Employee Insurance

The recent global health crisis has had a disruptive impact on industries and economies everywhere. In the two years since the start of the pandemic, the business world has adapted surprisingly quickly. A large proportion of employers are once again looking to increase their workforces. This makes for a very competitive candidate market. As such, health benefits like employee insurance can be a huge asset for businesses to leverage for greater hiring success.

The presence of the right benefits makes a great value proposition to future candidates. This makes it easier for stakeholders like recruiters or an associated staffing agency to onboard new hires. At the very least, worker insurance is a significant benefit that can aid both recruitment and retention. Find out more below.

Using Employee Insurance to Stand Out

There is no denying that the job market is a very dynamic and fast-paced ecosystem. Employers have always competed over the best talent, usually represented by a small pool of candidates, for any role. The pandemic has changed that approach drastically, however. These days, firms don’t just have to worry about local competitors stealing away their best performers. Thanks to remote working platforms and internet availability, they also have to contend with national businesses focused on hiring remote workers.

For employers, it is now more important than ever to deliver a strong and succinct value proposition to attract the kind of talent they desire. This also carries a component of delivering greater job satisfaction than everyone else. Unless they use every advantage competitively, they risk losing hiring opportunities for future candidates. They may also find it harder to retain current workers as well. In this situation, employee insurance can be a significant way to differentiate a firm from other similar employers.

How Do Federal Employee Insurance Regulations Work?

The United States Department of Labor or DoL is the primary federal body tasked with administering and enforcing federal laws concerning employment. These laws and regulations impact a workforce of over 150 million Americans. While state and local laws will impact businesses, federal laws will always take precedence. Some DoL regulations address employee insurance in the context of employee benefits and security as follows:

Under the EBSA

The EBSA or Employee Benefits Security Administration is primarily responsible for regulating employee benefits and enforcing disclosure/reporting of the same. Many provisions under the EBSA typically preempt similar legislation at the state level. One of the key aspects of the government body involves mandating an insurance system to offer security to employees. Of course, the federal employee life insurance requirements come with minimum thresholds and other prerequisites.

These help to offset the risk of making a business payroll unsustainable because of federal employee health insurance costs. However, any employer that meets these requirements must offer an insurance system related to retirement security. The EBSA requires either the employer or the administrator of the insurance fund to direct the premium payments to the federal Pension Benefit Guaranty Corporation.

Under the HIPAA

Under the Health Insurance Portability and Accountability Act or HIIPA, the federal government addresses health insurance. In particular, HIIPA applies to group medical insurance plans that employers offer to various classes of workers. The plans can differ based on related regulations concerning things federal employee disability insurance. In this context, the government ensures that employers meet reporting and disclosure requirements.

Why Reporting and Disclosures?

The DoL is a regulatory body, not a legislative one. Therefore, it does not have the power to create new laws, such as those concerning small business employee health insurance. However, the intense scrutiny on reporting and disclosure requirements allows the DoL to enforce existing laws and regulations. That includes making sure employees are protected in terms of insurance and benefits.

Specific Employee State Insurance Laws

Before looking at specific insurance laws at the state level, it would be a good idea for employers to understand that laws can differ based on the state in which they operate. In terms of worker compensation and benefits (including state employee health insurance), it is always advisable to research the laws applicable in your state. It may also be best to work with a business consultant. Being in contravention of these laws can often carry severe consequences. Broadly speaking, firms should be aware of the following:

State Penalties for Non-Compliance with Insurance

Most states require employers to purchase workers’ insurance as part of their compensation and benefits structure. Not complying with these requirements can often result in legal consequences that range from penalties to prison time. The severity of the punishment can differ, but the following states have particularly severe penalties for non-compliance:

  • California criminalizes not offering worker compensation in cases where state law makes it mandatory. The punishment for this crime includes a penalty of at least $10,000, which can go up to $100,000. Depending on the severity of the case, the penalty can also include jail time.
  • New York charges uninsured with a misdemeanor or a felony based on the extent of the non-compliance. Typically, the minimum fine is $1,000 which is capped at $50,000. However, the state also imposes an additional $2,000 penalty for every 10 days the employer does not meet insurance coverage requirements.
  • Illinois has a system of penalizing insurance non-compliance similar to New York. The state imposes a minimum penalty of $10,000. But it also applies an additional $500/day penalty for each day an employer remains non-compliant.
  • Pennsylvania severely penalizes noncompliance in cases where it is obviously intentional. The state recognizes such noncompliance as a third-degree felony. The punishment can include a 7-year prison sentence as well as penalties up to $15,000.

State Requirements to Purchase Worker Insurance

Some states make it mandatory for all employers to purchase insurance for their employees from the state itself. Businesses that meet the state’s threshold must purchase their insurance directly from the state fund. These states enforce this requirement:

  • Ohio
  • Washington
  • North Dakota
  • Wyoming

A state fund will typically not cover liability insurance. To protect against workplace injuries through negligence, employers must seek liability insurance from providers other than the state.

