Member of Russell Bedford International, a global network of independent professional service firms.
The benefits package that your company offers is extremely important to your employees. How important? A survey performed by the Society of Human Resource Management (SHRM) found that benefits are directly tied to overall job satisfaction for 92% of employees. More importantly, 29% of employees cited the overall benefits package at their current employer as the top reason to look for new employment in the next 12 months.
So, what can you do to keep your employees satisfied when it comes to their benefits package? Here are a few tax-free ways that you can help bolster your benefits package and retain your staff:
According to SHRM, health insurance still remains one of the most important employee benefits. Health insurance benefits come in all shapes and sizes, so you will need to constantly evaluate plans and costs. From a tax standpoint, employers can deduct this expense, and your employees do not report health insurance premiums or employer contributions to health savings accounts (HSAs) as additional income. This includes premiums paid for the employee and qualified family members. Even better, the employee portion of premiums can still be paid in pre-tax dollars.
Employers are able to provide employees with up to $5,000 per year in tax-free dependent care assistance under a qualified plan. There are a few ways to provide this benefit, but a common method is to set up a flexible spending account (FSA) that both the employer and employee can use to make contributions. The employer portion is tax-free, and the employee portion reduces taxable income as long as the total benefit is $5,000 or less.
By offering tuition reimbursement, you can add another quality benefit to your package while investing in your employee’s career. Up to $5,250 of tuition expenses can be reimbursed tax-free to your employee each year.
This is a good benefit for outside sales or other employees that travel frequently. If you have a corporate credit card program, consider passing the points on to the employee. If you reimburse employee expenses under an accountable plan, estimate the value of points your employee earns on reimbursed business purchases and include it in your annual benefits presentation. Generally, the IRS considers credit card points as rebates and not taxable income.
You can generally exclude the cost of up to $50,000 of group term life insurance from your employee’s wages.
Some examples of other nontaxable fringe benefits are employee wellness programs, onsite fitness gyms, adoption assistance, retirement planning services and employee discounts.
The IRS calls these “de minimis” benefits. Small-valued benefits are not included in income and can include things like the use of the company copy machine, occasional meals, small gifts and tickets to a sporting event.
With historically low unemployment levels, employees have more options than normal to look around if they aren’t satisfied in their current position. The benefits package you offer is an important tool to help you retain your valued employees. While each is an additional expense to the employer, the perceived benefit by employees may far outweigh these costs. If you have any questions, please contact Cray Kaiser today.