Now Is A Great Time To Reconsider Benefits For Your Employees

There has been a lot of talk on the news and social media about the labor shortage that we are having in our country of late. Despite what some outlets are saying, there are a variety of reasons why employers are having a hard time finding and keeping personnel.

One way employers can get the employees they want is to offer benefits. I have worked in the workplace benefits arena for years and have seen many small business owners brush off the idea of having to deal with payroll deductions and billing issues. But those same people are now starting to reconsider as they find staffing their businesses to be more difficult than ever.

We work with several companies that offer benefits and can coordinate existing benefits into the mix as well. And we can cover groups of any size, from 2 people to 2000! If you are a business owner or know of someone having staffing issues, let us help you find a good product mix that your employees will want.

Drop us a note or book a short phone call to discuss what you currently offer and how we can help. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Can Employees Get Tax Breaks?

Since it is tax season I thought I would share a few ways that you can use and maximize your insurance to help lessen or avoid a big tax bill over the next few posts. Some of these ideas may be implemented immediately, while others will help you down the road. Like a wise man once said, "If you fail to plan, then plan to fail."

First and foremost, I have to give the obligatory disclaimer that I am not a tax expert and one should consult their own tax advisor before implementing any of these strategies. Remember that tax laws are constantly fluid and can change as political parties rotate in and out of Congress.

Also, I want to let you know in advance that not all of these plans will work for everyone, but hopefully there will be a nugget or two in here for everyone. With that said, let's get started.

For those of us who work for an employer and are fortunate enough to have medical benefits, find out if those benefits are being "pre-taxed". Section 125 of the IRS tax code allows your allows employers to deduct your benefits from your pay before figuring out what your taxable income is. By simply moving your deductions "above the line" it can save you (and your employer) some money, with estimates around 20-25% on the costs of those benefits. The savings, in other words, come in the form of paying less taxes. And since your employer has to match your FICA* (Social Security) portion of the deduction, that can be decreased for them as well. 

If you have an enrollment company or a worksite insurance company providing ancillary products like dental, vision, disability and other insurance products, odds are they can set up and handle the administration of a pre-tax plan. Many of these companies will do it at no charge for your employer if there is a minimum number of participants. 

Be aware of a couple of items though. First, life insurance can not be pre-taxed. Since life insurance proceeds are generally tax-free to begin with, the IRS is not going to allow pre-taxing. Also, certain benefits can be pre-taxed but really should not be. 

I have seen businesses where their disability insurance, for instance, was pre-taxed. When this is the case, there will be a huge problem if an employee needs to file a claim, as it will be taxed as income. As most disability policies pay around 60-65% of a person's gross income, having that partial pay be taxed can be a financial nightmare for a family struggling to pay their bills.

Other deductions that are not necessarily insurance products can be used for pre-tax savings as well. A 401(k) plan can help you out down the road for retirement and should be implemented if offered. These plans were created in the late 1970's as a way for employers to create a tax-advantaged savings account for their employees. Unfortunately many employers replaced pensions with these plans, mostly because it saved the businesses a lot of money. 

If your employer offers a 401(k) plan take advantage of it and the tax savings that come with it. But be aware that it is not a true "retirement plan" and is basically a "savings plan". By allowing the employee to allocate their money as they wish, it also exposes them to a lot of market risk. 

After the debacle at Enron years ago, laws were enacted to heavily regulate the 401(k) plans. And after the financial recession of 2008 many employers changed their plans or did away with them altogether. Do some research or ask your tax advisor what is best for you.

The next few posts will continue on the theme of insurance and taxes so stay tuned. In the meantime, please stay healthy!

*There is a downside to saving all of this money on taxes by using the Section 125 plan. By reducing your taxable income while working, it also reduces your FICA contribution. This, in turn, can reduce your the amount of your Social Security check when you are eligible to receive these benefits. If you are paying less in, plan to get less out.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!