Don’t Just Offer Benefits, But Offer The Right Benefits
When it comes to Employee Benefits, most companies offer a baseline of coverage that include the big “3”:
- Group Health or Medical insurance – which includes a prescription drug plan
- Dental insurance, and
- Vision insurance
After implementing this “baseline” of insurance coverages, there are a handful of other benefits to consider as well.
The first of these ancillary insurance products that are customarily added is a cafeteria plan, also known as a salary reduction plan or Section 125 plan. These include voluntary benefit options. Not only are they reasonably priced, but they can be totally employee paid. These plans are referred to as a cafeteria plan because like being in a cafeteria or buffet, there are many different items to choose from. Maybe you want mashed potatoes but not green beans, chicken, but not steak, life insurance, but not an accident plan, just choose what you want from the available offerings, if anything.
Cafeteria plans include such things as the aforementioned accident plans, cancer insurance, heart or stroke insurance, voluntary short-term disability, and life insurance. Traditionally, products like Premium Only Plans (POP), and Flexible Spending Accounts (FSA) are included in cafeteria plans. In addition, Health Savings Accounts (HSA), and Health Reimbursement Arrangements (HRA) can be added. These can help both employers and employees by allowing them to take advantage of parts of the tax code to save and pay for certain insurance expenses on a tax favored basis.* These types of benefits put the employee in control of what’s important to them.
Another example could be companies that choose to offer employer sponsored short-term disability, long-term disability, or life insurance tied together with an accidental death and dismemberment insurance (ADD) benefit. Perhaps long-term care insurance or pet insurance is an important offering for your employees.
One of the most important components of the employee benefits conversation is not only communicating what is available to your employees, but more importantly, how those options work and how they can benefit them.
Benefits are confusing. In fact, we say that understanding health insurance is an oxymoron! Every company is different and has specific goals when it comes to their benefit offerings. We would value the opportunity to hear about your specific goals and create a custom benefit solution for you and your team.
* Hendricks & Associates, Inc. is not a tax advisor, accounting or CPA firm. We do not offer tax or legal advice. Please contact your tax advisor or attorney about any tax advice.