Chapter 20 Employment-Based Risk Management (General)

Overview of Employee Benefits

Noncash compensation, or employee benefitsAll noncash compensation items sponsored by employers for their employees; includes group insurance, educational assistance, legal assistance, childcare, discounts, and so forth., today is a large portion of the employer’s cost of employment. The Employee Benefit Research Institute (EBRI), an important research organization in the area of employee benefits, reported that, in 2007, employers spent $1.5 trillion on major voluntary and mandatory employee benefit programs, including $693.9 billion for retirement programs, $623.1 billion for health benefit programs, and $138 billion for other benefit programs.Employee Benefit Research Institute, EBRI Databook on Employee Benefits, ch.2: Finances of the Employee Benefit System, updated September 2008. http://www.ebri.org. More information can also be found in the U.S. Chamber of Commerce Survey at uschamber.com at http://www.uschamber.org/Research+and+Statistics/Publications/Employee+Benefits+Study.htm (accessed April 12, 2009). The complete picture of employee benefits costs over the years is provided in Table 20.1 "Employer Spending on Noncash Compensation, 1960–2007" As you can see in this table, benefits make up a significant amount of the pay from employers, equating to 18.6 percent of total compensation in 2007. The largest shares of the benefits go toward legally required benefits (social insurance), paid leave, and health insurance.

As noted above, employee benefits have tax incentives. Some benefits such as health care, educational assistance, legal assistance, child care, discounts, parking, cafeteria facility, and meals are deductible to the employer and completely tax exempt to the employees. Retirement benefits, both the contributions and earnings on the contributions, are tax deductible to the employer and tax deferred to the employees until their retirement. Some of the benefits paid by employees themselves are tax deferred, such as investment in 401(k) plans (discussed in Chapter 21 "Employment-Based and Individual Longevity Risk Management"). Other benefits are partially tax exempt, such as group life. The employee is not required to pay taxes on the cost of life insurance up to coverage in the amount of $50,000 in death benefits. For greater amounts of death benefits, the employer’s contributed premiums are counted as taxable income to the employee. The largest expense comes in the form of health benefits, with $532.1 billion out of $1,454.9 billion of the total benefits spent by employers in 2007 (see Table 20.1 "Employer Spending on Noncash Compensation, 1960–2007"). Health benefits receive the most favorable tax exemption of all employee benefit programs.

When we do not pay taxes, the government is forgoing income. Each year, the White House Office of Management and Budget calculates the amounts forgone by the tax benefits. EBRI reports that the foregone taxes from employer-provided benefits are projected to amount to $1.05 trillion for 2009 through 2013.Employee Benefits Research Institute, “Tax Expenditures and Employee Benefits: Estimates from the FY 2009 Budget,” February 2008, http://www.ebri.org/pdf/publications/facts/0208fact.pdf (accessed April 12, 2009).

With the tax incentives comes a very stringent set of rules for nondiscrimination to ensure that employers provide the benefits to all employees, not only to executives and top management. The most stringent rules appear in the Employee Retirement Income Security Act, which will be explored in Chapter 21 "Employment-Based and Individual Longevity Risk Management" in the discussion of pensions. Keep in mind that employee benefits are a balance of tax incentives as long as employers do not violate nondiscrimination rulesRules set forth by the IRS stipulating that employee benefit plans must be for the benefit of all employees, not just executives and top management in order to qualify for tax incentives. and act in good faith for the protection of the employees in their fiduciary capacity. The efforts to protect employees in cases of bankruptcies are featured in the box “Your Employer’s Bankruptcy: How Will It Affect Your Employee Benefits?” Ways to detect mismanagement of certain benefit plan funding are described in the box “Ten Warning Signs That Pension Contributions Are Being Misused.”

Employer Objectives

The first step in managing an effective employee benefits program, as with the other aspects of risk management discussed in Part I of the text, is setting objectives. Objectives take into account both (1) the economic security needs of employees and (2) the financial constraints of the employer. Without objectives, a plan is likely to develop incrementally into a haphazard program. An employer who does not have an on-staff specialist in this field would be wise to engage an employee benefits consulting firm.

Employers can use several methods to set objectives for benefit plans. They may investigate what other organizations in the region or within the industry are doing and then design a competitive package of their own to recruit and retain qualified employees. Benefits may be designed to compete with plans offered for unionized workers. Employers may survey employees to find out what benefits are most desired and then design the benefits package with employees’ responses in mind.

