In our last presentation we continued our series on how to hire and manage with a look at “How to Design an Employee Compensation Plan.” As we discussed in that video we believe you should develop a “total compensation philosophy” for your business that includes a dollar amount of pay, opportunities for professional development, and benefits. This presentation will help you understand what’s involved with offering benefits, health insurance and retirement benefits. So let’s get started!

1. The ultimate Guide to setting up
employee benefits
by FitSmallBusiness.com

2. This presentation will help you
understand the benefits portion of
your compensation plan, and answer
these three main questions:
1. What are typical benefits?
2. What are they going to cost your
business?
3. Where can you get them?

3. Things you should keep in mind
1. Benefits are not one size fits all. The appeal of certain benefits will
differ depending on the demographics of your company.
2. Let your employees to choose from different benefits options so
they can tailor their benifits to their specific needs.

4. Things you should keep in mind
3. You won’t know what is most important to your employees if you
don’t ask what they want. Ask them what their priorities are. This
way, you won’t waste money by offering benefits that don’t appeal to
your employees.

5. For the sake of simplicity, this guide is divided
up into three core benefit categories:
1) Healthcare
2) Retirement benefits and
3) Specialty benefits.

6. Category 1: Healthcare

7. Health Insurance
The most important, but also the most
expensive benefit that you can offer
your employees. Healthcare is not
currently mandatory but offering it can
help you attract and keep top quality
talent.

8. You can purchase group health
insurance from insurance providers, or
you can shop through the new health
care marketplaces created by
Obamacare. Offering healthcare through
the SHOP Exchanges may also qualify
your business for a number of tax
breaks.
For more on this read our Take a look at out
Ultimate Guide To Obamacare.

9. How Much Does Health Care Cost?
In the past half of small business have
spent 7.5% of payroll cost, and about a
quarter more than 15%.

10. Where You Can Get Health
Insurance?
If you decided to purchase from an
insurance provider, you can get a direct
quote from their website or a broker.
Some of the top providers are:
•United Healthcare
•Aetna
•Cigna

11. Check this great guide for an overview of
different types of plans available to
employers. Also check this article on
how to choose the best plan for you.
Before you decide on a plan, you should
look at the SHOP exchanges,which allow
you to compare different plans online.
You can access your state’s exchange here.

12. Category 2: Retirement benefits

13. Offering retirement benefits can
help your company attract and
retain top talent. Retirement
benefits are broken down into
two categories:
•Defined Contribution Plans
•Defined Benefit Plans

14. Defined Contribution Plan
The basic concept is to encourage
employees to set aside their own founds
for retirement each pay period.

15. What will a defined contribution
plan cost?
This will depend on the size of your
company, and how much they end up
saving.
For many small business, the SIMPLE
IRA’s and SIMPLE 401 (k)s are a good
option.

16. These only require 2 page IRS forms,
and cost $350 plus $25 per
participant. They both allow total
combined contributions (which is
employee contribution + employer
matching) of up to $11,500 per year.
A full 401 (k) is only a good idea once
your payroll reaches about $500,000.

17. where can you get a defined contribution plan?
Before setting up the right contribution plan with a professional, familiarize
yourself with the different types of plans available for small business and the
features and benefits of each using the following links:
•Types of plans available for small businesses from fivecentnickle.com
•Comparison Chart of the features and benefits of each from 401Khelpcenter.com.
•How to launch your company’s 401K plan from Inc.com
•Many more resources from 401Khelpcenter.com

18. Category 3: Specialty benefits

19. “Specialty benefits” refer to
benefits generally considered of
secondary importance to healthcare
and retirement benefits.
Nevertheless, specialty benefits can
help your company expand its range
of benefit options and really
distinguish itself from the
competition.

20. Life Insurance
Generally, life insurance policies
should pay out the equivalent of what
an employee makes in one year, and at
the very least enough to handle
funeral expenses. We don’t
recommend going below $20,000
when selecting a plan.

21. What will life insurance cost?
In general, life insurance policies cost
about 5 cents for every $1,000 worth
of coverage. The exact rates, however,
are based on a number of factors that
include the size of the group, the
company claims history, the
occupations of the group, the gender
and age of employees, and salaries.

22. Most insurance companies offer group
life insurance, so shop around until
you find one that suites your needs
and budget. Fidelity, Vanguard and
ADP all offer life insurance services,
and here are 3 other top providers.
Prudential
Allstate
New York Life

23. Disability Insurance
Disability insurance provides your
employees with a source of income in
the event that they are unable to
work. There are certain states that
require employers to provide
disability insurance, so check here to
determine your obligations.

24. There are two types of disability
insurance coverage: short-term
disability (STD) and long-term
disability (LTD). STD benefits
typically pay out around $1,000 a
week, while LTD benefits are usually
$6,000 a month.

25. What will disability insurance cost?
Regardless of your company’s size, the
cost of offering disability insurance is
generally between 0.25 and 0.5 percent
of total compensation. For 0.5 to 1
percent of compensation, you can
generally offer both STD and LTD
benefits.

26. Where can you get disability insurance?
Disability insurance is offered by most
insurance companies like Prudential,
Allstate, and New York Life. ADP also
offers disability plans.
For more on offering disability
insurance to your employees see this
article from the NFIB and this site.

27. Dental and Vision Coverage
There are three options for offering
dental and vision plans: Fully-Funded
Employer Plans, Partially-Funded
Employer Plans, and Fully-Funded
Employee Plans, where employees
pay the total cost of the plan, but the
employer takes over administrative
costs and payroll deductions.

28. What will dental and vision coverage
cost?
The costs of dental and vision benefits
depend on different factors, including
plan design, provider network,
healthcare expense trends, group
characteristics, funding mechanisms,
and administrative expenses. It is best
to contact your broker or provider
directly.

29. Where can you get dental and
vision coverage?
Most health insurance companies,
including United Healthcare, Cigna,
and Aetna also offer dental and
vision coverage. ADP also offers
both vision and dental.
For more on setting up a dental plan
see this article from Inc.com.

30. Paid Time Off
Paid time off refers to vacation time,
family medical leave, maternity leave,
and flextime. There are certain
instances in which you are legally
required to offer medical and maternity
leave, so read this article to make sure
you are aware of these.

31. How will paid time off cost?
The cost of paid time off will depend on your individual payroll expenses, and
the amount of time you decided to offer. Here are some additional resources
for setting up your vacation and paid time off policies.
•“How to Set a Workplace Vacation Policy,” from Inc.com.
•“The ABCs of Offering Time Off,” from Entrepreneur.com
•“Sample Employee Leave or Time Off Policies,” from
USChanberSmallBusiness.com

32. Tuition Assistance
Tuition assistance programs are a type
of benefit in which an employer
reimburses the costs of their
employees’ continuing education.
Offering tuition assistance can help
your workforce expand its skill set and
attract employees interested in
personal career development.

33. What will tuition assistance
cost?
Tuition assistance can be costly so be
sure to set clear guidelines when
developing your benefit package.
Despite these costs, adding tuition
assistance may help you qualify for
certain tax breaks.

34. Where can you get tuition
assistance?
Tuition assistance is largely an internal
policy, so you can decide how to handle
reimbursements.
For additional information on tuition
assistance programs go here and here.

35. Further reading
You may find these links and articles helpful as you develop your benefit
packages:
•“Required Employee Benefits”
•“How to Build a Competitive Employee Benefits Package”
•“The Best Benefits Package for Small Businesses”
•“8 Uncommon Benefits Your Employees Will Love”

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