California Employee Benefits
As a California business owner, you need to consider the benefits that you are required to provide as well as the ones you want to offer as an incentive to employees—and the costs and benefits of these to your company. Offering employee benefits attracts workers to your company and helps keep them; the personal and financial security they provide are often reflected in the quality of work employees’ perform and their commitment to the goals of your business.
And because you are bargaining with California insurance providers to cover all of your employees, you can lower individual costs, allowing your employees to have coverages they could not afford on their own. Moreover, you may receive certain tax benefits.
So read over the types of insurance often offered by business owners, list out what seems best for your company, and get some quotes so that you know what your plans would cost.
Workers Compensation
Federal and California state law require that you provide your employees with workers compensation to cover on-the-job injuries.
Health Care
The most common and expected optional employee benefit is the health care package provided and paid for, at least in part, by employers.
Which California Health Care Plan Is Right for Your Business?
The choice of which plan your business will provide depends upon many factors, such as your number of employees, your location, your proximity to large health-care facilities, and the costs. Most California businesses provide some kind of managed-care plan, such as an HMO or PPO. These plans may include dental or vision insurance, or you may select plans specifically for these coverages.
Managed Care
HMO – Health Maintenance Organization
- providers and facilities agree to offer discounted healthcare to members
- members pay a premium each month
- members must pick a primary care physician from within the network
- primary care physician handles all medical needs, including referrals and pre-
- approvals for particular services.
Costs of an HMO for employees and their families are generally low.
PPO – Preferred Provider Organization
- like an HMO, but often more limited in the scope of network services
- members can choose out-of-network healthcare
- out-of-network care is usually paid out-of-pocket by the employee, and may not be fully reimbursed.
Costs for a PPO are generally higher than for an HMO.
Indemnity, or Fee-for-Service
An indemnity, or fee-for-service, plan is no longer a common choice for businesses. In these plans, employees choose any health care professional or facility, pay for the service, and then file for reimbursement. In general, only a very large business might find this plan cost-effective.
Supplementing Medicare
California businesses today also need to consider benefits for over-65 workers. Workers who are on government Medicare insurance are looking for supplemental health insurance that your business may be able to provide.
FSA or HSA Options
You may also choose a health plan that allows employees to set up a Flexible Spending Account (FSA) or Health Saving Account (HSA) that can be used to help pay health costs.
Additional Disability Insurance
Disability insurance provides benefits to employees if they are unable to work due to a long-lasting injury or illness. These insurance plans provide security to your workforce.
- Short-term Disability generally has a short waiting period and pays for two to three years, until the employee can return to work.
- Long-term disability pays for major long-term illnesses or injuries, for a longer time period or the employee’s lifetime.
Life Insurance—Security for Families
Life insurance, another common type of insurance that California employers offer, pays a premium to beneficiaries in the event of an employee’s death. You may choose
- term life insurance, which lasts for a designated time, has no added cash value, and generally costs less
- permanent life insurance, which has a death benefit and also an accruing cash value, but generally costs more.
Either way, you help your employees provide for their families in the event of death.
Other Employee Benefits—Retirement
Beside insurance benefits, California employers provide certain other benefits. Many employees have options for retirement benefits, such as 401(k) plans and other pension plans. These options make your company more desirable, so that you attract and retain the best employees.
Tuition and Childcare
Tuition reimbursement plans allow employees to get needed training. Childcare plans help families provide childcare so that parents can work.
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