Retirement plan sponsors are the first, and most important, line of defense in providing employees with well-managed retirement savings plans.
Running a company is no easy task, especially in our ever-changing business landscape. The law is constantly evolving, and with the myriad of options for providing employee benefits, it can be difficult for business owners to keep up! Between health benefits, tuition reimbursement, paternity leave, and retirement savings plans, how are business owners supposed to keep track of what benefits are required by law?
According to the U.S. Bureau of Labor Statistics, "legally required benefits provide workers and their families with retirement income and medical care, mitigate economic hardship resulting from loss of work and disability, and cover liabilities resulting from workplace injuries and illnesses."
Here is the list of benefits that businesses are required to provide by the federal government:
1. Medicare & Social Security Contributions
Social security and Medicare are two federally mandated benefits programs that all employees in the U.S. pay into while they work and then benefit from later in life. Medicare and Social Security taxes are paid by both the employee and their employer as payroll deductions.
Social security benefits ensure that employees will have an income after they retire or in the event that they become permanently disabled. Medicare provides health insurance coverage for Americans aged 65 or older or those with certain disabilities or medical conditions.
2. Workers’ Compensation Insurance
Another benefit that you’re legally required to provide your employees is workers’ compensation insurance, which covers the cost of medical care, treatment, rehabilitation, and paid leave or replacement income for employees who incur injury or illness in a situation related to their job.
3. Unemployment Insurance
In the event that an employee involuntarily loses his or her job, unemployment compensation provides partial income replacement for a short time. Both employees and their employers contribute to unemployment compensation insurance, which is administered by the government on both a state and federal level.
4. Health Insurance
Currently, the Affordable Care Act (ACA) requires any organization that employs 50 or more full-time employees must provide healthcare coverage. These businesses are also required to report the value of health insurance on employee W2-forms and they’ll also have to file the appropriate forms with the IRS, providing details regarding the cost and types of insurance plans they offer their employees. Not offering sufficient or affordable health insurance to full-time employees could result in an assessment and possible penalties from the federal government.
5. Family and medical leave
If your private business employs more than 50 employees, the federal Family Medical Leave Act (FMLA) requires that your company provide its workers with up to 12 weeks of unpaid leave while still protecting their job security.
This law was created to help workers balance the demands of family, personal, and medical needs without having to worry about being fired over taking time off. Situations in which an employee may apply for family and medical leave include the birth of a child, caring for a spouse or family member with serious medical condition, transitioning to active duty military service, and caring for their own serious health condition.
To qualify for family and medical leave under the FMLA, employees must:
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Work for the company for a period of 12 months or longer
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Have worked a minimum of 1,250 hours prior to the start of paid leave time
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Work for a company that employs 50 or more workers within a 75 mile radius
Medicare and social security, unemployment insurance, workers’ compensation, health insurance, and family and medical leave are all benefits that the federal government requires businesses to provide. State governments may have other requirements.
Whether you offer additional benefits to your employees is up to your discretion. Given that 62% of employees say they would leave their job for better benefits, adding voluntary benefits that your company doesn't have to pay for is a no-brainer. Seek out voluntary insurance programs as a way to offer employees additional benefits, savings, convenience, and financial assistance.
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