Think you can’t afford Fringe Benefits for Employees? Think Again!
Most small business owners agree – hiring and retaining quality employees is a challenge, especially if you cannot afford to pay much (if anything) for a benefits package. What if, instead of saying “we don’t offer any benefits” you could say “we offer pre-tax access to some health benefits, and an insurance advisor to help you”? Would it change the conversation?
The first option business owners typically consider is traditional group health insurance via the small business marketplace. The problem: businesses offering this are required by law to pay at least 50% of the employees’ premiums and have minimum participation. This usually adds up to a high cost, something many small businesses cannot afford.
But there is another option at low or no cost to the business owner. You can offer some fringe benefits to your employees pre-tax through a cafeteria plan, and it is pretty easy to do if you have a payroll system. Here’s how it works:
● Employees pay some benefit premiums pre-tax; even if your business cannot afford to contribute, the employee is effectively getting a discount on their coverage.
● If you are able to contribute something toward employee benefits, that contribution is tax deductible to your business. The employee can use these funds toward benefits you decide to offer through the plan, including dental, vision, etc.
● Some employers increase their benefit contribution to employees over time to encourage retention (for example: $50/month after 90 days, $75 in year two, $100 in year three).
● Any pre-tax fringe benefits the employees elect to utilize lower their taxable salary, which lowers the small business’s taxable payroll. This in turn lowers the employer’s payroll taxes, saving the business money overall.
● Some licensed agents are willing to be your small business insurance specialist at no cost, working directly with current or prospective employees regarding the fringe benefit options to take something off your very full plate (in corporate America you call HR; now you can call your insurance specialist!)
● Licensed agents may also be willing to coordinate with your accountant / payroll company in setting up your plan.
These benefits will help your small business stand out, enabling you to grow your business through attracting and retaining quality employees. And we all know that happy and healthy employees result in lower turnover and improved productivity – and happy business owners!

Lisa has her accounting degree and MBA from the University of Dayton. She has over 20 years of healthcare administration experience (insurance companies, hospitals and physician groups), and has started two small businesses. She is now using her experience to help small business owners grow their businesses.