How to Put the Right Employee Benefits in Place
Having the right employees can make or break your business, so careful selection is important. At the same time, a potential employee needs to decide whether you’re a desirable employer to work for. One of the biggest factors that influence employee retention is great benefits.
If you’ve just started a business or you want to reconfigure your employee benefits and seek ways to save, consider working with an independent agent who can help you put together the right employee benefits plan. An independent agent in the Trusted Choice® network who specializes in commercial insurance can help you manage all of your coverage plans, including your employee benefits. Contact a local member agent today for personal assistance.
Employee Benefits in the United States
As you begin to think about what kind of benefits package you want to offer your employees, consider some facts about employee benefits in the U.S.:
- In 2012, 57% of private industry workers had the option of medical care benefits through their employers
- Paid vacation and holidays are the most common benefits offered to employees
- 99% of full time state and local government workers were offered retirement benefits
No matter the size or type of business you have, an attractive employee benefits package can help to provide security for your current and future employees that can help you to optimize your investment in your staffing.
Elements of a Competitive Employee Benefits Package
A good benefits package will include a number of different types of coverage that help to round out the compensation you provide, which of course starts with your employees' normal salary.
Some of the employee benefits you can consider include retirement income, workers compensation, short term disability, long term disability, healthcare coverage, dental and vision plans, life insurance, identity theft protection and paid time off. If you are a public company, or a company that is considering going public, your offering may include employee stock options as well.
Putting thought into your benefits program is important, not only because it can help you to draw top talent to your business, but it can also help your employees to manage their health and wellness and provide financial protection in the event of disability.
What Are the Four Major Types of Employee Benefits?
Working with an agent who is well-versed in benefits plans is an excellent way to review the entire menu of options and choose the most advantageous plans for your company and budget. The four most common types of employee benefits are:
- Medical insurance: These plans can cover hospital visits, doctor visits, surgeries, prescriptions and possibly vision and dental. As the employer, you will cover the majority of the premium.
- Life insurance: If your employee dies, this benefit will provide financial payments to the employee's named beneciaries; these benefits can help that person's family to cover funeral costs and ongoing living expenses.
- Disability Insurance: You can choose to offer short term and/or long term disability insurance. In the event that your employee is injured or has a lengthy illness, this benefit provides payment during the period of time your employee cannot work.
- Retirement Benefits: The most common type is a 401(k) which allows employees to deduct a certain amount of each paycheck to put towards retirement savings. Some businesses choose to match that deduction amount.
If you can’t afford the total package, you can work with a Trusted Choice independent agent who specializes in commercial business insurance to help you assemble the best employee benefits solutions for your business and your workers.
What Employee Benefits are Required by Law?
Some employee benefits are required by law. Employers who disregard these required benefits potentially face fines.
- Social Security taxes: If you hire an employee, you must deduct social security taxes from that employee’s wages, pay the taxes to the IRS, and report the wages to the Social Security Administration (SSA). In return, your employee may receive Social Security and Medicare benefits later in life.
- Unemployment insurance: For each employee, you must pay unemployment insurance taxes to your state government. Those fees are given to qualified unemployed individuals. Procedures and requirements vary by state.
- Workers compensation: This is a type of employee benefits insurance that works for both parties. By agreeing to pay for injuries and illness that an employee may suffer on the job, you limit your risk of an employee lawsuit. Workers compensation is required by most but not all states; in states where it is required, typically companies that have over three employees must provide this coverage.
What Do Workers Expect Today in Non-Wage Compensation?
Employees want to feel valued and to be part of a team working for a common goal. They also have everyday needs for healthcare and financial resources. Good health benefits can be extremely attractive, due to the high cost of healthcare today. Employees also want to know that taking a vacation once or twice a year isn’t going to cost them the job, and that they will be able to maintain the same lifestyle they enjoy now in retirement.
For an employee, having the protection of employee benefits and insurance to help weather life’s challenges can provide peace of mind. Providing employee protection through a quality benefits plan can improve employee morale and result in a more committed workforce.
What Employee Benefits Are Taxable?
In addition to a paycheck, many employers provide certain “fringe benefits.” This can include things like child care, medical insurance, and retirement planning services. Some items are completely exempt while others are only exempt up to a certain amount.
If an employee is provided with a benefit that is not excluded by a specific tax code and is not paid for by the employee, it is considered a taxable benefit.
What Employee Benefits Are Not Taxable?
Certain fringe benefits that are provided to an employee are not taxable and should not be reported on your W-2. Examples include:
- Tuition reimbursement: If your business participates in an education program and agrees to reimburse an employee for tuition, that payment is not taxable income.
- Employer lodging: If you provide housing for an employee for business purposes and certain requirements are met, the rent amount cannot be included on an employee’s taxes.
- Services and discounts: If you have a partnership with a telephone company and employees receive 20% off phone bills, for example, the money saved is not taxable.
- Random perks: The occasional office lunch shouldn’t go on and employee’s W-2.
What Employee Benefits Are Tax Deductible?
Many fringe benefits that you offer your employees can be deducted from the expenses of running a business. It can be a win-win situation, but make sure you’re aware of restrictions and guidelines when claiming deductions. The following are benefits that may be tax deductible:
- Health insurance
- Retirement plans
- Services and discounts
- Random perks
- Dependent care assistance
- Educational assistance/tuition reduction
- Life insurance
- Health savings accounts (HSAs)
- Commuting benefits
How to Find Employee Benefits Providers
Choosing the right employee benefits programs can be a tough choice. Even after you’ve made a decision, it’s likely you’ll have questions. When tackling employee benefits insurance packages, you need someone you can trust to help you invest wisely.
With an independent Trusted Choice member agent who specializes in commercial insurance, you can feel more confident about your choices. Even after you’ve found the perfect employee benefits package, an agent can provide employee benefits consulting or refer you to someone who can help.
Trusted Choice member agents can help you with all of your business insurance needs. You will have one agent to work with for every aspect of your business insurance, from commercial auto insurance to property insurance, fraud protection and liability coverage. Contact a member agent today with any questions about employee benefits.
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