Employee Benefit Plans - Who Needs Them?                                 This is a Printer-Friendly Page It's a given that most business owners are acutely aware of the challenges and difficulties they face to reduce operational expenses.  However, since most of their time and attention is directed to managing their day-to-day operation, they find little or no time to research the many resources and options available or "shop around" to find the right financial product or service solution that may dramatically improve their bottom line profitability. Regardless of the business (SIC Code) classification,  the largest expense every employer has to manage and control is Employee Expense.  These include: Federal and State Payroll taxes, Workers Compensation, Employee Benefits (if offered), and Administrative Expenses. But one additional expense often unaccounted for is Employee Attrition (turnover). Some related costs may include loss of production, customers, good will, merchandise and equipment. While some business owners simply adopt a "...It's just the way things are/The cost of doing business" attitude regarding employee turnover, more and more are taking a pro-active and successful approach to not only reduce Employee "replacement" cost, but their Employer Payroll Taxes (up to 20%) and Business Income Tax as well. A recent Employee exit survey showed the main reason(s) employees are dissatisfied and more likely to leave one employer for another is: Lack of Employee Benefits or the opportunity to purchase them through Payroll Deduction. Unfortunately, an employer is seldom made aware of an employee's decision to leave, until after they have secured other employment. It is then difficult to persuade them to remain and allow them to "save face" with family, friends and the prospective employer. Often, they just don't show up for work. Whereas, if they had some investment, or would be leaving some funds behind with no access to them if they left - they may reconsider. THERE IS A SOLUTION. When a small business owner says they are "unable to afford" employee benefits, such as Medical, Disability and Personal Leave, it is often because they haven't been helped to understand how they CAN and/or how much it costs NOT to offer them.   EXAMPLE:    This is NOT an illustration for GROUP INSURANCE. The average Payroll Tax Expense is 16-18.5%. This is an unavoidable and unrecoverable "Bottom Line" expense for most Employers - with only ONE EXCEPTION. BOTH Federal and State Payroll Tax expenses are reduced proportionately for every Employee-invested dollar in an Employer-sponsored Section 125 (cafeteria) plan. In other words, it is NOT an additional expense, because the tax dollar savings can be redirected as the Employer's participation amount to provide benefits. In turn, these dollars are 100% tax-deductible by the Company as a Business Expense. Of Course, a comprehensive Group Medical cannot be fully funded with 16% of employee salaries, but when the Employee is also helped to understand that a tax credit (33%) for every dollar he/she invests in the cafeteria plan is paid by Uncle Sam, it immediately becomes more attractive for BOTH the Employer and Employee(s). Consider this. Bob (Employee) works for ABC (Company).  Bob earns a hourly wage of $9 and normally works a 40 hour week. His Gross Pay is $360. Claiming 2 Exemptions on his W-4, about $80 will be deducted for Income Taxes. In addition to the $360 Salary expense, ABC will incur a payroll tax of about $63 for FICA/FUTA/MC/SCIT/SUTA. Let's say, Bob agrees to a Section 125 (pre-tax deduction) of $25, and ABC contributes $12.60 (20% of $63). Based on 52 payroll weeks, this will credit his Section 125 $2,384/yr. He can then: use these funds to purchase Individual/Family Medical, Disability, Dental, or Vision insurance, set up a Health Savings Account (HSA) to pay family medical expenses with a Debit Card, use the money for Child Care expenses, use funds to supplement loss of income, in the event of disability or family medical leave, set aside funds for Retirement. REMEMBER: Bob is having $25 deducted, but he is actually getting credit for $33.25/wk. (33% Tax Bracket). QUESTIONS: If an Employer can facilitate $2,400/yr. in Benefits for an employee without cost, would he/she do it to help retain Employees? Would employees possibly think twice about changing jobs, and be better, happier and healthier workers? Would it make sense to allow Employees to make the Sec. 125 deposits through Payroll Deduction? Does the Section 125 Plan require the Employer to offer expensive Group Health Insurance?  NO. Are there Administrative Costs associated with a Section 125 Plan?  NO. Is the Employer REQUIRED to make contributions?  NO. Does re-directing Employer tax dollars into an Employee Benefit plan sound like a good investment in the Bottom Line AND Employee Retention?  YES. Who benefits most from a "No Cost" Employer Benefit Plan?  Employee or Employer?  YOU DECIDE.
