employee welfare & erisa -cihon

7/29/2019 Employee Welfare & Erisa -Cihon

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EMPLOYEE WELFARE

PROGRAMS AND ERISA

Chapters 11 and 9


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SOCIAL SECURITY

The Social Security Program was created in1935 (42 U.S.C. 301 et seq.) to provide oldage, survivors, and disability insurance

benefits to workers and their families. Unlike welfare, social security benefits are

paid to an individual or his or her family atleast in part on the basis of that person's

employment record and prior contributionsto the system.
http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=42:chapter7http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=42:chapter7http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=42:chapter7http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=42:chapter7http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=42:chapter7http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=42:chapter7


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SOCIAL SECURITY

The program is administered by the SocialSecurity Administration (SSA)

Since 1965 it has included health insurance

benefits under the Medicare program The Federal Old Age, Survivors, and Disability

Insurance (OASDI) pays out monthly benefitsto retired people, to families whose wageearner has died, and to workersunemployed due to sickness or accident.
http://www.ssa.gov/http://www.ssa.gov/http://www.law.cornell.edu/wex/index.php/Medicarehttp://www.ssa.gov/policy/docs/microdata/mbr/http://www.ssa.gov/policy/docs/microdata/mbr/http://www.ssa.gov/policy/docs/microdata/mbr/http://www.ssa.gov/policy/docs/microdata/mbr/http://www.law.cornell.edu/wex/index.php/Medicarehttp://www.ssa.gov/http://www.ssa.gov/http://www.ssa.gov/


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SOCIAL SECURITY

Workers qualify for its protection byhaving been employed for a minimumamount of time and by having made

contributions to the program.

Once an individual has qualified forprotection, certain other family

members are, as well. Financial needis not a requirement.


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SOCIAL SECURITYContributions to the Program

Workers pay the tax as they earn their incomes. Thissystem is known as "pay-as-you-go" or "pay-as-you-earn." Workers' payroll taxes support those who arecurrently receiving Social Security benefits.

The Social Security (full FICA) rate withholding is7.65% (6.2% Social Security plus 1.45% Medicare) forwages up to $97,500 in 2007 (up to $102,000 in2008). All wages over that amount are subject onlyto the 1.45% Medicare rate.

The rate remains at 1.45% for those who are subjectonly to Medicare. The Medicare wage base has nothad a dollar limit for any year after 1993.


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Social Security Benefits

To determine your benefits, try a Socialsecurity benefit calculator
http://www.ssa.gov/planners/calculators.htmhttp://www.ssa.gov/planners/calculators.htmhttp://www.ssa.gov/planners/calculators.htmhttp://www.ssa.gov/planners/calculators.htm


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Some recipients of Social Security Benefitsmust pay tax on those benefits.

The Government devised a complexformula that can result in the taxation of up

to 85% of social security benefits fortaxpayers who have significant otherincome while leaving benefits completelytax free for those who have little otherincome

MAGI = AGI before any social securitybenefits + exempt interest income + ofsocial security benefits


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If MAGI is less than $25,000 for single individualsor$32,000 for married couples, then none of thesocial security benefits received are taxable

Single taxpayers with MAGI above $34,000 andmarried taxpayers with income above $44,000can be taxed on up to 85% of their benefits

Taxpayers between the above thresholds canbe taxed on up to 50% of their social security

benefits MAGI = AGI before any social security benefits +

exempt interest income + of social securitybenefits


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Unemployment CompensationLaw

Unemployment insurance provides workers, whosejobs have been terminated through no fault of theirown, monetary payments for a given period of timeor until they find a new job.

Unemployment insurance is based on a dualprogram of federal and state statutes. The programwas established by the federal Social Security Act in1935. Much of the federal program is implementedthrough the Federal Unemployment Tax Act.

Each state administers a separate unemployment

insurance program, which must be approved bythe Secretary of Labor, based on federal standards.The state programs are explicitly made applicableto areas normally regulated by laws of the U.S.


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To support the unemploymentcompensation systems a combination offederal and state taxes are levied upon

employers. State employer contributions are normally

based on the amount of wages they havepaid, the amount they have contributed to

the unemployment fund, and the amountthat their discharged employees have beencompensated from the fund.


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The proceeds from the unemploymenttaxes are deposited in anUnemployment Trust Fund (the Fund).


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unemployment compensationlaw

Georgia:To apply for unemployment

To Learn About UnemploymentBenefits for Individuals
http://www.georgia.gov/00/article/0,2086,4802_5037_11785737,00.htmlhttp://www.dol.state.ga.us/js/unemployment_benefits_individuals.htmhttp://www.dol.state.ga.us/js/unemployment_benefits_individuals.htmhttp://www.dol.state.ga.us/js/unemployment_benefits_individuals.htmhttp://www.dol.state.ga.us/js/unemployment_benefits_individuals.htmhttp://www.georgia.gov/00/article/0,2086,4802_5037_11785737,00.html


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Employment Retirement SecurityAct

CHAPTER 9


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Myths About ERISA

1. Your pension plans are not protectedagainst the trustees who administerthem

2. If you put money into a retirementplan, it will be there when you retire3. If you put money into a retirement

plan, it will not be there when you

retire4. ERISA applies only to retirement or

pension funds


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Statutory Basis

Employee Retirement Income SecurityAct allows for civil action byparticipants or beneficiaries to recoverbenefits or enforce rights under theterms of his or her plan

It prohibits interference with thoserights protected under such plans


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Who is Covered

Any employer that offers welfarebenefit plans to its employees iscovered by ERISA

Most private sector plans are covered

Generally, plans maintained bygovernmental entities or churches arenot covered


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Types of Plans to WhichERISA Applies

ERISA covers employee benefit plans Welfare plans

Pension plans

Defined benefit contribution plansDefined benefit plans

Qualified plans must be permanent, inwriting and communicated, must haveassets held in trust, and mustexclusively benefit employees andbeneficiaries


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ERISA Regulations

Reporting and disclosure

Summary plan descriptions

Annual reports

Fiduciary duty

Fiduciary is one who holds funds in trust foranother

Must handle funds in best interests ofparticipants


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Eligibility and vesting rules

All employees over 21 and with one yearof employment are eligible

Vesting is acquiring a right or interest thatis irrevocable by the donor

Employees vested after 5 7 years

Consolidated Omnibus BudgetReconciliation Act of 1985 (COBRA)

Allows temporary continuation of healthcare coverage

Covers retrieval of pension funds byemployers


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Health Insurance Portability andAccountability Act (HIPAA)

Limits preexisting exclusions in health careplans

Protects individual health information from

inappropriate use Funding requirements of defined

benefit plans are set forth under ERISA

Also covers modification of existingretirement plans


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Enforcement of ERISA

Enforced by Department of Labor andInternal Revenue Service

Plaintiffs may only file for relief underERISA

State common-law claims are preempted

Some ERISA claims may also beviolations of ADEA

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