What Is Employee Insurance?

To protect employees against workers against injuries, reduce financial uncertainty, and help manage possible adversities, a business owner can take advantage of employee insurance. As the compensation packages are becoming more complex, employee insurance can include multiple types of perks, from medical insurance to retirement benefits to profit-sharing to stock options.

As a job seeker, it would only be wise to factor employee insurance in your evaluation of different job offers. As an employer or business owner, you might be interested to stand out from the crowd by providing the most competitive employer insurance package.

What Does Employee Insurance Cover?

It includes workers’ compensation insurance (according to the law in the majority of the U.S. states) and disability insurance. The former covers costs of on-site injuries or illnesses; the latter can be short-term and long-term:

  • Short-term disability insurance covers up to 80% of the lost wages for a period of up to 6 months.
  • Long-term disability insurance covers up to 60% of the lost wages for an indefinite time. Long-term disability insurance is usually costly, but provides greater coverage.

Whereas almost all employers provide workers’ compensation insurance for it doesn’t cost them at all, only a part of them enables cost-effective disability insurance.

As for the employee benefits, some are mandated by law – minimum wage, overtime pay, leave benefits, extended medical benefits, and unemployment benefits – while some may be provided by the employer (health insurance, life insurance, dental insurance, vision insurance, sick days, paid holidays, etc.).

How Much Is Employee Insurance?

The monthly cost of employee insurance depends on the type of insurance, the benefits included, and whether the insurance is employer-contributory or voluntary. In the former case, the employer can cover up to 100% of the premiums; in the latter case, the employer covers up to 49% of the premiums. In 2020, employers covered about 75% of premiums, whereas the average cost of health coverage was about $5,000 a person.