Here’s how to choose benefits offerings at a price point that works for you and your staffers.
When it comes to benefits, the range of options available seems limitless — from the most basic, like healthcare coverage, to work/life balance assistance that includes onsite dry cleaners. Businesses look to provide benefits and perks that make them stand out from the competition, and data reveals just how important benefits are to attract and retain workers. Most companies are not in the market for an in-house masseuse and aren’t ready to offer unlimited paid time off, but there are benefits almost every employee wants that small and medium-sized businesses can provide.
Benefits and perks are considered a part of an overall compensation package. While employees often consider their salary the only factor in the cost of hiring, business owners know that benefits can represent a substantial portion of the overall cost of staff. The Bureau of Labor Statistics estimates private industry employers spend 30% of their employee costs on benefits alone. When choosing benefit options for staffers, look to the financial perks that offer the most bang for your buck.
1. Healthcare coverage
Nearly 80% of workers prefer new or additional benefits over a pay raise.
Topping the list of the most desired benefits an employer can offer is healthcare coverage. According to a Glassdoor study, nearly 80% of workers prefer new or additional benefits over a pay raise. The reason is obvious: healthcare costs are a huge burden for workers. From the least pricey annual checkup to the most catastrophic care, having coverage that lessens the burden is a weight off employees’ minds. For companies that provide coverage, it’s easier to attract and retain staffers. For those who don’t, attrition rates are often high, and it’s frequently more difficult to hire.
Businesses that are considering offering healthcare coverage may be surprised at how many options are available, and how the cost of the benefit can be offset with tax incentives and breaks. They often find when they offer the benefit, they see reductions in absenteeism as well as increases in productivity. Offering healthcare coverage — from the most basic medical to adding dental, vision and wellness — is a smart move for businesses.
2. Paid time off
Getting paid time off is often another factor in a candidate’s decision to join a company. Paid sick, vacation, and personal time are important benefits to provide. When employees have the option to stay home and recover when they’re ill, they’re less likely to infect others and underperform.
Personal time off, typically just 2 days per year, give the option to take a mental health day when needed. Vacation also gives staffers the chance to recharge and reconnect with family once a year. For many companies, tracking time off is the biggest challenge. Leveraging a third-party provider can help take the administrative duties (and headaches) off your desk.
PTO is a top benefit that can be challenging to provide, particularly for companies that run a lean operation. But there is help. In many states, paid sick time is now required by law. For these locations, states are creating employee-paid funds to offset the cost. This important benefit can now be offered, in some areas, at no cost to the employer.
3. Retirement planning
A 401(k) retirement plan is often the best benefit your employees don’t know they need. More seasoned employees understand the need to plan for their time post-employment, but younger workers are beginning to see the value of planning as well. The most daunting aspects of offering a 401(k) plan for most SMBs are the cost and the administration of the plan. Fortunately, there’s help on both fronts.
There are many tax benefits and incentives for businesses to offer retirement planning for staffers. Any money employees set aside to their 401(k) is pre-tax, which lowers their and their employer’s tax burden. Additionally, any money the company matches into an employee’s plan is deductible. When the numbers fall into place, the cost of offering the benefit is much lower than most SMBs anticipate.
There are many tax benefits and incentives for businesses to offer retirement planning for staffers. Any money employees set aside to their 401(k) is pre-tax, which lowers their and their employer’s tax burden.
When it comes to administration, it’s a best practice to leave it to the professionals. Plan enrollment and administration can be complex and requires fiduciary responsibility. Look to third party providers to get you started and help employees plan for their golden years.
4. Flexible spending accounts
Flexible spending accounts are another way business can help staffers meet their financial goals and obligations. While there is no cost to the employer, this important benefit is an important service to staff members. There are 2 types of FSAs: healthcare and dependent care. Both allow employees to set aside a portion of their pre-tax earnings into the account to use for expenses in the coming year.
Healthcare savings accounts allow workers to set aside a portion of their wages for anticipated and unexpected health care costs. These include co-pays, deductibles, uncovered costs (like dental/vision if not covered) and even some over-the-counter medications.
Dependent care accounts allow workers to set aside funds for child care or other dependent care services they anticipate for the year. Since pre-tax dollars are diverted into the fund, both the worker and the business enjoy a slightly lower tax burden.
5. Tuition assistance/reimbursement
Offering tuition assistance or reimbursement is an investment in your staff. The more they know, the more valuable they are to the organization.
Planning for the future also includes planning for career growth. For employers, offering tuition assistance or reimbursement is an investment in your staff. The more they know, the more valuable they are to the organization. Tuition assistance can come in many forms: for some employers educational benefits are paid for classes that are directly related to the job. For others, more varied options are available.
Job seekers and employees look for companies willing to invest in their future and career goals. Providing tuition reimbursement underscores you’re looking to the long-term for your staff members. A bonus: payments for tuition can be tax deductible.
6. Supplemental insurance
Another benefit employers can offer is supplemental insurance. Life insurance for workers and their spouses is something no one wants to use, but can be a lifeline in the event of a loss. Disability coverage is another option for business. Providing these coverages illustrates to your staffers that you support them when times are good or bad.
Bonus benefit for 2020: student loan debt reimbursement
Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, businesses have an opportunity to help staff members pay down some of their student loan debt. A highly overlooked provision of the CARES Act allows businesses to pay up to $5,250 toward an employee’s student loan debt through the end of 2020. This payment also reduces the employee’s taxable income, lowering their and their employer’s tax burden. Many are recommending this incentive be continued past its 2020 deadline.
When it comes to benefits, employers know the cost of providing the best options for staffers nets better talent and more productive workers. The challenge is to provide the most sought-after benefits you can afford at a price point that works for you and your staffers.
Benefits administration — from open enrollment to sick time tracking — is another challenge for businesses. Turning these tasks over to third-party experts is a best practice to keep SMBs on track with earning, not administering.