transforming risk into opportunity
July 15, 2019
Uncover the Benefits of Flexible Spending Account
TRISTAR

According to a recent article in the Wall Street Journal, job growth for small business has fallen to the lowest levels in nearly eight years as those firms struggle to attract and retain workers in the tightest US job market in half a century (Simon 2019). 

 

It has become increasingly competitive and more difficult to attract the talent a small business needs to grow.  A successful company must create a culture that people are excited to work in.  It is equally important to offer compensation and benefits plans that are competitive in order to attract quality candidates. 

 

According to Glassdoor’s 2015 Employment Confidence Survey, about 60% of people in the workplace report that benefits and perks are major factors when considering whether to accept a job offer.  The survey also found that 80% of employees would choose additional benefits over a pay raise (Glassdoor Team 2015). 

 

Much of the media’s coverage of employee benefits is dominated by what the high-tech industries and companies are doing and how they are pushing the edge of benefits.  What are the options for a company that cannot afford to provide meals, massages, extended paid maternity/paternity leave, etc.? 

 

As a leader of your organization, what can you do to improve the hiring rate, decrease turnover, and ensure continual growth without breaking the bank? 

 

Here is the good news! According to some of these same studies, many perks and benefits that employees care about are relatively inexpensive and provide a huge return on investment. One such benefit is the Flexible Spending Account (FSA) program.  It is a “net positive” benefit program because employees are saving money on taxes while saving for medical expenses; at the same time employers can also reap financial benefits by reducing their payroll tax obligation.

 

For a company with 25 participants, the cost to offer a TRISTAR FSA program is around $6 per employee per month (with annual fees, approximately $1800 per year for all 25 employees).  By offering an FSA employers avoid paying the 7.65% payroll tax for Medicare and Social Security on the total employee contribution to an FSA.  According to Employment Benefits Research Institute, the national average of Health FSA contributions is around $1,200 per employee per year, so the annual tax savings is as follow:

 

25 employees x $1,200 contribution = $30,000 x 0.0765 tax obligation = $2,295

 

This translates to an employer’s “profit” of $2,295.00 - $1,800.00 = $495 per year.   This may not seem like a lot, but when you factor in intangible benefits (employee satisfaction, goodwill, higher retention and hiring rates) FSA is a program that pays for itself and much more. 

 

TRISTAR BENEFIT ADMINISTRATORS provides personalized and comprehensive third party administration services for self-insured employer health plans and insured group plans for over 275 companies.  Services include:

 

  • self-funded claims administration
  • health reimbursement arrangement (HRA) plan administration
  • flexible spending account (FSA) plan administration
  • dental plan administration (DPA),
  • self-funded short-term and long-term disability (STD/LTD),
  • Family and Medical Leave Act (FMLA)
  • COBRA/HIPAA plan administration

 

TRISTAR also provides the latest service trends in employer and employee service administration including Leave of Absence and Disability Claims Management. TRISTAR develops, customizes and manages absence and disability benefit programs for employers to control absences and costs while caring for their employees. TRISTAR is an expert in managing FMLA, short-term and long-term disability in all jurisdictions.   For more information, call us today and see how TRISTAR can help bolster your employee engagement and your bottom-line. 

 

Disclaimer: Price may vary based on company size, location and participation rate. 

 

Works Cited

Glassdoor Team. 4 in 5 Employees Want Benefits or Perks More Than a Pay Raise; Glassdoor Employment Confidence Survey (Q3 2015). October 2, 2015. (accessed June 7https://www.glassdoor.com/blog/ecs-q3-2015/, 2019).

 

Simon, Ruth. "Small Firms Battle To Hire." The Wall Street Journal, 2019: A1.