When a business is started, it needs to offer employees basic benefits. These typically include group medical insurance, life insurance and disability insurance. These traditional benefits are essential to help attract and keep valuable employees.
One of the most valuable components of a total compensation package for your employees is a quality benefit plan. How do you decide what to offer and what you can afford?
Evaluating your employee benefits needs involves the following steps.
- Specify the Objectives to be Accomplished
Some business owners feel a social obligation to their employees. Some business owners are looking to keep key employees. All business owners want to take advantage of as many tax deductions as possible.
How can your benefit plan be constructed to accomplish your objectives? An employee benefit specialist can help you align your program with the goals that you want it to achieve.
- Examine Your Current Plan if You Have One
Components of your current benefit plan may or may not meet your expectations. Evaluate what you like and don't like about your current situation.
Identifying what you are looking for will help in tailoring a plan to your needs.
- Decide What Benefits You Want to Make Available
Every business has specific needs. Begin by evaluating which benefits you want to offer to your employees and what requirements you want to place on qualifying for those benefits. Group health, life and disability insurance are common offerings. Some companies also offer opportunities for long-term care planning.
You might also consider if individual plans for key employees should be in place to encourage retention and performance.
Providing employee benefits can be complicated, technical and time consuming.
Business owners need to provide the quality benefits employees desire without jeopardizing their profit margins. They need to leverage as many tax advantages as possible to help defray the cost of providing benefits, while using the best funding options available.
- They are typically more cost-efficient and less expensive.
- They are easier to implement and administer.
- They provide coverage for all full-time employees.
- The employer can share costs with the employee.
- The employer generally receives a tax deduction for any premiums paid, and the employee may generally exclude from income employer contributions to the plan.
- Combining group and individual plans may provide employees with greater flexibility and higher benefit levels.
- Businesses may have to pay a portion of premiums under a group benefit plan.
- Although group benefit plans are most often funded with appropriate insurance products, larger businesses may choose to “self-insure.”
Employee benefit services are offered by local independently-owned and operated companies that are not subsidiaries of The Northwestern Mutual Life Insurance Company. Your Northwestern Mutual Financial Representative may work with a variety of local employee benefit companies.
The information contained on this website is not intended to be used as basis for legal or tax advice. In specific cases, the parties involved must always seek out and rely upon the counsel of their own attorneys.