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Handbook of Methods Employee Benefits Concepts

Employee Benefits: Concepts

The Employee Benefits program produces comprehensive data on the incidence (the percentage of workers who have access to and participate in employer-provided benefit plans) and provisions of selected employee benefit plans. Employee Benefits provides estimates of the percentages of workers who have access to and participate in a benefit plan, premium averages and shares of premiums, take-up rates, and percentages of establishments offering benefits. The benefits covered include financial, leave, insurance (including healthcare), quality of life, and retirement for the civilian, private industry, and state and local government ownerships. These benefits data are available by occupational groups, industry groups, geographic area, bargaining status, full-time/part-time work status, establishment size, and average wage category.

Ownership. The type of sector, either private industry or state and local government, that the establishment is controlled by. 

Civilian workers. A combination of those employed in private industry and state and local government. Volunteers, unpaid workers, individuals receiving long-term disability compensation, and those working overseas are excluded.

Private industry. Those employed in private industry. Workers in private households, the self-employed, workers who set their own pay (for example, proprietors, owners, major stockholders, and partners in unincorporated firms), family members paid token wages, and the agricultural sector are excluded from the private industry.  

State and local government. Those employed in state and local government establishments. Federal government and quasi-federal agency workers and military personnel are excluded. 

State government. Those employed in state government establishments.

Local government. Those employed in local government establishments.

Subcategory. Category identifying the attributes of workers or establishments for the estimate. 

Industry group. A group of organizations that produce similar products or services. Establishments are classified into industries using the North American Industry Classification System (NAICS).

Occupational group. A group of related occupations that are based on duties performed. Workers are classified into occupations using the Standard Occupational Classification (SOC).

Bargaining status. Workers are classified as union workers when these conditions are met: 1) a labor organization is recognized as the bargaining agent for all workers in the occupation, 2) wage and salary rates are determined through collective bargaining or negotiations, and 3) settlement terms on earning provisions are embodied in a signed, mutually binding collective bargaining agreement. Workers that do not meet these conditions are classified as nonunion workers.

Full-time and part-time work status. Employees are classified based on the definitions used by each establishment. Employee Benefits does not use a specific threshold of hours to determine the work status.

Establishment size. The number of employees reported working at an establishment. The category is reported as a range (less than 50 workers, 50–99 workers, less than 100 workers, 100 workers or more, 100–499 workers, or 500 workers or more).

Average wage category. Average wage category groups employees into six wage categories—the lowest 10 percent, the lowest 25 percent, the second 25 percent, the third 25 percent, the highest 25 percent, and the highest 10^⁠ percent of wage earners. Average wage category groups are based on March Employer Costs for Employee Compensation estimates included in the technical note of each Employee Benefits release.  

Area. The physical boundaries within which an establishment must be located (e.g., state, county, parish, township, or city) to be included in the surveys.

National. Includes the continental United States (including Alaska) and Hawaii, and excludes U.S. territories such as Puerto Rico, American Samoa, Guam, Northern Mariana Islands and the Virgin Islands.

Census division. Grouping of the United States into nine geographical areas: 

• New England(Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont)
• Middle Atlantic(New Jersey, New York, and Pennsylvania)
• South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia)
• East South Central (Alabama, Kentucky, Mississippi, and Tennessee)
• West South Central (Arkansas, Louisiana, Oklahoma, and Texas)
• East North Central (Illinois, Indiana, Michigan, Ohio, and Wisconsin)
• West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota)
• Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming)
• Pacific (Alaska, California, Hawaii, Oregon, and Washington)

• Northeast (New England and Middle Atlantic)
• South (South Atlantic, East South Central, and West South Central)
• Midwest (East North Central and West North Central)
• West (Mountain and Pacific)

Benefits. Employer-sponsored compensation provided to employees in addition to their base salaries and wage.

Contributory plan. An employer-sponsored plan, which is paid for in part by the employer and in part by the employee. Employees in contributory plans are considered participating if they have paid the required plan cost and fulfilled any applicable eligibility requirements. Defined contribution plans and medical care plans are typically contributory plans.

