Adopted & Customized from Anonymous

Source

1
JOIN AND REMAIN WITH THE ORGANIZATION
Attraction & Membership
Loyalty & Longevity

PERFORM THEIR JOBS EFFECTIVELY

Attendance and Required Behavior
Accomplish Specific Results
Do What is Expected

ENGAGE IN SPONTANEOUS, INNOVATIVE BEHAVIOR ON BEHALF OF

THE FIRM
Put Themselves Out by “Going the 2nd Mile”
Demonstrate Committed “We Care” Behavior
Doing the Unexpected, But Highly Appreciated
ORGANIZATIONAL CITIZENSHIP BEHAVIOR

2
HOW TO DIVIDE THE COMPENSATION DOLLAR
Base Wages (Basic Pay)
Incentives (Utilities)
Benefits (Additional perks/facilities)

PAY EQUITY (Fairness)

INTERNAL
Compared to other jobs within the organization
EXTERNAL
Compared to similar jobs outside the
organization

CONFIDENTIALITY OF THE PAY SYSTEM

Is it secret, or are the scales and criteria public
information?

3
NUMBER OF PAY SYSTEMS
SEPARATE PAY SYSTEMS FOR DIFFERENT OCCUPATIONAL GROUPS?
Different factors determine the worth of these positions (clerical, professional,
skilled trades)
ONE SINGLE PAY SYSTEM FOR THE WHOLE ORGANIZATION
This approach appears “fairer” and avoids comparable worth issues

ABILITY TO PAY COMPETITIVE WAGES

SET PAY AT, ABOVE, OR BELOW THE GOING RATES IN THE INDUSTRY
What can we afford? What other compensation do we provide?

PHILOSOPHY OF EXECUTIVE COMPENSATION

Wage differences between the top and bottom jobs in the firm
(“multiples”)

PHILOSOPHY OF WAGE PROGRESSION

Number of pay grades and amount of overlap between them
Number of steps within each grade?
On what basis is each move (step) granted? Merit? Seniority?
Experience?
4
A SINGLE RATE FOR EACH JOB
There is no range, this job pays $12.00/hr
There are no pay increments awarded for either seniority or
merit

A PAY RANGE FOR EACH JOB

The pay for this job ranges from $11.00 to $17.00/hr
On what basis do employees progress through the range?
SENIORITY? TIME-IN-GRADE? MERIT?
How large should each step or increment be? $.50? $1.00?
$2.00?

A PAY GRADE SYSTEM

Several jobs are grouped together into a single pay grade
All these jobs will share a common pay range
Painters, mechanics, and truck drivers are paid from $10.50 to
16.85/hr

5
RANKING
 Manager rank-orders all jobs in descending order of importance
 Used in small organizations with a limited number of different jobs

CLASSIFICATION SYSTEM
 Jobs are grouped together into clusters with similar difficulty
 A generic “description” is written for each cluster or grade (classification)
 US Postal Service…all jobs are slotted into one of 16 job grades

FACTOR COMPARISONS
 Key jobs selected and ranked on four or five job factors (skills, effort,
responsibility, work conditions)
 Allocate the base wage for each key job across factors (eg, $4 for skill, $3
for effort, etc)
 Assemble benchmarks into a manual which can be used to set pay for other
non-key jobs

POINT SYSTEM
 Establish criteria (compensable factors) on which to evaluate all jobs
 Write degree descriptions which illustrate the variability of demand for each
factor
 Assign weights to each factor; then assign points to each degree descriptor
 Assemble into a point manual, which can act as a standard to evaluate all
jobs
 The more points allocated to the job, the higher the base wage should be

6
PROCEDURES

1. SELECT KEY JOBS (well-known jobs which we believe are fairly-paid)

2. CREATE RANK ORDERINGS OF THE KEY JOBS WITHIN EACH OF THE UNIVERSAL
COMPENSABLE FACTORS
◦ Skills
◦ Effort (Physical and Mental)
◦ Responsibility
◦ Working Conditions

3. ALLOCATE THE KEY JOB PAY ACROSS THE COMPENSABLE FACTORS

1. How much of the total wage do you pay for “skills?” …How much for “effort?”

4. CREATE A FACTOR COMPARISON MANUAL USING YOUR MONETARY ALLOCATIONS

TO BENCHMARK THE VALUE OF EACH KEY JOB.

