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Sigma FreePresents…
Provided by Sigma College of Small Business, Inc.
Employee BenefitsCreating the Right Package
Sponsored by:
Sponsored by:
Copyright 2010, Sigma College of Small Business, Inc.2
Introductions
Keynote TopicEmployee Benefits
Creating the Right Package
Our Sponsor:Freeman & Sherburne
Keynote ConclusionEmployee Benefits
Creating the Right Package
Break – Refreshments and NetworkingAsk
Questions Any Time
Agenda
Employee Benefits ‐ Creating the Right Package
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Copyright 2010, Sigma College of Small Business, Inc.
Value of a Benefits Package
• Tax advantages– Use pre‐tax dollars to pay– Example
• Find and keep a better work force– Competing for talent– Cost of turnover– Cost of an “unhealthy” work force
• The “Right Thing”
3Employee Benefits ‐ Creating the Right Package
What would you do if a valued, uninsured employee had a major
medical issue?
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Copyright 2010, Sigma College of Small Business, Inc.
Health Insurance Confusion
4Employee Benefits ‐ Creating the Right Package
Types of Plan• Group or Individual
• Managed or Fee for Service
• HMO, PPO, POS
Coverages• Preventative Care
• Hospitalization
• Prescriptions
Costs• Premium
• Co‐Pay
• Deductible
• Max Out of Pocket
Networks• In network
• Out of network
• Available physicians
Amount of Coverage• Mix of employer to
employee
• Vision, Dental
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Comparison of Types of Coverage
5Employee Benefits ‐ Creating the Right Package
MonthlyPremium
Plan “Out of Pocket”(Copays, Deductibles, Out of Network)
High Deductible
PPO
Fee‐for‐Service(Indemnity)
HMO
POS
Group Plan• “Risk” averaged across company• Requires minimum enrollmentIndividual Plan• “Risk” is for individual and family• Typically less expensive
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Costs
• Premium– Monthly payment– Typically shared between employer and
employee• Co‐pay
– Standard “per‐visit” amount paid• Deductible
– Amount paid before insurance “kicks in”– Deductibles are for individual family members
• Maximum Out‐of‐Pocket– Maximum amount that will be paid by individual– Typically less than combined deductibles
6Employee Benefits ‐ Creating the Right Package
Consider all costs when determining the right
package for you and
employees.
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Copyright 2010, Sigma College of Small Business, Inc.
Total Cost ExampleBusiness owners need to look at and have their employees consider the “total cost” of the plan.
7Employee Benefits ‐ Creating the Right Package
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Paying the Out‐of‐Pocket
• Flexible Savings Account – FSA– Pre‐tax dollars for out‐of‐pocket medical– Determine amount to be withheld from pay– Use it or lose it
• Health Savings Account – HSA– Employee and Employer contribute pre‐tax– Contribute at will – can change amount– Owned and moves with employee
• Health Reimbursement Arrangement – HRA– System for employer to reimburse out‐of‐pocket– Pre‐paid cards used by employees then paid by employer
8Employee Benefits ‐ Creating the Right Package
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Copyright 2010, Sigma College of Small Business, Inc.
Designing the Plan
• What type of plan– Managed currently offers best pricing– High deductible with HSA becoming popular
• How much to pay– Remain competitive in line with other
objectives– Consider tax benefits
• Add ons– Dental, Vision
• Changing plans– How to approach rising costs
• Health Care Reform – what will it mean?
9Employee Benefits ‐ Creating the Right Package
Sigma FreePresents…
Provided by Sigma College of Small Business, Inc.
Employee BenefitsCreating the Right Package
Sponsored by:
Sponsored by:
Copyright 2010, Sigma College of Small Business, Inc.
Retirement PlansTypes and Terms
• Qualified v. Non‐qualified– Qualified is pre‐tax and tax‐deferred
earnings• Time and Cost to Administer
– Forms and third parties required to start and administer the plan
• Contribution Limits– Limits on the amount that employees and
employers can and/or must contribute• Highly Paid Employee
– Qualified plans have rules to prevent discriminatory practices and disproportionate contributions
– Safe Harbor
11Employee Benefits ‐ Creating the Right Package
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Retirement PlansIRA Based Plans 401(k) Based Plans Other
PayrollDeduct IRA
SEP IRA SIMPLE IRA 401(k) Safe Harbor401(k)
Profit Sharing
Key Difference
Employee only contribution
Employer only contribution
Employee contributes, Employer matches
Higher limits Contribution requirements, no test for discrimination
Discretionary annually, must offer to all
Contributors Employee Employer Both Both Both Employer
Max Annual Contribution
$5,000 25% NTE$45,000
Ee ‐ $10,500Er – Match to 3%, or 2%
Ee ‐ $15,000Co – 100% of comp NTE $45,000
Ee ‐ $15,000Co – 100% of comp NTE $45,000
Set annually
ContributorOptions
Ee can decide at any time
Er can decide year to year
Ee can contribute,Er must match
Ee and Er can contribute
Ee can contribute, Ermust match
Er accordingto plan terms
Vesting Immediate100%
Immediate 100%
Immediate 100% Ee – Immediate 100%Er ‐ optional
Ee and most Er‐Immediate 100%
According to plan terms
12Employee Benefits ‐ Creating the Right Package
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Copyright 2010, Sigma College of Small Business, Inc.
Disability
• Pays when a medical condition prevents working– Most working adults are more likely to
become disabled than to die• Short Term Disability
– Effective for several months (typically 180 days)
– Percent of salary• Long Term Disability
– Becomes effective after a specified waiting period
– Amount and waiting period affect premium
13Employee Benefits ‐ Creating the Right Package
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Additional Benefits
• Life Insurance
• Vacation
• Sick Days
• Holidays
• Education
• Voluntary Programs
14Employee Benefits ‐ Creating the Right Package
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Copyright 2010, Sigma College of Small Business, Inc.
Critical Business Areas
Strategy and Planning
Marketing and Sales
Accounting and Finance
Operations and Quality
Leadership and Administration
Technology and Innovation
Sigma College of Small Business
• Focus Workshops– YouTube: Grow Your Business with Online
Video• Tuesday, May 18, 2010
• 9am – 12pm, $99
• Upcoming SigmaFree Classes– 5/18 – No Class
– 5/25 – Business Networking for the Non‐Networker
– 6/8 – What’s the Best Entity? Solve the Mystery of Legal Organization
15Dedicated to the Learning Needs of Small Business!
Sigma FreePresents…
Provided by Sigma College of Small Business, Inc.
Employee BenefitsCreating the Right Package
Sponsored by: