Find Out About the Benefits Your Business is Required to Provide
When most people hear the term ‘employee benefits', they think of things like health insurance, vacation time and 401(k) plans. Employee benefits are much more than that though. According to Merriam-Webster's definition of the word ‘benefit'... a benefit is a service or right provided by an employer in addition to wages or salary.
Some of these ‘services' or ‘rights' are government mandated and companies are required by law to provide them to their employees. So while you may choose to offer your employees fringe benefits like a retirement plan or dental insurance, there are 3 mandated benefits that most small and mid-size business owners must provide their employees.
Government Mandated Benefits for Employees
In addition to paying your employees a salary or hourly wage, the following are government mandated employee benefits which most businesses are required by law to provide.
- Social Security & Medicare Contributions
- Workers' Compensation Insurance
- Unemployment Compensation Contributions
Depending on the size of your company and the benefits you offer your employees, you may also be required to provide COBRA, CHIPRA (Children's Health Insurance Program Reauthorization Act) and Family and Medical Leave.
Social Security & Medicare
Social security and Medicare are Federally-funded and mandated benefits programs. These 2 government taxes are paid equally by both the employee and their employer as payroll deductions. Social security benefits provide income to employees after they retire or in instances where they become permanently disabled. Medicare provides health insurance programs for people age 65 or older and in some cases, people that are younger than 65 due to certain disabilities or medical conditions.
Workers' compensation insurance provides medical care and treatment, rehabilitation and replacement income for employees due to job related injuries and illnesses. Workers' comp is provided by an employer through either a state run insurance fund or through an insurance company.
The purpose of unemployment compensation is to provide temporary and partial income replacement to employees that have involuntarily lost their jobs. Terminated employees may not collect unemployment if they were let go due to certain circumstances... one being willful misconduct. Unemployment insurance is a combination of Federal and State run programs that both employees and employers pay into.