Sample Essay On HRM

What is FICA? What percent do the employer and the employee pay?

The Federal Insurance Contributions Act (FICA) is the federal payroll tax system which is implemented in the United States and is imposed both on employers and the employees in order to fund Medicare and the Social Security system. This program provides benefits to children of the workers who are no more alive, retirees and disabled citizens. The tax base also provides financing to the healthcare sector, especially to institutions that provide insurance to employees who can afford to avail insurance benefits and afford health care costs and treatment. The total amount that an employee pays throughout his career indirectly supports the social security amount that is received when one retires. The employee has to pay 6.2 percent tax on gross compensation, and another portion of the tax that has to pay is 1.45 percent of wages for Medicare. On the other hand, an employer also has to pay 6.2 percent of Social Security and 1.45 percent of Medicare taxes resulting in a total amount of 12.4 percent of Social Security tax and around 2.9 percent of Medicare tax (Payroll Taxes, 2015).

What is ERISA? When and why was it enacted?

ERISA is known as Employee Retirement Income Security Act, was enacted in September 1974. ERISA was established as a law by the federal government in order to establish minimum standards for pension plans in the industry that operates privately. It also provides for many different rules that help in the development of federal income tax that is linked with employee benefits plans. The reason for enactment of ERISA was to protect the rights and interests of benefit plans of employees, and their beneficiaries by developing standards of conduct for beneficiary plans; provide access to different courts and relevant remedies and support; and lastly require the employees to disclose their financial information in order to provide employment plan for beneficiaries (Niall, 2009).

What do you feel is the future of the social security system and why?

The social security system is an integral part of every citizen in the United States. The social security system has provided economic, and health benefits to generations of different workers and have provided quality health care to employees and other people who can’t afford the cost of health care. People are now concerned about the future of the social security system. The situation is sensitive for the social security system to continue, and it’s going to be a long-term battle to bring things back to the basic and reduce the overall level of social security taxes. The report, published in 2014 by the board of trustee of the social security program provided certain estimates that the reserve funds will run out of fund till 2034. This actually means that the fund will not be able to complete full retirement benefits (Sheyna, 2015). There are three major factors due to which the future of social security system looks bleak. First and foremost, the benefits are not paid to the younger generation through saving, but to support and provide care for the older generation. Secondly, the living standard of the people has increased since years. The tax benefits have changed over time in comparison to the worker’s earnings, which has affected the national wage index. Third and last there have been dramatic demographic changes. As the baby boomers enter their retirement age, the number of the ratio of labor has relatively declined. The reason being, that Americans have been provided with quality health care, and their living life has increased considerably (Sheyna, 2015).

References

Niall Brennan (Aug, 2009) Improving Quality and Value in the U.S. Health Care System, Brookings, http://www.brookings.edu/research/reports/2009/08/21-bpc-qualityreport
Payroll Taxes (2015) Employer’s Responsibility for FICA Payroll Taxes, http://www.bizfilings.com/toolkit/sbg/tax-info/payroll-taxes/employers-responsibility-fica-payroll-taxes.aspx
Sheyna S. (Mar, 2015) Will Social Security be there when you need it? Bankrate.com, http://www.bankrate.com/finance/retirement/future-of-social-security.aspx