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13.10 Worksite Plans

These plans are voluntary benefit programs offered by insurers, with premiums typically collected through payroll deductions. They allow employees to select from a variety of coverage options to complement existing employer-sponsored benefits. The policies are issued on an individual basis and are portable, meaning employees can retain coverage after leaving employment by continuing to pay premiums directly to the insurer. Common examples of worksite insurance products include:

  • Dental Insurance
  • Vision Insurance
  • Accident-Disability Insurance
  • Short-Term Disability Insurance
  • Long-Term Disability Insurance
  • Critical Illness Insurance

Worksite plans offer flexible funding arrangements, including:

  • Employer-paid premiums (less common)
  • Employee-paid premiums (most common)
  • Shared-cost arrangements established by the employer, such as contributions to a Flexible Spending Account (FSA)
  • Section 125 cafeteria plan options, which allow premiums to be paid using pre-tax income

Worksite insurance plans are designed to complement, supplement, or enhance other employer-sponsored benefits. While these plans may be issued under a master contract to the employer, the employer typically serves only as a conduit for collecting premiums through payroll deductions. In most cases, these plans are not subject to ERISA regulation.

Quiz​

1. What is a key characteristic of worksite insurance plans?

A. They are mandatory for all employees

B. They are voluntary and offered through payroll deduction

C. They replace all employer-sponsored benefits

D. They are only available to executives

Correct Answer: B

Rationale: Worksite plans are voluntary benefits typically paid through payroll deductions.

2. How are worksite insurance policies generally issued?

A. As group policies only

B. As government-sponsored plans

C. As individual policies

D. As employer-owned policies

Correct Answer: C

Rationale: Worksite plans are issued as individual policies, even though offered through the workplace.

3. What does it mean that worksite insurance plans are “portable”?

A. They can be transferred to another employer

B. They can be converted to group coverage

C. They can be kept after leaving employment by paying premiums directly

D. They are free to move between insurers

Correct Answer: C

Rationale: Portability means employees can retain coverage after leaving a job by continuing premium payments.

4. Which funding method is most commonly used for worksite insurance plans?

A. Employer-paid premiums

B. Government subsidies

C. Employee-paid premiums

D. Third-party funding

Correct Answer: C

Rationale: Most worksite plans are funded primarily through employee-paid premiums.

5. What is the employer’s typical role in worksite insurance plans?

A. To underwrite the policy

B. To provide medical services

C. To act as a conduit for premium collection

D. To guarantee benefits

Correct Answer: C

Rationale: Employers usually serve only to collect premiums via payroll deduction and do not manage the plan.