Basic Employee Benefits 

basic employee benefits 
When a business is started, it needs to offer employees basic benefits. These typically include medical insurance, life insurance and disability insurance. These traditional benefits are essential to help attract and retain valuable employees.

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Evaluate Your Needs

One of the most valuable components of a total compensation plan 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 retain 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? A Strategic 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 in an employee benefit plan will help in tailoring a new benefit plan for your needs.

Decide What Benefits You Want to Make Available

Don't think about your benefits as a package solution. 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 Medical, Life and Disability are common offerings.

You might also consider if individual plans for key employees should be in place to encourage retention and performance.

How Benefit Plans Fit Your Business

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.

Advantages of Group Plans

  • 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.

Disadvantages of Group Plans

  • They are limited in their flexibility.
  • Group plans may not provide a high enough level of benefit to attract and retain key employees.

The business may have to contribute toward the payment of premiums for the group benefit plan. In most cases, group benefit plans are funded by the purchase of appropriate insurance contracts, although some larger businesses may "self-insure" the benefits.

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Strategic Employee Benefit Services is a marketing program in which local independently owned and operated companies that are not subsidiaries or affiliates of The Northwestern Mutual Life Insurance Company provide comprehensive employee benefit services. Strategic Employee Benefit Services provides Northwestern Mutual Financial Network Representatives with access to a variety of top employee benefit companies.

The information contained on this website is not intended to be used as a 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.