5. USE THIS FACTOR COMPARISON “MANUAL” TO ASSIGN BASE PAY VALUES TO THE
NON-KEY JOBS WITHIN THE ORGANIZATION.

6. THE FACTOR COMPARISON SYSTEM COMPARES JOBS TO JOBS…THERE REALLY

ISN’T ANYTHING SPECIFIC IN THE MANUAL TO PRECISELY DEFINE WHAT “SKILLS” IS.

7
KEY JOBS “Fair” Base Pay Rate
Systems Programmer $ 20/hr
Plumber $ 18/hr
Carpenter $ 17/hr
Painter $ 14/hr
Office Secretary $ 13/hr

BENCHMARKS

SKILL EFFORT RESPONSIB WORK COND

Programmer $10 ph $ 10 ph $ 10 ph
Plumber $ 7 ph $ 5 ph $ 5 ph
Office Secretary $ 6 ph $ 8 ph $ 6 ph

8
PROCEDURES
1. Establish criteria (more specific examples of compensable factors) on
which to evaluate all jobs

2. Write degree descriptions to illustrate the variability of demand for each

factor

3. Assign weights to each factor

4. Assign points to each degree descriptor in harmony with the weightings

5. Assemble these descriptions and points into a manual, which can act as
a standard to evaluate all jobs

6. Validate the manual by evaluating “KEY JOBS” on each criterion.

7. Allocate the corresponding points, run a regression analysis on the

assigned points and the “fair” base pay for each key job. If the regression is a
good statistical fit, and at least 90% of the key jobs stay within 10% of the
calculated regression line, the manual has been validated, and can be used to
assign base pay rates to all non-key jobs in the organization.

8. The more points allocated to the job, the higher the base wage should
be.

9
 EDUCATION (20%)

Education represents the knowledge required to perform the duties involved in the job; usually acquired through
formal education. Consider only what the job requires, not the education of the current employee on the job. Exclude
consideration of on-the-job experiences for this factor. The degrees are expressed in terms of formal education for
convenience.

Degree Points Definitions

1 20 Able to read and follow simple oral and written instructions. Can add and subtract.
Can fill out simple reports and forms. Equivalent to an eighth grade elementary education.

2 35 Able to give clear oral and written instructions. Writes reports. Makes simple computations
and comparisons. Can multiply and divide, equivalent to skills acquired by a tenth grade
education.

3 50 Good knowledge of high school subjects such as algebra, geometry, physics, chemistry,
English, computing or knowledge of commercial, mechanical, or vocational
subjects equivalent to a typical high school graduate.

4 80 One year of college or vocational/technical training beyond the high school level in a
specific technical or theoretical subject area.

5 115 Two years of specific subject knowledge beyond high school is required. Specialized
subject knowledge may demand registration, certification, or licensure. Required education
is equivalent to an AS degree.

6 155 A specialized baccalaureate degree is required.

7 200 A specialized master's degree is required.

10
 I. EDUCATION (20%)
1 (20) Able to read, do simple math (add/subtract), and follow instructions (eighth-grade level)
2 (35) Makes comparisons, computes (multiply/divide), writes instructions & reports (tenth grade level)
3 (50) Good knowledge of math, chemistry, English, or computing equivalent to a high school graduate
4 (80) One year of specific subject knowledge – technical or trade school equivalent
5 (115) Two years of specific subject knowledge – certification/licensure required – equivalent to an AS degree
6 (155) Bachelor’s degree – specialized degree required
7 (200) Master’s degree – specialized degree required
II. EXPERIENCE (10%)
1 (10) No previous experience required – can learn on the job
2 (40) Three to six months previous experience is required
3 (80) At least one year of previous experience is required
4 (100) Must have at least two years previous experience
III. SUPERVISION (20%)
1 (20) None
2 (60) Informal supervision, provides advice and guidance to 1-4 coworkers
3 (120) Formal supervision, schedules and appraises 1-4 workers
4 (170) Formal supervision of 5-9 workers
5 (200) Formal supervision of ten or more workers
IV. PHYSICAL DEMANDS (18%)
1 (18) Mostly sits; visual demands less than 20% of the day; no required standing or walking
2 (40) Sits about 75% of the day; visual demands less than 50% of the day; stands or walks about 25% of the day
3 (70) High visual demands more than 50% of the day; constant finger motion; moderate standing/walking
4 (105) Rapid hand coordination much of the day; stands more than 50% of the day; occasionally carries loads up
to 20 lbs
5 (150) Regularly lifts/carries loads of 50 lbs or more; stands/walks all day long; constant physical activity
6 (180) Regularly lifts/carries loads > 80 lbs; stands, pushes, crawls; very strenuous physical activity much of the
day