		Employee Benefit Plan Calculator (Simplified) How Much Can You Afford (not) To Invest? 1.  Payroll Frequency:     Weekly      Bi-Weekly      Semi-Monthly      Monthly 2.  Average Gross Payroll: $___________ (Per Payroll Period) 3.  Taxes:  Federal W/H $______      SCIT $______      SUTA  $______     Total:  $________                  (FICA/FUTA/MC)                            (State Income Tax)       (State Unemployment) 4.  Number of Employees (Full & P/T):  ____ X  $______*= $________  X .1875= $________ *Estimated Amount each EE will voluntarily contribute to Sec. 125 Plan. Typically, equal to 1/2 Day pay per Week. 5. Subtract Line 4 from Line 3 to determine Payroll Tax Savings                            $________ 6.  Employer Contribution to Sec. 125 (per EE)  $______  X ____ Employees   =   $________**                                                                                                                         ** 100% Tax-Deductible as Business Expense 7.  Lines 5 + 6 = TOTAL Employee/Employer Tax Savings per Pay Period              $________ Multiply Total on Line 7 by # of Pay Periods (annually) to Determine Savings.        $________ REMEMBER: Any portion of this (line 7) amount deposited into the Section 125 plan an Employer contribution is 100% Tax-Deductible as a Business Expense. The Internal Revenue Service requires verification of Section 125 Plan contributions made by the Employer and the Employee. No Section 125 withholdings may be withheld by the Employer, nor or distributed directly or indirectly to the Employee. For Tax verification purposes, the Plan Administrator is Responsible for filing Quarterly withholding reports. Plan Administrator - The Insurance Company to whom all premiums and contributions are paid by the Employee, and submitted by the Employer. READ & UNDERSTAND THE IRS REGULATIONS PERTAINING TO THE USE OF EMPLOYER-SPONSORED CAFETERIA PLANS. These pages, along with other helpful information for Business owners and individuals is located at:                                                www.horizon2000.org/INSURANCE.html
			An AFFORDABLE Employee Health Plan                                                               Sensible Health Insurance for Today’s Lifestyles.                                                    FLEXGUARD Medical/Surgical Plan                                                   Guaranteed Renewable (non-cancelable) coverage.   Issue Ages: 0-63                                                                                                                                               Policy Features                                                             Choice of Benefit Maximum                                                                 (Per Occurrence – Accident/Illness) They Choose A Plan              $50,000          $75,000         $100,000 to Fit Their Budget.                       Daily Hospital Expense Benefit                                                      $2,000             $3,000           $4,000                                                               Surgery Expense Benefit NO Deductible,                               $7,500             $7,500           $10,000   unless Confined                           Out-Patient ER, Clinic. Lab. Benefit to Hospital ($500).                           $300                $400               $500                                                     Daily In-Patient Physician/RN Benefit                                                                   80% - up to $50/$100 15-30% Savings OFF                      Out-Patient Physician Visit Benefit Comparable Group Plan                                          $67.50 Rates.                                                   $100 Annual Wellness Benefit                                                                                      Options Available NO Minimum                                           $10,000 Emergency Accident Participation Required.                                  $15 Drug Copay (# of Employees)                             $10,000-$30,000 Critical Illness Cash                                                       Issue Age Payroll Deduction Rates                                                                      BASIC $50k Plan w/$10k Critical Illness* Benefit.                        AGE                Sex                  Weekly               Bi-Weekly                  Monthly                       00-17                M/F                $13/$13                $26/$26                $  52/$  52                       18-25                M/F                $18/$23                $37/$46                $  73/$  92                       26-30                M/F                $20/$28                $40/$57                $  80/$113                       31-35                M/F                $22/$32                $43/$63                $  85/$125                       36-40                M/F                $25/$33                $50/$67                $  99/$134                       41-45                M/F                $30/$38                $59/$76                $118/$152                       46-50                M/F                $38/$44                $75/$83                $149/$165 Add $15 Drug Copay, $10k Emergency Accident                 and HealthCare Advocacy**                               $25                        $50                       $100 (Covers ALL Family Members) *     Critical Illness – Heart Attack, Stroke, Cancer, Malignancy, Leukemia, Paralysis, Organ Transplant, Loss of Sight or Limb(s). **   Assures Out-of-Pocket Healthcare expenses billed to Subscriber will be negotiated to a substantially reduced Provider rate. Voluntary Plans allow Employees to decide which benefit level/option is best suited to his/her Needs and Budget. All policies are individually rated, underwritten and Employee maintained. NOT a Group Medical Plan. Employer receives a List Bill for all participants and remits premiums after deducting from Employee payroll. NO Employer costs are required. However, re-directed Payroll Tax savings are Tax-Deductible as a Business Expense.   Employer participation (cost-sharing) is encouraged proportionate to Payroll Tax-Savings of Section125/Cafeteria Plan. Supplemental Plans available – Term Life, Weekly Disability, Cancer Expense & Long Term Care.                                                                             “When Your Employees Can Make the Choice,                                                       You’ve Made the Right Decision”.