Noncontributory plan. An employer-sponsored plan that is completely paid by the employer. Employee contributions are not needed to participate. Employees in noncontributory plans are considered participating if they have fulfilled any applicable eligibility requirements. Traditional defined benefit plans, life insurance, and short- and long-term disability plans are typically noncontributory. 

Financial benefits. Plans that would provide knowledge or relief in money-related areas.

Cash (or) Deferred Arrangements (CODAs). Employer-sponsored plans that are used to fund retirement savings and/or pension plans without an employer contribution. 

Dependent Care Flexible Spending Accounts (FSAs). Employees participating in these accounts allocate a declared amount, up to a set Internal Revenue Service (IRS) limit, for qualified dependent care expenses, including childcare, eldercare, or services to a disabled independent.

Financial planning. A free or subsidized financial service to help employees make decisions related to savings, borrowing, investing, home purchases, education expenses, and/or retirement income.

Flexible benefits. Plans that allow employees to select their benefit coverage from a menu of employer offerings, which may include benefits such as cash, life insurance, health insurance, vacation, and retirement contributions. A common type of flexible benefit plan is a cafeteria plan, which allows employees to receive their benefits on a pre-tax basis.

Health Flexible Spending Accounts (FSAs). Employees participating in these accounts allocate a declared amount, up to a set Internal Revenue Service (IRS) limit, for out-of-pocket healthcare expenses such as deductibles, copayments, coinsurance, and other qualified healthcare expenses not covered by their health insurance.

Health Savings Accounts (HSA). Individual, portable accounts used to pay for current and future medical expenses used in combination with High-Deductible Health Plans (HDHPs). Funds are controlled and held by the employee.

Student loan repayment assistance. Also referred to as a tuition forgiveness program, this benefit provides support to employees for education already obtained. This benefit does not include instances where the employer supports ongoing education expenses by the employee.

Nonproduction bonus. Nonproduction bonuses are benefits in the form of payments to employees that are not directly related by any formula to employee productivity. Forms of nonproduction bonuses published include:

• Employment incentive awards: hiring bonuses, referral bonuses, retention bonuses
• Performance-based awards: cash profit sharing, end-of-year bonuses, holiday bonuses, management incentive bonuses
• Recognition awards: attendance bonuses, employee recognition bonuses, longevity bonuses, safety bonuses, suggestion bonuses
• Other bonuses: contract signing bonuses, lump sum bonuses, in lieu of benefit payments, nonformula related cash payments

Payroll Deduction Individual Retirement Account (IRA). Under a Payroll Deduction IRA, the employer sets up the payroll deduction process with a selected financial institution(s), allowing workers the option to contribute. Workers decide whether to establish an IRA. As long as the employer keeps its involvement to a minimum, the program will not be treated as an employer-sponsored retirement plan under Federal law.

Healthcare benefits. Plans provide preventive and protective medical, dental, vision, or prescription drug coverage to the employee and the employee’s dependents, including the spouse and children.

Medical care plans. Plans provide services or payments for services rendered in the hospital or by a qualified medical care provider.

Dental care plans. Plans provide services or payments for prevention, restorative care, and related treatment to the teeth and gums.

Vision care plans. Plans provide coverage for the non-surgical improvement of eyesight, including eyeglasses and contact lenses. Coverage typically is limited and is subject to applicable copayments or scheduled cash allowances.

Prescription drug plans. Plans provide coverage for outpatient prescription drugs. Prescription drugs dispensed during a hospital stay are covered as hospital miscellaneous charges.

Insurance benefits. Plans providing protection against financial loss in the event of a certain loss, damage, or injury.

Life insurance. Life insurance provides a lump-sum payment to a designated beneficiary or beneficiaries of a deceased employee. Companies may provide a basic amount of life insurance benefits, which may vary with an employee's age, income, and occupation. Companies also may allow employees to pay for additional amounts of coverage.

