Today’s tight job market makes it imperative for small businesses to offer an array of benefits to employees. Many benefits are commonly offered…health care, retirement plans, and dependent care assistance. But employers may need to go beyond the basics and consider other benefits. Doing so won’t necessarily be expensive. Here are some additional benefits to consider:
While working remotely, many employees became accustomed to working alongside their pets. As they return to the office, consider policy to allow pets on your premises. In offering this benefit, consider the feelings and concerns of employees who do not have pets. There are templates you can use for this, such as one from Workable. Also review your business liability policy.
Another way to assist employees with their pets is to facilitate pet insurance. About half of Fortune 500 companies do. You don’t have to pay for it (you can but then it’s just additional compensation), but you can make it easy for them to have it. Arrange with pet insurance carriers for premium payments via payroll deductions. Depending on your location and the pet insurance carrier, employees may enjoy premium discounts.
Paying student loan debt
If you have an educational assistance plan, you can use it to pay employees’ student loans. Up to $5,250 is tax free to employees and exempt from employment taxes.
You may, of course, choose to pay any amount without regard to having an educational assistance plan. But then this is just additional compensation…taxable to the employee and subject to employment taxes. Either way, the employer deducts the payments.
Identity theft protection
If an employee experiences identity theft, it can drain considerable time and focus to resolve problems. Identity theft insurance can be a great help. It’s estimated that more than half of all companies now offer this benefit.
From a tax perspective, the IRS says if the company has experienced a data breach and then offers this insurance to employees, it’s a tax-free fringe benefit. But if it’s being offered merely to attract and retain valued employees, it is taxable to employees and subject to employment taxes.
Beyond basic health insurance
Small businesses can offer basic health coverage through traditional group plans or reimburse employees for individually-obtained coverage via Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) or Individual Coverage Health Reimbursement Arrangements (ICHRAs). But these options have limitations for employees’ health care expenses. To go beyond the basics, consider:
- Excepted benefit HRAs. This is an option to pay benefits…vision, dental, hearing, etc., that are not usually covered in basic health plans. There’s an annual dollar limit on this benefit ($1,800 in 2021 but likely will be higher for 2022).
- Long-term care insurance. This insurance pays for care for chronic conditions that impact daily living activities and are not otherwise covered by basic insurance or even Medicare. Employers may obtain coverage at more favorable rates than if employees bought it on their own. Premiums usually can’t be paid through a company’s cafeteria plan, but may be paid from a health savings account. Employees can continue the coverage even after retiring or otherwise leaving the company.
- Wellness programs. Employers can incentivize employers to get healthier (e.g., quit smoking, become more physically active). This can be done in a variety of ways, including:
- Sponsoring company sports teams.
- Stocking the break room with health snacks (e.g., fruits).
- Offering information about local resources on smoking cession and weight loss programs.
But be sure wellness programs that offer specific incentives and rewards do not violate Affordable Care Act rules.
The benefits you choose to offer are, of course, limited by your budget. But don’t assume that being a small business prevents you from offering a vast array of benefits without busting your budget. Work with your CPA to determine which benefits may provide tax saving opportunities for the company while remaining attractive to employees.