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ultimate
employee benefits guide
contents
Overview
pg 1
Think of your business as a tree. Your roots dig deep into the ground
to provide your trunk, branches, and leaves strong and stable
foundation. Roots protect your tree from falling over and help you
absorb water and nutrients needed to survive. Your business needs
strong roots to bring in talented employees and keep them happy.
Your roots will keep these talented employees from fleeing to the
next best opportunity. Think of your roots as your benefits package.
Stable and supportive benefits will attract and keep the best
employees.
www.employersresource.com
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Part One
Why Are Employee Benefits Important?
What’s your ‘big draw’ when trying to recruit and retain talent?
Do you have one outstanding selling point? Not all businesses are
able to offer things like a pet friendly office, work from home
flexibility, yearly retreats, unlimited time off, or a high-end
salary. Building a benefits package that’s competitive is possibly
the best way to compete for talent.
Employers are finding it more and more difficult to hire and keep
quality employees. Maybe it has something to do with the
economy or a surge of younger workers eager to jump ship. Call
it what you will, the stakes are higher than ever. You need to find
a way to attract the employees you need.
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This entrepreneur article sites a
2011 Harvard Business Review
Analytic Services survey of
human resource leaders. It
found 60 percent said an
attractive benefits package is
"very important" in recruiting
and retaining quality
employees. Contrast this with
only 38 percent who said a high
base salary is very important.
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2. Keep great employees
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3. Increase morale and promote better
work/life balance
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5. You’ll sleep better at night.
Insurance, after all, is for peace of mind. In this case, you will feel
better knowing that you’ve provided a great support system for
your employees through these benefits.
So, why are employee benefits important? Because they help you
attract and retain better employees, keep them healthy and
happy, and at the end of the day it helps you!
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Part Two
Types of Employee Benefits
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EMPLOYEE PERKS
What's the Difference?
& BENEFITS
Do you understand the difference between employee perks and
benefits?
It hurts to see top talent walk out your door. You might not always
know why they left. But you can take action to prevent it from
happening again. You want to stay competitive and desirable in the
eye of the employee. Employee perks on top of a few necessary
benefits will help you do just that.
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What Drives Talent Away?
Millennials are often said to lack loyalty at their jobs and expect to
change jobs within the year. Being the largest population in the
workforce, this means higher turnover in the future for your
business.
Perks like paid vacation time, flexible work schedules, free food,
merchandise discounts, a company car, and even a standing work
desk can all be additional reasons to stick with a company. This is
true for any generation.
Employee perks and benefits are powerful tools to help you keep your
team happy and dedicated. For your own benefit, we urge you to
follow business trends this year and focus on reducing employee
burnout and dissatisfaction. Focus on the things you already have and
make any necessary adjustments to improve.
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EMPLOYEE
Definition
PERKS
Perks have the potential to boost employee happiness and daily
performance. They can spark an emotional response as perks care for
the employee’s wants. If essential needs are met through benefits,
meeting your employee’s wants could be the extra mile it takes to bring
in the top talent that YOU want.
Perks can be pretty much anything and oftentimes won’t cost you
much at all:
Free food
Vacations gifted for reaching goals
Merchandise discounts
Rewards programs
Use of a company car
Expanded or unlimited paid time off
Paid time off for volunteering
Education assistance
Standing work desks
Flexible schedules
Gym memberships
Unique break room areas and features
Laundry service
Childcare
Pet friendliness
Work from home opportunities
UP NEXT:
The Four Major
Types of Benefits
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THE FOUR
Major Types of
EMPLOYEE BENEFITS
Let’s take a look at the four major types of employee benefits that
your people are going to expect from the get-go.
1. Medical
The most common (and often most essential) type of benefit
employers can offer is medical coverage. The costs of health
insurance, doctors and hospital visits, dental work, vision care, and
prescriptions are rapidly increasing. Employers and their
employees are finding it more and more difficult to deal.
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2. Life
Another common employee benefit is life insurance or
accidental death and dismemberment insurance. If one of your
employees dies, life insurance benefits will provide payments to
the employee’s family to cover funeral costs and ongoing living
expenses. If you’ve been involved in this process then you
understand the incredible financial burden it can place on a
family.
For more information on Life Insurance and the four major types
of employee benefits, see our full article here.
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3. Disability
Employers can offer short term and/or long term disability
insurance to their employees. If an insured employee is injured or
has a lengthy illness, the benefit pays them during the period of
time they are unable to work.
4. Retirement
The most common type of retirement benefits is the 401(k) plan.
This allows employees to deduct a certain percentage of each
paycheck to put towards retirement savings. Some businesses
choose to match the employee’s deduction or match a certain
percentage of the employee’s deduction.
BENEFITS TRENDS
When looking at the state of talent at your business, your benefits
offerings are the first place to start. We want to help make sure
those high-quality employees are looking at your business.
1. Wellness Programs
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2. Health Savings Assistance
Over the recent years, the popularity of FSAs and HRAs has risen in
sync with high deductible plans and health care costs. We’ll take a
much closer look at these options in part 3.
