Employee Benefits Strategies

Workers' Compensation

Workers' Compensation is a no-fault insurance plan to pay for workplace injuries and accidents.

Workers' Compensation includes payment for:

• medical treatment
• wage replacement benefits
• death benefits

Workers' Compensation is a state-mandated program, so the exact composition of benefits varies by state. Benefits are usually based on a worker's wages at the time of injury and the number of his or her dependents. Costs to employers are influenced by the provisions of state law as well as by the employer's accident record.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act (FMLA) was passed in 1993.

FMLA provides all eligible employees with leave of up to 12 workweeks per year for specified family and medical reasons.

Leave may be paid if the employee has earned paid time off, or unpaid if not.

Such leave may be for the:

• birth of and care of a child
• adoption of a child
• care of a family member with a serious health condition
• maintenance of an employee's own serious health condition
• time needed for an emergency arising from a covered military family member’s active duty service

Military caregiver leave of 26 workweeks per year to care for a covered servicemember with a serious injury or illness is also provided for if the servicemember is a family member of the employee.

The employee must give 30 days' notice before taking such leave when practical. The employee may retain benefits during the leave and is entitled to return to the same or an equivalent position of duties and pay.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

The Consolidated Omnibus Budget Reconciliation Act (COBRA) entitles most employees and their dependents to extend their group health benefits for up to 18 months after losing their coverage. Dependents may extend coverage for up to 36 months in certain circumstances. Coverage may be extended for up to 29 months for certain disabled individuals. The employee or dependent must pay the premium plus a 2% administrative fee to keep the coverage.

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) establishes a federal role for regulating the employer group and individual insurance markets. One goal of the legislation is to improve availability and portability of health insurance coverage. It guarantees the availability of insurance to all small employers, those with 2 or more employees, and assures that individuals who leave employment are able to maintain health insurance coverage.

In certain circumstances, states may impose stricter obligations on health insurance plans. HIPAA allows states to regulate insured employer medical plans as long as their provisions are more beneficial than federal law.

The HIPAA Privacy Rule created national standards to protect individuals’ medical records and other personal health information.

Regulated Benefits

There are benefits that are not required but are considered to be so important to the social safety net that they are regulated by the federal government. These are the following:

• Retirement Plans
• Health Care

Employee Retirement Income Security Act (ERISA)

The Employment Retirement Income Security Act of 1974 (ERISA) was passed to ensure that pensions offered by employers meet certain standards and are received by employees. ERISA does not require employers to offer pension or retirement programs. It does require that those companies that do offer retirement programs follow certain rules if they want favorable tax treatment for their contributions and for their employees' deferral of income.

Patient Protection and Affordable Care Act (ACA)

Under the Patient Protection and Affordable Care Act:

1. Employers are required to disclose the coverage and cost of each employee’s employer-sponsored group health insurance coverage using a standard Summary of Benefits and Coverage (SBC) form.
2. 2026 Health FSA contributions are limited to $3,400/year and the limit is indexed to cost-of-living adjustments in the following years.
3. Individual and small group policies are available through state and federally operated health insurance exchanges, with some individual purchasers qualifying for premium and cost-sharing subsidies.
4. Employers must announce whether they will continue to offer health care coverage or whether they will elect to pay applicable taxes and give employees the option to buy coverage through an exchange.
5. Employers with 50 or more full-time equivalent employees, health insurance companies, and self-insuring employers of any size need to file an annual report stating whether they provide health insurance to their employees and, if so, detailing what it is. Businesses with 50 or more employees are also subject to the employer shared responsibility provisions which means they must offer their full-time employees a minimum essential coverage that is affordable and that provides minimum value – or make an employer responsibility payment to the IRS.
6. 2026 out-of-pocket maximums for Affordable Care Act compliant health plans are $10,600 for self-only coverage or $21,200 for family coverage.
7. Any waiting period for coverage is limited to 90 days.