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STRATEGIC COMPENSATION
A Human Resource
Management Approach
Chapter 10
Legally Required Benefits
10-1
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Prepared by David Oakes
Legally Required
Benefits
 Social Security
 Workers’ Compensation
 Family & Medical Leave
10-2
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Social Security Programs
 Unemployment insurance
 Old Age, Survivor, and Disability
Insurance (OASDI)
 Medicare
10-3
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Unemployment Insurance
 Unemployment not worker’s fault
 States administer within federal guidelines
 States send money to federal government
 Agriculture & domestic workers are exempt
10-4
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Unemployment Eligibility
 Did not leave job voluntarily
 Able and available for work
 Actively seeking work
 Has not refused suitable work
 Not off due to labor dispute
 Not fired for gross work violations
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OASDI
 Old Age, Survivor, and Disability
Insurance
 Enacted in 1935, for retirement
 Survivors’ insurance added 1939
 Disability insurance added 1965
10-6
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OASDI Exemptions
 Civilian federal workers
 Railroad employees (before 1984)
 State & local government workers
 Children
 Under 21, if working for a parent
 Unless over 18, working in the
family’s business
10-7
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OASDI Retirement Requirements
 Earn 40 quarters of credit, or
 Be employed for 10 years
 Be age 62 for partial benefits
 Be age 65 for full benefits
 In 2022, be age 67
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OASDI Survivor’s Benefits
 Based on Eligibility Status &
Relationship
 Deceased was fully insured
 Dependent, unmarried children
 Widow(er) age 60 +
 Dependent parent age 62 +
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Disability Benefits
 Worker was fully insured
 Meets Social Security work
requirements
 Varies according to age & disability
 Disability must last 1 year or be terminal
 6 Months waiting period
10-10
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Medicare
 For citizens age 65 +
 Provided insurance coverage for
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Hospitalization
Convalescent care
Major doctor bills
Prescription drug costs
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Medicare Options
 Part A
 Part B
 Medigap
 Medicare Advantage (Part C)
 Prescription Drug Program
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Medicare Part A
 Covers inpatient & outpatient
hospital care & services
 Provides unlimited in-home care
 Participants
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Social security beneficiaries
Retirees
Voluntary enrollees
Disabled
 Employer & employee financed
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Medicare Part B
 Voluntary supplementary medical
insurance
 $110 deductible, then covers 80%
 Financed by government & enrollees
 Participants
 Part A enrollees
 Those on social security
 Railroad retirees
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Part B Coverage
 Diagnosis, therapy, surgery
 Consultations
 Medical services & supplies
 Medications not self administered
 Outpatient hospital services
 Home health services
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Medigap
 Supplements Parts A & B
 Through private insurers
 10 standardized choices
 Medicare Select Option
 Lower premiums for fewer choices
 Not offered in all states
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Medicare Advantage
 Medicare + Choice, Part C
 Established through Balanced
Budget Act of 1997
 Alternative to Parts A & B
 Options
 Fee-for-services
 Managed care plans
 Medical savings accounts
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Medicare Prescription Drug
Program
 Part D
 Covers 75% after $250 deductible up to
$2,250
 Cover 95% after $3,600 out-of-pocket
 Employer subsidy for similar plan
10-18
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Workers’ Compensation
 State compulsory disability laws
 Enacted in 1911
 Employer liable regardless of fault
 Maritime, federal civilian, domestic
agriculture, & small business workers
not covered
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Objectives
 Provide income & medical benefits
 Reduce litigation
 Relieve charities’ financial drain
 Eliminate legal fees & time
 Encourage employer safety
 Promote accident study & avoidance
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NCSWCL Obligations
 Take initiative in administration
 Review performance & adjust
 Inform workers & insure payment
 Inform providers & employers
 Resolve disputes
 Adjudicate unresolved claims
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Workers’ Compensation Claims
 Injury
 Occupational disease
 Death
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Workers’ Compensation Benefits
 Medical services
 Disability income
 Death benefits
 Rehabilitative services
10-23
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FMLA Benefits
 12 weeks of unpaid leave for
 Birth, adoption, foster care
 Serious family medical problems
 Worker’s serious medical problem
 Retention of
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Seniority
Health insurance coverage
Credit for previous service
Accrued retirement benefits
10-24
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