Required employee benefitsBefore you can start building your aspirational list of employee benefits, first you must meet certain federal and state requirements. Here are the employee benefits you must provide:Social Security taxesYou must pay Social Security taxes at the same rate as your employees. The best source for information regarding Social Security taxes is the Social Security Association’s (SSA) website.Unemployment insuranceDepending on your state’s requirements, you may need to pay unemployment taxes. If you are required to do so, you must register with your state’s workforce agency.Disability insuranceSelect states and/or territories require that businesses provide partial wage replacement insurance to eligible employees for non-work-related sickness or injury. The states/territories that require disability insurance are:Family and Medical Leave ActWhile other leave (including vacation, personal days or holidays) is often not required by federal law, employers must provide leave consideration under the Family and Medical Leave Act (FMLA). This federal act entitles employees up to 12 weeks of job-protected and unpaid leave during a 12-month period for any of the following reasons:
- Birth and care of the eligible employee’s child or placement for adoption or foster care of a child with the employee
- Care of an immediate family member (spouse, child, parent) who has a serious health condition
- Care of the employee’s own serious health condition
Common employee benefitsWhile not required by federal or state law, it is common for employers to provide some standard benefits for their employees. This directly impacts your employees’ sense of safety and well-being, which impacts their work performance, and that impacts your bottom line.Here are some of the more common employee benefits:MedicalEncompassing both health and dental insurance, medical insurance is one of the more expensive health benefits, but it’s also one of the most important to your employees. Most employers only pay a percentage of the premium charged per employee, passing the rest of that cost to the employee via his or her paycheck. As further incentive, some employers elect to pay the entire health insurance premium per employee.Obviously, there are a number of options for insurance providers, and depending on where your business is located, you may have even more regional choices. Aside from regional considerations, number of employees, and number of full-time employees can affect your health insurance coverage options. Additionally, the passage of the Affordable Care Act by Congress in 2010 has added even more intricacy to healthcare coverage—learn more about how it affects your small business.Flexible Spending Accounts (FSA)FSAs allow employees to contribute pre-tax dollars every pay period to a Flexible Spending Account. This money can often be accessed using a credit or debit card issued by the account holder. There are four common types of Flexible Spending Accounts:
- Medical expense: This money can be used to cover the costs of medical expenses that your health insurance does not cover (i.e. prescription or office visit co-pays or procedures). It can be used for all types of healthcare expenses, including vision, dental and, in some cases, chiropractic work.
- Dependent care: Pre-tax contributions up to $5,000 are allowed annually in this type of FSA. It is generally used to pay daycare expenses for employees with children under the age of 13.
- Health premiums: If you choose not to offer health insurance, you can instead offer your employees a Health Premium FSA. The money your employees choose to contribute to this account can be applied toward health insurance premiums they may elect to get on their own.
- Adoption assistance: Adoption costs can be very high, and allowing employees the opportunity to contribute pre-tax funds into an Adoption Assistance FSA may enable them to fulfill their dream of adopting a child.