Social Security in USA

1. Legal Framework

United States law provides for retirement benefits and subsidized health insurance under federal Social Security and Medicare programs.

2. Contributions

Employers are required to contribute 6.2% of each employee’s salary (in 2015, on the first $118,500 of an employee’s gross wages) to Social Security, as well as 1.45% of each employee’s salary (without any limit on the wage base) to Medicare. Equal contributions are deducted from each employee’s wages and act as an “employee contribution.” These federal programs provide benefits for retirees, the disabled, and children of deceased workers. Social Security benefits include old-age, survivors, and disability insurance. Medicare provides hospital insurance benefits.

3. Insurances

Employers are not required to provide employees with health insurance benefits, except as otherwise provided in a negotiated collective bargaining agreement or employment contract.

4. Maternity Leave

The Family and Medical Leave Act (”FMLA”) requires employers with fifty (50) or more employees within a seventy-five (75) mile radius to provide covered employees with twelve (12) weeks’ unpaid leave in a 12-month period for the birth or placement of a child. Some state laws provide for maternity leave for employees who are not covered under the FMLA.

5. Pension

Unless otherwise provided for pursuant to a collective bargaining agreement or and employment contract, employers are not required to provide employee pensions or any retirement benefits. Many American employers do provide some retirement benefit to their employees, but increasingly in the form of a retirement savings plan, which is a defined contribution plan and commonly named after the applicable section of the Internal Revenues Code as a “401k” plan.

For more information on these articles or any other issues involving labour and employment matters in United States, please contact John Sander, Principal at Jackson Lewis P.C. ( at
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