11
V. PROPERTY/LIABILITY (10%)
1 (10) Potential loss < $100; minor equipment maintenance; products; cash; no exposure to confidential
information
2 (35) Potential loss $1000; equipment; product quality; cash; lawsuit; exposure/loss of semi-confidential
information
3 (55) Potential loss $3000; equipment; product quality; cash; lawsuit; exposure/loss of semi-confidential
information
4 (75) Potential loss $6000; cash; equipment; product quality; lawsuit; exposure/loss of highly-
confidential information
5 (100) Potential loss $10000; cash; equipment; products; lawsuit; exposure/loss of highly-confidential
information
VI. PUBLIC CONTACTS (12%)
1 (12) Deals only with departmental personnel; rarely has contact with people in other departments
2 (30) Has several important contacts within the organization (other departments); occasionally meets
publics (outsiders)
3 (55) Has frequent public contacts and many internal contacts within the organization
4 (85) Nearly constant public contact and many internal contacts; more than 90% of all contacts are
friendly
5 (120) Constant public and internal contacts; > 15% of contacts are stressful; tact and negotiating skills
needed
VII. WORK ENVIRONMENT (10%)
1 (10) Pleasant, well-lit, climate-controlled environment; safe
2 (35) Workplace is a bit uncomfortable, cramped; dirty/dim/damp; noisy environment; hot/cold
3 (60) Minor injury possible if care is not exercised; exposure to sharp surfaces, minor cuts, slippery
floors, sprains and strains
4 (100) Major injury possible if care is not exercised; exposure to fumes, falls, unguarded equipment; safety
equipment required

12
1---SELECT 10-15 “KEY JOBS” FROM WITHIN THE ORGANIZATION.
--a “KEY” job is one that has a well-known job description, and is fairly paid…
in other words, we believe the current pay for the job is correct/fair.

2---EVALUATE EACH KEY JOB, USING THE JOB DESCRIPTION AND THE POINT MANUAL

3---FOR EACH COMPENSABLE FACTOR, ASSIGN THE APPROPRIATE “DEGREE” AND THE
APPROPRIATE POINT VALUE ASSOCIATED WITH IT.

4---ONCE COMPLETE, TOTAL UP THE POINTS ASSIGNED TO EACH KEY JOB.

5---REPORT THE CURRENT PAY FOR EACH POSITION (…which we assume is fair/correct).

6---PLOT EACH KEY JOB ON A GRAPH (Points assigned on the bottom, Pay rate on the left)

7---RUN A REGRESSION ANALYSIS OF THE DATA.

8---IF THE REGRESSION MODEL IS STATISTICALLY APPROPRIATE, THE MANUAL IS USABLE

13
COMPENSABLE FACTORS FINISH SPRAYER
(Job Specifications) Explanation Assign degree Points

Education Able to read, write, and make simple math calculations 1 20

Experience No previous experience needed, can learn on-the-job 1 10

Supervision No supervisory duties 1 20

Physical Demands Lifts 50 lbs or more, stands constantly, must turn pieces by hand 5 150

Property/Liability Keep equip unclogged; paint mistakes cause rework + lost production 2 35

Public Contacts Works alone… all work-related contacts are internal 1 12

Work Environment Exposed to fumes and overspray, must wear respirator at all times 4 100

TOTAL POINTS ASSIGNED 347

14
GREEN CIRCLE RATES
RAISE PAY UP AS SOON AS POSSIBLE TO THE APPROPRIATE LEVEL

GOLD CIRCLE RATES

LEAVE RATE AS IS…DO NOT ADJUST…CONTINUE GIVING RAISES & COLAs

SILVER CIRCLE RATES

LEAVE RATE AS IS…DO NOT ADJUST, CONTINUE COLAs BUT NOT RAISES

RED CIRCLE RATES

MUST BRING RATES DOWN TO THE PROPER LEVEL

15
BRING RATES IMMEDIATELY DOWN INTO LINE
Give proper notification first

PAY A “LUMP SUM” SETTLEMENT

Bring rates into line, but pay a one-time severance settlement

PROVIDE AN “ADDER” SUPPLEMENT

Bring rates into line, but issue a supplemental check each pay
period that is gradually reduced over time

FREEZE PAY RATE IMMEDIATELY

No raises given for seniority or COLA
Eventually, the entire organizational pay structure will rise
(due to COLAs and wage surveys) which will bring the pay rate
back into range, at which time the worker will again get raises
and COLAs.

