Employee Benefits

DefinitionsIRS Guide for Employers

Self EmploymentLegal Issues

????? SSI IRA COBRA COLA FICAHIPAA PPA/PPO TSA ERISA HMO ?????

????? MSA 401K 403B TPA SPDHSA SAR FMLA ?????

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Most Offered Employee BenefitsOffered by Employers

Benefit Type Employers Offering

• Life Insurance 90%• Vacation Pay 77%• Holiday Pay 76%• Medical Care 71%• Retirement Plans 60%• Education Assistance Programs 49%• Non-Production Bonuses 46%• Employee Assistance Programs 40%• Healthcare Reimbursement Accounts 32%• Dependent Care Reimbursement Accounts 30%• Wellness Programs 23%• Job-Related Travel And Accident Insurance 22%• Employer Assistance For Childcare 15%• Fitness Centers 13%• Long Term Care Insurance 12%• Adoption Assistance 10%• Stock Options 8%• Subsidized Commuting 5%• Flexible Workplace 4%• Employer Provided Personal Computer 2%

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Most Desired Employee BenefitsDesired by Employees

Benefit Type Desirability

• Retirement Annuity (Pension Plan) 91%• Thrift / Savings Plan (401k / 403b) 89%• Employee Healthcare Benefits 89%• Retiree Healthcare Benefits 87%• Life Insurance 71%• Long-Term Care Insurance 63%• Health / Wellness Programs 53%• Flexible Spending Accounts 45%• Tele-work / Telecommuting 40%• Child Care Subsidies 31%

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Most Common Employee BenefitsDesired by Employees and Offered by Employers

Benefit Type Desirability Offered

• Retirement Annuity (Pension Plan) 91% 60%• Thrift / Savings Plan (401k / 403b) 89%• Employee Healthcare Benefits 89% 71%• Retiree Healthcare Benefits 87%• Life Insurance 71% 90%• Long-Term Care Insurance 63% 12%• Health / Wellness Programs 53% 23%• Flexible Spending Accounts 45% 31%• Tele-work / Telecommuting 40% 4%• Child Care Subsidies 31% 15%

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Mandated Benefits/Taxesthese have to be paid as “payroll taxes” (almost)

Either the Employer and Employee pay for these; or, the self-employed person pays for these

• 15.3% FICA (Federal Insurance Contributions Act)– 12.4% Social Security paid only on earnings up to $113,700

• 6.2% paid by Employer• 6.2% paid by Employee

– 2.9% Medicare paid on all earnings• 1.45% paid by Employer• 1.45% paid by Employee (increases to 2.35% for high salaries)

• $420 Federal Unemployment Taxes - 6% of first $7,000• NYS Unemployment - 1.5% to 9.9%• Workers Compensation - based on type of job, salary, prior

claims

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Your Take-Home Pay After Mandated Taxes &

Income Tax Withholdings

SUBTRACT:• 7.65% FICA (50% of Soc Sec & Medicare Taxes)• 25.00% Federal Income Tax withholding• 9.77% NYS Income Tax withholding

42.42% of income is “withheld” as taxes

Your Take-Home Pay58% of what you earn

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Health & Medical Insurance

• Health (Medical) Insurance– $16,000/$5,615 Family/Individual (up 4%/3% 2012)

• Dental Insurance $300-$400/$123-$253• Vision Care• Health Savings Accounts (Medicare Bill 2003)• Mental Health Insurance• Disability Insurance – Long-Term & Short-Term• Health & Dental Insurance During Retirement

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Costs of Health Insurance Year Single Family % Increase

2000 $2,471 $6,438 2001 $2,689 $7,061 9.6%2002 $3,083 $8,003 13.3%2003 $3,383 $9,068 13.3%2004 $3,695 $9,950 9.7%2005 $4,024 $10,880 9.3%2006 $4,242 $11,480 5.5%2007 $4,479 $12,106 5.5%2008 $4,704 $12,680 4.7 %2009 $4,824 $13,375 5.1% increase

131% increase in Family Health Insurance cost 2000-200928% general economic inflation 2000-2009

2002-2007 & 2007-2012

Source: Kaiser Family Foundation; Health Research & Educational Trust

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Employer/Employee Contribution toHealth Insurance Costs

