Komo Inc Comprehensive Benefits Package Term Paper
- Length: 25 pages
- Sources: 5
- Subject: Careers
- Type: Term Paper
- Paper: #15493324
Excerpt from Term Paper :
Funds will be managed by Prudential Financial Services for maximum benefit to the employee (Prudential.com). Prudential offers a number of retirement products for employees to choose from and they have a proven track record for positive fund management.
In order to encourage long-term employment with the company, employees will not be fully vested in their contributions until they have been with the company for a full five years. The percentage of investiture will increase by 20% every year until the employee has reached the five-year mark. The amounts reflected in the represent the scenario where every employee is fully vested, with the company responsible for covering the entire amount.
Employees will be encouraged to begin aggressively saving for their retirement early. If employees in the investment age group contribute their maximum and the company must match its 5% then the contribution amount would be $74,937. This amount must set aside from the budget to prepare for this scenario. It is not expected that every younger employee will take advantage of this offer, but the funds must be available just in case they do. After funds are set aside for retirement benefits, the total amount left for other benefits is $323,515.
Life Insurance is an important part of retirement and life planning, especially for those employees with spouses and dependents. Kokomo, Inc. has access to life insurance at the rate of $0.13 per $1,000.00 of coverage per month. It is suggested that the employee have at least one year of life insurance coverage at their annual base pay. Employees will have the option of enrolling or not enrolling, as they see fit. For those that choose to enroll, the amount will be deducted from their pay after taxes. Although, free life insurance is an excellent benefit, it is an individual decision. The company will offer excellent coverage, but it will be up to the employee to elect to pay for it.
Health, Dental, Vision
Maintaining proper health is an important part of maintaining productivity. Offering a health, dental, and vision plan is considered a standard benefit. Companies that do not offer these basic benefits are not likely to attract or retain employees. Expenses for individual polices are astronomical and it is not expected that employees will be able to pay for individual policies. Good health coverage can be an excellent benefit used to attract and retain valuable employees.
The company currently offers three levels of health care coverage that the employee can use to cover their needs. Employees can choose the type and level of coverage that best suits their circumstances. The company offers Basic plus Major Medical, HMO and PPO. The price for coverage increases according to the number of dependents.
The following chart represents the worst case scenario, in terms of company contribution. This is subject to change, as employees leave and are replaced with employees that have different numbers of dependents. The following represents a worst case scenario, but will not be likely to represent realistic plan choices. However, the company must plan for the worst case scenario in terms of expenditure. If this case does not occur, the company will have a budgetary surplus, rather than a shortage. The most expensive plan is the Basic plus Major Medical. Therefore, this level will be used to calculate the worst case scenario.
A emp w / no dep #emp w / 1 Dep #emp w / 2 Dep #emp w / 3 Dep Total Basic Plus MM 15 7-4-4-30 Cost Per Employee $310 $428 $687 $928 $4,650 $2,996 $2,748 $3,712 $14,106
This chart makes several assumptions. The first assumption is that single employees with a domestic partner do not have to provide coverage for their partner. This does not fall under the same category as a married spouse, who must provide coverage for their spouse. It also assumes that spouses of married employees do not have primary coverage of their own. These assumptions represent the worst case scenario in terms of expenditure for the company. This is a conservative estimate in terms of risk and is not likely to represent actual numbers. However, the company must prepare for the worst case scenario and have the funds set aside, just in case it should happen.
The budgeted amount does not include the amount contributed by the employee, which may affect the plan chosen. It only takes into account the amount that the company is responsible for, should every employee choose the most expensive plan. Out of pocket costs are constant for the employee in this case scenario. All of these plans offer various deductibles and co-pays. Every plan offered includes diagnostics and wellness screenings for each family member.
This health insurance plan is highly competitive, as the cost to the employee remains constant. They can choose the amount levels and amounts of coverage that are appropriate for their particular scenario. Low cost health insurance has been demonstrated to represent an attractive incentive for employees to join and stay at a company. A recent Harris Poll indicates that a decrease in health insurance coverage is worse than a plan that include no pay increase (Harris Poll, 2003). One of the reasons for these findings is that uncovered health care costs are rising astronomically. Uncovered health care costs could represent astronomical financial risk to the employee, particularly those in the lower income categories. Kokomo, Inc.'s health care plan has been ranked as one of the most competitive in the area and has been found to be a major reason for employees wishing to work for this company. Therefore, no changes are proposed for the health care plan.
Currently, the company makes employees pay for dental and vision care plan maintenance costs from their own pocket. The choice to enroll in these programs voluntary. Many employees choose not to enroll for reasons of cost. None of the lower tier employees are enrolled in the dental and vision plans. A recent survey indicates that the key reason is that the reduction in weekly pay is too great to bear. In order to remedy this, the company will offer free dental and vision care for all employees. The costs of such care are as follows.
Plan Cost Family Policy Plan Cost Total Dental 14 $23/month 16 $67/month $1,394/month Vision 14 $14/month 16 $31.97/month $717/month Cost per Month/employee $2,101/month Cost per year $25,218/year
Under the current plan, many employees have chosen to elect not to be covered. As a result, many are not receiving the required proper dental and vision care that they need. When an emergency arises in these areas employees are often stressed by the financial burden. The total costs to cover all of the current employees at no cost to them is $25,218 per year. This is a minor amount for the company, but represents huge benefits to the employee. A recent employee poll indicates that offering free dental and vision care would represent a major incentive to remain with the company for an extended period of time.
Other health and Wellness Programs
Employee surveys indicate that health and wellness is a top priority for the Kokomo, Inc., employee. In addition to basic health, vision and dental programs, there are a number of other wellness related programs that may be of benefit to the employee and that would increase employee retention.
In addition to the regular health plan, which primarily covers incidents such as illness or accident, the company also has at its disposal a wellness program that includes free annual health screenings for conditions such as diabetes, high blood pressure, and cholesterol levels. This plan includes allowances for gymnasium discounts and other programs that go beyond basic illness prevention. It is believed that these programs are an attractive incentive for employees.
We also believe that employees that are in excellent health are more productive. Evidence indicates that employee health means real dollar amounts in terms of productivity (Pilette, 2005). According to this same study, employee assistance programs (EAP) also represent positive revenues for the company due to decreased absenteeism and productivity losses (Pillette, 2005). Research demonstrates that employees that are healthy and happy represent real increases in productivity, both due to decreased absenteeism and by increased productivity while on the job. Therefore, the company will cover the expenses for an EAP program, Wellness Program, and Prescription Drug Program. The costs for these programs are as follows.
Program Cost per employee/month # employees Cost/Month Annual Cost Wellness $24-30 $720 $8,640 Prescription Drug $57-30 $1,710 $20,520 EAP $17.50-30 $525 $6,300 Total $35,460
These costs are considered to be negligible, compared to the benefits of productive, happy employees. Full coverage will be offered to all employees, regardless of classification or longevity. This is expected to be a major attraction for employees to remain with the company. Employees need to feel that the company cares about them and their well-being. Providing these benefits for free will demonstrate good-will towards the employees. This is expected to increase their dedication and loyalty to…