TRANSFER THE WORKER TO A HIGHER-RATED JOB

16
 Needed to attract and retain workers with scarce skills
 Develops a sense of external equity and fairness
 Helps the firm maintain an adequate pay structure

DETERMINING THE SCOPE OF THE SURVEY

 Where are we having trouble retaining workers?

 Where are market rates likely to be different from
internal rates?
 Which jobs are the most difficult to fill?
 Where are we adding new positions to our organization?

17
PROS:
 Minimal time investment needed for the individual firm
 Data is based on large samples – adequate representation
 Surveys conducted by experts…people who know how to
do it
 Data is summarized, categorized, easy to interpret

CONS:
 There may be a fee (cost) for access to the data
 You can’t select the specific companies surveyed
 Can’t control the type of data reported (which jobs?
benefits?)
 Data summaries may mask differences you want to
examine

18
PHONE INTERVIEW -- (easiest)

+ Quick and relatively easy to do

+ Job content can be clarified to ensure the jobs are comparable
+ Can build rapport with respondent over time. Future contacts will be
easier.
- Puts a burden on the responder to reply immediately (to a possible
stranger)
- May yield incomplete answers because the respondent didn’t anticipate
your call
- Long phone calls are not welcome. You can’t get much data in five
minutes.

MAILED QUESTIONNAIRE -- (most common)

+ Can collect data on many different job titles, benefits, etc

+ Responses aren’t rushed – allows time for careful thought before
answering
- Response rates may be very low
- Misunderstanding or confusion about comparable jobs cannot be clarified
- Only gathers responses to specific questions posed - if you forgot to ask –
too bad!

19
INTERVIEW – (most reliable)
+ Can ask questions, clarify job titles, etc
+ Gathers data with minimum impact on respondent
+ Builds relationships which can make future data exchange easier
- Very time consuming to make and set appointments, conduct
interviews, etc
- Costly method; the expense of travel, etc

CONFERENCE -- (least used, but promising)

+ Takes advantage of professional meetings and conferences of HR
personnel
+ Agenda of jobs to be reviewed, etc. established ahead of time—
people come prepared
+ Face-to-face meetings allow clarification and detailed discussion of
jobs, benefits, etc
- Meetings can be time consuming and tiring, after a day of conference
activities
- Determining when and where to gather requires coordination with
several other firms

20
 Introductory letter or contact
 Explain purpose and solicit cooperation
 Assure confidentiality
 Offer to share a summary of results

INFORMATION PROVIDED
Job titles and summary of duties section
INFORMATION SOUGHT
Comparable job titles in the surveyed organization
Base pay ranges (bottom, midpoint, top)
Benefits (is the medical, pension, etc. contributory?)
Incentives (how large and based on what?)

ADDITIONAL CONSIDERATIONS
Use of stratified samples?
Will reminders be sent?
21
 ARE WE TAKING FULL ADVANTAGE OF THE REWARDS WE
CONTROL?

 HAVE WE THOUGHT THROUGH THE FULL IMPACT THAT

OUR REWARD SYSTEM HAS ON THE ORGANIZATION?

 DO EMPLOYEES HIGHLY VALUE THE REWARDS WE MAKE

AVAILABLE TO THEM?

 DO EMPLOYEES KNOW WHAT THEY MUST DO TO OBTAIN

THESE REWARDS?

 IN SHORT, DO WE REWARD EXCELLENCE OR MEDOCRITY?

22
 PRODUCTIVITY
 ACHIEVEMENTS & ACCOMPLISHMENTS
 ACQUISITION OF NEW SKILLS
 LONGEVITY WITH THE FIRM

HOW TO ADMINISTER INCENTIVE PAY

A. ADD IT TO THE REGULAR PAYCHECK
ONCE ACQUIRED…FOREVER PAID…NEVER IS “EARNED” AGAIN
INCENTIVE PAY MIXED WITH BASE PAY…WORKERS LOSE MOTIVATION

B. PAY IT ALL OUT AS A LUMP-SUM AT ONE TIME

LARGE CASH OUTFLOWS ARE DIFFICULT FOR THE FIRM TO MANAGE
OPPOSED BY UNIONS BECAUSE ANNUAL WAGES DON’T GROW

23
1.SENIORITY & LONGEVITY SYSTEMS

 Rewards loyalty to the firm…not productivity or

performance
 Workforce more likely to possess obsolete skills
 Increments must be granted each year (no limit or “cap”)

2.ACQUIRED SKILLS & KNOWLEDGE INCENTIVES

 The size of pay increments for each added skill

 Labor costs go up…but does productivity improve?
 Once all skills are mastered…what motivates the worker?
 There are no rewards for work performance

24
3.PIECE RATES & COMMISSIONS
 Setting “fair” standards

 Changing standards and rates

 Who controls work outcomes?

