Employee Benefits - Creating the Right Package


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Small business owners will learn about the options available to them when considering a benefits package for themselves and their employees. They will also learn to assess the benefits of having a solid benefit package and options for structuring the plan to minimize the overall expense.

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Employee Benefits - Creating the Right Package

  1. 1. Sigma Free Presents… Employee Benefits Creating the Right Package Sponsored by: Provided by Sigma College of Small Business, Inc.
  2. 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. 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. 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. 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. 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. 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. 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. 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. 10. Sigma Free Presents… Employee Benefits Creating the Right Package Sponsored by: Provided by Sigma College of Small Business, Inc.
  11. 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. 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. 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. 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. 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. 16. Sigma Free Presents… Employee Benefits Creating the Right Package Sponsored by: Provided by Sigma College of Small Business, Inc.