With open enrollment quickly approaching for many businesses, it’s important to take the time to review your current health care offerings and benefits plans. Regardless of your team’s size, investing in health care is essential as it significantly impacts the health, wellness, and happiness of your most valuable asset: your employees. Choosing the best health plan and benefits can be overwhelming, but it doesn’t have to be.  

Open Enrollment 

Open enrollment occurs annually, providing individuals the opportunity to enroll in or change their health care plan or other benefits. Individuals can review or update their existing coverage to meet their current needs; they can enroll in a new health care plan, modify their coverage levels, adjust their contributions, add beneficiaries, and more. Common benefits that individuals update are dental, retirement, vision, and more.  

Open enrollment is a crucial period for employers and employees, as it is the only time when changes to health care plans and benefits can be made. There are some exceptions to this rule, such as experiencing a qualifying life event like having a child, getting married, or getting a divorce.  

With rising health care costs, individuals are prioritizing utilizing affordable health care and benefits plans. This trend enhances the appeal of employers who offer comprehensive benefits packages to potential employees. In fact, 57% of U.S. workers have taken a new job if it provided better family and reproductive benefits.  

Tips For Open Enrollment Season 

As an employer, reviewing current policies or selecting the right health care plan for your employees during open enrollment can be overwhelming. However, there are a variety of strategies that can help you prepare and streamline the open enrollment process. 

Make a schedule 

Due to the hard cut-off date of the open enrollment period, marking your calendar with important dates and deadlines is essential. This year, open enrollment for HealthCare.gov begins on November 1, 2024, and ends on January 15, 2025. Consistently communicate with your employees about your important dates to ensure they are well-prepared and ready to submit their information to secure coverage for the upcoming year.  

Offer personalized benefits options 

As an employer, transparency and open communication are vital to a seamless open enrollment process. While there are many different coverage options and plans for your employees, it’s important to understand your employees’ priorities, their thoughts on their current plans, and updates or changes they’d like to see made. This can be done with an employee survey, a meeting, or a company-wide email. Offering a benefits plan that satisfies your employees will likely result in a more engaged, productive, and happy workforce. 

In recent years, employees have been more strategic and thoughtful about their benefits selections. Employees are taking a more holistic perspective toward their health, and they want a strong, comprehensive benefits package to mirror that. Seventy-nine percent of employed individuals express interest in receiving support to maximize their workplace benefits dollars across retirement savings, health savings accounts (HSAs), health care insurance, and voluntary benefits.  

Research coverage options 

To ensure you are offering the best plans to your employees, it’s important to review your current coverage options and research potential alternatives. It’s crucial to check available providers and ensure they match your employee’s’ needs in terms of cost, services, and amount of coverage. To enhance your research process, consider the following steps: 

Conduct employee surveys 

By conducting an employee survey about your current coverage offerings, you’ll gain a greater understanding of what your employees are looking for with their health care options. When you utilize this feedback, you’ll be able to choose the best coverage that align with your employees’ wants and needs, potentially improving employee happiness and retention.  

Compare coverage 

As an employer, it’s crucial to benchmark health care coverage with federal standards to ensure that employees receive comprehensive and competitive benefits. It can also be helpful to compare your health care offerings with other companies in the same industry, to determine how your company’s current coverage compares to competitors or if any changes need to be made.  

Keep your employees educated 

As an employer, you need to make sure your employees understand their available coverage options, potential updates they can make, and possible costs. Open enrollment can be challenging, and providing resources to help employees better understand the process and the benefits available to them can significantly enhance their satisfaction with their plans. Providing resources like webinars, emails, guides, and insurance marketplace updates is a great way to keep your employees informed about the latest open enrollment information. 

Open Enrollment Assistance 

It’s never too early to start thinking about open enrollment. Ensuring your employees have a seamless enrollment process may seem daunting, but it doesn’t have to be. With a professional employer organization (PEO) like Group Management Services (GMS), you gain access to a dedicated HR team to help answer questions about open enrollment. GMS can also help reduce costs and administrative burdens while providing your employees with quality medical coverage. With our in-house master health plan, you can also avoid large swings in usage and renewal rates.  

For more information about how GMS can help you navigate open enrollment, contact us today! 

