As a business owner, finding top talent can be challenging. Keeping your employees once you've hired them can present another set of challenges. It is best to be proactive and offer your employees benefits in addition to compensation.
An independent insurance agent will walk you through a selection of benefit offerings so you can make a wise decision. Choosing the right benefits can aid in the growth and retention of your employees.
What Are Employee Benefits?
Employee benefits are designed to offer additional compensation beyond a regular paycheck. The business will contribute a specified amount of money towards either a certain type of insurance, retirement fund, or both for qualifying employees.
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Why You Need Employee Benefits
As an employer, you need to stay relevant and competitive in the market. Making your job offers more attractive by having quality benefit offerings can help you hire the right candidates as well as retain current employees.
A nice benefits package can mean the difference in obtaining a future employee or losing them to a competitor.
What Are the Most Common Types of Employee Benefits?
An employer may offer these benefits in one of two ways:
Through group insurance plans: All qualifying employees are able to opt-in to the same specific plan the employer selects.
Through reimbursement: This is similar to an allowance for employees to pay towards their own individual plans.
The most common types of benefit offerings:
- Medical: Employers can offer their workers group health insurance plans to help cover medical expenses, and even contribute towards their health insurance premiums.
- Dental: Dental insurance is a separate policy from medical insurance, and employers may be able to lessen the financial burden of maintaining their employees' dental hygiene.
- Life insurance: In exchange for an employer paying the insurance company, they will pay a designated beneficiary a matched amount if an employee happens to die.
- Long-term disability and short-term disability: This kind of coverage will protect employees from losing income should they become unable to work due to injury or illness for an extended period of time.
- Voluntary vision: Vision is a necessity to do most jobs properly. Offering your employees vision insurance can be a nice benefit.
The following benefits operate a bit differently from those above:
- Health savings accounts and flexible spending accounts: HSAs and FSAs are different types of healthcare plans that allow employees to pay for medical expenses and have reduced tax liability. They work similar to personal savings accounts, but the money in them must be used for medical expenses.
- Company matched 401(k): Businesses will match employees’ contributions to their 401(k) retirement plans through a percentage of their contribution or through a specified percentage of their total annual salary.
Who Is Eligible for Employee Benefits?
Eligibility varies widely from employer to employer. Business owners are allowed to make up their own eligibility guidelines within their company.
Examples of eligibility rules:
- Insurance carriers usually won't offer plans to employees who work less than 20 hours per week.
- Most commonly, benefits are offered to employees who work between 30 and 40 hours per week.
- 401(k) eligibility requirements are determined on a plan-by-plan basis, and the employer can also set their own rules here. For example, an employee must work for 90 days before becoming eligible to apply for coverage.
- Employers are not allowed to discriminate on who they deem as a worthy employee from an incompetent one. If an employee meets plan and policy requirements, they are eligible to receive benefits.
Are Employee Benefits Required By Law?
Employee benefits are typically not required by law. However, larger companies can face potential penalties if they don't offer health insurance. Offering benefits to your employees will help with retention and is a good way to show that your company cares.
How Will Employee Benefits Affect Paychecks?
Many types of benefits such as medical, dental, vision, 401(k) and HSAs/FSAs can be deducted on a pre-tax basis. This means that having them will reduce tax liability. You and your employees will be subject to less tax because the amount earned will be less with benefits deducted.
Also, since the amounts deducted for each benefit will have been predetermined by you, the plan selected, or the employee, they'll come out automatically each time.
Benefits of an Independent Insurance Agent
Benefits can be complex. They draw in several intimidating factors including taxes, laws, different insurance carriers, company rules, and various employee needs. An independent insurance agent's role is to simplify the process.
Independent insurance agents advise you while presenting the most competitive rates and plans that meet your business's needs. They work with a variety of carriers to compare insurance quotes, breaking down the insurance language so you can make an educated decision.
Finding and Comparing Employee Benefit Quotes
Your independent insurance agent will review your needs and help you evaluate which employee benefits make the most sense. They'll also compare policies and quotes from multiple insurance companies to make sure you have the best protection out there.