3. Financial Management
Student-loan assistance
Paid parental leave
Retirement planning
Assistance with medical expenses (like savings accounts
mentioned above)
Financial education services
Employee discount programs
Employee savings clubs like Christmas or vacation clubs
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4. REAL Appreciation
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Part Three
HRAs, FSAs, and HSAs
What Is a Health
Reimbursement Account?
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The Benefits and Drawbacks of HRAs
One of the greatest benefits the HRA gives
employers and businesses is the flexibility
it offers. Since the account is managed and
funded solely by the employer, you have
the ability to design the program to fit your
needs.
The Good
reimburse (as long as reimbursements are
for qualified medical expenses under IRS
Section 213(d), and you decide what to do
with unused funds. As long as your
program remains in compliance, you can
take the lead with this flexible option.
The Bad
Employers can choose to allow HRA funds
to rollover year after year while the
employee remains actively employed.
Unused funds do not follow employees to
new employment or beyond termination of
employment (unless continuing medical
plan coverage during a COBRA
continuation period).
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The HRA Tax Advantage
Using an HRA allows you to deduct HRA
reimbursements as a business expense
which lowers your cost of FICA and
FUTA taxes. Your employees also
benefit from the tax savings, they will
save 20-40% on medical expenses
because they are essentially using pre-
tax dollars to make these purchases.
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What Are Flexible Spending
Accounts?
Employees can choose to regularly contribute a portion of their pay
to an FSA to use for qualified expenses, like medical or dependent
care. The funds are deducted from the employee’s pay before taxes,
so it can significantly lower the employee’s overall annual tax
burden.
1. FSA - Health
The most common type of FSA is the health account. Used to pay for
medical and dental expenses not covered by insurance. Over the
counter medications are allowed, but they often require a doctor’s
prescription, except for some cases like insulin.
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How Do You and Your Employees Use the
FSA Funds?
Health accounts will be issued a debit card used to make eligible
purchases.
Dependent Care accounts are not issued debit cards. Employees will
need to be reimbursed for purchases. To be reimbursed for a
qualifying purchase, they will need to fax an explanation of benefits
statement or receipt for services. The reimbursement will be sent
directly to the account.
Make sure employees know who to ask questions to, and who to
report claims with. Also, cover eligible expenses with them and
provide a resource where they can check the eligibility of their
purchases.
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What are the risks?
The main risk when offering FSAs to your employees is the ability
for funds to be used up front.
The risk being that the employee could resign shortly after having
used the funds, but before they have deposited the funds. In that
case, your business would be responsible for the full reimbursement.
To offset this risk, the use-it-or-lose-it rule means that any unused
funds are forfeited back to your business at the end of the plan year.
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The Benefits of Dependent Care FSA
Millions of Americans have children or dependents who need care
during the day while they work full-time. In most U.S. families, all of
the adults work, putting a large financial burden on those families to
find day care. Offering a dependent care FSA option will help lessen
this burden on your employees.
Any way you can help lessen financial burdens for your employees
will make them happier and possibly even more engaged with their
work. Your employees will be less stressed and feel greater loyalty
toward your company when their needs are met.
Both, HSAs and FSAs, allow employees with health insurance to set
aside their own money for healthcare expenses including
deductibles, copayments and coinsurance, and prescription costs.
Your employees will usually receive a debit card for these accounts,
which they will use to pay for eligible expenses throughout the year.
But, not all of your employees will qualify for the Health Savings
Account. Only employees who have high-deductible health plans
(HDHPs) can select the HSA. HDHPs are health insurance plans with
high deductibles.
HSAs and FSAs share similar tax advantages to your employees and
your business. To learn more about the Health Savings Account see
our recent article, here.
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Part Four
Employee Benefits Solutions
You could choose to find an insurance broker that will help guide
you in the process of obtaining an employee benefits package. This
looks different depending on what you’re looking for: health
insurance, retirement benefits, etc.
This solution also means that the broker is trying to find a plan for
you and your group of employees. This usually means a group of 50
or less employees. Without being part of a large group, you do not
have access to the bargaining power and discounts that large groups
have.
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2. Professional Employer Organization
You won’t have as much control over your insurance policies since
the PEO can choose to change coverage at any time. PEOs aren’t
required to give warning to policy changes which could be viewed as
an advantage or a disadvantage, depending on how you look at it.
3. SHOP Marketplace
4. On Your Own
That’s right. Many of the perks we discussed in this ebook are simple
and easy for you to set up and start on your own without the help of
any third party. Get creative. Starting a perk program for your
employees can be as simple as saying, “every Tuesday I will be
grabbing sub-sandwiches for the office.” It’s amazing what this can
do for boosting morale.
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5. Don’t Offer Benefits to Your Employees
THANK YOU!
However you choose to obtain your employee benefits, you can feel
confident knowing your employees needs are being met. Your retention
and recruitment will be improved through increased engagement and
happiness among your employees. Your overall productivity will be
increased as your employees are more motivated to succeed. With firm
roots planted, your tree will be able to grow and thrive.
Thanks for reading this guide. We hope you’ve learned something new
and feel one step closer to an Employee Benefits solution for your
business.
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