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Employee Benefits Required By Law Essay Research (стр. 1 из 3)

Employee Benefits Required By Law Essay, Research Paper

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

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


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 insurance. In fact, the value of the survivors insurance

he/she has under Social Security is probably more than the value of his/her

individual life insurance. When someone who has worked and paid into Social

Security dies, survivor benefits can be paid to certain family members.

These include widows, widowers, children, and dependent parents. Anyone

earns survivors insurance by working and paying Social Security taxes.

When someone dies, certain members of his/her family may be eligible for

survivors? benefits if the person worked, paid Social Security taxes and

earned enough credits. You can earn a maximum of four credits each year.

The number of credits you need depends on your age when you die. The younger

a person is, the fewer credits he or she needs to have family members be

eligible for survivors? benefits. But nobody needs more than forty credits

to be eligible for any Social Security benefits.

Under a special rule, benefits can be paid

to your children and your spouse, who is caring for the children, even

if you do not have the number of credits needed. They can get benefits

if you have credit for one and one-half years of work in the three years

just before your death. When you die, Social Security survivors benefits

can be paid to your:

(a) Widow or widower – full benefits at

age 65 or older (if born before 1938) or reduced benefits as early as age

60. A disabled widow or widower can get benefits at 50 ? 60. The surviving

spouse?s benefits may be reduced if he or she also receives a pension from

a job where Social Security taxes were not withheld. Widow or widower -

at any age if he or she takes care of your child under age 16 or disabled

who get benefits. (b) Unmarried children under age 18 or up to age 19 if

they are attending elementary or secondary school full time. Your child

can get benefits at any age if he or she was disabled before age 22 and

remained disabled. Under certain circumstances, benefits also can be paid

to you stepchildren, grandchildren, or adopted children. (c) Dependent

parents at 62 or older.

Some people find Social Security taxes

an unwelcome deduction from the family?s earnings. They are thinking about

how they could use the money to pay bills or plan for their children’s

college education. But the illness or injury–or even the death–of a parent

in a family with young children can suddenly make Social Security a very

important part of the family’s survival. Those paycheck deductions for

Social Security taxes could make it possible for the family to stay together.

For example, some families can get as much as $2,000 a month when the worker

is disabled. This fact sheet focuses on benefits paid to the children when

one or both parents become disabled, retire or die. When people think of

Social Security benefits, they usually think of older men and women who

are retired or who are widows or widowers. If you find it difficult to

picture a small child as a Social Security beneficiary, you may be surprised

to learn that 3.8 million children receive approximately $1.4 billion each

month because one or both of their parents are disabled, retired or deceased.

Those dollars are helping provide the necessities of life for the family

members and helping make it possible for those children to complete high

school. When a parent becomes disabled or dies, Social Security benefits

help stabilize the young family’s financial future.

The child can be the worker’s biological

child, adopted child or stepchild. The child also could be a dependent

grandchild. To get benefits, a child must have a parent(s) who is disabled

or retired and entitled to Social Security benefits, or have a parent who

died after having worked long enough in a job where he or she paid Social

Security taxes. The child also must be under age 18; be 18-19 years old

and a full-time student (no higher than grade 12); or be 18 or older and

disabled. The disability must have started before age 22. Normally, benefits

stop when the child reaches age 18 unless he or she is disabled. Five months

before the beneficiary’s 18th birthday, we send the child a notice that

benefits will end at age 18, unless he or she is a full-time student at

a secondary (or elementary) school. If the beneficiary is under age19 and

still attending a secondary or elementary school, he or she must notify

us by completing a statement of attendance. The benefits then will continue

until he or she graduates or until two months after becoming age 19, which

ever comes first. If a child who is receiving Social Security benefits

is in the mother’s (or father’s) care, the parent may be able to receive

benefits until the child reaches age 16. The child’s benefits continue,

but the parent’s benefits stop unless he or she is age 60 or over and is

receiving benefits as a widow or widower or is age 62 or older and receiving

retirement benefits.

Within a family, each child may receive

up to one-half of the worker’s full retirement or disability benefit, or

75 percent of the deceased parent’s basic Social Security benefit. However,

there’s a limit to the amount of money that can be paid to a family. The

family maximum payment is determined as part of every Social Security benefit

computation and can be from 150 to 180 percent of the worker’s full benefit

amount. If the total amount payable to all family members exceeds this

limit, each person’s benefit is reduced proportionately (except the worker’s)

until the total equals the maximum allowable amount. As an example of monthly

benefits, let’s say Tom Brown earns $30,000 a year, is age 35, married

and has one child. Tom is severely injured in a car accident and is found

to be eligible for Social Security disability benefits. Tom, his wife and

their child receive $1,640 each month. As another example of how Social

Security benefits can help the young family, Sara was age 45 and earning

$50,000 when she died, leaving her husband and two children. The husband

and children receive $2,370 each month based on Sara’s earnings record.

