What are your options as a business owner in this new, uncharted era of healthcare? The answer: Let your insurance broker design a series of additional employee benefits options for potential and existing employees that add value to the basic traditional Affordable Care Act plans. More importantly, with extra protection built into your group benefits packages, you illustrate an added dedication and commitment to the well-being of your team – a real value to your company morale and brand loyalty. Voluntary benefits not only make you more competitive in this age of universal health care, but as an added bonus to you, they may actually protect your bottom line if an employee experiences a catastrophic accident or illness. An extra cushion, these types of benefits add protection in case of a potential financial drain that a life event can cause an employee which often results in a loss of work productivity. Thus, just as you provide the employee peace of mind – you also receive some solace when it comes to your business’ bottom line. It’s a real win-win for all concerned.
What are Voluntary Benefits?
Voluntary Benefits can be run through a Section 125 pre-tax premium arrangement. Like with anything worth exploring, there are pros and cons. The pros being the employee receives a substantial federal and state income tax savings. The employee AND employer share in the FICA tax savings and the employer may benefit from wage base reductions related to workers compensation premiums.
The IRS refers to the plans under Tax Code Section 125, as cafeteria plans. According to IRS.gov a voluntary plan or cafeteria plan is:
…a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code. It provides participants an opportunity to receive certain benefits on a pretax basis. Participants in a cafeteria plan must be permitted to choose among at least one taxable benefit (such as cash) and one qualified benefit.
A qualified benefit is one that does not defer compensation and is PRE-TAX thus not included in an employee’s gross income. According to the IRS, some of the qualified benefits included are the following:
- Accident and health benefits
- Dependent care assistance
- Health savings accounts, including distributions to pay long-term care services
There aren’t many cons to choosing the addition of a VB plan to your company benefits options. The only real down-side is that an employee can’t simply opt out of the plan mid-year due to affordability or other reasons. Only a qualifying life event can allow an employee to terminate coverage outside of the annual open enrollment.
Come to the Game of Life Prepared
Voluntary benefits add value but the real value comes in the way of security – a giant perk that comes with the smart decision to plan ahead by ”pre-budgeting” for life’s unexpected, but costly events. Accident plans can be a perfect choice— just one example—for the active individual or family who play(s) sports. Life happens right? Adding voluntary accident coverage helps you “plan” for the unknown.
Although there’s no scientific way to predict life, the least you can do is stay prepared. For instance, if your child breaks his leg in a soccer game, a high deductible plan could leave you on the hook for amounts as high as $1500. If you have an accidental plan however, it kicks in immediately. You’re covered for any out-of-pocket expenses. Imagine your sense of relief as you await X-ray results in the emergency room after having made the smart decision to contribute $50 pre-tax payroll deductions? No waiting periods or vested limitations, you‘re covered from the day you sign up. If you make your first pre-tax contribution on a Tuesday and get hurt the following month, you’re covered – simple.
Also anyone over the age of 40 has worried at one time or another about the possibility of Cancer. A voluntary plan for a catastrophic illness can pay a lump sum for organ transplants, heart attacks, strokes, out-of-pocket medical expenses and even a supplement to lost wages. Also most employees will find that pre-tax payroll deductions, once in place, are barely missed. You sign up and never have to think about it – unless of course you need it and then it’s invaluable!
Let Bridgeport be a Resource for You
Bridgeport Benefits can design a plan that offers all sorts of options for your existing employee pool. Also as an added benefit, one that will boost your competitive factor, if you choose to, you can contribute to the plan in the form of employer-covered disability insurance or by offering a $50 credit for signing up. Talk to Bridgeport about all of your options. Life happens and when it does, preparedness is your best defense.
Bridgeport has spent the past 25 years perfecting the way we manage and administer employee benefits in greater Los Angeles, Nevada, and throughout California. When you choose Bridgeport, you choose value and choice for your company so you can get back to concentrating on your business. Ask Bridgeport Benefits how we can be a resource for you.