In an effort to attract and retain quality employees, many employers elect to offer health insurance and other benefits. There is no federal or state law requiring employers to offer health benefits, although there are laws surrounding the implementation of benefit programs. In addition, there are certain benefits that are guaranteed by law. Here we will examine the legal issues surrounding employee health benefits.

Required Benefits

The Family and Medical Leave Act grants employees the right to take up to 12 weeks of unpaid leave for any of several covered conditions, including childbirth and the illness of a relative. The employee is entitled to return to the same or similar job, and does not have to take all 12 weeks at once.

The Federal Insurance Contributions Act (FICA) tax is used to pay Social Security and Medicare benefits. Normally the cost is divided between the employer and employee, while self-employed workers assume the entire burden themselves.

Under the Consolidated Omnibus Reconciliation Act (COBRA), employees are entitled to continue their existing health benefits for 18 months following the termination of employment. The employee normally assumes the full cost of the health premium along with a small percentage to cover administrative fees.

Health Benefits Plan Options

Typically employers buy into group health plans and offer participation to employees and their spouses and children. The premium cost may be paid fully by the employer or fully by the employee, but is generally shared between the two. Health benefits are generally governed by managed care, and may feature an HMO (Health Maintenance Organization), PPO (Preferred Provider Organization) or POS (Point of Service) organizational structure.

If health benefits are offered, many states require certain types of coverage to be included. It is important that an employer obtain the latest state guidelines before deciding on which health benefits to offer.


Although employers are not required to offer health insurance at all, if it is offered then it must be granted in a fair manner to all employees. It is illegal to make distinctions between employees when deciding whether to offer insurance and, if so, the level of coverage. All employees at the same level of employment are entitled to the same health benefits. In particular, employers need to be careful not to discriminate against pregnant, disabled or older workers. Pregnancy-related conditions must be treated the same as any other medical condition.


The Employee Retirement Income Security Act was designed to protect employee retirement benefits. However, ERISA’s guidelines also affect health benefits. In particular, ERISA requires that employers notify employees of all relevant rules that govern their insurance plans. This includes plan eligibility, claim procedures and any changes to the plan.

Federal and state laws leave it to the employer to decide whether to offer most benefits, including health benefits. However, once an employer makes the decision to offer coverage, it is responsible for ensuring that all federal and state regulations are carefully followed. Both ERISA and anti-discrimination legislation govern the application of health benefits.