Group Insurance: Regulation, Taxation and Funding
“Employee Benefits ”in the chapters in this part of the book mean those employerprovided insurance benefits which the firm voluntarily offers to their employees. By contrast, social insurance programs (offered through social security, unemployment insurance or workers’ compensation) specify both a level of benefits that a firm must offer and an administrative process to see that the firm is complying in providing those benefits.
KeywordsUnemployment Insurance Insurance Premium Medical Expense Employee Benefit Benefit Program
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Notes to Chapter 11
- 1.By qualified I mean both tax favored welfare benefit programs (like medical expense, disability, death, etc. benefits) and appropriate pension (defined benefit and defined contribution) and profit sharing (401k, etc.) programs.Google Scholar
- 2.The amount of reportable income from “excess ”Group Life insurance varies by age, and has been set by the following federal table: age reportable monthly income per $1,000 under 30 $.08 30-34 $.09 35-39 $.11 40-44 $.17 45-49 $.29 50-54 $.48 55-59 $.75 60-64 $1.17 65-69 $2.17 70 and above $3.76Google Scholar
- 3.This is the case if the firm thinks it has a comparative advantage in managing that money, either because it has more information about its own risks or because it can more readily customize its overall risk strategy when it has more control. But these savings are subject to overstatement where there are competitive markets: the employer is credited with interest earned on the employer’s funds while they are held in reserves and these interest earnings are received tax free to the employers, but self insured employers’ interest income on reserves is generally subject to income taxation.Google Scholar