Employee benefits
Employee benefits are the non-wage compensation you provide alongside pay, including health coverage, life and disability insurance, retirement plans, and paid leave.
Some benefits are required by law; others are offered to compete for employees. Nearly all of them create a payroll deduction, an employer contribution, or both. Employee deduction and employer contribution stay two numbers, never one. A benefit election is complete only when the election, the payroll deduction, the carrier enrollment, and the billing record all agree. Each stage can fail on its own, so a benefits question rarely has one owner.
Which benefits are required and which are optional?
Legally mandated benefits are a narrow set; everything else is voluntary and competitive. The Affordable Care Act adds an offer requirement for applicable large employers, generally those averaging 50 or more full-time and full-time-equivalent employees. If your plan includes prescription drug coverage, you generally must send a Medicare Part D creditable coverage notice before October 15 each year, and at other set times, telling Medicare-eligible enrollees and applicants whether it is creditable. A package is usually described by total cost and by your contribution percentage at each coverage tier.
- Social Security and Medicare contributions
- Unemployment insurance
- Workers’ compensation coverage, where state law requires it
- Continuation coverage through COBRA at employers with 20 or more employees
- Paid sick leave and paid family or disability leave programs, where state or local law requires them
- Medical, dental, and vision plans
- Group life and disability
- A 401(k) or similar retirement plan
- Health savings and flexible spending accounts
- Paid time off beyond any state or local mandate
- Voluntary benefits, such as accident, critical illness, and pet insurance
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.