EMPLOYEE WELFARE PROGRAMS AND ERISA

Chapters 11 and 9

SOCIAL SECURITY
The Social Security Program was created in 1935 (42 U.S.C. 301 et seq.) to provide old age, 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 at least in part on the basis of that person's employment record and prior contributions to the system.

SOCIAL SECURITY
The program is administered by the Social Security 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 benefits to retired people, to families whose wage earner has died, and to workers unemployed due to sickness or accident.

SOCIAL SECURITY
Workers qualify for its protection by having been employed for a minimum amount of time and by having made contributions to the program. Once an individual has qualified for protection, certain other family members are, as well. Financial need is not a requirement.

SOCIAL SECURITY Contributions to the Program

Workers pay the tax as they earn their incomes. This system is known as "pay-as-you-go" or "pay-as-youearn." Workers' payroll taxes support those who are currently receiving Social Security benefits. The Social Security (full FICA) rate withholding is 7.65% (6.2% Social Security plus 1.45% Medicare) for wages up to $97,500 in 2007 (up to $102,000 in 2008). All wages over that amount are subject only to the 1.45% Medicare rate. The rate remains at 1.45% for those who are subject only to Medicare. The Medicare wage base has not had a dollar limit for any year after 1993.

Social Security Benefits

To determine your benefits, try a Social security benefit calculator

Social Security Benefits

Some recipients of Social Security Benefits must pay tax on those benefits. The Government devised a complex formula that can result in the taxation of up to 85% of social security benefits for taxpayers who have significant other income while leaving benefits completely tax free for those who have little other income MAGI = AGI before any social security benefits + exempt interest income + of social security benefits

Social Security Benefits

If MAGI is less than $25,000 for single individuals or $32,000 for married couples, then none of the social security benefits received are taxable Single taxpayers with MAGI above $34,000 and married taxpayers with income above $44,000 can be taxed on up to 85% of their benefits Taxpayers between the above thresholds can be taxed on up to 50% of their social security benefits MAGI = AGI before any social security benefits + exempt interest income + of social security benefits

Unemployment Compensation Law

Unemployment insurance provides workers, whose jobs have been terminated through no fault of their own, monetary payments for a given period of time or until they find a new job. Unemployment insurance is based on a dual program of federal and state statutes. The program was established by the federal Social Security Act in 1935. Much of the federal program is implemented through the Federal Unemployment Tax Act. Each state administers a separate unemployment insurance program, which must be approved by the Secretary of Labor, based on federal standards. The state programs are explicitly made applicable to areas normally regulated by laws of the U.S.

Unemployment Compensation Law

To support the unemployment compensation systems a combination of federal and state taxes are levied upon employers. State employer contributions are normally based on the amount of wages they have paid, the amount they have contributed to the unemployment fund, and the amount that their discharged employees have been compensated from the fund.

Unemployment Compensation Law

The proceeds from the unemployment taxes are deposited in an Unemployment Trust Fund (the Fund).

unemployment compensation law

Georgia:
To apply for unemployment To Learn About Unemployment Benefits for Individuals

Employment Retirement Security Act

CHAPTER 9

Myths About ERISA

1. Your pension plans are not protected against the trustees who administer them 2. If you put money into a retirement plan, it will be there when you retire 3. If you put money into a retirement plan, it will not be there when you retire 4. ERISA applies only to retirement or pension funds

Statutory Basis
Employee Retirement Income Security Act allows for civil action by participants or beneficiaries to recover benefits or enforce rights under the terms of his or her plan It prohibits interference with those rights protected under such plans

Who is Covered
Any employer that offers welfare benefit plans to its employees is covered by ERISA Most private sector plans are covered Generally, plans maintained by governmental entities or churches are not covered

Types of Plans to Which ERISA Applies

ERISA covers employee benefit plans
Welfare plans Pension plans
Defined benefit contribution plans Defined benefit plans

Qualified plans must be permanent, in writing and communicated, must have assets held in trust, and must exclusively benefit employees and beneficiaries

ERISA Regulations
Reporting and disclosure
Summary plan descriptions Annual reports

Fiduciary duty
Fiduciary is one who holds funds in trust for another Must handle funds in best interests of participants

 Eligibility and vesting rules

All employees over 21 and with one year of employment are eligible Vesting is acquiring a right or interest that is irrevocable by the donor
Employees vested after 5 7 years

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Allows temporary continuation of health care coverage Covers retrieval of pension funds by employers

 Health Insurance Portability and Accountability Act (HIPAA)

Limits preexisting exclusions in health care plans Protects individual health information from inappropriate use

Funding requirements of defined benefit plans are set forth under ERISA Also covers modification of existing retirement plans

Enforcement of ERISA
Enforced by Department of Labor and Internal Revenue Service Plaintiffs may only file for relief under ERISA
State common-law claims are preempted

Some ERISA claims may also be violations of ADEA