Top Five Components of a Small Business Employee Benefit Plan
Offering the right benefits package means the difference between keeping star employees and sending them to your competitors. Whether you are just starting out or streamlining current offers, employee benefits consultants will always recommend including these high-value items in your small business employee benefit plan.
1. Health Insurance
Health insurance consistently ranks as the number one benefit demanded by workers. At the same time, only 57 percent of companies with fewer than 100 employees actually offer health benefits, according to the U.S. Bureau of Labor Statistics’ 2014 National Compensation Survey. Chipping in for a health plan is an easy way to set your business apart from others and keep employees happy.
Instead of paying all of the premiums, split costs with workers through managed care plans. HMOs and PPOs restrict doctor choices but also keep costs down. Implement copayments and high deductibles to shrink the price tag further. Eligible employers that pay at least half of the premiums may qualify for the Small Business Health Care Tax Credit.
2. Retirement Plan
Forbes and Inc. rate retirement as another hot topic. Executives, managers and front-line employees are demanding greater access to long-term savings programs. As of 2014, only half of American small businesses provide retirement plans compared to 82 percent of companies with 100 or more workers.
A 401(k) is the most common retirement solution. It is simple, flexible, cost-effective and most or all of the contributions come from employees. A SIMPLE IRA plan is another option, but the employer must contribute a certain amount of money. Keep in mind that starting either retirement plan may earn your business a tax credit.
3. Disability Insurance
Long-term or short-term disability insurance should be another strong component of your benefit plan. This coverage supplements a worker’s wages after an illness or injury. As of June 2015, the following states mandate some form of disability insurance: California, Hawaii, New Jersey, New York and Rhode Island.
4. Paid Time Off
Even though the Fair Labor Standards Act does not require paid time off, failing to offer respite can reduce morale and amplify employee turnover. Small businesses commonly pay for one or two weeks of vacation and holidays such as New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. Some states also require time off for voting, jury duty and funerals. Federal laws mandate time off for military service and for approved absences under the Family and Medical Leave Act.
5. Optional Fringe Benefits
Before investing in specialty benefits, survey employees to determine how many people want them and how much they are willing to contribute. Life insurance, for example, may not be a “must have” in a workplace filled with 20-year-olds. Optional fringe benefits include vision and dental coverage, tuition reimbursement and wellness programs. Non-monetary perks, such as flexible hours and telecommuting options, contribute to work/life balance and keep staff happy.
The best small business benefit plan may limit costs, but it also keeps employees productive and committed to your cause. Grow your business faster and smarter by providing health insurance, retirement plans, disability coverage, time off and a few extra perks.
At Verdeja, De Armas & Trujillo, LLC, our team of Miami business advisors is dedicated to providing you with a formalized business plan to give your business an economic advantage over current business competitor practices. Contact us today for a small business accounting consultation.