HRM textbook

CHAPTER 13 BENEFITS AND SERVICES 447
FIGURE 13-5 (Continued)
benefits expenses with pretax dollars (so the IRS, in effect, subsidizes some of the
employee s expense). To encourage employees to use this option without laying out
cash, some firms are offering debit cards that employees can use at their medical
provider or pharmacy. 131 Core plus option plans establish a core set of benefits (such as
medical insurance), which are usually mandatory for all employees. Beyond the core,
employees can then choose from various benefits options. 132
Benefits and Employee Leasing
As we ll explain in Chapter 18, many businesses particularly smaller ones don t have
the resources or employee base to support the cost of many of the benefits we ve
discussed in this chapter. That s one big reason they turn to employee leasing.
In brief, employee leasing firms (also called professional employer organizations or
staff leasing firms) assume all or most of the employer s human resources chores.
In doing so, they also become the employer of record for the employer s employees,
by transferring them all to the employee leasing firm s payroll. The leasing firm thus
becomes the employees legal employer, and usually handles employee-related activities
such as recruiting, hiring (with client firms supervisors approvals), and paying
taxes (Social Security payments, unemployment insurance, and so on).
Insurance and benefits are usually the big attraction. Even group rates for life or
health insurance can be quite high when only 20 or 30 employees are involved. That s
where the leasing firm comes in. Remember that the leasing firm is the legal employer
of your employees. The employees therefore are absorbed into a much larger insurable
flexible benefits plan/cafeteria
benefits plan
Individualized plans allowed by employers
to accommodate employee preferences
for benefits.