States Are Free to Set Their Own Requirements

Almost every state has laws and regulations that require employers to have insurance coverage for their employers. This can include health, injury, disability, and employee life insurance. However, each state sets and regulates its own requirements. But nearly all of them designate a minimum workforce strength for the relevant laws to become applicable.

Three Tips on Leveraging Worker Insurance to Source and Retain Top Talent

Workforce compensation structures that include insurance and extras like supplemental employee life insurance are usually more attractive to any candidate than ones without them. This can be determining factor in acquiring the quality of talent most businesses seek. Good professionals understand their worth and the importance of compensation that reflects that worth.

Offering better benefits than the competition is usually a great way to influence candidate decisions. In conjunction, there is also the question of unnecessarily driving up average employee health insurance cost. Employers need to be very cognizant of what they offer and its impact on employees as well as payroll. Therefore, it may be more appropriate to approach this aspect of compensation more creatively. The following may serve as starting points to develop a more appealing benefits structure that includes insurance:

Look Beyond Conventional Health Benefits

Among the many things the pandemic has transformed in workplaces are employee needs and expectations. Employers can no longer hold on to conventional or outdated health plans. Workforces, especially those that follow a remote or hybrid model, may not be able to function adequately under these conditions with conventional health plans. Therefore, employers would do well to consider additional areas including:

  • Professional coaching or counseling on virtual platforms.
  • Regular and transparent communication on insurance and benefits.
  • Offering flexibility aimed at improving employee health.

Make Health Plans More Holistic

Health plans should no longer relate to physical health alone. The added stress of a pandemic and global disruption on top of regular workplace pressures has had a huge impact on mental health. Therefore, it should be apparent that businesses need to start offering more holistic medical plans. An employer that understands mental health and is willing to do more to support it will always be an appealing choice to a candidate or existing employee.

Be Flexible to Workers with Chronic Problems

Chronic illnesses can impact a worker’s career choices considerably. Employers that value talent, however, should not let chronic illnesses stand in the way of recruiting or retaining employees. Instead, offering empathy and visible support like employee critical illness insurance may be all that’s needed to communicate the right message.

Real-World Insurance Plans in Action

When looking for inspiration, examining existing plans among large corporations can often benefit smaller employers. Obviously, the scale of the benefits plan will be much smaller for a new startup or small business. Building on a workable method may prove a safe and scalable option. Here are a few good examples of employee insurance plans among somerecognizable businesses:


Walmart is one of the largest physical retail corporations in the world. The business operates across the United States and has a decentralized recruitment system. This aids the company in recruiting and onboarding a larger workforce each year.

Walmart also offers comprehensive health plans to its workers. Most candidates already know this. These plans prove another key factor among others that make it easier for Walmart to source new candidates. The company offers a mix of financial protection, health security, stock options, 401(k) accounts, and paid-time-off as part of its benefits structure. Moreover, Walmart employee health insurance typically involves a range of options that workers can choose from.


United Parcel Service is a global shipping, logistics, and supply chain services company. It is also one of the world’s oldest parcel companies, dating to 1907. UPS is a Fortune 500 organization with a multinational presence. UPS employee insurance is one of the most important factors that contribute to its workforce sustainability and growth. This package encompasses a range of coverage, including general health, life insurance, vision and dental health, accidental insurance, supplemental health plans, and even mental health care.


Amazon is the undisputed King of the E-commerce industry. Over the years, the company has steadily expanded its operations and has established a global footprint. The company has enjoyed a mixed reputation. But there is no denying it offers a comprehensive insurance plan to all full-time employees. Amazon employee health insurance covers medical issues, dental health, and vision.


Walgreens is one of the largest pharmacy chains in the country. The company works in pharmaceutical retail and health products and is the closest competitor to pharma-retail giant CVS. Walgreens employee insurance consists of two comprehensive health insurance plans. Depending on which one worker choose, they can get health, vision, and dental insurance. These plans cover dependents as well.

Frequently Asked Questions

What is employer-employee insurance?

An insurance plan where employers purchase the policies with employees as the beneficiary.

What is employee accident insurance?

An indemnity plan that protects insured employees in the event of common or accidental injuries.

What is employee optional life insurance?

An additional insurance plan that can be added to an existing one if an employee opts to do so.

Can an employer contribute different amounts towards employee medical insurance?

Yes, employers can do so at their discretion, since no federal laws prohibit the same.

Are employee contributions to health insurance taxable?

Generally, employees do not have to pay tax on their insurance contributions.

What is employee supplemental life insurance?

A free or lower-priced insurance plan that full-time employees can add to a whole-term life insurance plan. Provider their employer offers one, of course.

Is employer-paid life insurance taxable to the employee?

No, unless the employer pays premiums above $50,000 on an employee’s behalf.

What is employee life insurance?

A life insurance plan offers financial security to a worker’s family, dependents, or specified beneficiary in case of death.

Can you cancel group employee health insurance?

Yes, but canceling a group plan must be followed by a Special Enrollment Period that allows employees to purchase policies on their own.

How much do employers pay for employee health insurance?

In most cases, employers must pay at least 50% of the cost of employee health insurance.

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