- SOCIAL SECURITY & MEDICARE
- UNEMPLOYMENT INSURANCE
- ELIGIBILITY FOR BENEFITS
- SICK PAY PLANS
- DISABILITY PLANS
- WORKERS’ COMPENSATION
- FAMILY AND MEDICAL LEAVE ACT
- RELIGIOUS LEAVE
- VOTING LEAVE
- JURY DUTY
- VETERANS’ RIGHTS
- MANDATED BENEFITS AT-A-GLANCE
- FORMS AND CHECKLISTS
- Are there any employee benefits that are required by law?
- Who is covered by Social Security and Medicare?
- What does unemployment compensation cover?
- Are small businesses subject to the requirements of the Family and Medical Leave Act of 1993?
- What is disability insurance?
- What do accident and sickness plans provide for?
- Are salary and wages paid for vacations, holidays or special days off, subject to regular income tax?
- Are small businesses obligated to grant military leave to employees serving in the National Guard and reserves?
- What types of accommodations must employers make for employee’s religious observance?
- Must employers allow work-time off to perform jury duty?
In addition to the fringe benefits that many employers provide voluntarily, various state and federal laws require that certain minimum benefits be provided to employees. These mandated benefits include contributions to the federally-funded programs, such as Social Security and Medicare, as well as state-mandated worker’s compensation and disability insurance. These benefits—which most employers must provide—are discussed in this section. Both required and optional benefits have tax and legal ramifications.
Group Health Plans
Although not technically a mandated benefit, the Affordable Care Act establishes a number of new requirements for group health plans.
Social Security pays benefits when you retire, become disabled, or die. You must meet certain eligibility requirements for each type of benefit. Other members of your family may also be eligible for benefits when you become entitled.
Practically everyone who is employed or self-employed is covered by Social Security and Medicare, with few exceptions.
The employer and employee pay taxes for Social Security and Medicare. The employer pays half the cost— while the employee receives all the benefits.
The taxes that you and your employer pay each year are based on the tax rate (percent of pay) and the amount of earnings. Tax rates are established by federal law. The maximum taxable amounts increases each year, based on increases in the average wages and salaries of all the employees in the country.
Old-Age, Survivors and Disability Insurance (OASDI). This tax pays for cash benefits to entitled beneficiaries.
Hospital Insurance (HI). This tax pays for hospital benefits for people covered by Medicare.
This section provides information to Human Resource professionals regarding the various Social Security programs and Medicare and is a valuable resource in helping your employees plan for retirement or other life events.
Watch the video How Social Security Can Help You Plan for Retirement, to understand the role that Social Security plays in retirement planning. In addition, knowing the planning tools and other help available from Social Security makes retirement planning so much easier.
SocialSecurity.gov also have a video available for those employees who are deaf and hard of hearing at: www.socialsecurity.gov/multimedia/video/asl.
For Additional Information
- Social Security Information and Resources for Employers
- Social Security: Business Services Online
- Employer W-2 Filling Instructions and Information
- Instructions for Hiring Employees Not Covered by Social Security
- Social Security Forms
- Social Security Publications
Verify Employees’ Social Security Numbers
The Social Security Number Verification Service allows employers to verify the names and Social Security numbers of current and former employees for wage reporting purposes only.
Social Security also offers the Consent Based Social Security Number Verification Service.
Unemployment compensation provides for a continuation of income for unemployed workers and their families. Employers do not have a choice of whether to provide unemployment benefits; all employers must contribute to the unemployment insurance funds in their states. And, the amount of benefits is set by law.
Benefits are available only to workers who are actively seeking suitable work to replace jobs they lost through no fault of their own. Workers laid off when there is no longer a need for their services and workers who lose their job because of lack of ability to meet the job’s requirements are eligible for benefits. However, claimants who are fired because of misconduct or who are not willing, able, and available for work are not eligible for unemployment benefits.
If your business is required to pay these taxes, you must register with your state’s workforce agency, which can be found on this State and Local Tax page.
