structure, as companies either deposit the total cost of a benefit scheme or ask the workers to pay a little amount of premium. (Gabel; Long; Marquis, 2002) A lot of people do not pay much attention to insure their lives and consider it as an extra. And the individuals who do intend to take one, experience the tiring process of documentation and the possibilities of not getting through the physical test and shell out steep premiums. Due to this reason, life insurance that is funded by the company could be above all a lucrative advantage for potential personnel. Small-scale enterprises can even afford to extend this extra benefit to their staff by taking up a Group Insurance Policy. (Offering Life Insurance to Your Employees)

Equal consideration should be accorded for choosing life insurance policy as also a health scheme. As per the usual practice, life insurance gives death proceeds to the dependents of the workers who meet death in their work life. There are certain types of life insurance schemes. One is the Survivor income plan. Yet another regular feature in the package of benefits has been Group Insurance. Besides, security extended for one year, which can be renewed, group life insurance, devoid of cash surrender value or paid up insurance benefit is widely known. These are often offered by the health insurance programs. (Martocchio, 2003) Workers are in need of the same as it might lessen anxieties they have in their mind regarding the worsening of economic condition of their dependents following their death. Companies prefer to invite applications for it as it comes at a low cost in contrast to other inducements such as health insurance or retirement plans. The company applies for the Group Insurance Policies as the Policy holder and the workers who are covered are known as the insured's.

Similar to any life insurance policy, in the event of the demise of the employee, the proceeds are paid to the next of the kin of the policy holder, usually a member of the family named by the worker. Two distinct categories of life insurance policies are available i.e. permanent and term. A permanent policy insures an individual throughout his life, till the individual is depositing the premium. On the other hand a term policy gives insurance protection for a specified period of time. Nearly all Group Life Insurance policies are term policies extending the blanket of insurance only for the period of their engagement with the organization. In a majority of instances when a worker attains the age of retirement, or also if he remains on leave, the person is not covered by a basic group life policy. Nearly all companies pay the basic premiums of Group Insurance. In case they give extra insurance protection, the staff will have to bear the additional amount. Group life is absolutely framed to add to an individual's life insurance policy. Medical test is not mandatory for Group Life Insurance; therefore health condition of the employees will not have a bearing in the cost. (Offering Life Insurance to Your Employees)

However, the age of the employees, sex and salaries will have a bearing. Through the use of these variables, the risk factor of every employee will be estimated. The average of the risk factors is arrived to calculate the premium. An additional feature of risk factor is the nature of the business. For instance, in an accounting organization, wherein the job of the staff entails sitting at their desks will have a low level of risk factor compared to a staff engaged in a building site of a property dealer. Factoring of the premium is done on every $1,000 of the benefit of the employee. A…[continue]

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