The Quandary Regarding Employee Fringe Benefits

By Michael T. Tamm, CPA

Businesses are finding it increasingly difficult to provide satisfactory, cost effective employee benefits. It can be a struggle to stretch the dollars needed to meet the needs of a company’s workforce while trying to maintain a competitive advantage.

The price of health insurance benefits has sky-rocketed in recent years. Business owners are pressured to control the costs and must consider various options. These options can include reviewing plans, coverages, deductibles, premium co-pays, and policy co-pays. Companies have been forced to cost share with employees, and to accomplish this, employers have utilized flex plans, medical savings accounts, and health reimbursement accounts.

One possibility is to institute voluntary benefits. Voluntary benefits are purchased by the employee, but the advantages are employees may choose benefits appropriate for their family situations and within their budgets. Often there is relaxed underwriting and some of the benefits may be purchased at a discount due to the group offering. It is important to note the benefits are portable. While there is no added cost to employers, employees may enjoy a new array of discounted benefit options and workplace morale may be positively impacted.

Examples of voluntary benefits may include disability insurance, life insurance, and long term care insurance. Long term care insurance is becoming a significant consideration for a variety of reasons. This voluntary benefit can be made available for employees, employee parents and in-laws.

In the event that an employee is a primary care giver and something happens to the employee’s parent or in-law, it can impact the employee’s effectiveness on the job due to lost time away from work. Long term care benefit plans are valuable for employers to facilitate because they will help to cover the cost of the care required. Baby boomers are beginning to see the impact of long term care issues in their families, and Medicaid benefits in the State of Michigan may soon be disappearing. This could create a void that many families will be unable to fill, thus the need for long term care benefits will be greater than ever.

There are many other voluntary benefits available in addition to those listed above. Employers should work closely with a qualified financial professional to develop the voluntary benefits that are appropriate for his or her own company. Education is a key component in providing the venue and opportunity to get employees involved in making decisions that will benefit them and their families. A good financial planning team can add value in facilitating this process.

Michael T. Tamm, CPA is a shareholder with Echelbarger, Himebaugh, Tamm & Co., P.C. (EHTC). He specializes in the areas of tax, business planning and personal financial planning. He has worked closely with business owners in the areas of strategic planning, executive compensation, succession planning, and operational issues. He may be reached at 616.575.3482 or miket@ehtc.com.