Employers are required by federal and state law to make unemployment insurance contributions on behalf of their employees.
Federal and state unemployment taxes are fully deductible by employers. In contrast, recipients of unemployment insurance benefits must pay federal income tax on the full amount of their benefits. Although a few states still follow the old federal formula, which provided for a partial exclusion of unemployment insurance benefits from taxable income, most states now tax unemployment compensation in the same way as regular wages.
The majority of common leave benefits offered by employers are not required by federal law, and are offered to employees as part of the employer’s overall compensation and benefits plan. However, states may have leave requirements, such as for jury duty and voting. Other leave benefits include holiday/vacation, jury duty, personal leave, sick leave and funeral/bereavement leave. Employers are required to provide leave under the Family and Medical Leave Act (FMLA).
The Family and Medical Leave Act entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Eligible employees are entitled to:
- Twelve workweeks of leave in a 12-month period for:
- the birth of a child and to care for the newborn child within one year of birth;
- the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
- to care for the employee’s spouse, child, or parent who has a serious health condition;
- a serious health condition that makes the employee unable to perform the essential functions of his or her job;
- any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty;” or
- Twenty-six workweeks of leave during a single 12-month period to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin (military caregiver leave).
For a more detailed discussion of the Family and Medical Leave Act, see our FMLA page.
Disability insurance is insurance that provides for the payment of amounts in place of a person’s salary when physical or mental disabilities prevent the person from performing gainful employment. Short-term disability payments generally refer to payments of a disability that is of a temporary nature, where the person’s ability to return to their employment is expected. Long-term disability is a disability whose length is not ascertainable.
The following states and territories require businesses to provide partial wage replacement insurance coverage to their eligible employees for non-work related sickness or injury:
Employees need to be assured that if they are injured on the job, their medical benefits will be taken care of and they will receive some income continuation while they are unable to work.
The workers’ compensation program covers job-related injuries and illnesses. Income replacement benefits are provided—at the employer’s expense—for disabilities that are temporary or permanent, partial or total. Benefits are also provided to surviving dependents in the case of job-related deaths. In addition, full medical care and, to a limited extent, vocational rehabilitation are covered.
Businesses with employees are required to carry Workers’ Compensation Insurance coverage through a commercial carrier, on a self-insured basis, or through the state Workers’ Compensation Insurance program.
The Family and Medical Leave Act of 1993 (FMLA) is intended to provide a means for employees to balance their work and family responsibilities by taking unpaid leave for certain reasons.
The FMLA entitles employees to have up to 12 weeks of job-protected, unpaid leave during any 12-month period for any of the following reasons:
- Birth and care of the eligible employee’s child, or placement for adoption or foster care of a child with the employee
- Care of an immediate family member (spouse, child, parent) who has a serious health condition
- Care of the employee’s own serious health condition
FMLA requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave. FMLA applies to private employers with 50 or more employees, and to all public employers. Visit the Department of Labor’s website for more information.
The majority of common leave benefits offered by employers are not required by federal law, and are offered to employees as part of the employer’s overall compensation and benefits plan. These leave benefits include holiday/vacation, jury duty, personal leave, sick leave and funeral/bereavement leave.
Employers must make provisions for religious observance by workers under Title VII of the Civil Rights Act of 1964. But, employers are not specifically required to provide paid leave or to make an accommodation that would cause the company “undue hardship.”
While there is no federal statute on voting leave, many states have passed laws that require employers to grant employees time off to vote. Whether they are subject to state statutes, employers generally allow some leeway in employee arrival or departure on days when a national election or important state, city, or county election is held. Usually, pay is not deducted for missed work time.
Each state has its own laws with which you must comply. This page includes links to your state labor office.
Employees who are U.S. citizens may be called on periodically to serve as jurors within the court system, and employers are generally obliged to permit their absence for performance of this public service.
Employers allow work-time off to perform jury duty, often without requiring them to forgo pay. Within certain constraints of the law, employers can influence the timing of jury service to requesting postponements from the courts.