Understanding CalSavers: A Mandate For Employers 

California’s CalSavers Retirement Savings Program is a state-mandated initiative designed to ensure that employees across the state have access to retirement savings options. All California employers with five or more employees must either offer a private retirement plan or facilitate access to CalSavers for their employees.  

With CalSavers, small businesses can keep employees engaged and attract new talent without incurring the overhead and administrative costs of a retirement plan. This law also aims to address the growing retirement savings gap, especially among workers who do not have access to employer-sponsored retirement plans. 

How CalSavers Works 

CalSavers is an automatic enrollment program, meaning eligible employees are automatically enrolled unless they opt-out. Contributions are made through payroll deductions, and employees can choose to save a portion of their wages into a Roth IRA. The program is designed to be simple for both employers and employees, without employer fees or fiduciary responsibilities. Employers are required to register with CalSavers and upload their employee roster, after which employees are notified of their enrollment. 

Key Features Of CalSavers 

• Automatic enrollment: Employees are automatically enrolled but have the option to opt-out. 
• Roth IRA contributions: Employees contribute post-tax dollars, with a default contribution rate of 5%, though they can adjust this rate. 
• Portability: The account is tied to the individual, not the employer, meaning employees can take their savings with them if they change jobs. 

Newly mandated businesses with five or more employees must register by the end of the calendar year in which they become subject to the mandate. Business size is based on the average number of employees reported to the Employment Development Department on the four DE9C filings from the previous year. 

Beyond California: Similar Programs In Other States 

California isn’t alone in implementing a state-mandated retirement savings program. Several other states, including Oregon, Illinois, Colorado, and New York, have launched or are in the process of launching similar initiatives.  

These programs share a common goal: to increase retirement savings among workers and reduce the burden on public assistance programs. For employers operating in multiple states, these varying requirements can become complex and challenging to manage. Each state’s program may have different deadlines, contribution rates, and administrative requirements, making compliance a potential headache for businesses. 

How GMS Can Help  

Navigating the intricacies of state-mandated retirement programs like CalSavers can be challenging, especially for businesses operating in multiple states. GMS is here to simplify the process. Our experts stay up-to-date with the latest regulatory changes across the country, ensuring that your business remains compliant no matter where you operate. We can help you implement and manage retirement savings programs that meet state requirements, so you can focus on growing your business while we handle the complexities of compliance. 

Whether your business is in California, Colorado, New York, or any other state with similar mandates, GMS provides the support you need to stay ahead of these changes. Contact us today to learn more about how we can assist you in navigating retirement savings laws and ensuring your business remains compliant nationwide.  

As life expectancy increases and social security benefits remain uncertain, the importance of personal retirement savings grows. Vanguard’s How America Saves 2023 report found that more Americans than ever before (83%) are actively saving for retirement. This number is up eight percentage points since 2013.

One critical component of a robust retirement plan is the employer’s contribution to an employee’s retirement savings. These contributions significantly enhance employees’ ability to build a substantial nest egg for their retirement. Not all companies provide 401(k) matching programs, but by investing in your employees’ future, you demonstrate that you value them beyond their contributions to the workplace. This commitment enhances your appeal as a competitive employer, aiding in both recruitment and retention.

Understanding Employer Contributions

Employer contributions refer to the funds that employers add to their employees’ retirement savings accounts, such as 401(k) plans, 403(b) plans, or other defined contribution plans. These contributions can come in various forms, including matching, non-elective, and profit-sharing contributions.

Employer contributions are a popular benefit, especially in companies offering a 401(k) plan. In 2021, ICI Research found that 90% of 401(k) plan participants received employer contributions to their retirement savings. The average employer contribution across plans reached a record high of 4.8% in Q1 of 2023.

Three Types Of Employer Contributions

The type of contribution you offer employees will ultimately depend on several factors, including company financial health, competitive considerations, employee needs and preferences, regulatory requirements, and the overall benefits strategy. There are three popular types of contributions to choose from.

1. Matching contributions

Employers match a percentage of the employee’s contributions to their retirement account. For example, an employer might match 50% of the employee’s contributions up to 6% of their salary. If an employee earns $50,000 annually and contributes 6% ($3,000) to their 401(k), the employer would contribute an additional $1,500.

