Newsletter Articles

iNews Articles 2011

Wellness Awareness

Glossary of Terms

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Colorado Nonprofit Insurance Agency is a wholly owned Subsidiary of Colorado Nonprofit Association

DESIGNING A BENEFITS PLAN

Employee benefits were once called fringe benefits; today they are anything but fringe. For many employees, benefits are one of the most important aspects of their employment. Not many people would consider a job without benefits - no vacation, no sick leave, no health insurance and no worker's compensation.

Some benefits are mandated by law: Social security, unemployment compensation, workers' compensation and COBRA or state continuation. However, most benefits are provided at the employer's option and are part of the total compensation package designed not only to take care of the staff but also to attract and retain qualified staff. Not all employees must have the same benefits. Employers may create eligibility criteria. For example, only full time employees are entitled to health insurance.

Surveys show that intangibles such as flexible working hours, family-friendly working conditions and even "satisfying work" and "respect in the workplace" are important factors in attracting and retaining employees long term. Nonprofit job seekers ranked benefits such as vacation plans, flexible work plans, telecommuting and a 4-day work week as the most important non-salary benefits. Those factors ranked above vision and dental insurance, tuition debt support, performance bonuses and family leave.

This trend provides both a challenge and an opportunity to nonprofit employers. On the one hand, compared to many private sector employers, resources are limited and offering expensive insurance or even reduced work weeks may not be possible. On the other hand, many nonprofit workplaces are entrepreneurial and less formal places to work that are able to be flexible in work hours and job arrangements. For the right candidate, they offer job satisfaction that is unparalleled in the for-profit sector. As competition for talented staff is on the rise, nonprofits are offering benefits in the form of insurance plans that rival their for-profit counterparts.

The key is in understanding what, beyond dollars, can motivate your employees to come to work excited every day and to stay with your organization over the long haul. Some of the most appreciated benefits may be the least expensive ones.

Because of the special tax status that many benefits enjoy, certain benefits can be worth more to your employees than they cost you to provide. For example; a health insurance plan for an employee may cost you $3,000 per year. Because the employee pays no taxes on that benefit, it is like earning $4,166 (assuming a 28% tax bracket). The employee would have to earn about $347 per month before taxes in order to spend $250 per month on health insurance. If your organization has a group health plan in place, the employee should be able to get much better coverage with that $250 than he or she could get as an individual in the marketplace.

Also, compensation can be set aside, on a pre-tax basis, and used by employees for their portion of health care costs. A Flexible Spending Account allows an employee to set aside a portion of his or her paycheck for medical expenses, dependent care and insurance premiums. Many diverse types of expenditures qualify for t pre-tax spending from co-payments to contact solution, daycare fees, diapers and even gym fees.

The staff at Colorado Nonprofit Insurance Agencyhas many years of experience helping organizations to determine the appropriate coverage. Give us a call if you would like to talk with us about our insurance programs.

Let us address one of your questions!