 Are there rewards for all the essential duties of the job?

WHEN IS IT FEASIBLE TO USE PIECE RATES?

1. UNITS OF WORK ARE EASY TO DISTINGUISH AND MEASURE

2. QUALITY IS OF LESSER IMPORTANCE THAN QUANTITY
3. WORKER INVOLVEMENT IS A MAJOR DETERMINANT OF PRODUCTIVITY
4. THE WORKER CONTROLS WORK SPEED…NOT MACHINE-PACED
5. CLOSE SUPERVISION IS IMPRACTICAL
6. CHANGES IN WORK PROCESSES ARE INFREQUENT
7. YOU HAVE EXPERTS TO SET AND EVALUATE YOUR WORK STANDARDS
8. COMPETITION REQUIRES THAT UNIT LABOR COSTS BE PREDICTABLE

25
4. MERIT REVIEW PLANS

WHY DO MERIT PLANS FAIL? (HAMNER, 75)

 Appraisal ratings seem invalid or biased

◦ APPROPRIATE MEASURES?
◦ OBJECTIVITY OR RATERS?
 Pay adjustments not seen as being related to performance
 Supervisors more concerned about satisfaction than
performance
 Incentives offered (type and size) aren’t motivating
◦ ARE THESE REWARDS HIGHLY DESIRED?
◦ SMALL INCREMENTS DO NOT MOTIVATE
 Usually added to base pay as a percentage
◦ EARNED ONCE…KEPT FOREVER
 Trust and openness about pay and merit increases is very low

26
5. SUGGESTION SYSTEMS
 Origin of the idea…who should get the credit?
 Some workers can’t write their ideas down
 Does management follow up on the ideas submitted?
 Supervisors criticized…suggests they’re incompetent

6. COST-REDUCTION (GAINSHARING) PLANS

◦ SCANLON, KAISER, RUCKER, IMPROSHARE
 Sensitive cost data must be revealed to workers
 Middle management is left out
 Unions use the system to criticize management
 Usually a complex formula for distributing rewards
 Weakened link between rewards & individual
performance

27
7. PROFIT-SHARING PLANS
 Is there a real link to worker performance?
 Impact of economic decline…what happens to
motivation?
 Determining the formula for distribution

8. STOCK OWNERSHIP PLANS

 Dilution of control over the company
 Impact of changes in the tax laws and economic cycles
 Any real link to worker performance?

9. SPECIAL CONTESTS AND AWARDS

ABSENTEEISM, SALES PROMOTIONS, OUTSTANDING SERVICE AWARDS
 Are the consequences of the spirit of competition anticipated?
JEALOUSY, UNCOOPERATIVENESS, COMPETITION WITHIN TEAMS AND GROUPS
 Only the “Best” receives a reward…what about # 2?
 Awards are often seen as “rights” (I earned it!), not as gifts

28
1. PERFORMANCE INDICATORS MUST BE CLEARLY DEFINED

2. STANDARDS MUST BE COMMUNICATED TO WORKERS

3. WORKERS MUST BE ABLE TO INFLUENCE PERFORMANCE

ACHIEVEMENT

4. PERFORMANCE MUST BE ACCURATELY EVALUATED

5. REWARDS MUST BE BASED ON WORKER PERFORMANCE

6. REWARDS OFFERED MUST BE HIGHLY VALUED BY WORKERS

7. WORKERS AND MANAGEMENT MUST TRUST EACH OTHER

29
1911 – WORKER’S COMPENSATION
BENEFITS FOR ON-THE-JOB INJURIES

1935 – UNEMPLOYMENT COMPENSATION

NO-FAULT LOSS OF JOB BENEFITS; 6.2% of first $7000, w/ 5.4% to State

1935 – SOCIAL SECURITY ACT

7.65% paid by employee, 7.65% matched by employer; 13.2% for self-employed

1974 – EMPLOYEE RETIREMENT INCOME & SECURITY ACT (ERISA)