2. Non-elective contributions

Employers contribute a fixed amount to employee retirement accounts regardless of whether the employee makes their contributions. This ensures that all eligible employees receive a retirement benefit.

3. Profit-sharing contributions

Employers share a portion of the   with employees by contributing to their retirement accounts. This type of contribution can vary yearly based on the company’s profitability.

Benefits Of Employer Contributions

Benefits for employees:

Increased retirement savings

Employer contributions significantly boost the total retirement savings of employees. For instance, an employer match can add thousands of dollars to an employee’s retirement fund over time, which can compound and grow substantially.

Incentive to save

Matching contributions are a powerful incentive for employees to contribute to their retirement accounts. Knowing that their employer will add extra money if they save encourages employees to participate in retirement plans and contribute more than they might have otherwise.

Tax advantages

Employer contributions, like employee contributions, often come with tax benefits. Contributions to retirement accounts are typically made on a pre-tax basis, reducing the employee’s taxable income. Additionally, the growth of these contributions is tax-deferred until withdrawal.

Financial security

With employer contributions, employees can feel more secure about their financial future. The additional funds help build a larger retirement cushion, which is crucial for maintaining a comfortable lifestyle in retirement.

Benefits for employers:

Attracting and retaining talent

Offering competitive retirement benefits, including employer contributions, helps attract top talent. Employees value retirement benefits, and a generous contribution policy can be a crucial differentiator in a competitive job market.

Employee satisfaction and loyalty

Retirement contributions are a form of investment in employees’ futures, which can lead to increased job satisfaction and loyalty. Employees who feel supported in their long-term financial goals are more likely to remain with the company and contribute positively to its success.

Tax deductions

Employers can benefit from tax deductions for their contributions to employees’ retirement plans. These deductions can offset some of the costs associated with providing these benefits.

Enhanced company culture

Providing robust retirement benefits can enhance the overall company culture. It demonstrates that you value your team and are committed to their long-term well-being.

The Impact Of Employer Contributions On Retirement Savings

The additional funds from employer contributions can significantly enhance the compounding effect: the more money invested early on, the more potential for growth over time. For instance, a $1,000 contribution at age 30 can grow significantly more than a $1,000 contribution at age 50 due to the longer time for compounding. Additionally, employer contributions can: 

• Increase participation rates: Employer matching contributions often lead to higher participation rates in retirement plans. Employees are more likely to enroll and contribute to their plans when they know they will receive additional funds from their employer.
• Balance retirement portfolios: Employees can diversify their retirement portfolios more effectively with additional contributions. This diversification can help manage risk and potentially lead to better investment outcomes over the long term.
• Reduce retirement savings gaps: Employer contributions help bridge the retirement savings gap, particularly for employees who cannot contribute significantly. This is especially important for lower-income workers who might otherwise struggle to save adequately for retirement.

Managing And Planning Employer Contributions With GMS

Employer contributions to employee retirement savings are a vital component of a successful retirement plan. They provide significant financial benefits, savings incentives, and enhanced economic security for employees. For employers, offering generous retirement contributions can attract and retain top talent, foster loyalty, and improve company culture.

By understanding the types of employer contributions and strategies for maximizing their benefits, employees can ensure they are well-prepared for a financially secure retirement. Ultimately, employer contributions not only support individual employees but also contribute to a more stable and prosperous workforce.

If you’re thinking about offering your employees a retirement plan, consider partnering with a professional employer organization (PEO) like Group Management Services (GMS). With experience supporting over 3,500 businesses in managing payroll, human resources, risk management, and benefits, including 401(k) plans, GMS provides affordable solutions comparable to larger corporations.

Interested in enhancing your business’s retirement plan offerings? Learn more about how GMS can support your company’s needs. 

Selecting the right retirement plan for your small business is a crucial decision that can impact your ability to attract and retain talent. It’s essential to carefully evaluate your business’s needs and goals to choose the most suitable retirement plan. Numerous options are available, each with its own rules, benefits, and limitations. Knowing the pros and cons of each one can help you make an informed decision.

Why Offer A Retirement Plan?

