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Reflect on Learning: When you think about your future career, do you contemplate only the salary? To you, how important are things like healthcare coverage and the ability to participate in a retirement fund? Can you explain why benefits are so beneficial to employees? Benefits reduce an employee's taxes, provide cheaper insurance, build wealth and improve the quality of life. II. Employee Benefits Required by Law Some benefits are required by law , meaning that they will be found in all compensation packages. Social Security. Social Security is what is known as a federal government entitlement program . Social Security was created under the Federal Insurance Contributions Act (FICA) and provides monthly benefits to retired workers. Employers are required by law to collect and pay a certain percentage of an employee’s earnings into the Social Security fund. The money is not reserved in an account for the benefit of the employee. It is immediately paid out in benefits to retired workers all over the country. The idea is that the younger American workforce provides support to older, retired workers — one generation supporting the prior generation. You, personally, won’t reap the rewards of this benefit for several decades. In a later chapter you will learn more about Social Security. Workers Compensation. What happens if you get sick or injured as a result of your job and can’t work due to your illness or injury? How will you support yourself or pay your bills? All employers are required by law to maintain workers compensation insurance for the benefit of their employees. It provides financial support to people who are unable to work as a result of a workplace injury or illness . This insurance is paid entirely by the employer. Unemployment Insurance. Laid off and can’t find another job? It happens. All employers are required by law to provide unemployment insurance which compensates employees who have been laid off until they are able to find another job . These are also referred to as jobless benefits . However, an employee who was fired due to poor job performance may not collect unemployment insurance. Healthcare insurance. Companies of more than 50 employees must provide healthcare insurance for employees according to the requirements of the Affordable Care Act . Companies with fewer than 50 employees are not required to provide healthcare coverage for their employees. It is optional. However, most do because it is such a key and desirable benefit it’s hard to compete for employees without it . If you work for a small company that does not offer healthcare coverage, the Affordable Care Act makes you personally responsible for obtaining individual coverage . Don’t worry. It’s not hard to get and not expensive. So if you’re offered your dream job with a small company, but it doesn’t have a healthcare insurance, don’t be put off. You don’t have to work for a large organization just to get coverage. You can get your own. More information is available at healthcare.gov. Reflect on Learning: Note that in 2017, changes may be made to the Affordable Care Act, including its elimination in favor of a different program. In any event, be aware of the fact that some employers provide healthcare insurance — some don’t, and that healthcare insurance is a valuable and desirable employee benefit. PRODUCT PREVIEW
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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