• No contribution – no insurance plan• No contribution – but, insurance plan is available• 100% coverage of the cost for employee• % of cost for employee, two-people, family• % for employee & different % for two-people/family• Different “threshold” (deduction) and co-pays

– No standard deduction– Standard deduction – employee pays first $$$– Co-pay– Annual or Life maximum

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Other Insurance

• Life Insurance

• Long-Term Care Insurance

• Job-Related Travel & Accident Insurance

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Retirement - Pension• Social Security - based on lifetime earnings

– May start at age 62, 65, 67, . . . . ??– You may be able to delay start for higher payment– If you work another job, SS is taxable

• Defined Benefits - % of income at/over a time– Work a minimum number of years, such as 20 years– Retire after a certain age or age+tenure, such as 55– Income based on formula, such as: 2% of highest 3 years

• Defined Contributions– 401K (pre-tax - you pay taxes when withdrawn during retirement)– 403B (pre-tax - you pay taxes when withdrawn during retirement)– IRA (professionally-managed or self-directed/self-managed)

• Regular (pre-tax - no taxes until withdrawn during retirement)• Roth (“bought” after taxes - no taxes when withdrawn during retirement)• Conversions (tax implications based on type of IRA)

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Strategy for Retirement - Pension Start saving for retirement when you start working. Put away as much as possible. Look at this as a tax on yourself by yourself. Look at this as a gift to yourself. You (your retirement) comes first. Follow a “painless” strategy for saving for retirement. Painless Strategy = put it away before you ever see it in any

paycheck.

The Strategy Above Is A Minimum-StrategyDO THIS AND REMEMBER ME WHEN YOU ARE 40

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Strategy for Retirement - Painless Follow a “painless” strategy for saving for retirement.

Start at the maximum of your employer’s matching-contribution. At a minimum, put away 5% of pre-tax income. If your employer does not provide match, use Roth IRA. Add at least 1% of your income per year; or, Add at least 25% of each annual pay-increase; until you reach the max ($16,500). Once you are above your employer’s match, max out Roth first then use IRA until the max is

reached.

Painless Strategy = put it away before you ever see it in any paycheck.

The Strategy Above Is A Minimum-StrategyDO THIS AND REMEMBER ME WHEN YOU ARE 40

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SRAs & FSAs & HSAs

• Health Savings Accounts in Medicare Bill of 2003

• Salary Reduction Arrangements - FSAs– Health Savings Accounts - Flexible Spending Account– Dependent Care Account - Flexible Spending Account

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Vacation, Holidays, Leaves• Vacation (paid and unpaid)

Average Vacation Benefit (days)Length of Service (years) 1 3 5 10 15 20 25

(years)Paid Days 8.9 11.1 13.6 16.2 17.8 18.6 19.3 (days)

• Paid Holidays• Paid Personal Leave (Mental Health Days)• Paid Sick Leave• Paid Bereavement Leave• Paid Maternity Leave• Family Medical Leave Act of 1993 (FMLA)

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Travel & Professional Activity

• Business Travel & Expenses Reimbursement

• Travel Insurance - business & personal?

• Membership in Professional Organization(s)

• Membership in Community Organization(s)

• Attendance at Professional Conference(s()

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Miscellaneous Benefits 1

• Educational Benefits and Career Planning

• Scholarships for children

• Relocation Expenses

• Legal Services

• Gym/Exercise/Spa membership

• Profit-Sharing and/or discount stock purchase

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Miscellaneous Benefits 2

• Cafeteria System

• Cash Payout for not using a benefit

• Career Advancement Planning

• Performance Evaluations - Pay Increases

• Defined Career Paths & Counseling/Mentoring

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Miscellaneous Benefits 3

• Direct Deposit• Wellness Program• Company Discounts• Parking Privileges• Business Cards & Title• Computer Loan (of money or equipment)• Hours off for Community Service• Healthy Physical Exam bonus

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Pay/Benefit Laws

• Consolidated Omnibus Budget Reconciliation Act

COBRA - continuation of health benefits

• Employment Retirement Income Security Act

ERISA

• Overtime Pay