Employer-Sponsored Benefit Plans: Requirements & Examples

Instructor: A. Casey Carr-Jones

Casey Carr-Jones holds a Bachelor's degree in English & Psychology. She is currently a PHR-certified Human Resources Consultant.

There are a variety of different employee benefit plans and regulations surrounding them. This lesson will review what an employer sponsored benefit plan is, and what California's specific legal requirements are.

Benefits Plans for a New Hire

Ken is an employee of ABC Warehouse Company, and has just received his benefits information for enrollment. He brings the information to his HR Manager, Steven, with questions regarding Ken's domestic partner and coverage eligibility. 'Don't worry Ken,' says Steven, 'With our employer-sponsored benefit plan, your domestic partner has the same coverage as other dependents.'

In California, there are certain legal requirements for benefits plans, including domestic partner coverage and COBRA continuation coverage.

Employer Sponsored Benefit Plans

Benefit plans come in many shapes and sizes. 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. The employees, if electing coverage, must cover the remainder of the premium. Insurance premiums are payments made for health insurance coverage in order to keep the coverage active. Premiums are typically deducted from the employee's paycheck on a pre-tax basis. Other insurance costs are deductibles, which are the expenses paid out of pocket before an insurer will pay any expenses. For example, a $200 deductible means that the employee must pay the first $200 of coverage before the insurance starts covering costs. Another type of cost is a copayment, which is a set, fixed amount that must be paid for a certain treatment, procedure, or medication, which is paid when the employee receives service. For example, an employee might have a $50 copay on his diabetes medication instead of paying the total cost of $300, the remainder of which is covered by the insurance company.

Legal Requirements for Employer Sponsored Benefit Plans - Domestic Partner Coverage

The state of California has certain requirements for employer sponsored benefit plans. The California Insurance Equality Act requires CA healthcare insurers to provide coverage to registered domestic partners of the covered employees. This means that a domestic partnership cannot be the basis for denying coverage. Domestic partners are two individuals who live together and share a common domestic life, but are not married to each other (and are not married to anyone else). The act requires that the coverage provided to a domestic partner dependent should be equal to the coverage provided to a spouse dependent.

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