Employer objectives are developed by answering questions such as the following:

• Who is eligible for each type of benefit?
• Should seniority, position, salary, and other characteristics influence the amount of each employee’s benefit? (Care in observing nondiscrimination rules is very important in this area.)
• How might a specific benefit affect employee turnover, absenteeism, and morale?
• How should benefits be funded? (Should the employer buy insurance or self-insure?)
• Should the benefits program be designed to adjust to the differing needs of employees?
• How do laws and regulations influence benefit plan design?
• To what extent should tax preferences affect plan design?

In answering questions like these, management must keep in mind the effect of its benefits decisions on the organization’s prime need to operate at an efficient level of total expenditures with a competitive product price. Efficiency requires management of total labor costs, wages plus benefits. Thus, if benefits are made more generous, this change can have a dampening effect on wages, all else being equal. Financial constraints are a major factor in benefit plan design. It is critical to note that health insurance is a key benefit employees expect and need. As shown in Table 20.1 "Employer Spending on Noncash Compensation, 1960–2007", group health insurance is a major part of the average compensation in the United States. Most people regard the employer as responsible to provide this very expensive benefit, which is discussed in detail in Chapter 22 "Employment and Individual Health Risk Management" (unless and until proposed changes are enacted by the Obama administration, that is).

Administration

The administration of group insurance differs from individual insurance because the contract is made with the employer rather than with each individual. The employer receives a master contractIn group insurance, document issued to employer describing all the terms and conditions of the group policy. that describes all the terms and conditions of the group policy. The employer, in turn, provides each insured employee with a certificate of insuranceProvided by employers to insured employees as evidence of participation in a group insurance plan. as evidence of participation. ParticipantsIn a group benefit plan may include employees; their dependents (including a spouse and children under a specified age, such as twenty-one, when enrolled in school); retirees; and their dependents. in the benefit plan may include employees, their dependents (including a spouse and children under a specified age, such as twenty-one, when enrolled in school), retirees, and their dependents. Participants receive a booklet describing the plan, distributed by the employer at the time the plan goes into effect or when eligibility begins, whichever is later.

Administration of group insurance also differs from individual insurance because the employer may be responsible for the record keeping ordinarily done by the insurer, especially if the group is large. Administration is simplified by the employer paying periodic premiums directly to the insurer. If employees are required to contribute toward the premium, the employer is responsible for collection or payroll deduction of employee contributions, as well as for payment to the insurer of the total group premium amount.

Many large employer plans are self-insuredWhen large employers with sufficient means pay claims in a group insurance arrangement and bear the risk that actual claims will exceed expected claims., and employers, rather than insurers, pay claims and bear the risk that actual claims will exceed expected claims. Some employers with self-insured plans also administer the benefits themselves. However, insurers and third-party administrators (TPAs)Unaffiliated party contracted to administer self-funded group insurance plans. administer many (even large) self-funded plans under an administrative services only (ASO)Arrangement under which an insurer or third-party administrator (TPA) handles record keeping and claim payment functions for employers sponsoring self-insured group insurance plans, who pay 5 to 10 percent of the normal premium for these services. contract. The employer transfers record keeping and claim payment functions to the insurer or TPA, paying about 5 to 10 percent of the normal premium for administrative services.

In addition, the employer may purchase stop-loss insuranceA form of reinsurance or excess insurance for self-insured group insurance plans whereby an insurer or third-party administrator (TPA) provides protection against unexpectedly high claims. from the same or another insurer through the TPA for protection against unexpectedly high claims. Stop-loss coverage is a form of reinsurance or excess insurance for self-insured plans. The two basic forms of coverage are specific stop lossStop-loss insurance for self-insured group insurance plans that provides a limit per claim above which the employer is not responsible., in which a limit is set per claim, and aggregate stop lossStop-loss insurance for self-insured group insurance plans that provides a limit on the total claims in a year for which the employer is responsible., in which a limit is set for the total claims in a year. The insurer reimburses the employer for claim amounts above the limit, also called the attachment point. Purchase of an ASO contract and stop-loss insurance gives the employer the potential cash flow and expense advantage of self-funding, while reducing the employer’s administrative burden and potential for catastrophic risk.

