Employees At Small Employers

Short-Term Disability. This is the single most important benefit. If you cannot work, you can’t pay the rent, you can’t pay your mortgage. You need money to go to the doctor. The best thing here is the price is low, it’s the biggest bang for the buck, and it is useful at the most likely time. If you attempt to buy this yourself, it will be more expensive, and there will be medical questions. Very clear: if it is offered, take it.

Life Insurance. Many employers pay for $X amount of benefit. This is obvious, you keep it. What is not well-known is that many insurance companies will allow you to take this with you (called “portability”), this needs to be known by you. Again, the price here is lower than in the individual market, so employers should offer this, if they need to attract/retain employees.

Health Insurance. Far, far trickier. This should not be handled alone. There are many combinations here. The employer may pay part and not all of your premium. You may be able to get the ACA subsidy (a tax credit), even if your employer offers health insurance, if you get an exception, which is possible, but everyday people will have no practical way of figuring it out by themselves. The difference in money can be in the thousands of dollars a year here.

Special note: there is an idea of “association plans,” where a set of small employers is offered a package of payroll services and employee benefits as a set of services provided by a single entity. This is to be VERY carefully examined, and the reason is that the health insurance policy will very likely be a large group health insurance plan, which has an entirely different pricing structure from the small group health insurance market. How overpriced? It can result in an excess of well over $20,000 to the employer (and that is an understatement), a year.

Voluntary Life Insurance. If your employer pays for $X of life insurance, then it is possible that there is voluntary life insurance available, where you are responsible for the premium. In this instance, it should be looked at very carefully. First, the underwriting (medical questions) is far easier than if you applied on an individual basis (more on that in other posts, later). Second, the price / benefit ratio will also be better than the individual market. Therefore, you should look at it, if it is available.

Long-Term Disability. This is rarely offered by employers. The price is high, so a “small employer” can be a professional firm. That said, it coordinates with Social Security Disability Insurance, so there is a use for it, especially if your income is high.