EMPLOYERS MUST SET ASIDE PENSION OBLIGATIONS ANNUALLY

1985 – CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA)

>20+ Employees; Separated workers can stay on medical insurance for 18 months

1993 – FAMILY AND MEDICAL LEAVE ACT

>50+ Employees; Unpaid leave for up to 12 weeks for family/medical emergencies

2010 – PATIENT PROTECTION & AFFORDABLE CARE ACT (PPACA)

HEALTH INSURANCE REFORM, 26 yr old dependents covered, Pre-existing conditions eliminated

30
SOCIAL SECURITY -- 40 Quarters –Earn $500+ per qtr
RETIREMENT
DISABILITY
SURVIVOR
HEALTH INSURANCE

UNEMPLOYMENT COMPENSATION – 26 wks + 13

NO-FAULT JOB LOSS

WORKER’S COMPENSATION
JOB-RELATED INJURIES

31
PAYMENT FOR TIME NOT WORKED
HOLIDAYS
VACATIONS
SICK PAY
FUNERAL LEAVE, ETC.

INSURANCE PLANS
HEALTH
DENTAL
VISION
LIFE

RETIREMENT PLANS
PENSION

32
SOCIAL SECURITY – mandated by the federal government

PRIVATE PENSION PLANS

DEFINED BENEFIT vs DEFINED CONTRIBUTION PLANS
CONTRIBUTORY vs NONCONTRIBUTORY PLANS
INDIVIDUAL RETIREMENT ACCOUNTS (IRAs)
PROFIT SHARING PLANS
EMPLOYEE STOCK PLANS
Stock Grants
Stock Options
ESOPs

EMPLOYEE RETIREMENT INCOME SECURITY ACT of 1974 (ERISA)

ADEQUATE FUNDING OF PRIVATE PENSION PLANS
VESTING REQUIREMENTS
REPORTING & DISCLOSURE

33
ORGANIZATIONS WITH 50 OR MORE EMPLOYEES
EMPLOYED FOR ONE YEAR PRIOR TO LEAVE REQUEST
UP TO 12 WEEKS OF UNPAID LEAVE FOR:
CHILDBIRTH
ADOPTION
SERIOUSLY ILL FAMILY MEMBER (Child, Spouse, Parent)
EMPLOYEE’S OWN ILLNESS

EMPLOYERS MUST CONTINUE HEALTH COVERAGE

MUST ALLOW RETURN TO SAME/COMPARABLE POSITION
“KEY” EMPLOYEES EXEMPTED (Highest paid 10%)

34
THE JOB ITSELF
CHALLENGING
MEANINGFUL
RESPONSIBLE
POTENTIAL FOR ADVANCEMENT
INTRINSICALLY REWARDING

THE WORK ENVIRONMENT

COMPETENT SUPERVISION
CONGENIAL COWORKERS
APPROPRIATE STATUS SYMBOLS
ENLIGHTENED MANAGERIAL PHILOSOPHY & PROGRAMS

35
WORK SCHEDULES
COMPRESSED WORKWEEK
FLEXTIME
JOB SHARING/PART-TIME WORK
TELECOMMUTING/WORK-AT-HOME

INNOVATIVE COMPANY POLICIES

ALL-SALARY WORKFORCE
OVERTIME FOR EXEMPT EMPLOYEES
DAYCARE & ELDERCARE BENEFITS
COMMUTER ALLOWANCES
FLEXIBLE (CAFETERIA) BENEFIT PLANS
MEDICAL TRAVEL OPTIONS

36
TYPES OF FLEXIBLE PLANS
CORE
MODULAR ( BASE + PACKAGES)
FLEXIBLE SPENDING ACCOUNTS
HEALTH SAVINGS ACCOUNTS

ADVANTAGES
CAPS OR CONTAINS BENEFIT COSTS
RAISES CONSCIOUSNESS RE: BENEFIT COSTS
PROVIDES WORKERS ONLY THE BENEFITS THEY DESIRE

LIMITATIONS
COST OF BENEFITS FLUCTUATES (ADVERSE SELECTION)
PEOPLE MAKE IRRESPONSIBLE DECISIONS
IRS RULINGS & TAX LIABILITY ISSUES
BOOKKEEPING & ADMINISTRATIVE ISSUES
37
GIVE EMPLOYEES THE OPTION TO TRAVEL ABROAD FOR ELECTIVE MEDICAL PROCEDURES
…knee replacements, dental work, cosmetic surgery, etc.