Underwriting

Individually purchased life and health insurance contracts involve individual underwriting. The purchaser files an application and, in some cases, takes a medical examination. On the basis of this and other information, the underwriter decides whether or not to issue insurance, and on what terms. The merits of each application are decided individually. Group underwritingDoes not involve an application to the insurer by each participant or a medical examination (except in some very small employer groups); the employer makes one application for the entire group, and, instead of selecting individual insureds, the insurer makes an underwriting decision based on group characteristics. does not involve an application to the insurer by each participant, or a medical examination (except in some very small employer groups). The group as a whole is being underwritten. The employer makes one application for the entire group and, instead of selecting individual insureds, the insurer makes an underwriting decision based on group characteristics.

Pricing

Some employers pay the entire cost of the group insurance premium. These are noncontributory plansPension plan funded only by employer contributions.. In contributory plansPension plan that requires the employee to pay all or part of pension fund contributions., employees pay part of the cost. Frequently, group life and disability insurance plans are noncontributory, but they require the employees to contribute if other family members are covered. Health insurance is more likely to be contributory because of rising premiums, a situation described in the box “What Is the Tradeoff between Health Care Cost and Benefits?” in Chapter 22 "Employment and Individual Health Risk Management". The employer makes the premium payment to the insurer; contributory amounts, if any, are deducted from the employee’s paycheck.

Important factors in underwriting for pricing are (1) the age and gender composition of the group, (2) the industry represented by the group, and (3) the geographical location of the group.

Group insurance is usually less expensive than individual insurance for several reasons: (1) with group coverage, the insurer deals with one insured instead of many, streamlining marketing costs; (2) the employer takes care of much of the administrative detail; (3) commission scales on group business are lower than they are on individual policies; (4) medical examinations are not needed because the employees are at least healthy enough to work; (5) the employer collects the premiums and pays the insurer in one lump sum, which is more efficient for the insurer; and (6) the employer often does some monitoring to eliminate false or unnecessary claims for health care benefits. In addition, group insurance theory maintains that the replacement by younger employees of employees who retire or quit keeps average mortality and morbidity rates from rising to prohibitive levels. That is, a flow of persons through the group tends to keep average costs down. This is often true when the number of employees in a group is growing, but it is less true for an organization that is downsizing.

Group life and health insurance rates are usually quoted by insurers as one monthly rate (e.g., $0.15 per $1,000 of coverage in the case of life insurance) for all employees. This rate is based on a weighted average, taking into account the age, sex, and accompanying mortality and morbidity rates for each employee in the group. Because mortality and morbidity rates increase with age, life insurance rates are quoted in age brackets. Someone in the thirty-one to thirty-five age bracket will pay slightly more than someone in the the twenty-six to thirty bracket. Thus, groups with a higher proportion of older people will have relatively higher premiums.

Most small organizations (e.g., those with fewer than fifty employees) have their entire premium based on pooled claims experience for similar-size firms. However, larger employers are likely to have experience-rated premiumsWhen a group’s own claims experience experience affects the cost of coverage for group insurance. in which the group’s own claims experience affects the cost of coverage, as described in Chapter 16 "Risks Related to the Job: Workers’ Compensation and Unemployment Compensation" for worker’s compensation. Experience rating allows employer groups to benefit directly from their own good claims experience, and it provides a direct economic incentive for risk managers to control claims.

With experience rating, the weight or credibility given to a group’s own experience increases with the number of participants. The experience of smaller groups (e.g., those with fewer than 500 or 1,000 employees) is not considered sufficiently statistically credible or reliable to determine premiums completely. Therefore, insurers use a weighted average of the group’s loss experience and the pooled experience for groups of similar size and characteristics in developing the claims charge. For example, the group’s actual loss experience may be weighted at 70 percent of the claims charge, and the pooled experience for groups of similar attributes may carry a weight of 30 percent. If the group had a loss experience of $80,000 and the pool experience was $100,000, then the claims charge for the experience-rated premium would be $86,000 per year. A larger group would have more statistically reliable experience and might receive an 80 percent weighting for its own experience and a 20 percent weighting for the pooled experience, resulting in a claims charge of $84,000. Thus, the larger the group, the more credit the group receives for its own claims experience. The experience-rated claims charge makes up the bulk of the total premium due, but the final experience-rated premium also includes administrative charges and fees.

