Government Mandated Employee Benefits

Government Mandated Benefits That Employers Must Provide To Employees

Federal law requires that employers of medium and large organizations must provide their employees with these five main benefits

Employee benefits fall into two clear categories, there are basic ones that are required by law such as social security, workers compensation and disability insurance. Then there are those additional benefits that employers choose to offer like flexible spending accounts, child care, commuter benefits and discount offers. Most of the mandatory benefits must be provided by all companies, but family medical leave and COBRA are only required for companies who have over 50 employees.

Most organizations will combine the mandatory benefits with a few non-mandatory benefits to create an attractive employee benefits package based on the organization’s budgets and the needs of the employees. Usually towards the end of the year, the benefits advisor will gather information from the employees and meet with management to decide what additional benefits they would like to see offered. Using this information and the budget they have to work with, the benefits advisors can create a suitable package to offer to both existing employees and prospective employees. The mandatory benefits are similar across all organizations, which means that no one company can offer a better basic package than another, so the only time that an organization can really set it itself apart is by offering better additional benefits.

The Government Mandated Benefits Are:

Social Security and Medicare Contributions

Both social security and medicare are employee benefits that are federally-managed benefits programs. They are paid in equal parts by the employer and the employee through payroll deductions and employer payroll tax. The social security payments go towards an employees retirement or disability fund. Medicare payments go towards a fund for Medicare which is the federal health insurance program for medical coverage once an employee turns 65.

Workers Compensation Fund

Workers compensation supports the employee in the event that they can no longer work as a result of an event that occurs in the workplace. This covers an injury in the workplace, illness related to a job or emotional impairment due to the job. It can help by providing medical care and treatment and also contribute towards rehabilitation costs. Workers compensation can be provided to employees through a state run insurance program or through an independent insurance company.

Unemployment Compensation

The unemployment compensation benefit is part of the Social Security Act of 1935 and is the financial compensation that is available to employees that unexpectedly and involuntarily lose their job. This does not count if the employee is terminated for cause. Unemployment insurance is made up of a combination of federal and state run programs and funds that are paid into by both the employees and the employers.

Family and Medical Leave

The Family and Medical Leaves Act of 1993 (FMLA) states that an employer with more than 50 employees should provide employees with 12 weeks of unpaid time off. The leave can be used by the employee to take time away from work with the reassurance that they will have a job to return to. Employees can use this time if they need to care for themselves or an immediate family member, including the birth of a child, adoption, fostering or illness. In most cases this time off is unpaid unless it is an optional part of the employer's benefits package, and if the employee requires more time off in excess of the 12 weeks they will join the state disability program.

Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)

The federally managed COBRA program allows all eligible employees, and their dependents, to continue health insurance coverage for a period of up to 18 months after the employee has left their employment. Only organizations with more than 50 employees are required to follow the COBRA edict. COBRA gives the employee the piece of mind during the transition period from one job to another, that their health coverage remains. When an employee leaves an organization, the employer will stop paying their share of the medical insurance premium but will allow the employee to continue the benefits of the coverage by increasing the employees payments to match the total premium. Although there may be a significant increase in the amount an individual has to pay towards the cost of the medical insurance, because it is still at the discounted rate given to the larger organization, it is far less than what an individual would pay if they were to seek alternative health insurance during the period between jobs. There are some employees that are excluded from COBRA and that can include employees who work for churches and the federal government. Employees that have been terminated for gross misconduct are also ineligible for this program.