Over time, there has been an increase in the number of employers offering employee benefit packages for their workers. As a business, you might be thinking about implementing a plan or reviewing your existing one. However, before you make any decisions, you may want to look at some of your options and some of the motives other employers have expressed when they established benefit packages for their employees.
As an employer, in designing a plan and selecting specific programs to include, you should consider your objectives and your goals. Here are some of the most common advantages of implementing a new program or redesigning an existing one.
- One of your most important objectives may be tax reduction. Your contributions to the plan are tax deductible as a business expense. Depending on federal and state laws, you may elect which benefits you wish to subsidize and either pay all, or a part, of the cost.
- When unemployment is low and there is shrinkage in the workforce, your employee benefit package can be a calling card to attract and retain key employees. Increasingly, employees desire to accumulate assets for their retirement, secure the lower premium costs of group insurance, reduce their taxes through pre-tax contributions, and provide health care coverage for their families. Offering a plan comparable to other businesses in your industry may help you maintain your competitive edge.
- With a retirement plan, you can address your employees’ need for financial security during retirement years. Without a plan, your employees probably would not accumulate retirement funds as quickly. Employer-sponsored plans generally allow for larger contribution schedules, matching contributions, and a disciplined savings plan through regular payroll deductions.
- Because your census represents a group of employees, you may qualify for discounted rates. In that event, medical underwriting for health, disability, and life insurance may be waived—a benefit for those employees who otherwise would have been charged higher premiums or declined coverage. Employees and their families welcome affordable insurance coverage. In fact, if you so elect, some coverage may be available on a contributory basis.
- By electing a vesting schedule for retirement plans or a “waiting period” for other benefits, you can use the employee benefit package as a reward to your employees for their service in your business. In this way, you can assist your employees up to and through their retirement years.
- You can also demonstrate the true value of wages your employees receive from you. Some of your employees may have underestimated the cost they would pay if they were to duplicate their benefits without group rates and with after-tax dollars.
- Over the years, many employers may find that after an employee benefit package is implemented, employee productivity increases. Psychologically, by erasing the anxiety of facing an illness without health or disability insurance coverage, employees generally may be healthier, better employer-employee relationships may be formed, and more productivity and profitability may result.
- You and your family can also participate in the plan with your employees. Providing you follow federal regulations, you are permitted to receive the same advantages you have offered to your employees.
Take a few moments to review the census of your business. There might be a benefit you could provide that would fulfil your needs and those of your employees. By offering an attractive benefit plan to your employees, you may reduce employee turnover, form closer relationships between your business and your employees, offer valued support to your employees’ families, and become not just a provider, but a full-time participant in the employee benefit plan.
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any insurance product or individual security. To determine which insurance product(s) or investment(s) may be appropriate for you, consult your financial professional prior to purchasing or investing.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This article was prepared by Liberty Publishing, Inc.
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