Premiums for larger organizations, however, may reflect only the group’s own loss experience. With prospective experience rating, the group’s claims experience for the previous few years, plus an inflation factor, partly or completely determines the premium for the current year. A retrospective experience rating plan uses loss experience to determine whether premium refunds (or dividends) should be paid at the end of each policy year.

Group insurance premiums paid by the employer are a deductible business expense and are not taxable income to employees except for amounts of term life insurance in excess of $50,000 per person and all group property-liability insurance. Employee premium contributions are not tax deductible, except if they are allowed to be used in a cafeteria program under a premium conversion plan or flexible spending account (FSA), discussed later in this chapter. The other tax-sheltered accounts available under health savings account (HSA) plans are discussed in Chapter 22 "Employment and Individual Health Risk Management". Proceeds paid from group life insurance at death are not taxable income to the beneficiary, as noted in Chapter 19 "Mortality Risk Management: Individual Life Insurance and Group Life Insurance", but are included in the estate of the insured, if he or she is the owner, for federal estate tax purposes.

Group disability insurance (discussed in Chapter 22 "Employment and Individual Health Risk Management") premiums paid by the employer are also a deductible business expense for the employer, and they do not result in an immediate tax liability for the employee. If an employee receives disability benefits, the portion paid for by the employer is taxable to the employee. For example, if the employer pays one-third of the premium amount for disability coverage, and if the employee becomes disabled and receives benefits, one-third of the benefits are taxable income to the employee. Benefits attributable to coverage paid for by the employee with after-tax dollars are not taxable. Thus, in this example, two-thirds of the disability benefit amount would not be taxable income. Explaining taxation of disability income to employees can be a challenge for the benefits manager. However, many employers are successful in conveying the importance of after-tax premium payment to the level of benefits if disability occurs. The tax savings on the premiums are very small relative to the tax savings on the disability benefits.

The Flexibility Issue

Employers have been interested in flexible benefit plansGive the employee choices among an array of benefits or cash to choose from. since the early 1970s. These plans give the employee the ability to choose from among an array of benefits or cash and benefits. Few flexible plans were adopted until tax issues were clarified in 1984. At that time, it became clear that employees could choose between taxable cash income and nontaxable benefits without adversely affecting the favorable tax status of a benefit plan. These are the cafeteria plans and flexible spending account (FSA) rules. Rules regarding these plans have continued to change, resulting in some employer hesitancy to adopt them. Despite the uncertain legislative environment, flexible plans became very popular in the mid-1980s, particularly among large employers. Employers are attracted to flexible benefit plans because, relative to traditional designs, they do the following:

• Increase employee awareness of the cost and value of benefit plans
• Meet diverse employee economic security needs
• Help control total employer costs for the benefit plan
• Improve employee morale and job satisfaction

How flexible benefit plans accomplish these goals will become clear through discussion of cafeteria plans and flexible spending accounts.

Cafeteria Plans

Flexible benefit plans are frequently called cafeteria plansAllow employees to select the types and amounts of desired benefits using flex credits and usually involves five elements: flexible benefit credits, minimum levels of certain benefits, optional benefits, cash credits, and tax deferral. because they allow selection of the types and amounts of desired benefits. A cafeteria plan usually involves five elements: flexible benefit credits, minimum levels of certain benefits, optional benefits, cash credits, and tax deferral.

In a cafeteria plan, the employer generally allows each employee to spend a specified number of flexible credits, usually expressed in dollar amounts. The options in a cafeteria plan have to include a choice whether or not to take cash in lieu of benefits. The cash element is necessary in order for the plan to be considered a cafeteria plan for tax purposes. There may be a core plus cafeteria planRequires selection of basic employee benefits such as group life insurance and long-term disability, while giving the employee a choice among some health plans, additional disability coverage, dental coverage, and so forth. where basic benefits are required, such as $50,000 death benefits in a group life insurance and basic group long-term disability. The employee then has a choice among a few health plans, more disability coverage, dental coverage, and more. The additions are paid with the flexible credits. If there are not enough credits, the employee can pay the additional cost through payroll deduction on a pretax basis using a premium conversion planAllows employees to purchase additional coverage in a cafeteria plan with pretax dollars through a payroll deduction.. Usually, employees pay for dependents’ health care on a pretax basis using the premium conversion plan.