ADVANTAGES
TREATED AT JCI-ACCREDITED HOSPITALS BY PHYSICIANS TRAINED IN US OR EUROPE
COST OF PROCEDURES IS MUCH LESS…SAVES THOUSANDS ON INSURANCE
TRAVEL TO EXOTIC LOCATIONS…CAN TAKE VACATION BEFORE OR AFTER TREATMENT
MANY PLANS NOT ONLY PAY ALL TRANSPORTATION, BUT ALSO OFFER $$ INCENTIVES

LIMITATIONS
HAVING A SERIOUS HEALTH MATTER TREATED IN A “FOREIGN” ENVIRONMENT
DON’T KNOW THE PHYSICIAN BEFOREHAND
STAFF MAY NOT SPEAK ENGLISH VERY WELL
MAY NEED A LONG RECOUPERATION TIME BEFORE FLYING BACK HOME
COUNTRY MAY NOT ALLOW LAWSUITS IF NEGLIGENT TREATMENT OCCURS
GETTING GOOD AFTERCARE & REHABILITATION ONCE YOU RETURN HOME

38
PROCEDURES US Price Costa Rica

Angioplasty $57,000 $9,000

Heart Bypass Surgery $130,000 $24,000
Heart Valve Replacement $160,000 $15,000
Hip Replacement $43,000 $12,000
Hysterectomy $20,000 $4,000
Knee Replacement $40,000 $11,000
Spinal Fusion $62,000 $25,000

Breast Augmentation $5-8,000 $2,700-$2,900

Dental Reconstruction $8,500-$10,000 $2,500-$3,000
Facelift $7-9,000 $4,600-$5,000
Gastric Bypass $30,000 $10,500
Rhinoplasty $8-12,000 $3,500-$3,900
Tummy Tuck $6-8,500 $3,900-$4,200

(Tico Times Directory 2009)

39
PROCEDURES US Price India Thailand Singapore

Angioplasty $55,000 $11,000 $12,000 $13,000

Heart Bypass Surgery $120,000 $10,000 $10,000 $18,500
Heart Valve Replacement $165,000 $9,000 $9,000 $12,500
Hip Replacement $80,000 $9,000 $10,000 $11,000
Hysterectomy $21,000 $3,000 $4,000 $6,000
Knee Replacement $65,000 $8,500 $9,000 $13,000
Spinal Fusion $65,000 $5,500 $7,000 $9,000

(Medical Tourism: Thailand 2009)

IS YOUR MEDICAL INSURER OR EMPLOYER WILLING TO SHARE SOME OF THE COST

SAVINGS WITH YOU (… as an incentive) IF YOU OPT TO GO OVERSEAS FOR
SURGERY?

40
COSTA RICA
Hospital Clinica Biblica Affiliated with Ochster Medical Institute - New Orleans
INDIA
Apollo Hospitals Designated as a “Center of Excellence in Global Healthcare”
Wockhardt Hospitals Affiliated with Harvard Medical School
MALAYSIA
Panang Adventist Hospital Affiliated with Loma Linda University & Hospital
MEXICO
CIMA Hospitals Affiliated with CIMA hospitals in US
Grupo Christus Muguerza Affiliated with Christus Muguerza system in US
SINGAPORE
Gleneagles Hospital Affiliated with Johns Hopkins University & Hospital
THAILAND
Bumrungrad Hospital Designated a “Center for Excellence in Global Healthcare.”
Has an American management team & 200+ US or UK doctors

41
 The AMA advocates that employers and insurance companies that facilitate or
incentivize medical care outside the U.S. adhere to the following principles:
 (a) Medical care outside of the U.S. must be voluntary.
 (b) Financial incentives to travel outside the U.S. for medical care should not inappropriately limit
the diagnostic and therapeutic alternatives that are offered to patients, or restrict treatment or
referral options.
 (c) Patients should only be referred to institutions that have been accredited by recognized
international accrediting bodies [e.g., the Joint Commission International (JCI) or the
International Society for Quality in Health Care (ISQHC)].
 (d) Prior to travel, local follow-up care should be coordinated and financing should be arranged
to ensure continuity of care when patients return from medical care outside the US.
 (e) Coverage for travel outside the U.S. for medical care must include the costs of necessary
follow-up care upon return to the U.S.
 (f) Patients should be informed of their rights and legal recourse prior to agreeing to travel
outside the U.S. for medical care.
 (g) Access to physician licensing and outcome data, as well as facility accreditation and
outcomes data, should be arranged for patients seeking medical care outside the U.S.
 (h) The transfer of patient medical records to and from facilities outside the U.S. should be
consistent with HIPAA guidelines.
 (i) Patients choosing to travel outside the U.S. for medical care should be provided with
information about the potential risks of combining surgical procedures with long flights and
vacation activities.

