What is Employee Health Insurance Coverage?
Employee Health Insurance is a kind of insurance coverage paid for by the organisation or company where the beneficiary works. It is a type of coverage that is purchased by an employer for employees in the organisation. It is being paid for sometimes by the employer or jointly by the employer and employee. It is important to note that not all organisations provide employer-based health insurance coverage, as a matter of fact, not all organisations are mandated to provide health insurance coverage for their workers. In accordance with the Affordable Care Act (ACA) companies or organisations with less than 50 employees who work full time, are regarded as small businesses and therefore not obligated to provide employer-based health insurance coverage for their employees.
Recently, Employer-based health insurance has been subsidised in part by the federal government via tax exclusions for employer contributions to employee health insurance plans. This subsidisation costs the federal purse being on the brink of 10 billion dollars a year in lost revenues. A lot of proposed national health insurance plans assign an important role to employer-based health insurance as a means of financing health care. Subsidisation of employer-based health insurance and plans by the federal government that assign employers a major role in the administration of a national health insurance plan both assume that private industry acts to realise federal health policy goals—particularly cost containment—in administering health insurance plans. Not much is known, however, about how employers go about the selection of the plans they offer their employees or about the incentives and disincentives regarding the cost of care than are created by employer-based health insurance. However, existing evidence suggests that instead of helping to contain health care costs, employer-based insurance could also be partly liable for their present increment. Besides, employer-based health insurance may not be the most equitable way to carry out national health insurance plans.
Furthermore, the employer portion of payroll taxes comprises
- Medicare taxes(1.4% of wages)
- Taxes for social security (6.2% up to the annual maximum)
- Federal unemployment taxes
In the course of starting a business, most entrepreneurs want to draw in employees by offering them a strong benefits package. Then, reality sets in, and that they realise that this may need to wait until they establish positive income. Well, no matter if an employer is simply starting out or if they’re already well established, employers need to realise that there are certain required employee benefits they MUST offer to take care of compliance with the law; failure to try to so can trigger large penalties. Here are required employee benefits employers cannot skip — and a few that are only applicable as a business grows.
What Are The Required Employee Benefits?
1. Social Security and Medicare Benefits:
Every employer, no matter size, is subject to the specified employee advantage of matching their employees’ Social Security and Medicare contributions. The present rate for Social Security is 6.2% of the employee’s wage from each party, equalling 12.4 percent in total, up to the primary $127,200 in earnings. This sum is otherwise called the “wage base limit.”
The present rate for Medicare is 1.45 percent of the employee’s wage from each party, totalling 2..9 percent in total. Also, employers are liable for paying a further 0.9 percent Medicare tax for workers earning quite $200,000 per annum, starting in the pay period in which wages cross the $200,000 threshold and still do so for the rest of the civil year. The results of not withholding social security or Medicare taxes are no joking matter. Employers that fail to withhold proper taxes open themselves up to both criminal and civil charges in court. Employees can also be impacted; they’ll not be ready to qualify for Social Security, Medicare, or unemployment benefits.
2. Unemployment Insurance:
All employers, no matter size, are mandated to hold unemployment insurance. This type of insurance is usually used if a corporation lays off employees, but it is also used if a former employee files a claim against an employer and that employer doesn’t have documentation for the reasons behind their termination. More so, this tax helps protect employers when an unemployment claim is filed against them. Every state has different regulations dictating the bottom wage upon which calculations are made. Regardless, this tax is exclusive because employers even have a touch of control over their rate. By showing diligent termination practices (such as keeping extensive documentation), employers will be better able to reduce their company’s risk and their rate is going to be less than a corporation with several indefensible claims against it. In some ways, unemployment insurance works a touch like a car insurance: if you’re found guilty for multiple car accidents, your rates are likely to travel up. The fewer the amount of at-fault claims, the lower an employer’s rates are going to be.
3. Worker’s Compensation:
Any business with workers or employees is subject to the specified employee advantage of worker’s compensation insurance. Employers may either choose to self-insure or get coverage through their state, but they need to carry it. Worker’s compensation is meant to guard employees who pick up an injury at work while completing work-related duties. In turn, it helps protect employers from expensive lawsuits.
According to the Society for Human Resource Management, five states (California, Hawaii, Rhode Island, New Jersey, and New York— plus Puerto Rico) require employers to hold welfare. This is to guard employees, should they have to miss work for a non-work related injury or illness. Though not required for employers altogether states, some businesses in unaffected states prefer to offer social insurance as a voluntary benefit. This amount is usually paid for fully by employees who prefer to purchase a policy. The employer’s only responsibility is to supply a link between the worker and therefore the benefits broker selling the policies