How to Choose Benefit Offers for Employees

Are you in charge of running one of the 28 million small businesses in the United States? If so, you may have done some research on the benefit offers available to your employees.

As you navigate this journey, you might find there are myriad possibilities when it comes to employee coverage. There’s no one-size-fits-all approach when it comes to balancing these options. Yet, the selection process doesn’t have to be overwhelming.

Today, we’re going over a few tips to help you narrow down the field. This can help you choose the offers that best align with your company resources.

Ready to learn more? Let’s get started!

1. Categorize the Benefit Offers

By law, small business owners are required to pay for certain types of employee benefits. These include Social Security taxes and worker’s compensation.

But most other benefit offers are optional, and as such, are not quite as cut-and-dry.

The easiest way to begin is to categorize the optional benefits into three sections.

These include health insurance, retirement savings, and other, specialized benefits. You’ll then be in a better position to find a provider, compare the options, weigh the costs, and determine exactly what you can provide.

Health Insurance

The Affordable Care Act mandates that if your small business has more than 50 full-time equivalent (FTE) employees, you must provide at least some level of health insurance.

If your small business has 50 or fewer FTE employees, you can still offer health insurance to your employees. You’ll do this through the government’s Small Business Health Options Program (SHOP).

Depending on your resources, you can select one universal company plan, or let your employees choose from a variety of options. You can opt to provide health coverage, dental coverage, or health and dental coverage combined.

You’ll also be able to select the amount you contribute to employee premiums and the support (if any) you’re able to extend to family dependents.

Retirement Savings

The IRS provides a few options when it comes to selecting a retirement savings plan for your small business. You can select from Individual Retirement Account (IRA) plans, defined contribution plans, or defined benefits plans.

An IRA plan can be designed as a Payroll-Deduction IRA, a Simplified Employee Pension (SEP) plan, or a Simple IRA Plan.

A defined contribution plan typically takes the form of a small business 401k. These can be a Safe Harbor 401k, Automatic Enrollment 401K, or Traditional 401k.

A defined benefit plan, otherwise known as a pension, is more complex and can be costly to establish. It uses each employee’s length of employment and salary history to compute retirement benefits.

To learn more about these options, check out this helpful guide created by the IRS.

Specialty Benefits

If your small business is able, you may want to extend specialty benefits to your employees. These are often akin to those provided by larger companies, such as:

  • Vision insurance
  • Life/Accidental Death and Dismemberment (AD&D) insurance
  • Disability Insurance (required by law in some states)

If you choose to provide these services, consider what level of coverage you’re able to afford. Also, see how much your employees are willing to contribute. Then, use this knowledge to guide your decision.

Hire a Knowledgeable Specialist

Have you determined roughly which benefit offers your small business can provide? If so, an insurance agent or broker is invaluable in helping you sort out the details.

He or she will walk you through all the available options (and sub-options) to help you pick the ones that are right for your company. To this end, it’s helpful to look for one who’s familiar with your industry.

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