Another cafeteria plan may be the modular cafeteria planA less-flexible cafeteria plan that includes a few packages available for employees to choose from.. This type of cafeteria plan includes a few packages available to the employees to choose from. It is less flexible than the core plus plan and requires less administrative cost. The number of credits assigned each year may vary with employee salary, length of service, and age. Cafeteria plans are included under Section 125 of the Internal Revenue Code. Qualified benefits in a cafeteria plan are any welfare benefits excluded from taxation under the Internal Revenue Code. The flexible spending account (explained later) is also part of a cafeteria plan. Long-term care is not included, while a 401(k) plan is included.

Benefit election must be made prior to the beginning of the plan year and cannot be changed during the plan year unless allowed by the plan; they can be changed because of changes in the following:

1. Legal marital status
2. Number of dependents
3. Employment status
4. Work schedule
5. Dependent status under a health plan for unmarried dependents
6. Residence or worksite of the employee, spouse, or dependent

The employer may restrict employee benefit choice to some degree because the employer has a vested interest in making sure that some minimal level of economic security is provided to employees. For example, the organization might be embarrassed if the employee did not elect health coverage and was subsequently unable to pay a large hospital bill. Most flexible benefit plans specify a minimum level of certain benefits judged to be essential, such as those in a core plus plan. For example, a core of medical, death, and disability benefits may be specified for all employees. The employee can elect to opt out of a core benefit by supplying written evidence that similar benefits are available from another source, such as the spouse’s employer or the military retirement system.

Cafeteria plans also help control employer benefit costs. Employers set a dollar amount on benefit expenditures per employee, and employees choose within that framework. This maximizes employee appreciation because employees choose what they want, and it minimizes employer cost because employers do not have to increase coverage for all employees in order to satisfy the needs of certain workers.

Cafeteria plans have been especially effective in controlling group medical expense insurance costs. Employees often are offered several alternative medical plans, including health maintenance organizations (HMOs) and preferred provider organizations (PPOs), plans designed to control costs (discussed in Chapter 22 "Employment and Individual Health Risk Management"). In addition, employees may be charged lower prices for traditional plans with more cost containment features. For example, a comprehensive medical insurance plan may have an option with a $100 deductible, 90 percent coinsurance, a $1,000 out-of-pocket or stop-loss provision, and a $1 million maximum benefit. A lower-priced comprehensive plan may offer the same maximum benefit with a $2,000 deductible, 80 percent coinsurance, and a $4,000 stop-loss provision. The employee uses fewer benefit credits to get the lower option plan, and the cost-sharing requirements likely reduce claim costs, too. Likewise, long-term disability insurance choices attach lower prices per $100 of monthly benefit with an option that insures 50 percent of income rather than 60 or 70 percent. Here again, lower prices attract employees to options with more cost sharing, and the cost sharing helps contain claims.

Cafeteria plans are well suited to meet the needs of a demographically diverse work force. The number of women, single heads of households, and dual-career couples in the work force (as discussed in Chapter 17 "Life Cycle Financial Risks") has given rise to the need for different benefit options. A single employee with no dependents may prefer fewer benefits and more cash income. Someone covered by medical benefits through a spouse’s employer may prefer to use benefit dollars on more generous disability coverage. An older worker with grown children may prefer more generous medical benefits and fewer life insurance benefits. Clearly, economic security needs vary, and job satisfaction and morale may improve by giving employees some voice in how benefits, a significant percentage of total compensation, are spent.

However, both higher administrative costs and adverse selection discourage employers from implementing cafeteria plans. Record keeping increases significantly when benefit packages vary for each employee. Computers help, but they do not eliminate the administrative cost factor. Communication with employees is both more important and more complicated because employees are selecting their own benefits and all choices must be thoroughly explained. Employers are careful to explain but not to advise about benefit choices because then the employer would be liable for any adverse effect of benefit selection on the employee.

Cafeteria plans may have some adverse selection effects because an employee selects benefits that he or she is more likely to need. Those with eye problems, for example, are more likely to choose vision care benefits, while other employees may skip vision care and select dental care to cover orthodontia. The result is higher claims per employee selecting each benefit. Adverse selection can be reduced by plan design and pricing. The employer may require, for example, that employees who select vision care must also choose dental care, thus bringing more healthy people into both plans. Pricing helps by setting each benefit’s unit price high enough to cover the true average claim cost per employee or dependent, while trying to avoid excessive pricing that would discourage the enrollment of healthy employees.

