As a business owner, you’re tasked with determining the best benefits plan to serve the needs and interests of your employees and your business. From health insurance to medical leave to retirement contributions and more, there are many benefits you must consider as you develop your benefits plan, especially if you want to stay competitive. Benefits are an important component in retaining your employees and appealing to strong new hires, but they impact more than just your employees — they shape your spending, too.
For small businesses, your benefits plan should be strategic: comprehensive enough to best serve your employees and attract new hires, but within the budget your business can afford. Explore small business benefits requirements so you know what benefits are required to factor into your plan, then read on to learn our top tip for maximizing your benefits offerings while minimizing your costs.
Small Business Benefits Requirements
As you decide which benefits to include in your small business’s offerings, you’ll find there are two categories: benefits you can voluntarily offer, and benefits you’re required to offer by law. Let’s explore required benefits.
Social Security and Medicare
Both employers and their employees are required to contribute to the Federal Insurance Contributions Act, the federal tax used to fund Social Security and Medicare. You and your employee will both pay a 6.2% tax on their earnings of up to $160,200. Employers are also required to withhold and match 1.45% of gross wages for each employee for Medicare.
Health Insurance
Depending on the size of your business and the state you’re located in, it may be required that you provide healthcare to full-time employees. Though it’s no longer required at the federal level, you may face tax penalties if you don’t offer healthcare depending on the restrictions where you operate your business. If you have specific questions regarding your requirements, speak with an HR benefits expert.
Workers Compensation
Workers compensation is an insurance policy that covers the medical expenses and lost wages of employees who become injured or fall ill on the job. Without workers compensation, you’d be obligated to pay out-of-pocket when these circumstances arise. Each state has a unique set of rules on when compensation must be offered and what it must consist of, so it’s important to connect with a benefits expert to ensure you’re meeting requirements and avoiding penalties.
Family and Medical Leave
Employers are federally required by the Family and Medical Leave Act to offer job-protected, unpaid leave in certain circumstances, such as an illness of a family member they must care for or the addition of a new child. This benefit only applies to employees who have worked in your company for at least twelve months and have worked a minimum of 1,250 hours during such time.
COBRA Benefits
Federal COBRA laws require that you continue to provide health insurance for former employees for up to eighteen months after they’ve been terminated from your company. This only applies to businesses with a minimum of twenty employees, unless you live in a state with a smaller requirement. It also only applies to companies that offer healthcare coverage under a group plan.
Voluntary Benefits that Make an Impact
The benefits you offer your employees play a big role in the strength of the candidates you recruit when hiring and the employees you retain. Over 49% of employees will leave their role within only twelve months due to lacking benefits, and 78% of employees said they would stay at a company due to strong benefits.
In this age of constant layoffs and looming recession fears, it’s critical to keep your employees satisfied to stay at your company instead of seeking other opportunities, and part of that means a robust benefits package. Consider the following voluntary benefits that make a difference in your retention and hiring efforts:
Expanded Healthcare Packages - Studies resound that healthcare is the top benefit employees consider, and expanding your healthcare offering to include dental, vision, or other key healthcare benefits can show your employees you care.
Retirement Planning - Though not required, retirement benefits like 401k contributions have become so common that they’re often expected. Adding this benefit into your benefits package can ensure you’re staying on par with your competition.
Paid Time Off - Since the pandemic started, paid time off packages are expanding. Some employers have adopted unlimited paid time off options, while others have restructured their offering to allow for more flexible uses, like paid Friday afternoons. Whatever your unique choice, adding paid time off into your benefits plan will entice new hires and keep your current employees from burning out.
Miscellaneous Lifestyle Benefits - Every company is different, and your benefits package should reflect that. From gym memberships to entertainment subscriptions to food delivery services, some companies choose to offer unique benefits to their employees that serve their lifestyles.
Build Your Best Benefits Package with Cognos HR
At Cognos HR, we’re the HR consultant dedicated to helping you build your best benefits package based on your unique needs and ambitions. We’re experts on all things benefits: what offerings attract top talent, which benefits you must have to meet state and federal requirements, and how you can build a benefits plan that keeps your current employees happy at your company. We recognize the importance of strategic benefits package building for small businesses, and we’re here to help you maximize your offerings in ways that make an impact while minimizing your excess costs.
When you outsource the building of your benefits plan to our qualified team, you get personalized aid with unparalleled knowledge and attention to your unique needs. We’re here to help you create a benefits plan that serves the needs and interests of your employees and your company, while still meeting small business benefits requirements set by your state or federal government.
No matter your industry or business location, we’re here to help. For better benefits planning, contact Cognos HR today.