Benefits

Employers are required to make contributions on behalf of employees into several social insurance programs. These include Social Security, unemployment insurance, and workers’ compensation (for replacement income and medical expenses arising from workplace injuries). Leave provided under the Family and Medical Leave Act (FMLA) can also be thought of as a type of legally mandated benefit, although it does not require that paid time off be provided beyond the employer’s own leave policy.

Employers are not, strictly speaking, required to offer group health plans, although larger employers may be subject to monetary penalties if they fail to do so. The general rule is that employers are not legally required to provide health insurance, pensions, disability insurance, life insurance, or any other benefits. These laws come into play only after an employer has decided to offer benefit plans and determined how generous those plans will be.

In 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law. This law—also known as the Affordable Care Act (ACA) or “Obamacare”—is intended to ensure that most Americans will have health insurance coverage and receive quality medical care. At the same time, the law includes a number of measures aimed at reining in the costs of health care. The PPACA is a complex statute. In large part, the law’s complexity stems from its ambitious objectives and the need for a comprehensive approach to achieve those objectives.

Under ERISA, pension plans are categorized as either defined benefit or defined contribution plans. Legal requirements vary depending on the type of plan, with defined benefit plans being more closely regulated. As the name suggests, defined benefit plans promise a specific pension benefit on retirement. The size of an individual’s pension is typically determined by a formula based on years of service and earnings.