Jury Duty Leave
The Federal Jury System Improvement Act makes it unlawful for employers to discriminate against or discharge an employee summoned to serve as a juror in any court of the United States. Many states similarly protect employees summoned to serve as a juror or witness in state court. Federal and state laws generally do not require employees to be paid for jury or witness duty time off, although some states require a minimum form of salary continuation for jury duty time.
Each state has its own laws with which you must comply. This page includes links to your state labor office.
The Uniformed Services Employment and Re-employment Rights Act of 1994 (USERRA) protects veterans who have left an employment position (other than temporary) to perform training or service in the armed forces. Coast Guard personnel are treated equally with other uniformed service personnel. USERRA also may apply to employees who left employment for active duty within the past five years, but who have not yet returned from service.
USERRA provides that an employee or his or her dependents who have coverage under an employer’s health plan must be offered continuation coverage for up to 18 months after commencement of military service. With the exception of service-connected conditions as determined by the secretary of veterans’ affairs, if coverage under the health plan is terminated because of military service, an exclusion or waiting period may not be imposed on the employee (or family member) when the employee is re-employed.
USERRA applies to all traditional pension plans and defined contribution plans such as profit sharing plans, 401(k) plans, Employee Stock Ownership Plans (ESOPs), money purchase plans, and other deferred compensation arrangements. Returning veterans have a right to plan benefits with no break in employment service, no forfeiture of benefits already accrued, and no necessity to requalify for participation. Upon re-employment, service in the military will count as employment service for purposes of vesting and for determining the accrual of benefits.
- Virtually everyone who is employed or self-employed is covered by Social Security and Medicare.
- Unemployment compensation provides for a continuation of income for unemployed workers and their families.
- Sick leave pay generally provides employees with full pay for occasional unplanned absences caused by non-work related personal illness or injury.
- Disability insurance is insurance that provides for the payment of amounts in place of a person’s salary when physical or mental disabilities prevent the person from performing gainful employment.
- Generally, employers are obligated by USERRA—and, in most cases, state law, as well—to grant military leave to employees serving in the National Guard and reserves and to reinstate such employees returning from service in the armed forces.
- The FMLA requires employers with fifty or more employees to provide up to twelve weeks of leave a year to qualified employees.
- Employers must make provisions for religious observance by workers; but not to make an accommodation that would cause the company “undue hardship.”
- Most employers allow work-time off to perform jury duty, often without requiring them to forgo pay.
- Checklist for Determining Employee Eligibility for Leaves of Absence
- Application for a Leave of Absence
- Model Medical Leave Certification Form
- Short-Term Disability Benefits Policy
- Long-Term Disability Benefits Policy
- Military Leave Policy
- Maternity Leave Policy
- Request for Family Leave
- Request for Medical Leave of Absence
- Policy on Family and Medical Leave
- Small-Employer Family Leave Policy
For Additional Information
- Administration on Aging — Information designed for Older Americans and their families
- Agency for Healthcare Research and Quality (AHRQ)
- Business USA — Access to federal government information and services for businesses.
- Centers for Medicare & Medicaid Services (CMS) — The Medicare and Medicaid Agency
- Department of Health and Human Services (DHHS)
- Department of Veterans Affairs — (VA)
- Disability.Gov — Resources for Americans with Disabilities
- Internal Revenue Service (IRS) – Retirement Plan Information
- Medicare — The Official U.S. Government Site for Medicare Information
- Medicaid –The Official Site for Medicaid Information
- Mymoney.gov — Providing financial education resources for all Americans
- National Council on Disability (NCD)
- Pension Benefit Guaranty Corporation – (PBGC) The federal agency that protects traditional pension plans.
- Railroad Retirement Board
- USA.Gov — The U.S. government’s official web portal
- U.S. Citizenship and Immigration Services
- U.S. Office of Personnel Management Federal Retirement Benefits (OPM) — Federal Retirement Programs.