An In-Depth Review of Small Business Employee Benefits Programs
When considering where to cut back on expenses, employers may question the value of offering a small business employee benefits program. And even if they understand the value, successfully offering competitive benefits remains a top challenge for HR leaders, according to the 2018 Paychex Pulse of HR Survey. However, it’s important to consider the value of offering a combination of benefits that are affordable, yet desirable to current and future employees.
A solid benefits package, when added to a competitive salary, can attract job candidates and encourage great employees to stick around, helping to ensure the longevity of the business. What should you keep in mind when building an employee benefits program? Here are some questions to guide you through the process:
Why should I offer benefits to my employees?
Many employers offer benefits because some employee benefits are legally mandated by state or federal labor laws. But savvy business owners recognize that simply meeting the legally required minimum benefits offerings may not be in the best long-term interests of the business. Many employees consider the benefits package a major factor in deciding whether to accept a job offer, and is a top reason why employees choose to leave a job. To build and keep a strong labor force, employers must be competitive in their benefits offerings.
What does a basic benefits package include?
A typical benefits package can include health insurance, dental and vision coverage, paid time off, a retirement plan, a flexible spending account, and a health savings account/health reimbursement account. Other benefits offerings may include life insurance and disability coverage (five states and the Commonwealth of Puerto Rico require that employers provide short-term disability insurance to employees). Although mandated by federal and state law, Social Security and unemployment insurance taxes are considered employee benefits as well.
What benefits can set my company apart from competitors?
Research and determine what other firms in similar industries are offering their employees — perhaps the local Chamber of Commerce, or a local HR association would have benefits survey results for the local area. Your insurance and tax professionals are also good resources for getting information on "what everybody else is doing." It may also be helpful to talk with employees and determine what they would most like to have — and there may be an affordable way to get them what they want.
For example, employers can open an IRA or 401(k) plan without a company contribution. In the case of health coverage, they can set up a high deductible health plan and fund a portion of the deductible through a health reimbursement account — there are numerous options available, and it's worth having a conversation with your CPA or insurance broker. It makes the most sense to think about starting or expanding benefits that will mean something to your workforce, and maybe provide tax savings for the business.
How can my business afford a comprehensive employee benefits program?
Some benefit plans do not need any funding from an employer (other than administrative costs to manage the plan), such as a flexible spending account for dependent care expenses and dental and vision insurance, which can be paid completely by the employee who enrolls in the plan. Depending on the size of your business, you may also be eligible for a small business health care tax credit if you offer health care to employees.
To further minimize costs associated with your small business employee benefits program, consider non-traditional benefits, such as flex scheduling, employee assistance programs, or telecommuting. You can also include low-cost benefits such as paid time off enhancements, free meals, or rewards for a job well done (like gift cards for a local coffee house, gas station, etc.) to incentivize employees.
How do I show employees the value of the benefits I'm offering?
Create and distribute a "total compensation summary" for each employee. These statements illustrate, in dollars and cents, the value of not only the employee's salary, but also the employer's contribution toward both mandatory and voluntary benefits. Seeing these figures in black and white can help employees understand the real value of these benefits.
If you've previously offered benefits and are changing or updating your benefits package, develop a communication plan for delivering the new information. A well-thought-out plan will help ensure that employees thoroughly understand the reason for the changes, the impact of new and updated benefits offered, and where to go for additional information or questions.
How can I minimize the work involved with managing an employee benefits program?
Technology now makes it possible to integrate your benefits administration with your payroll processing. While offering a benefits package is important to your business, it doesn't need to add additional administrative burden onto your HR team. Solutions like Paychex Flex can handle the heavy lifting while still allowing you to do what you do best – run a successful business.