Spring 2020

Employee Benefits

General Instructions:  

Please respond to the following questions ascompletely as practicable. Please limit the total number of pagesto no more than 2, typed, double-spaced. Focus on answering thequestion(s) drawing on the material covered in the text as well asthe material covered during class. If you feel that you may needmore facts to answer a question, please identify the differentpaths and as appropriate make presumptions and move forward. If youstill have questions, please email me, and I will post an answer onBlackboard/via email.    Good luck!

You are the newly hired HR Director at a newreplacement window company called Newsen Windows (Newsen). Newsensells and installs replacement windows for home owners. Newsen wasformally established last week when a much larger replacementwindow company (BigCo) spun off 5 of its 50 locations to Newsen.Newsen has no other locations beyond those 5. Over the last weekthe Newsen owner decided on which of the former BigCo employees shewanted to hire to be Newsen employees. That has been completed, andnow she wants to focus on employee benefits. She hired you todayand has asked that your first order of business be to handle thisbenefits project.

By way of background, BigCo is headquartered inKansas, with locations nationwide. They offer a single PPO plan.Newsen is headquartered in Framingham, MA, with other locations inNew Hampshire, Maine, Rhode Island, and California. They have 250total employees today, evenly split across those locations. Averageage is 37 yrs old, but ages span from mid 20’s to 50’s. Like BigCo,they employ window salespeople (telemarketers and door to doorsales), and administration.   They work with outsidecontractors to do the installation work. The owner has somesignificant private investor backing, as well as aggressivebusiness growth plans. They are planning to add about 500+employees in two years. If business expands as planned, they intendto add staff through new hiring and will also look to potentiallyacquire more locations from BigCo.

Your first job is to brief the owner on whether theyshould offer a medical plan(s), with detailed reasoning. Then,assuming they offer a plan, please explain the difference between aHMO and a PPO plan, also identifying which you think might be agood fit for them, and why.   Finally, they have heardabout Consumer Directed Health plans, with HRAs andHSAs.   Let them know if you think they might be a goodfit here, with yourreasoning.