Employee Benefits Required by Law
By: David • Research Paper • 6,708 Words • March 4, 2009 • 897 Views
Essay title: Employee Benefits Required by Law
Employee Benefits Required by Law
The legally required employee benefits constitute nearly a quarter of the benefits package that employers provide. These benefits include employer contributions to Social Security, unemployment insurance, and workers' compensation insurance. Altogether such benefits represent about twenty-one and half percent of payroll costs.
Social Security is the federally administered insurance system. Under current federal laws, both employer and employee must pay into the system, and a certain percentage of the employee's salary is paid up to a maximum limit. Social Security is mandatory for employees and employers. The most noteworthy exceptions are state and local government employees.
The Social Security Act was passed in 1935. It provides an insurance plan designed to indemnify covered individuals against loss of earnings resulting from various causes. This loss of earnings may result from retirement, unemployment, disability, or the case of dependents, the death of the person supporting them. Social Security does not pay off except in the case where a loss of income through loss of employment actually is incurred. In order to be eligible for old age and survivors insurance (OASI) as well as disability and unemployment insurance under the Social Security Act, an individual must have been engaged in employment covered by the Act. Most employment in private enterprise, most types of self-employment, active military service after 1956 and employment in certain nonprofit organizations and governmental agencies are subject to coverage under the Act. Railroad workers and United States civil service employees who are covered by their own systems and some occupational groups, under certain conditions, are exempted form the Act. The Social Security Program is supported by means of a tax levied against an employee's earnings which must be matched buy the employer. Self-employed persons are required to pay a tax on their earnings at a rate, which is higher than that paid by employees but less than the combined rates paid by employees and their employers.
In order to receive old age insurance benefits, a person must have reached retirement age and be fully insured. A full-insured person is one who must have earned at least $50 in a quarter for a period of 40 quarters. It is possible for an individual who dies or becomes totally disabled at an early age to be classified as fully insured with less than 40 quarters. To receive old age insurance benefits, covered individuals must also meet the test of retirement. To meet this test, persons under 70 cannot be earning more than an established amount through gainful employment. This limitation of earnings does not include income from sources other than gainful employment such as investments or pensions. Social security retirement benefits consist of those benefits which individuals are entitled to receive in their own behalf, called the primary insurance amount, plus supplemental benefits for eligible dependents. These benefits can be determined from a prepared table. There are also both minimum and maximum limits to the amount that individuals and their dependents can receive.
The Social Security program provides benefit payments to workers who are too severely disabled to engage in gainful employment. In order to be eligible for such benefits, an individual's disability must have existed for at least 6 month and must be expected to continue for at least 12 months. Those eligible for disability benefits must have worked under Social Security for a t least 5 out of the 10 years before becoming disabled. Disability benefits, which include auxiliary benefits for dependents, are computed on the same basis as retirement benefits and are converted to retirement benefits when the individual reaches the age of 65.
The survivors' insurance benefits represent the form of life insurance that is paid to members of a deceased person's family who meet the requirements for eligibility. As in the case of life insurance, the benefits that the survivors of a covered individual's receive may be far in excess of their cost to this individual. Survivors of individuals, who were currently insured, as well as those who were fully insured at the time of death, are eligible to receive certain benefits, provided that the survivors meet other eligibility requirements. A currently insured person is one who has been covered during at least six out of the thirteen quarters prior death.
Many people think of Social Security as a retirement program. But, retirement benefits are just one part of the Social Security program. Some of the Social Security taxes person pays go toward survivors
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