Nowadays, it’s common for small business owners to offer a benefits package to employees on top of their monthly salary. Employees value these perks and see them as incentives to remain loyal to the company. In fact, according to a report from Glassdoor, 79 percent of employees would rather have essential benefits than more money.
Employees can save a lot more from a company-sponsored plan than from a health plan purchased on their own. Bearing in mind how highly valued health plans are, you can choose to offer one of the following:
- Low-deductible plan with flexible spending accounts – Although this involves high premiums, the insured can choose from a wide selection of doctors and hospitals if the need arises. This option works for companies with employees who need a more health care, such as those who suffer from chronic illnesses or have young children.
- High-deductible plan with health savings account – Suitable for employees who are younger and/or generally healthy, this option provides lower premiums, and in turn, lowers your employer premium contribution. The caveat is that the employees must pay for treatment costs up front before the insurance kicks in. To make this financially viable, employees can deposit pretax money in a health savings account, which is used with a high-deductible plan to pay for out-of-pocket expenses. If unused, a health savings account can be rolled over and invested.
To determine which health plan your company should offer, consider the size of your company, employee health risks and the industry you operate in.
Paid Vacation Time
Offering paid vacation time is a low-cost benefit to provide your employees. The standard period is two weeks of paid time off for employees in small businesses from the first to the fifth years of service. It’s standard practice for paid vacation time to rise with tenure.
Based on your staff enrollment, keep in mind the type of business you manage. If you operate a homeware business, for example, festive seasons may be your most hectic period and you can limit or prohibit vacation days during that period.
If you have many employees in their mid-40s, they may value retirement benefits over health insurance, as their spouses may already have them covered.
It’s recommended that small businesses choose defined contribution plans if they’re considering retirement benefits. Such plans assist employees in saving funds for retirement at each pay period. The added benefit is that employees can invest their money in mutual funds to maximize their portfolio.
Updated federal regulations have now made it more affordable for small businesses to start a retirement plan. For example, according to the IRS, companies with 100 or fewer employees can get a maximum tax credit of $500 per year for the first three years upon introducing a retirement plan.
Employers who provide their staff with a competitive benefits package have everything to gain. The additional perks attract and retain talent as well as minimize turnover rates. Most importantly, investing in your employees can be deemed as an incentive to not only maximize productivity but also to show that you value their contribution at work.
Emmie Sahlan has a graduate degree in English and has been writing professionally for the past five years. Her niche areas are insurance, credit cards, personal finance and education.