Insurance

You may choose to offer your employees various types of insurance as a benefit. The types of insurance generally offered are various forms of health insurance, disability insurance, and life insurance.

Health insurance. Health care benefits are one of the most important and popular benefits that an employer can provide. Health plans typically reimburse employees for some or all of the costs associated with their medical care and, if you choose, for the medical care of their dependents. They don't cover work-related injuries that are covered by workers’ compensation As a practical matter, most employers will have to offer some kind of health care benefit to attract and retain high quality employees.

Although employers aren't required to provide health care, the insurers who provide health insurance are highly regulated. Group health plans are subject to substantial federal regulation regarding who and what must be covered. All 50 states also regulate insurers that offer health insurance by requiring them to include particular types of health care coverage if they offer health insurance policies at all. Thus, if you decide to offer health care coverage, you may have no choice about providing certain benefits.

You can establish rules to determine who is eligible for coverage and, if you apply them consistently, you shouldn't run afoul of any federal rules. Be careful, however, in applying age restrictions or requirements on eligibility. While there are no laws establishing minimum and maximum ages for coverage, employees may charge that you're discriminating against them if the rules are set up so as to deny coverage, for example, people over some age. However, many plans terminate dependent coverage when a child reaches age 22. Plans may also require employees eligible for Medicare to take advantage of it.

The terms of the coverage are also up to you, and you have a wide range of options:

Will part-time workers be covered?
Who, in addition to the employee, will be covered?
Will coverage be optional?
Will employees be asked to cover part or all of the cost?
How long after being hired must an employee wait to participate?

Finally, how you go about obtaining coverage is up to you. There are numerous ways to obtain health care insurance, including:

fee-for-service insurance or indemnity plans
health maintenance organizations (HMOs)
preferred provider organizations (PPOs)
dental, vision, and hearing care plans
flexible spending accounts and health savings accounts (HSAs)
long-term care insurance

Disability Benefits. Some employers offer benefits that guarantee income when an employee can't work because of sickness or accident. Disability benefits include paid sick leave, short-term disability insurance, and long-term disability insurance. If you decide to provide disability benefits and purchase an insurance policy to provide the benefits, the plan will probably be subject to ERISA.

Short-term disability insurance provides income to employees who become disabled due to sickness or accident. Typically an employee will receive a percentage of his or her wages after being absent from work for a short waiting period. The term of the benefit is specified in the contract, and is generally less than a year.
Long-term disability policies take up where short-term policies leave off, covering employees who are disabled and unable to work for longer periods of time. Payments continue for the duration of the disability to retirement age or for a specified number of months.

Life insurance. Group-term life insurance is the most common form of life insurance offered as a benefit. Under a group-term policy, an employer typically purchases term life insurance coverage for all employees during the period that they're employed. Each employee is free to designate the beneficiary of the policy.

Other types of life insurance are also available, such as accidental death and dismemberment and business travel accident insurance.