Small business owner’s guide
August 27, 2017
1. Health insurance
When most employers think about employee benefits, health insurance and health insurance are top priority. Medicare may not be necessary if there are fewer than 50 full-time employees (or equivalent). But sometimes it may be more complete, so check the state law.
If you decide to join health insurance, please ask the following four questions.
How many employees would you like to enroll?
Do employees prefer high or low deductions?
Do you want insurance premiums to offer more expensive plans and ask employees to pay more of the premium or to provide a cheaper plan covering the entire premium?
Do you live in a city where HMO dominates? (HMO is often cheap.)
All of the questions above will be answered with your health insurance guide. Also, from HMO to PPO, HDHP, I would like to understand the soup of the alphabet that constitutes the insurance plan.
Cost of health insurance
The cost of health insurance is largely dependent on where you purchase your company’s health plan (both at work and location), so there is no simple answer. Employers can pay a monthly allowance or a premium percentage. Even if the plan is expensive, it is not expensive for your business or employees. Most health insurance premiums are calculated as employee deductions.
Health insurance is provided by PEO, HR software, SHOP exchange, local HMO, health insurance or insurance broker.
2. Dental insurance and vision
Why do most employers provide dentistry and vision if you do not provide health insurance? Well, dentistry and vision are very beneficial and cost effective for employees. If you can not join health insurance, you can provide dental insurance and vision insurance, maintain and attract employees.
Cost of dental insurance and vision
The cost of dental care and vision depends on many factors, including planning plan, medical institution network, medical expenses trend, group characteristics, funding mechanism, and management cost. We recommend that you contact the broker or supplier, or directly with the PEO or HR service provider, to receive the estimate directly. Like other health insurance, dental insurance and sight insurance premiums are also taken into account as input tax deductions.
Dental or visual insurance is provided by PEO, HR software, insurance company, or local broker. Dental insurance can also be used at SHOP’s exchange.
3. Life insurance, disability insurance and supplementary insurance
Another low-cost, high-value employee benefits can be life insurance or short-term and long-term disability insurance. They also provide complementary insurance such as Aflac and Cigna to help employees offset costs and earn income in the event of serious health events such as cancer or heart attacks .
Many employers provide these benefits as voluntary benefits of employee checks but can provide them as benefits payable by employers. Workers with children can be worthy of life insurance and elderly workers can understand these other options. Your employees have low cost advantages.
Two things related to life, disability and supplementary insurance are as follows.
The age of your labor force (older workers may like older workers while young workers do not care about it)
That your workers have families (that is, those who have children can rate this higher)
For more information on life insurance and short and long term obstacles, please refer to their guidance on how to provide insurance. Washington National introduces an overview of supplementary insurance.
Living expenses insurance
In general, the cost of life insurance is more than about 5 cents per $ 1,000 covered. However, the exact rate is based on a number of factors, including the number of employees receiving benefits, company history, group occupation, employee sex and age, employee salary. Some insurance premiums may be deducted before tax.
Cost of disability insurance
Regardless of the size of your business, the cost of providing disability insurance (STD or LTD) is usually 1 to 3% of employee salary. This makes disability insurance an affordable advantage that employees can pay directly through you or a payroll deduction. Some insurance premiums may be deducted before tax.
Cost of additional insurance
Depending on the type of additional insurance purchased, additional insurance for 5 to 10 months per employee is applied. For example, at Aflac, parents’ families may join cancer insurance at about $ 8 a month. The Cigna option requires an offer but may be nearly the same. Some insurance premiums may be deducted before tax.
Life insurance, short and long term disability insurance and supplemental insurance can be provided by PEO, HR software, some subcontract software provider, insurance company, and broker.
4. Retirement plan: 401 K, simple IRA etc.
Another advantage that is interesting for many employees is 401K or some form of profit sharing or retirement planning.
There are several options for retirement. In general, we recommend setting SIMPLE IRA as owner of small business. I will explain the procedure here.
To select the right plan, three questions need to be considered.
Do you want to donate something, does the employee contribute to it? Or both?
How much do your employees want to contribute each year?
What is the purpose of old-age benefits: Are you looking for incentive tax incentives, do you want to provide 401k as a recruitment tool?
Depending on your response, you will need to choose from 4 different retirement plans including simple IRA, SEP IRA, 401K, traditional Roth IRA.
Cost to provide a pension plan
The cost of providing the pension system depends on three factors.
Your company’s size
When we receive part of the employee’s contribution
How much do you want to save?
Small businesses should pay $ 1 to the employee (eg, 1 US dollar per hour or 100 US dollars per billing cycle), or based on contribution percentage, usually between 3% and 6% Can be selected.
For many SMEs, simple and easy IRA 401 (k) is a good choice. These require only two IRS forms per page and cost about $ 350 and $ 25 per participant. In a simple IRA, the combined contribution amount (equivalent to the employer’s employer contribution amount) of up to $ 12,500 per year is allowed in total. The upper limit of 401 K is a maximum of 18,000 dollars per year. For details on IRS restrictions, please see here. You can also set the full 401 (k), but it is more expensive and complicated. SHRM has several considerations. The 401k deduction is usually restricted before employee’s tax calculation.
For the 401 (k) solution your employee loves and does not bring you luck, you should see people’s attention. A dedicated account manager provides compliance support and helps employees to choose cost-effective investment options. For companies with 20 employees, it costs 200 dollars per month. For details, please click here.
5. Alternative performance options
There are other types of medical services that can be offered in parallel with or in place of traditional health insurance. These include Flexible Expense Account (FSA), Health Insurance (HRA) Account, or Section 125 Cafeteria Benefit Plan. Place these in the “Alternate Benefit” category. It is due to its own law and requirements for small business. Many of them can be offered to employees as deduction for bid tax.
In the following situations, other advantages can be considered.
They do not want to be satisfied with actual medical insurance and accompanying headaches, such as premiums, compliance issues, privacy laws are constantly changing.
You want to provide health benefits for employee and recruitment purposes
I would like to provide a health benefit limited to a fixed amount per employee
We have resources for the following specific service / performance plan:
• Health redemption account (HRA)
• Flexible spending account (FSA)
• Health savings account (HSA)
Cost of alternative service
Most options have a setting fee of US $ 1,000 and there is generally monthly administrative expenses incurred per employee. In that case, the cost will be part of the insurance premium that the employer contributes to each employee.
Alternative performance plans may be provided by PEO, HR software, insurance companies, or brokers. There are also providers such as credit unions, banks and other financial services organizations.