Disability benefits. Disability benefits provide protection against loss of income due to a nonoccupational illness or injury.

Short-term disability plans. Short-term disability plans provide benefits for nonwork-related illnesses or accidents on a per-disability basis, typically for a 6-month to 12-month period. Benefits are paid as a percentage of employee earnings or as a flat dollar amount. Short-term disability benefits vary with the amount of pre-disability earnings, length of service with the establishment, or length of disability.

Long-term disability plans. Long-term disability plans provide a monthly benefit to eligible employees who, because of a nonwork-related illness or injury, are unable to work for an extended length of time. Benefits usually are paid as a fixed percentage of pre-disability earnings, up to a set limit. Most participants have a waiting period of 3 to 6 months, or until sick leave or short-term disability benefits end, before long-term disability benefits begin. Long-term disability benefits generally continue until retirement or a specified age, or for a period that varies with the employee's age at the time of the disability.

Leave benefits. Paid or unpaid absence from work.

Unpaid family leave. This leave is granted to an employee to care for a family member. The leave may be used to care for a newborn child, an adopted child, a sick child, or a sick adult relative. A typical family leave plan extends leave without pay to an employee for a period of several months while the employee cares for the family member.

Paid family leave. Family leave is granted to an employee to care for a family member and includes paid maternity and paternity leave. The leave may be available to care for a newborn child, an adopted child, a sick child, or a sick adult relative. Paid family leave is given in addition to any sick leave, vacation, personal leave, or short-term disability leave that is available to the employee.

Paid funeral leave. Funeral leave provides time off from work because of a death in the family. The period of absence is usually limited to a few days.

Paid holiday. Holidays are days of special religious, cultural, social, or patriotic significance on which work and business ordinarily cease. Employees usually have these days off from work and may receive either full or partial pay for holidays.

Paid jury duty leave. Jury duty leave provides a paid absence from work when one is summoned to serve as a juror. Employer payments commonly make up the difference between the employee's regular pay and the court's jury allowance.

Paid military leave. Military leave is paid absence from work to fulfill military commitments. Pay may be either regular pay or the difference between employees' regular earnings and the amount they receive from the military.

Paid personal leave. Personal leave is a general-purpose leave benefit, used for reasons important to the individual employee, but not otherwise provided by other forms of leave. Some employers place restrictions on the purposes for which personal leave may be used.

Paid sick leave. Sick leave is paid absence from work if an employee is unable to work because of a non-work-related illness or injury. The employer usually provides all or part of an employee's earnings. Employees commonly receive their regular pay for a specified number of days off per year. Sick leave is provided on a per-year basis, usually expressed in days, and is never insured.

Paid vacations. Vacations are leave from work (or pay in lieu of time off) provided on an annual basis and normally taken in blocks of days or weeks. Paid vacations commonly are granted to employees only after they meet specified service requirements. The amount of vacation leave received each year usually varies with the length of service. Vacation time off normally is paid at full pay or partial pay, or it may be a percentage of employee earnings.

Consolidated leave plans. These are plans that replace different types of leave, such as vacation, sick leave, and personal leave. In consolidated leave plans, all types of leave are combined or used interchangeably within a single plan. Employees are allowed to use leave for any purpose that is stipulated by the plan. These plans are most often found at establishments such as hospitals, which must be open around-the-clock.

Quality-of-life benefits. Benefits designed to increase the overall wellbeing of employees.

Childcare assistance. This benefit provides either full or partial reimbursement for the cost of caring for an employee's children in a nursery, daycare center, or by a babysitter. Care can be provided in facilities that are either on or off the employer's premises.

Employee assistance programs (EAPs). These programs provide structured plans, closely related to employee wellness programs, which typically deal with more serious personal problems than the medical problems covered by wellness programs. EAPs can offer referral services, or referral services in combination with counseling services. Both the referral services and the counseling services may be supplied by company personnel, by an outside organization under contract, or by a combination of both.

