The Other Benefits – The Ones You Don’t Think About
By VICKY BROWN
Ok, when it comes to benefits, we all know about the standards – medical, dental, vision, life and disability insurance. But, did you know there’s a whole world of other benefits you can make available to your team.
And believe me – they will make you seem like a superstar.
In the past few years, transportation benefit plans have become very popular. They allow the employee to set aside money on a pre-tax basis to pay for qualified work-related transportation expenses like mass transit and parking.
These plans are 100% employee paid, and they can provide a big benefit. If possible, the commuter is issued a transit card, or they can go online and claim reimbursement.
The IRS has set monthly contribution limits – and you as the employer can set limits at the plan level as well. But on the flip side, the employee can start or stop their contributions at any time. And another big benefit is that they can usually carry over any unused funds to the next year.
Another, often overlooked plan is a Flexible Spending Account or FSA. This is a special account, again funded by the employee’s pre tax dollars, that they can use to pay for certain out-of-pocket health care costs. Things like the deductible, or the out of pocket cost for an office visit etc.
And, in fact, there are two sides to an FSA – there is the medical contribution side, and also the option of having a dependent care FSA. The dependent care FSA can be used for paying childcare of adult dependent care expenses that are necessary to allow you to work.
Now again, since an FSA is an animal of tax law, it means there are restrictions.
First up – there are limits to how much you can contribute. The IRS lists the maximums each year, so be on the lookout.
Also, on the medical FSA side, the funds have to be immediately available to the employee. So, that means that if I decide to contribute $3,000 to my FSA for the year; and I have surgery in February and put in a claim for $3,000 – even though I may not have contributed the full $3,000 to my account yet, the company has to cover the funds to get me the full $3,000 reimbursement right away.
Now, as you might guess, that can sometimes put a company off from putting an FSA in place, because basically, the company is liable to cover anything not yet contributed to the plan. And, if I, as the employee, leave before I’ve contributed the full $3,000 – well then, the company is simply out that money.
However, on the other hand, if I contribute $3,000 to the plan, and only have $2,000 worth of reimbursements against the plan during that year, then I – the employee – will lose the remaining $1,000.
It’s worth noting that the dependent care side isn’t subject to this ‘pre-funding’ requirement. The employee can only reimburse an amount they have already contributed.
“… … on the medical FSA side, the funds have to be immediately available to the employee. So, that means that if I decide to contribute $3,000 to my FSA for the year; …the company has to cover the funds to get me the full $3,000 reimbursement right away.”
Another type of account that can help with medical expense is a Health Savings Account or HSA. The main difference between an HSA and FSA is that an HSA is owned, if you will, by the employee. It goes with them from job to job. Also, the employee can change their contribution to the HSA at any time, but with an FSA once you enroll at a specific level, it has to stay at that level for the rest of the year.
Also, employees don’t have a deadline to submit reimbursement, the funds remain available to them. Now I’m specifically talking about a employee contribution only HSA plan. There are plans that allow for the employer to contribute as well, and they are slightly different. You should check with your insurance broker on specifics.
So, why would an employee choose an HSA over an FSA or vice versa. Well, an HSA has to be paired with a specific type of medical plan, called a high deductible plan. The features of these plans can be more expensive than the regular medical plans, so employees oftentimes don’t want that restriction.
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And then, there are the retirement accounts. Generally companies opt for a 401k retirement plan. But there are others in play as well – things like 403bs for non profits. There are also Employee Stock Ownership (or ESOP) plans, profit sharing plans and Simplified Employee Pension Plans (SEPs).
All these plans are IRS governed and have specific guidance around their participation and administration. You’ll need a financial adviser (this is different than your benefits broker). And I would also advise getting a Third Party Administrator or TPA to administrate the plan. It’s possible for you to try to do it all yourself, but the reporting, notice requirements, contributions – it can easily be overwhelming. Work with the professionals, and revel in peace of mind.
Other available options include things like ID Theft programs – these can be employee or employer paid, and cover getting the person back on their feet if they become the victim of identity theft. Prepaid legal plans – these are monthly subscription plans that give the employee access to an attorney and legal services (and no, they won’t help your employee sue the company!).
You could also do things like a fitness reimbursement program to cover the cost of gym membership; pet insurance to cover the expenses associated with having a pet; Long Term Care insurance that will provide coverage for long-term care or assistance with everyday tasks costs.
And there is also future planning in the form of an Employer Sponsored 529 Plan. These plans help employees save for K-12 tuition, higher education and trade schools for themselves or a loved one. The funds are invested in stock and bond funds, and have tax advantages.
So you see – with so many options available, the chances are high you’ll find the right mix for your team – and your budget.