Employers Should Revisit Benefits As Jobs Picture Improves
The jobs report released on April 1st was no joke: employment numbers are the best they’ve been in years. The U.S. economy added over 200,000 jobs, and the unemployment rate dipped to 8.8 percent. The rate had been hovering in the 9 to 10 percent range since 2009. This is one more optimistic sign that suggests the economy is improving. While that’s great news for your company, it also means that your top talent now has the best opportunity in years to look at other options for employment.
Smart Employers Will Offer Incentives to Employees
A recent study by WellPoint Research indicated just how important a good benefits package is to employees. A majority of survey respondents said that they were more likely to stay with an employer who did a good job of communicating the benefits package to employees – in fact, 60% said that they would stay in their same job, even if offered more money to work somewhere else. So, a proactive employer who wants to retain talented workers would do well to beef up the benefits package, and communicate that commitment to their employees.
Section 125 POP Plans – A Low-Cost Retention Tool
A low-cost way to offer more benefits to your workers is the Section 125 Premium-Only, or POP Plan. Also called a cafeteria plan, one option is to allow employees to choose from a range of voluntary benefits, such as health, dental, or disability insurance, and offer to allow premiums via payroll deduction. Even though the employer doesn’t pay any portion of these premiums, it is still a benefit to employees because the options are enrollment and payment is
convenient and premiums are deducted on a pre-tax basis. So, the deductions for insurance lower the employee’s taxable income. That, in turn, lowers the employee’s share of FICA and Medicare taxes. So, the employee not only gets access to useful benefits for himself and their family, it lowers the overall premiums from what it would be would be if he were to purchase the insurance outright.
The employer gets a benefit, too. Because the employee’s taxable income is lower, the employer’s share of those FICA and Medicare taxes is also reduced. This also lowers your FUTA taxes, and could lower your state employment taxes, too.
You can get a head start on retaining your best employees in minutes with TaxFreePremiums. We will provide you customized documents in minutes that are in compliance with all IRS cafeteria plan rules. Your cafeteria plan can be up and running today! Best part is we provide all the tools necessary to communicate this message with an easy to read SPD (Summary Plan Description) which explains how the plan works and complies with DOL (Department of Labor) requirements. With a low annual subscription of $99 you have access to all our tools, hosted on a secure and password protected site.