nov06minutes

November 2006 Minutes

Our speaker for November, Patty Roers, gave us the story of “all about benefits”. Here is a summary of what we learned:

There are different types of benefits: mandated benefits, welfare plans, retirement plans, executive compensation plans, and some others.

Mandated benefits, these are benefits mandated by law, include: workers compensation, unemployment, social security, federal and state income taxes, family and medical leave, and COBRA.

Welfare plans, these are not mandated by law, include: health, dental, vision, disability, life, vacation, sick leave, and education plans.

Retirement plans have two types, benefit plans and compensation plans. Defined benefit plans would be pension plans, whereas defined compensation plans would be 401(k), 403(b), ESOPs, and money purchase pension plans.

Executive compensation plans consist of deferred compensation programs, stock options, buy-sell agreements, and “perks”.

Insurance seems to be a big part of benefits, but what is it? Insurance is nothing more than a financial contract that insures financial risk by stating who is going to pay what. Different types are automobile, home owners and health. Of these, health insurance is the only one as an employee benefit. Why??

Dating back to the 1940’s and WWII, the government imposed a wage freeze. Companies, with the inability to increase wages, needed to attract and keep workers another way. They decided to pay for employee’s individual surgical or hospital insurance premiums; pension plans also began. At the end of WWII employers wanted to discontinue the insurance payments and pension arrangements, the employee didn’t like this idea and took employers to court. The Supreme Court declared employee benefits, including health care benefits were considered wages and therefore subject to collective bargaining under the Taft-Hartley Act.

Sixty percent of Americans have health insurance through their employer and twenty-five percent have health insurance through a government plan. Health insurance is a large and vital part of the employee compensation package, usually about 30% or more.

We thank Patty for her insight on the subject of benefits!! Our next meeting will be December 5^th, 2006 and we will be holding elections. Please come and join us as there are multiple position needed to be filled! Hope everyone had a great Thanksgiving!