If you were like most people, you would

rather work than stay home. But working is a big step for a person with

a disability. Social Security and SSI have special rules called “work incentives”

to help you overcome some problems. These work incentives include cash

benefits while you work; Medicare or Medicaid while you work; help with

any extra work expenses you may have as a result of your disability; and

help with education, training and rehabilitation to start a new line of

work. Social Security disability insurance benefits are paid to people

with disabilities or to individuals who are blind who have worked under

Social Security and to their dependents. SSI disability benefits are paid

to people with disabilities or to individuals who are blind who have little

income and few resources. Social Security beneficiaries with low income

and few resources also may qualify for SSI. Although there are differences

between Social Security and SSI, the work incentives under both programs

are designed to accomplish the same objective: to provide support and assistance

while you attempt to return to work or as you enter the workforce for the

first time.

The disabled individual will receive his

or her full monthly Social Security benefit for a year after the individual?s

return to work. If he or she continues to work beyond that while still

disabled, the person?s eligibility for monthly cash benefits will continue

for at least another 36 months. The person usually can have a trial work

period of nine during which his or her benefits will not be affected by

your earnings regardless of how much you earn. A trial work month is any

month in which his or her total earnings are more than $200 or, if he or

she are self-employed, the person will earn more than $200 (after expenses)

or spend more than 40 hours in the person?s own business. Before the person

will start loosing benefits he or she can earn more than $500 a month.

Nearly every American–man, woman and

child–has Social Security protection, either as a worker or as a dependent

of a worker. Most women did not work outside the home. Today, the role

of women is far different. Nearly 60 percent of all women are in the nation’s

workforce. Many women work throughout their adult lives. Although Social

Security always has provided benefits for women, it has taken on added

significance. More women work, pay Social Security taxes and earn credit

toward a monthly income for their retirement. Working women with children

earn Social Security protection for themselves and their families. This

could mean monthly benefits to a woman and her family if she becomes disabled

and can no longer work. If she dies, her survivors may be eligible for

benefits. Although some women choose lifetime careers outside the home,

many women work for a few years, leave the labor force to raise their children,

and then return to work. Some women choose not to work outside their homes.

They usually are covered by Social Security through their husband’s work

and can receive benefits when he retires, becomes disabled or dies. Whether

a woman works, has worked or has never worked, it is important that she

knows exactly what Social Security coverage means to her. She also should

know about Social Security coverage for anyone she may hire as a household

worker or provider of childcare. She needs to know what to do if she changes

her name. And she needs to know that if she receives a pension for work

not covered by Social Security, her Social Security benefits could be affected.

Unemployment Compensation

Unemployment insurance provides workers,

whose jobs have been terminated through no fault of their own. Monetary

payments for a given period of time or until they find a new job. Unemployment

payments are intended to provide an unemployed worker time to find a new

job equivalent to the one lost without major financial distress. Without

employment compensation many workers would be forced to take jobs for which

they were overqualified or end up on welfare. Unemployment compensation

has also been justified in terms of providing the economy with consumer

spending during periods of economic adjustment.

Unemployment compensation is a form of

insurance designed to provide funds to employees who have lost their jobs

and are seeking other jobs. Title IX of the Social Security Act of 1935

requires employers to pay taxes for unemployment compensation. The law

was written in such a manner as to encourage individual states to establish

their own unemployment systems. If a state established its own unemployment

compensation system according to prescribed federal standards, the proceeds

of the unemployment taxes paid an employer go to the state. By 1937, all

states and the District of Columbia had adopted acceptable unemployment

compensation plans.

Employees who have been working in employment

covered by the Social Security Act and who are laid off may be eligible

for unemployment insurance benefits during their unemployment for a period

up to twenty-six weeks. Eligible persons must submit an application for

unemployment compensation with their state employment agency, register

for available work and be willing to accept any suitable employment that

may be offered to them. However, the term suitable permits individuals

to enjoy considerable discretion in accepting or rejecting job offers.

The amount of the compensation that workers are eligible to receive which

varies among states, is determined by their previous wage rates and previous