Flexible Spending Accounts

Flexible spending accounts (FSAs)Allow employees to pay for specified benefits (defined by law) and out-of-pocket medical expenses using before-tax dollars contributed to the account at the beginning of the year; any funds not used by year-end are forfeited. allow employees to pay for specified benefits (which are defined by law) with before-tax dollars. In the absence of a flexible spending account, the employee would have purchased the same services with after-tax dollars. An FSA can either add flexibility to a cafeteria plan or can accompany traditional benefit plans with little other employee choice. The employer may fund the FSA exclusively, the employee may fund the account through a salary reduction agreement, or both may contribute to the FSA.

The employee decides at the beginning of each year how much money to personally contribute to the FSA, and then he or she signs a salary reduction agreement for this amount. The legal document establishing the employer’s program of flexible spending accounts specifies how funds can be spent, subject to the constraints of Section 125 in the Internal Revenue Code. For example, the simplest kind of FSA is funded solely by an employee salary reduction agreement and covers only employee contributions to a group medical insurance plan. The salary reduction agreement transforms the employee contribution from after-tax dollars to before-tax dollars, often a significant savings. A more comprehensive FSA, for example, may allow the employee to cover medical premium contributions, uninsured medical expenses, child care, and legal expenses. Dependent care is a nice addition in the FSA. The catch with an FSA plan is that the employee forfeits to the employer any balance in the account at year-end. This results in flexible spending accounts primarily being used to prefund highly predictable expenses on a before-tax basis.

Employees also pay their portion of the health premium in a premium conversion plan, which allows the funds to be collected on a pretax basis. These are usually the premiums for dependents.

Federal Regulation: Compliance with Nondiscrimination Laws

As noted above, the administration and design of group employee benefit plans have been affected by federal regulation through ERISA, EGTRRA 2001 (discussed in Chapter 21 "Employment-Based and Individual Longevity Risk Management"), the Age Discrimination in Employment Act, the Civil Rights Act (which includes pregnancy nondiscrimination), and the Americans with Disabilities Act. The Social Security Act was discussed in Chapter 18 "Social Security"; the Health Maintenance Organization Act will be discussed in Chapter 22 "Employment and Individual Health Risk Management", along with medical care delivery systems. Federal legislation is concerned with nondiscrimination in coverage and benefit amounts for plan participants. Some legislation relating to health care in general that also affects group underwriting practices is described in the box “Laws Affecting Health Care.” Individuals called to military duty and the families they leave behind have certain rights regarding group health and pension coverages. These rights are discussed in the box “Individual Coverage Rights When Called to Military Duty.”

Benefits Continuity and Portability

Multinational Employee Benefit Plans

Multinational corporations manage the human resource risk across national boundaries. The most common concern of multinational employers is the benefit needs of expatriatesU.S. citizens working outside the United States., U.S. citizens working outside the United States. However, the employer is also concerned with managing benefits for employees who are not U.S. citizens but who are working in the United States. In addition, benefits must be considered for employees who are not U.S. citizens and who work outside the United States.

The corporation designs multinational benefit policy to achieve several objectives. First, the plans need to be sufficient to attract, retain, and reward workers in locations around the world where a corporate presence is required. The plan needs to be fair for all employees within the corporation itself, within the industry, and within the country where employees are located. In addition, the multinational benefit policy needs to facilitate the transfer of workers across national boundaries whenever necessary with a minimum of overall transaction costs.

Typically, the multinational employer tries to protect the expatriate from losing benefits when the employee transfers outside the United States. A premium may be paid at the time of the move to compensate the employee for international relocation. The corporation often provides the expatriate with the same life, long-term disability, medical, and pension benefits as those provided to their U.S. employees. However, in some cases the employee may receive medical care or short-term disability benefits like those of the host country. When employers provide benefits in several international locations, they may use an international benefit networkCan be used to cover employees across countries under one master insurance contract when employers provide benefits in several international locations. to cover employees across countries under one master insurance contract. This can simplify international benefit administration. The employer must also consider the social insurance systems of the host country and coordinate coverage as necessary with the employee’s home country’s system.

Cultural and regulatory factors differ among countries and affect benefit design, financing, and communication. This makes international employee benefits management a dynamic and challenging field. With the continued globalization of business in the new millennium, career opportunities in international benefits management are likely to grow.