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Employers have been afforded new opportunities with the enactment of the Affordable Care Act (ACA). ACA creates a unique opportunity for employers to take a fresh, strategically based total compensation approach to planning. The concept of a total compensation framework is not new; however, a new way to achieve this approach is now possible. Employers need to create their own level playing field, and a total compensation approach is the optimal solution. This article discusses how employers that consider a framework driven toward total compensation accomplish many key objectives.
In 2010, the U.S. Congress passed the Affordable Care Act (ACA). The new law and subsequent laws, taxes, rulings and interpretations delivered by the U.S. Department of Labor, Internal Revenue Service, Department of Treasury and Supreme Court provided the most overhauling legislation since the passage of Medicare in 1965.
ACA creates a unique opportunity for employers to take a fresh, strategically based total compensation approach to planning. Consider a framework that accomplishes the following objectives:
* Cost containment related to compensation and benefit programs including health and retirement
* Flexibility to meet diverse employee needs
* Minimal additional administration and compliance
* A competitive-advantage total compensation program that aids in retention and attraction.
What Is a Total Compensation Approach?
A total compensation approach starts with having a total compensation philosophy designed to attract, retain and motivate employees. Accomplishing this requires a blend of base pay, incentive pay, health benefits, welfare benefits and retirement benefits.
Employers today are facing difficult decisions when it comes to one of their most important assets: their employees. Layoffs, salary and retirement plan freezes, pay cuts and health care benefit reductions all are being considered as companies look to cut or contain costs.
Unfortunately, when faced with difficult decisions, employers too often focus on one facet of total compensation instead of making a total analysis. To emerge strong and retain their best people, companies need a total compensation strategy that rewards top performers while effectively utilizing capital. The concept of a total compensation framework is not new. What is new is the concept of a coordinated approach of dealing with double-digit increases in benefit costs, balancing life/family demands and attempting to create an employment environment that does more than attract,...