Benefit Eligibility and Eligible Dependents

By hrlineup | 27.01.2021

Employers need to offer their eligible employees a benefits plan without bias. All of them should enjoy such benefits equally. For example, if you must present your employees with medical coverage, the program should be the same. Treating employees equally will encourage them to be more productive. You should also consider the employee’s eligible dependents that you must include in the plan. Including the dependents in your eligible employee’s health coverage will reduce their medical responsibility. They will focus on work even when the dependents are unwell.

Benefit eligibility

An eligible employee is a worker who has a legally signed contract to provide services for a company for a long duration. The duration can be at least five months. The employees have benefit eligibility right from the organization. Of course, for eligible employees and their dependents to enjoy such benefits, they must meet specific requirements. These benefits apply to employees who are on vacation, maternity leave, or unwell. The employees should also be on the organization’s payroll, and the employer pays their taxes. The following are the individuals who are not eligible for benefit plans:

  • Seasonal and temporary employees
  • Independent contractors
  • Employees on retirement
  • Company directors who are not on payslip like employees

So how will you differentiate between an eligible employee and an independent contractor? Look into these three factors.

  1. The way an employee performs their duty. Does an employer control the way they handle their work?
  2. Does the company fund for supplies used to perform a particular task? If the employee uses their funds, will the funds be reimbursed? How do they receive their payments?
  3. How do you relate to the employee? Do you have a contract? Do they enjoy employee benefits plans, and how will your relationship be once a specific task is complete?

Eligible dependents

These are the direct dependents of your eligible employee. They can be a legal spouse, child, or a domestic partner. For domestic partners to be in an insurance plan, they must provide an affidavit showing that they are living together as a spouse. This affidavit prevents ordinary roommates from defrauding an insurer. The employee must also provide marriage and birth documents for their spouse and child as proof.

In case an eligible employee is no longer part of the organization, they will no longer be part of the employee benefits plan. This will also apply to their eligible dependents.


Now that you know about benefit eligibility and eligible dependents, you need to classify employees for benefits eligibility to avoid tax liability. On the other hand, employees should report through a social security tax form for compensation if employers classify them as independent contractors. If you doubt the status of your worker, you can file form SS-8 for determination. Employers who hire from time to time have the advantage of using this form since it takes up to 6 months to provide the results. You can file a number of these forms so that the employees’ results will already be submitted when you begin hiring.