Core Employee Benefit Programs
One of the biggest concerns that a business owner has today is to get under control the cost of employee benefits. With 15-20% increases being the norm, employers need to have better ways to deal with this huge issue that every business owner faces.
The answer on how to solve this problem unfortunately is not an easy one. The solution involves taking a big picture approach and developing a long term plan to guide your employees to where you are going.
Part of the process involves using the IRS to assist you whenever possible. Here are a few ideas that can have a tremendous impact for your employees and yourself
- Pretax contributions- whenever possible. This saves the employee about 1/3 of the overall cost due to the tax benefits, and it saves the employer approximately 7.65% (Medicare tax) for all dollars used to pay for the benefits.
- Flexible Spending account- part of what is happening is that cost are being shifted to the employee with higher copays, deductibles and coinsurance. A flexible spending account allows the employees to set aside money pretax, to pay for out of pockets expenses. This saves the employee about 1/3 in taxes, and the employer about 7.65% for every dollar put in the plan.
- Voluntary Options- certain voluntary benefits can be offered to the employees on a pre-tax or after tax basis. The pre-tax benefits will save the employer and employee tax dollars and can be done for Cancer Care, vision, and many other benefits. Things like life insurance and disability should be not done on a pretax basis.
I think the key point that a business owner needs to understand is that every year, for at least the next few years, you will be getting substantial increases annually. You need to anticipate this in advance and develop a 5 year plan on what you want to pay and what you need to do to get there. Communication with the employees is critical and the more they understand the process, the easier it will be to get there.
Ask us how we can assist you control your costs while providing a competitive benefit program.
