Employers May See Productivity Backlash as Economy Improves

Created with Sketch.

Employers May See Productivity Backlash as Economy Improves

Setting up a Section 125 POP Plan

The American worker has spent the last few years being more productive than ever.  Thanks to the recession and a dismal job market, employers could easily mandate that workers “do more with less” without having to worry about a mass exodus.  It worked for a while, but new research suggests that employees are tired…and looking to work elsewhere.

In a recent survey, insurance company Metlife found that less than half of U.S. workers – just 47% – feel “very strong” loyalty to their employers.  That number is down from three years ago, when it was 59%.  The survey also discovered that over one-third of employees plan to work for someone else within the next 12 months.

Many Innovative and proactive employers are exploring value added options such as voluntary benefits, Health Savings Accounts, and Premium Only Plans to increase job satisfaction and morale with little to no out of pocket expense to the employer.

Section 125 POP Plans Offer Key Benefits

The study underscores the importance of a good benefits package to employees.  Employees who reported “high satisfaction” with their company’s benefits offerings had overwhelmingly higher loyalty (71%) to their employers than employees who were dissatisfied with benefits (25%).  The survey also found that 59% of respondents’ loyalty was driven by benefits other than a health plan, such as dental and life insurance.

A Section 125 POP Plan is a great way to offer benefits on a tax advantages basis and offer a full range of voluntary coverage to your employees.  A Premium-Only, or POP Plan accompanied with voluntary benefits allow an employer to offer benefits where the employee pays the premiums in full, so your company does not have to contribute anything.  But your employees get the benefit of the plan’s tax-advantaged status.  Because the premiums are deducted from the paycheck pre-tax, the employee’s taxable income is reduced, and so are his payroll taxes.

The employer also sees the benefit of the employee’s reduced taxable income in a lower employer share of FICA and Medicare taxes, as well as lower FUTA taxes.

Look Outside the Box – HSAs through the Section 125 Plan – A Growing Trend

Health Savings Accounts or HSAs are growing in popularity, with the Employee Benefits Research Institute reporting that some $7.7 billion dollars being socked away in through these vehicles in 2010.  HSAs are becoming a

favorite because they allow employees to save money for future medical expenses in an account that grows tax-free, is portable, and doesn’t have a time limit for spending.

In 2011, an employee can contribute up to $3,050 for an individual plan, or $6,100 for a family plan, to his HSA.  Offering a HSA through payroll deduction requires the use of Section 125 POP Plan with a specific provision allowing HSA contributions.  There is a bit more work required on the part of the employer but the employer has huge tax benefits as the plan sponsor.  Monies contributed through the IRS Section 125 Plan are exempt from employer matching taxes, so employers recognize tax benefits for assisting their employees.

If you value your employees and want to avoid them from looking for greener pastures, it takes very little time to communicate that message by offering administrative solutions.   Through payroll deduction for voluntary benefits,

pre-tax health deductions, or other conveniences that make your workers day a bit easier job satisfaction will increase and the cost is minimal if any.

Tags: , , , ,