Employee Benefits - Creating the Right Package
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The document is a presentation on creating the right employee benefits package, discussing key aspects such as the value of benefits, types of health insurance, and retirement plans. It covers costs, comparisons between coverage types, and additional benefits, emphasizing the importance of a comprehensive approach to employee welfare. The discussion includes strategies for managing rising costs and the implications of health care reform.
Employee Benefits - Creating the Right Package
- 1. Sigma Free Presents… Employee Benefits Creating the Right Package Sponsored by: Provided by Sigma College of Small Business, Inc.
- 2. Sponsored by: Agenda Introductions Keynote Topic Employee Benefits Creating the Right Package Our Sponsor: Freeman & Sherburne Break – Refreshments and Networking Ask Questions Any Time Keynote Conclusion Employee Benefits Creating the Right Package Employee Benefits ‐ Creating the Right Package 2 Copyright 2010, Sigma College of Small Business, Inc.
- 3. Sponsored by: Value of a Benefits Package • Tax advantages – Use pre‐tax dollars to pay – Example • Find and keep a better work force – Competing for talent – Cost of turnover – Cost of an “unhealthy” work force What would you do if a valued, uninsured employee had a major • The “Right Thing” medical issue? Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 3
- 4. Sponsored by: Health Insurance Confusion Coverages Amount of Coverage • Preventative Care • Mix of employer to • Hospitalization employee • Prescriptions • Vision, Dental Types of Plan • Group or Individual • Managed or Fee for Service Costs • HMO, PPO, POS Networks • Premium • In network • Co‐Pay • Out of network • Deductible • Available physicians • Max Out of Pocket Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 4
- 5. Sponsored by: Comparison of Types of Coverage Fee‐for‐Service Group Plan (Indemnity) • “Risk” averaged across company • Requires minimum enrollment Individual Plan • “Risk” is for individual and family • Typically less expensive POS Monthly Premium HMO PPO High Deductible Plan “Out of Pocket” (Copays, Deductibles, Out of Network) Employee Benefits ‐ Creating the Right Package 5 Copyright 2010, Sigma College of Small Business, Inc.
- 6. Sponsored by: Costs • Premium – Monthly payment – Typically shared between employer and Consider all employee costs when • Co‐pay determining – Standard “per‐visit” amount paid the right • Deductible package for – Amount paid before insurance “kicks in” – Deductibles are for individual family members you and • Maximum Out‐of‐Pocket employees. – Maximum amount that will be paid by individual – Typically less than combined deductibles Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 6
- 7. Sponsored by: Total Cost Example Business owners need to look at and have their employees consider the “total cost” of the plan. Employee Benefits ‐ Creating the Right Package 7 Copyright 2010, Sigma College of Small Business, Inc.
- 8. Sponsored by: Paying the Out‐of‐Pocket • Flexible Savings Account – FSA – Pre‐tax dollars for out‐of‐pocket medical – Determine amount to be withheld from pay – Use it or lose it • Health Savings Account – HSA – Employee and Employer contribute pre‐tax – Contribute at will – can change amount – Owned and moves with employee • Health Reimbursement Arrangement – HRA – System for employer to reimburse out‐of‐pocket – Pre‐paid cards used by employees then paid by employer Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 8
- 9. Sponsored by: Designing the Plan • What type of plan – Managed currently offers best pricing – High deductible with HSA becoming popular • How much to pay – Remain competitive in line with other objectives – Consider tax benefits • Add ons – Dental, Vision • Changing plans – How to approach rising costs • Health Care Reform – what will it mean? Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 9
- 10. Sigma Free Presents… Employee Benefits Creating the Right Package Sponsored by: Provided by Sigma College of Small Business, Inc.
- 11. Sponsored by: Retirement Plans Types and Terms • Qualified v. Non‐qualified – Qualified is pre‐tax and tax‐deferred earnings • Time and Cost to Administer – Forms and third parties required to start and administer the plan • Contribution Limits – Limits on the amount that employees and employers can and/or must contribute • Highly Paid Employee – Qualified plans have rules to prevent discriminatory practices and disproportionate contributions – Safe Harbor Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 11
- 12. Sponsored by: Retirement Plans IRA Based Plans 401(k) Based Plans Other Payroll SEP IRA SIMPLE IRA 401(k) Safe Harbor Profit Deduct IRA 401(k) Sharing Key Employee Employer Employee Higher limits Contribution Discretionary Difference only only contributes, requirements, annually, contribution contributio Employer matches no test for must offer to n discrimination all Contributors Employee Employer Both Both Both Employer Max Annual $5,000 25% NTE Ee ‐ $10,500 Ee ‐ $15,000 Ee ‐ $15,000 Set annually Contribution $45,000 Er – Match to 3%, Co – 100% of Co – 100% of or 2% comp NTE comp NTE $45,000 $45,000 Contributor Ee can decide Er can Ee can contribute, Ee and Er can Ee can Er according Options at any time decide Er must match contribute contribute, Er to plan terms year to must match year Vesting Immediate Immediate Immediate 100% Ee – Immediate Ee and most Er According to 100% 100% 100% ‐Immediate plan terms Er ‐ optional 100% Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 12
- 13. Sponsored by: Disability • Pays when a medical condition prevents working – Most working adults are more likely to become disabled than to die • Short Term Disability – Effective for several months (typically 180 days) – Percent of salary • Long Term Disability – Becomes effective after a specified waiting period – Amount and waiting period affect premium Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 13
- 14. Sponsored by: Additional Benefits • Life Insurance • Vacation • Sick Days • Holidays • Education • Voluntary Programs Employee Benefits ‐ Creating the Right Package Copyright 2010, Sigma College of Small Business, Inc. 14
- 15. Sponsored by: Sigma College of Small Business • Focus Workshops Critical Business – YouTube: Grow Your Business with Online Areas Video Strategy and Planning • Tuesday, May 18, 2010 Marketing and Sales • 9am – 12pm, $99 Accounting and • Upcoming SigmaFree Classes Finance – 5/18 – No Class Operations and Quality – 5/25 – Business Networking for the Non‐ Leadership and Networker Administration – 6/8 – What’s the Best Entity? Solve the Technology and Mystery of Legal Organization Innovation Dedicated to the Learning Needs of Small Business! Copyright 2010, Sigma College of Small Business, Inc. 15
- 16. Sigma Free Presents… Employee Benefits Creating the Right Package Sponsored by: Provided by Sigma College of Small Business, Inc.