If an employer offers work related benefits, it's important to understand the type of life insurance coverage available in order to prevent any insurance gaps or misunderstandings.
It is expected for employers to offer their employees some form of work related benefits. And while a few types of insurance coverages are mandatory for certain employers, others are not. Regardless, it could be in your best interest to understand the more common types of insurance that may be available through your employer. Why? Because by knowing what you do and don't have allows you to fill in any insurance gaps in your overall coverage. Plus, you'll be informed enough to seek the benefits you need, when you need them.
Healthcare insurance
Many employers offer some type of group healthcare insurance coverage to their employees. Plans will differ, and can be anything from basic coverage to a more comprehensive plan. Typically, employers will provide different plan options, allowing employees to select the type of insurance that best meets their needs. Getting to know your plan includes understanding what is and isn't covered, whether you can select your own physician, and what your out-of-pocket deductible and other costs may be.
Workers' compensation
Workers' compensation requirements for employers can vary from state to state. Some states never require coverage, some make it mandatory, and for others, the requirement for coverage depends on the number of employees. If you're hurt while on the job, this type of insurance should pay for necessary medical expenses, and compensate you for a portion of your lost wages until you are able to return to work.* It's important to note that because workers' compensation benefits act as a type of insurance, it generally precludes an employee from suing the employer for the covered injury.
Group life insurance through an employer is typically considered voluntary coverage. If your employer offers coverage, it's important that you know exactly what type of policy you have and what the death benefit is. Often, these types of life insurance group plans are just small term or accidental death policiesthat are just enough to cover final expenses, or come with death benefits that are equal to just one year of your salary - and that's it. Having some form of life insurance is better than nothing at all, and group life insurance could be an affordable way to get a policy established, often without having to undergo a medical exam. However, check your limits and policy type to be certain you have enough coverage.
Disability insurance
If you were to become injured or suffer a serious illness and were unable to return to work, disability insurance can help replace your regular income under a covered illness/injury as outlined in your plan until you are able to return to work. Policies can differ, so find out what type of disability policy you may already have. For example, a short-term disability policy may cover you for a shorter time period compared to a long-term disability policy. You'll also want to know how long you would have to wait before you could begin to receive your benefits. This waiting time is called the elimination period, and it can be anywhere between one week to several months.
If your employer offers you free or low cost benefits at work, you should take the time to review your coverages. If you discover that you may need more coverage in addition to what you have through your employer, speak to an insurance agent or insurance company representative who can help you find the right insurance to cover your needs.
For more information on employer-sponsored benefits or what happens to your coverage when you leave a job, visit the Protective Learning Center.
*Workers' compensation benefits vary from state to state. Check your state's guidelines for more information.
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FAQs
An employer-sponsored plan is a type of benefit plan offered to employees at no or relatively low cost. These plans, such as a 401(k) or HSA, cover an array of services including retirement savings and healthcare. Employees who enroll in such programs capitalize on the benefit of receiving discounted services.
What does employer-sponsored benefit mean? ›
An employer sponsored plan is an option included in a benefits package that provides a specific service to employees at either no cost or a significantly reduced cost.
What is employer sponsoring benefits? ›
Employer Sponsored Benefit Plans are funded by companies on behalf of their employees as a part of a comprehensive package of benefits for their staff. The employer makes a large (usually at least 70%) contribution to the insurance premiums for the employees and their dependents.
What are two 2 types of employee benefits an employer might offer? ›
Whether it's health insurance, retirement plans, paid time off, flexible work arrangements, professional development opportunities, employee assistance programs, or wellness programs, these types of benefits can greatly enhance an employee's overall job satisfaction and work-life balance.
What are the three common forms of employee benefits? ›
The most common benefits are medical, disability, and life insurance; retirement benefits; paid time off; and fringe benefits. Benefits can be quite valuable. Medical insurance alone can cost several hundred dollars a month. That's why it's important to consider benefits as part of your total compensation.
What is an example of employer-sponsored coverage? ›
Employers offer many types of health coverage options, such as group insurance, Health Reimbursem*nt Accounts (HRAs), supplemental plans, flex spending accounts to use with a health plan, and COBRA.
What are 3 benefits of an employer-sponsored retirement plan? ›
Employee benefits
Employee contributions can reduce current taxable income. Contributions and investment gains are not taxed until distributed. Contributions are easy to make through payroll deductions. Interest accrues over time, which allows small, regular contributions to grow to significant retirement savings.
What is a employer-sponsored? ›
The term "employer-sponsored coverage" refers to health insurance obtained through an employer—the most common way Americans get insurance. Employer-sponsored coverage includes not only insurance for current employees and their families, but can also include retired employees.
What are the disadvantages of sponsorship? ›
Disadvantages for sponsors
- Uncertain investment – sporting success is not guaranteed.
- If the event is disrupted, media exposure and advertising potential are lost.
- If the sport or performers cause bad publicity, this reflects badly on the sponsor.
Let's go over some of the most sought-after benefits for employees below.
- Health benefits. ...
- Wellness benefits. ...
- Flexible work schedules. ...
- Retirement benefits. ...
- Paid time off (PTO) ...
- Professional development. ...
- Education benefits.
Some of the most common employee benefits are:
- Health Insurance.
- Retirement Savings Plans.
- Flexible Spending Accounts.
- Paid Time Off (PTO)
- Tuition Reimbursem*nt.
Legally required employee benefits in the U.S. Federally-mandated benefits in the U.S. include Social Security, Medicare, unemployment insurance, and workers' compensation. Other statutory benefits, such as family leave, medical leave, and health insurance, only apply to qualifying employers.
What are fringe benefits for employees? ›
What Are Fringe Benefits Examples? Some of the most common examples of fringe benefits are health insurance, workers' compensation, retirement plans, and family and medical leave. Less common fringe benefits might include paid vacation, meal subsidization, commuter benefits, and more.
How many types of employee benefits are there? ›
4 major categories of employee benefits
Traditionally, employee benefits included medical insurance, life insurance, retirement plans, and disability insurance. These were usually mandated. For instance, many countries require that employers provide some type of medical insurance.
What are four types of insurance often offered as a benefit to employees? ›
4 Major Types Of Employee Benefits
- Health Insurance.
- Life Insurance.
- Short-Term and Long-Term Disability.
- Retirement Plans.
The term "employer-sponsored coverage" refers to health insurance obtained through an employer—the most common way Americans get insurance. Employer-sponsored coverage includes not only insurance for current employees and their families, but can also include retired employees.
What are the benefits of employer-sponsored 401k? ›
Reasons employers should offer 401(k) plans
- Attract and retain employees. ...
- Assist employees in saving for retirement. ...
- Potential tax saving advantages of a 401(k) plan. ...
- 401(k) plans are easy to set up and maintain. ...
- A financial wellness program can help increase employee productivity. ...
- Contributions are made pre-tax.
An employer-sponsored retirement plan works by deducting a certain percentage of an employee's wages from their paycheck and depositing it into a retirement account. The employer may also contribute to the retirement account, either by matching a portion of the employee's contributions or by making a flat contribution.
How does an employer-sponsored 401k work? ›
A 401(k) plan is a qualified plan that includes a feature allowing an employee to elect to have the employer contribute a portion of the employee's wages to an individual account under the plan. The underlying plan can be a profit-sharing, stock bonus, pre-ERISA money purchase pension, or a rural cooperative plan.
