What Is A Free Cover Limit With Group Insurance?
Question asked by Darrell Plant
I’m looking into sorting out some employee benefits for my staff. During the process, I’ve come across the term ‘participating employer’. What is a participating employer in relation to employee benefits? Do I need to worry about this when setting up cover for my employees?
A participating employer sounds complicated, but the meaning behind it is actually quite simple. In summary, it’s the business employing the workers an employee benefits scheme covers.
The reason it’s important only becomes apparent when there are multiple companies under a single umbrella. For instance, this might be a holding company and several subsidiaries.
Here, workers are typically employed by the subsidiary company or companies and not the holding company. That means each subsidiary is a ‘participating employer’ for the workers it employs.
Depending on the way your business is set up, you might pay for your employee benefits separately through each participating employer. On the other hand, you might simply pay for them in one go using the main holding company.
This will depend on the structure of your company. Ultimately, how you choose to pay for your benefits is a matter to discuss between you and your adviser. They will take into account how your company is set up and the best way to therefore structure your scheme.