One of the major issues in benefits these days is how to contain the costs of be
ID: 349485 • Letter: O
Question
One of the major issues in benefits these days is how to contain the costs of benefits. Address one or more of the following questions as you consider the costs of benefits:
---Which of the options for controlling health care costs seems most likely to reduce the firm’s costs while not demoralizing its employees?
---With benefit costs at about 30% of payroll, a CEO figures that benefits are costing over $10,000 per employee. He asks why he shouldn’t get rid of all employee benefits, fire his benefit manager and administrator, and with the savings give everyone a $10,000 pay increase. Why might this be a really bad idea? Does it have any merits as an idea?
---Should employers take a tough stand (e.g., charging higher premiums, even firing) against employees who are engaging in legal but unhealthy behaviors?
Explanation / Answer
Ans:- I believe that Good Health implies both for physical and mental well-being of a person,so first an analysis can be done to check whether the mental health/positivity of employees is at an optimum level which itself would lead to a healthier physical prognosis.
Secondly,if employees are happy and motivated,they are able to produce higher output and results plus there is minimum absentism due to health issues.So healthcare costs as a % would surely come down by these measures.
Secondly,my view on the CEO's idea of cutting down the healthcare benefits or removing the manager and administrator is that this is not the appropriate way to address the challenge as this support from employer is a sensitive matter for the employee and gives them a lot of mental strenghth that they will be taken care of in their hour of need...so removing this and paying money directly may not serve the intended purpose at all.
Lastly,employers need to counsel employees who indulge in unhealthy behaviours even though under legal rights and if they still persist then disciplinary actions like firing etc can be initiated or likewise even higher premiums for healthcare benefits be charged to such employees.
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