Flexible workplace. This benefit permits workers to work an agreed-upon portion of their work schedule at home or at some other approved location, such as a regional work center. This excludes one-time or ad hoc allowances or temporary arrangements that do not routinely permit telework.

Flexible work schedule. This benefit permits employees to set their own schedules within a general set of parameters. Employees generally are required to work a minimum number of core hours each day.

Wellness programs. These programs provide a structured plan, independent from health insurance that offers employees two or more of the following benefits: smoking cessation programs, exercise or physical fitness programs, weight control programs, nutrition education, hypertension tests, periodic physical examinations, stress management programs, back-care courses, and lifestyle assessment tests.

Subsidized commuting. This benefit provides employer-paid full or partial payment for the cost of an employee's commute to work via public or pooled transportation (for example, establishment sponsored van pool, discount subway fares, bus tokens, etc.) The use of a company car does not qualify as subsidized commuting.

Retirement benefits. Plans that provide employees with savings and investments distributed throughout an employee’s retirement. 

Defined benefit plans. Plans provide employees with guaranteed retirement benefits according to a fixed formula. A participant’s retirement age, length of service, and preretirement earnings may affect the benefits received. 

Defined contribution plans. Plans that specify the level of employer contributions and place those contributions into individual employee accounts.

Datatype. The measurement type of the estimate.

Incidence of benefits. The percentage of all workers who are provided a particular benefit plan. The incidence can be either a rate of access to, or a rate of participation in, a benefit plan.

Access. Employees are considered to have access to a benefit plan if it is available for their use. For example, if an employee is permitted to participate in a medical plan offered by the employer, but the employee declines to do so, he or she is placed in a category with those who have access to medical care benefits.

Participation in a benefit plan. Employees in contributory plans are deemed to be participating in a plan if they have paid required contributions and fulfilled any applicable service requirements. Eligible employees in noncontributory plans are considered to be participating in the plan.

Take-up rates. The percentage of workers with access to a plan who participate in the plan.

Establishments offering benefits. Employers may offer benefit plans to all workers or they may limit them to certain groups of workers. An establishment is considered as offering benefits if any workers have access.

Provisions of benefit plans. The terms of employer-sponsored benefit plans. These terms include eligibility requirements (for example, age, service, and combination of age and service), vesting requirements (for example, cliff, graded, and immediate), plan type (for example, savings and thrift, money purchase plan), additional employee costs (for example, out-of-pocket maximum, deductible, copayment, and coinsurance), number of days granted (for example, vacation and sick leave), and carryover provisions.

Premium average. The average (mean) of the rates paid by the employer/employee for coverage, typically paid as a flat dollar cost per month.

Share of premiums. The percentage of the total premium paid for by the employer or employee.

Sample. All the units or jobs selected for the survey.

Establishment. A single economic unit that engages in one, or predominantly one, type of economic activity. For private industry, the establishment is usually at a single physical location, such as a mine, factory, office, or store. If a sampled establishment is owned by a larger entity with many locations, only the employment and characteristics of the establishment selected for the sample are considered for the survey. For state and local governments, an establishment can include more than one physical location, such as a school district or a police department. Each establishment is assigned a six-digit code from NAICS.

Initiation. The process of collecting data from a new sample unit.

National Compensation Survey (NCS). The National Compensation Survey (NCS) is an establishment-based survey that provides comprehensive measures of employer costs for employee compensation, including wages and salaries, benefits, and the incidence and provisions of employer-sponsored benefits among workers.

Reference period. Incidence and provisions are published with a March reference date each year with data collected annually. Detailed provisions are published annually representing an entire year.

Update. The process of collecting current information from an initiated sample unit.

Work schedule. The number of daily hours, weekly hours, and annual weeks that employees in an occupation are scheduled and do work. The work schedule is the standard schedule for the selected job where short-term fluctuations and one-time events are not considered unless the change becomes permanent. Work schedules are either fixed, flexible, rotating, or nonfixed. Data are collected on usual work schedules. For more information on work schedules, see Work Schedules in the National Compensation Survey.