Employee Benefits

Guide to Offering Employee Benefits

Offer an attractive benefits package that doesn't break the bank
By Frances Sharpe

Many small business owners think they can't afford to offer employee benefits. In reality, small businesses can't afford not to offer a benefits package of some type. Although insurance and other benefits can be costly, offering employee benefits can pay off in the long run.

An attractive benefits package can help you recruit and retain quality personnel. It can also boost productivity and employee morale. The most common employee benefits offered include:

1. Paid time off
2. Health insurance
3. Disability insurance
4. Vision and dental insurance
5. Life insurance
6. Retirement plans

Action Steps

The best contacts and resources to help you get it done

Shop in online employee benefits malls Several Web-based services offer an efficient way for small businesses to outsource employee benefits, including group medical, dental, life and 401(k) products.

I recommend:  eGroupBenefits offers easy online quotes and enrollment, side-by-side benefit plan comparisons with independent advice, and more. BenefitMall is actually a site for brokers who sell to small business, but it's a handy place to learn about the benefit products being offered by top providers.

Offer paid time off Although you aren't required by law to offer paid vacation, holidays or sick leave, most small businesses do. In fact, you're likely to have trouble recruiting good talent without a vacation policy.

I recommend:  Salary.com takes a look at paid time off policies. Payscale.com breaks out average vacation days by more than a dozen criteria, including age and industry.

Find affordable health insurance Although health insurance costs are skyrocketing, it's one of the benefits employees want most. Whether you choose an HMO, a PPO or a POS, look for an accredited plan that offers adequate accessibility to physicians, affordability and quality. Choosing a health insurance plan that provides prescription benefits makes your plan even more attractive to employees.

I recommend:  To research, compare and apply for group health insurance yourself, visit eHealthInsurance.com, which offers small business plans from major carriers. Small business members of the NFIB have access to a wide array of cost-saving health plans for small businesses. Look for a health insurance broker who has experience helping small businesses in your industry at the National Association of Health Underwriters.

Disability insurance Disability insurance can give your employees peace of mind. This common benefit provides employees with a percentage of their salary if they become injured or ill and can't work. Higher-priced plans provide benefits if an employee is unable to perform his or her job even though they could perform other tasks; cheaper plans only provide benefits if the employee is completely unable to work.

I recommend:  UnumProvident and MetLife both offer a full menu of employee benefits for small businesses, including disability insurance.

Vision and dental insurance Vision insurance plans are fairly basic and there are only a handful of providers, making it relatively simple to choose and administer a plan. Choosing a dental insurance plan isn't so easy, with dozens of providers offering a vast array of options.

I recommend:  Vision Service Plan (VSP) is by far the largest provider of vision plans. Delta Dental is the nation's leading dental plan provider. Get the basics on dental and vision plans in the Dental and Vision Insurance Buyer's Guide at BuyerZone.com, where you can also find free quotes.

Life insurance Offering life insurance shows your concern for your employees and their families. Group term life insurance is often the most affordable option for small businesses.

I recommend:  Cigna is an employee benefits solutions provider that offers a number of life insurance options among other insurance products.

Retirement plans Smaller businesses that offer retirement plans generally offer a 401(k), a SEP-IRA or a Simple IRA. 401(k) plans are generally most appropriate for companies with more than 20 people. If you employ fewer than 20 people, consider a SEP-IRA or a Simple-IRA.

I recommend:  Fidelity offers a range of retirement plans, helps you choose the right one for your business and lets you set it up online.

Choose an administrator If you don't have a dedicated HR employee, delegate administration of employee benefits to a single person. Facilitate these duties by downloading benefits forms available online.

I recommend:  Find vacation forms at HRDirect.com. Download forms for medical recordkeeping at GNeil.com.

Tips & Tactics

Helpful advice for making the most of this Guide

• Additional employee benefits you may want to consider offering include flextime, parking privileges, education reimbursement and company discounts.
• Benefits, such as retirement plans and health insurance, must comply with government regulations. Consult a lawyer or benefits consultant before offering a plan.
• You don't have to foot the bill entirely. Most small businesses ask employees to make a contribution toward their health insurance and other benefits.
• Survey your employees to find out which benefits are most desirable. Save money by offering only the benefits they want most.
• If all of your employees are in their teens or 20s, life insurance may not be necessary.