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SELF-FUNDED GLOBAL HEALTHCARE OPTION
INITIAL DIAGNOSIS PROVIDED BY AN IN-NETWORK PROVIDER
PATIENT MUST BE A GOOD CANDIDATE FOR TRAVEL
FOLLOW-UP CARE TO BE PROVIDED BY AN IN-NETWORK PROVIDER
COVERAGE COORDINATED THROUGH AN APPROVED MEDICAL TRAVEL AGENCY
DESTINATION MUST BE A JCI-ACCREDITED FACILITY
SERVICES MUST MEET THE COST-EFFECTIVE THRESHOLD (HOW MUCH WILL IT SAVE?)

BENEFITS TO THE PATIENT

UP TO A $10,000 EMPLOYEE INCENTIVE (TREATED AS TAXABLE INCOME)
TRAVEL PROVIDED FOR PATIENT AND COMPANION (PHYSICIAN, NURSE, OR FAMILY MEMBER)
ALL APPOINTMENTS, LODGING AND TRAVEL ARRANGED BY MEDICAL TRAVEL AGENT
TRAVEL FIRST-CLASS AND STAY IN NEAR-LUXURY FACILITIES
CAN VACATION IN AN EXOTIC LOCATION EITHER BEFORE OR AFTER PROCEDURE

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MAKE THE TRAVEL BENEFIT A VOLUNTARY OPTION IF EMPLOYEES WANT IT

CAREFULLY SELECT THE MEDICAL TRAVEL AGENCY THAT WILL ARRANGE ALL
APPROVED MEDICAL TRAVEL PLANS

IDENTIFY INTERNATIONAL PROVIDERS (Doctors and Hospitals) YOU TRUST AND LIST
THEM AS “IN-NETWORK” PROVIDERS

PROVIDE A SIGNIFICANT INCENTIVE PAYMENT (Taxable) FOR ANY EMPLOYEE WHO

TAKES ADVANTAGE OF THE MEDICAL TRAVEL OPTION

HAVE EMPLOYEES SIGN A LIABILITY WAIVER THAT PROTECTS THE COMPANY, INSURER,
AND MEDICAL TRAVEL AGENCY

ARRANGE AND COORDINATE FOLLOW-UP CARE WITH IN-SYSTEM PROVIDERS WHEN

PATIENT RETURNS HOME

JUST A FEW PARTICIPATING EMPLOYEES SHOULD SAVE THE EMPLOYER THOUSANDS OF

$$$

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MEAL & REST BREAKS
LUNCH BREAKS Relieved of all work duties? Scheduled to work 4+ hours?
REST BREAKS Less than 20 minutes?
EXPRESS MILK BREAKS

TRAVEL TIME
DAY ONLY Subtract normal commute time?
OVERNIGHT Paid only for travel time during normal working hours

ON-CALL TIME
ON-PREMISES
OFF-PREMISES How frequently called? How much time to respond?
Where can employee go? What can employee do?

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PAY DOCKING & SUSPENSIONS
WHAT’S WRONG WITH DOCKING PAY? EXEMPT v. NON-EXEMPT?
Treating an exempt worker like a non-exempt worker – jeopardizes the exempt status of the job
A salary is a fixed amount… not dependent on time
As long as some work is done during the week… they’re entitled to the full salary

GARNISHMENTS
LEGAL OBLIGATION TO DEDUCT $$$ FROM PAYCHECK Child support, tax debts, alimony
COLLECT DEBTS THE WORKER OWES THE COMPANY Rent, salary advances, cafeteria
Can’t deduct so much money that a worker’s pay falls below the required minimum wage
Only garnish the amount the court orders

RECORD-KEEPING REQUIREMENTS
PERSONAL INFO, HOURS WORKED EACH DAY AND WEEK, TOTAL WEEKLY EARNINGS
REGULAR PAY RATE, OVERTIME PAY EACH WEEK, TOTAL PAID EACH PAY PERIOD
Need records to prove to the Department of Labor that you’ve complied with the law
KEEP ALL RECORDS FOR AT LEAST THREE YEARS (…after termination)

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