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Employee Benefits Concept. The meeting at the white office table


Employee benefits are a standard part of the work experience in this country. Most employees have access to at least some benefits, though not all do. One could make the case that mandatory benefits apply to everyone who works. Thus, no one is left out. But are mandatory benefits really benefits at all?

There are multiple ways to divide up employee benefits for the purposes of analysis. A common model is divides them into three categories:

  1. Mandatory: benefits that are required by law.
  2. Standard: benefits that are industry standards but not required by law.
  3. Voluntary: benefits that are completely voluntary for both employees and employers.

Standard benefits are things like health insurance and retirement plans. Some experts consider vision and dental plans standard as well. Voluntary benefits are things like disability insurance, long term illness cover, and pet insurance. BenefitMall, a brokerage general agency, says that voluntary benefits are gaining popularity among employers because they offer benefit customization without costing a lot.

More About Mandatory Benefits

As for mandatory benefits, they are so named because they are required by either federal or state law. But thanks to implementation of the Affordable Care Act (ACA), mandatory benefits are no longer black-and-white. There is some gray here.

How so? The ACA requires most employers to offer their workers a qualifying health insurance plan that meets minimum essential coverage (MEC) standards. For all intents and purposes, health insurance is now mandatory for most employers. Still, it is considered a standard benefit.

Also consider the fact that employees may have access to different types of plans depending on what their employers offer. When it comes to paying for those plans, a typical scenario has both employer and employee contributing toward monthly premiums. Now, let us compare that to other mandatory benefits.

Benefits That Might Not Be Benefits

Experts supporting the idea of mandatory benefits tend to define benefits as any type of compensation that supplements a worker’s normal wages. Thus, health insurance qualifies as a benefit. But what about the rest of the mandatory benefits? Let’s look at them:

1. Worker’s Compensation Insurance

Even though worker’s compensation insurance is regulated at the state level, having it is a federal requirement. The U.S. Department of Labor mandates worker’s comp as a safety net to protect workers at risk of losing income due to illness or injury. However, an employee will not ever benefit from the insurance if he never has cause to file a claim.

2. Minimum Wage and Overtime

Minimum wage and overtime pay are also considered mandatory benefits. Most states have minimum wage laws on the books. Those that do not follow the federal minimum wage requirement. But if benefits are defined as compensation that goes above and beyond normal wages, how can minimum wage and overtime pay be benefits? Both are part of normal compensation.

3. Unemployment Benefits

Unemployment benefits are made available to employees who lose their jobs. The benefits are covered by insurance employers are forced to pay for. But an employee only gets them if he is out of work. So is unemployment compensation really a benefit?

4. FICA and Medicare

Finally, both employers and employees contribute to FICA and Medicare. Contributions are made through payroll taxes. That being the case, are they really employee benefits, or are they services covered by tax dollars?

Mandatory benefits occupy a gray area. Some people say they truly are benefits while others argue they are not. One thing we can all agree on is that employers and employees don’t have a choice in terms of their participation. Mandatory means mandatory.


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