Recruiting and retaining an effective workforce is a constant battle. One of the best weapons in this ongoing struggle is essential benefits, such as Group Medical insurance and Group Life insurance. These coverages are available through most employers, and employers usually contribute at least some of the total cost. Some employers even offer other important coverages such as Dental, Vision, Short-Term Disability and Long-Term Disability insurance.
Employees value comprehensive benefit packages. Some types of coverage such as Dental insurance, Vision insurance, Short-Term Disability insurance and Long-Term Disability insurance may only be available through their employer, so employees are often willing to contribute some or all of the cost of ancillary benefits.
Other voluntary benefits such as Cancer insurance, Critical Illness insurance and Accident insurance offer cash benefits paid directly to employees to help with significant financial hardships. As an additional incentive for recruiting and retaining employees, employers can also offer coverage for non-traditional plans such as Pet insurance and Pre-Paid Legal coverage.
Voluntary plans benefit employers and employees alike. They create a more robust benefit offering which helps with recruitment and retention, and they reduce the payroll tax liability for both the company and worker.
Many types of insurance premiums can be collected through payroll deduction and are considered a “salary reduction,” meaning they’re deducted on a pre-tax basis under IRS Section 125. This effectively reduces the payroll tax liabilities for both the employer and employee. In some states, it can even reduce the basis for Worker’s Compensation insurance premiums.
Adding voluntary benefits creates a more comprehensive and attractive package for employees, reduces payroll taxes and controls employees’ contribution costs.
