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Three types of benefits

The amount or the benefits an employee can get from the organization as a
result of his potential work and performance or due to some disability is known
as Employee Benefits. Employee benefits is one of the most important aspect of
Payroll system in most of the developing countries as it does not only help
employees and their family to live above average level but also increase their
work performances and the loyalty of employees towards the organization. And
this is the reason how these benefits can judge the satisfaction level of an
employee towards his job and organization which in turn increase the
performance of your business.
Employee Benefits also known as perks and fringe benefits in British English are
some of the accommodation or compensation in wages or salaries of employees
in addition to the actual amount of salary which they are receiving. It is not
regarded as Salary exchange or Salary packaging where an employee asks the
employer to give some benefit in exchange of his salary which is in cash. In
employee benefit program, the employee has been given something extra else
than his normal wage amounting and the benefit can be in cash or non cash
form. Some of the Examples of these benefits include: rental or ownership of
houses, health insurance including dental and vision also, flexible working hours,
vacations, official trips, social security, bonuses, profit sharing either in cash or
shares form, educational and other medical expenses for the family.
The first and foremost important aim of this program is to make the living
standards of its employee better and to provide them with a sort of Economic
Security so that their work performance can be increased and organization can
get benefit of it. As such, it is one component of reward management.
Another term known as Perks is also used in employee benefit program. This
term refers to the benefits granted to senior employees or those whose
performances have reached optimal level. Some of the examples of common
perks granted to employees are take-home vehicles, work from home, flexible
working hours, official stays, social events, sports activities during work time etc
and it is often seen that when multiple choices exist, the first choice of employee
is to make the work hours flexible and of scheduling trips for vacations.
Now, we will discuss the three main types of Employee Benefits which are

Disability Insurance Benefit:


Disability Insurance is a type of insurance that assures an employee with
benefits of risk aversion against any disability risk. It is a form of insurance that
insures the income of an employee and creates a barrier for any risk related to
disability of an employee. The example could be any physiological, psychological
or mental disorder which makes it difficult for an employee to complete his task
properly, any illness or any condition which causes disorders or decrease
performance. It includes different other benefits also which are additional
medical leave, short and long term disability benefits.

There are different types of Disability Insurance which are;


Individual disability insurance;
It is a type of Disability Insurance for those employees whose employers or
organization are not granting them Disability Insurance benefits. In these
circumstances, employees who want this insurance may purchase policies or
programs allowed by Government of that state. Individual Disability Insurance
price and benefits vary between professions, states and organizations. Premiums
are also introduced in this type of insurance which includes relatively more
monthly benefits as compared to others, offers more sick leaves, and provide
payments of insurance more quickly
High-limit disability insurance
In this type, the range of benefits is kept up to 65% of the total salary of an
employee.
Key-person disability insurance
This type of disability insurance helps a company from facing any type of
economical or financial crises that may arise as a result of loss of a potential
employee. It basically benefits the company who can protect itself from the cost
of hiring new employee and the Insurance company can itself replace a new
employee at the place of old one for the organization on short term basis. In the
case of permanent disability, these benefits are transformed to adjust the cost of
recruitment, training, startup and loss in revenue.
Workers' compensation
In this type of insurance, employees who are disable or are unable to perform
their duties properly are granted payments. It is more than income insurance
because it encompasses all present and future economic and financial problems
of employee including payment of medical bills.

Retirement Benefit
Retirement benefits often known as Pension refer to the sum of money that is to
be paid regularly to employee who has retired from job. There are several types
of Pensions including benefit and contribution plans. The Retirement plans can be
designed either organizations, employees, Insurance companies, state
government or any legal institution i.e. labor unions, trade unions or employee
associations.
It is often regarded as a program designed by employer to satisfy his employee
after his retirement to live his life happily and satisfied. There are several types
of Pension. The one created by employer is known as an occupational or
employer pension. Government, Labor unions and other legal institutions can
also design and back these programs financially. Some of the pensions are also
the sum of the money from the Monthly salary of Employee for several years.

Many pensions also contain an additional insurance dimension as pay benefits to


survivors or disabled beneficiaries.
The basic use of term Retirement Benefit is to describe the benefits which the
employee will receive at the time of retirement under pre-agreed or legal terms.
The benefits can be in cash or non cash form but it is usually in cash form.

Medical benefits:
Medical benefits is a type of employee benefits in which an employee has been
given the insurance of Health and medical expenses to some extent or full extent
depending upon the norms of organization. In this type of program, the company
either pays all sorts of expenses related to health or buys the health insurance
program for its employee. It has also seen in many cases that the organization
buys health insurance program for its employee on the basis of certain
agreement but this is rarely seen in the corporate world as most of the
companies prefer health benefits program generated by their own Human
Resource department.
Generally, it is an employee welfare benefit program designed by either an
Employer or by an employee association i.e. Unions aiming to provide health
care for candidates and their family members through insurance coverage or
reimbursement.
There are numerous advantages of Employee benefits program. First and
foremost advantage is healthy employees which in turn put excessive efforts to
generate high revenue for the Organization. Second most important benefit is
the job satisfaction which employees get after these benefits programs. When
they are assured that they dont have to pay out of their pocket for any disability
or for any medical expense, then their loyalty towards the organization increases
and it reaches to utmost zenith when they are provided with retirement
insurance plan. Third benefit is the positive thinking of an employee who thinks
that their employer cares about them.
These all advantages together hold such strong position that now many
organizations situated in different countries are adopting these Employees
Benefits program in order to boost the performance of their employee which in
turn can create huge profits for the organization. Apart from boosted
performance, satisfied employee creates new opportunities for the organization
and brings creative and innovative ideas in his work.
However, despite of all these advantages, there are some disadvantages of
Employee Benefits program. For example, in some countries, there benefits are
taxed at individual level which eliminate the benefits of these programs and even
increase the burden on the shoulders of employees. Therefore, in such situations
these programs can prove to be counter-productive if there is no financial
advantage to the individual from the benefit.

In a nutshell, the number of advantages still outraged the disadvantages and if


Organizations and State Government design them in such a way which benefits
the employees that is the main purpose of these programs, the productivity and
satisfaction of employees can be bought to optimal level which is beneficial for
the state and organization itself also.
References:

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Advantage of Employee Healthcare Benefits" retrieved from
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Caxton. G. Institution for Health Care Research and Policy, Georgetown University, on behalf of
the Henry J. Kaiser Family Foundation.

Davis. K. Mirror, Mirror on the Wall: An International Update on the


Comparative Performance of American Health Care. retrieved from
http://www.commonwealthfund.org/Publications/FundReports/2007/May/Mirror--Mirror-on-the-Wall--An-International-Update-onthe-Comparative-Performance-of-American-Healt.aspx

Williams. R. Middle class, middle income and caught in the cross-hairs


as Labor turns its sights on a welfare crackdown, May 1, 2011.
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Belcher. L. M. Advantages & Disadvantages of Benefit Plans for


Employees. Retrieved from
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