Employee Benefits Plans For Small Businesses
Employee benefits are very crucial in the lives of employees together with their families. Employees will consider benefits if they are to work for an employer. There are those benefits that employers must provide as required by the state while others are optional and it is the employer who decides whether they can offer the benefits or not. Most benefits provided include employee social security, unemployment insurance taxes, employee compensations, disability insurance, leave benefits, family, and medical leave (United States Small Business Administration, 2017). On the contrary, optional benefits may include COBRA benefits, employee incentive programs, health insurance, and retirement benefits. The choice to provide insurance is one important choice for most employers. Employers have to design a benefits plan that will not make them lose skilled employees nor place the business at risk. The factors to consider when choosing an employee benefit is the cost of providing it and the gains one can gain from the benefit.
As a small business owner in Colorado, there are certain benefits that my employees have to be accorded. Firstly, the state requires that employers pay social security taxes at the same rate that the employees pay. The state also requires employment and income tax be paid hence the payment of unemployment taxes. Under the family and medical leave act (FMLA), employers are obliged to provide leave benefits. Small business owners thus provide sick leave, bereavement leave, personal leave and holidays. It is also a requirement for employers to provide family leaves and medical leaves as provided by the FMLA. The Act provides that employees can be given up to 12weeks of job-protected leave for birth and care of employees, the death of close members and employee’s own serious health conditions (United States Small Business Administration, 2017).
Most employees at Natural Grocers are in their thirties. Most of them have young children, and they prefer having good health coverage. To maintain talented employees, employers must provide health coverage. Natural Grocers, therefore, partnered with Professional Employer Organization (PEO) to provide Blue Cross Blue Shield health covers. They pay a flat amount of $400 per month for each employee. The small business wishes to provide life insurance covers and retirement benefits (United States Small Business Administration, 2017). Retirement benefits motivate employees at their forties. A good retirement plan is 401k or simple IRA which are defined contribution plans. Contribution plans sums employee contribution and employer’s match which amount to $11, 500 a year for each employer. Life insurance is another benefit that small companies would think of providing, but that should come as a retirement plan. Life insurance is secondary to both healthcare and retirement benefits. If taken, it will cost around $23,000 as this amount can handle funeral services (Meier, 2017).
According to Claxton, et al., (2013), notes that employers have an obligation to pay employee benefits. Therefore, top management and financial departments must make sure that they cater for the benefits as provided by the law. The management should find out what benefits the organization is required to provide and ensure that the financial department delivers payment. Management has a duty to provide leaves as provided by FMLA. The management together with the financial department should work together to calculate a cost-benefit analysis of the benefits they wish to offer their employees. If the benefits are more than the cost, then they should take it. The benefits provided should be sustainable for the company (Claxton et al., 2013).
Providing both the required and optional benefits will cost small businesses compared to large businesses because of lesser buying power and relatively high costs of administration. The cost of administration reduces the choices for small businesses to design benefit plans. Increasing benefit plans like providing the optional benefit plan on top of the required benefits automatically increases the administrative overhead. Health insurance costs are constantly increasing making it less affordable. Further, benefits provided need reporting. According to Mamorsky, (2016), there are legal costs that businesses may incur in regard to compliance. If mistakes are made in benefit plans, whether required or optional may lead to costly lawsuits or fines.
References
Claxton, G., Rae, M., Panchal, N., Damico, A., Whitmore, H., Bostick, N., & Kenward, K. (2013). Health benefits in 2013: moderate premium increases in employer-sponsored plans. Health Affairs, 32(9), 1667-1676.
Mamorsky, J. D. (2016). Employee Benefits Law: ERISA and Beyond. Law Journal Press.
Meier, D, (2017). The Basics of Employee Benefits: Retrieved From https://www.entrepreneur.com/article/80158. Entrepreneur.
United States Small Business Administration (2017). Employee benefit plans: What's law and what’s Optional Retrieved from https://www.sba.gov/blogs/employee-benefit-plans-whats-law-and-whats-optional: SBA
United States Small Business Administration (2017). Starting Business: Hire and Retain Employees. Retrieved from: https://www.sba.gov/starting-business/hire-retain-employees. SBA