The Center for Retirement Research found that only 46% of small businesses offered a retirement plan. A 2023 Capital Group survey reported that 40% of small business owners didn’t believe their company was large enough for a retirement plan option. The same study found that 32% of small business owners feel they lack the knowledge to offer retirement plans while keeping their businesses afloat.

However, despite these hesitations, there are several compelling reasons why offering a retirement plan will benefit your small business:

• Attract and retain talent: A competitive retirement plan can help you stand out to potential employees and retain current ones. Many job seekers consider retirement benefits a key factor when evaluating job offers.
• Tax advantages: Retirement plans can provide significant tax advantages for both employers and employees. Employer contributions are typically tax-deductible, and employees can defer taxes on their retirement savings until withdrawal. Additionally, the SECURE Act of 2022 offers a tax credit to small businesses that offer retirement plans and a bonus credit if that plan offers automatic enrollment.
• Employee financial security: Helping employees save for retirement can increase their economic security and overall job satisfaction, leading to a more motivated and productive workforce.
• Owner benefits: As a business owner, you can also personally benefit from a retirement plan by saving for your retirement in a tax-advantaged manner.

Types Of Retirement Plans For Small Businesses

Choosing the right plan for you and your team can be a complex process; the most common options include:

Simplified Employee Pension (SEP) Individual Retirement Account (IRA)

SEP IRAs are designed for self-employed individuals and small business owners. They are easy to set up and maintain, with low administrative costs. Only the employer contributes to the plan, and contribution limits are high. Employers can contribute up to 25% of each employees’ compensation, up to a maximum of $69,000 for 2024. Contributions are tax-deductible for the employer, and employees are immediately 100% vested in their SEP IRAs.

Pros:

• Simple to administer.
• Flexible annual contributions, allowing adjustments based on your business profitability.
• High contribution limits.

Cons:

• Only the employer can contribute.
• Contribution amounts must be the same percentage for all eligible employees.

Savings Incentive Match Plan For Employees (SIMPLE) IRA

SIMPLE IRAs are ideal for businesses with 100 or fewer employees. They are relatively easy to set up and administer. Both employers and employees can contribute to the plan. Employees can contribute up to $16,000 annually for 2024, with an additional $3,500 catch-up contribution for those aged 50 and over.

Employers must match employee contributions dollar-for-dollar up to 3% of compensation or make a 2% non-elective contribution for all eligible employees. Employer contributions are tax-deductible.

Pros:

• Easy to set up and manage.
• Encourages employee participation through matching contributions.
• Lower administrative costs compared to 401(k) plans.

Cons:

• Lower contribution limits compared to SEP IRAs and 401(k) plans.
• Employer contributions are mandatory, which can financially burden some businesses.

401(k) Plan

401(k) plans are one of the most popular retirement plans for businesses of all sizes. These plans can include features such as Roth contributions, loan provisions, and automatic enrollment. They offer flexibility and higher contribution limits.

Both employers and employees can contribute to the plan. Employees can contribute up to $23,000 annually for 2024, with an additional $7,500 catch-up contribution for those aged 50 and over. Employers can choose to match employee contributions or make non-elective contributions. All employer contributions are tax-deductible. Employers can also set up profit-sharing contributions.

Pros:

• High contribution limits.
• Flexibility in plan design and employer contributions.
• Encourages significant employee participation and savings.
• Attractive to potential employees.

Cons:

• Higher administrative and compliance costs.
• It is more complex to set up and maintain than SEP and SIMPLE IRAs.

Defined Benefit Plan

Defined benefit plans, or pension plans, promise a specific retirement benefit amount based on a formula considering factors such as salary history and years of service. In this plan, the employer contributes enough to fund the promised benefit. According to the IRS, this amount is “100% of the participant’s average compensation for his or her highest three consecutive calendar years or $275,000 for 2024.” This plan’s higher contribution limits allow for potentially substantial retirement savings.

Pros:

• Provides a guaranteed retirement benefit.
• High contribution limits.
• Attractive to employees seeking retirement security.

Cons:

• Complex and costly to administer.
• Employer bears investment risk and funding responsibility.
• Less flexibility in adjusting contribution amounts.

Factors To Consider When Choosing A Retirement Plan

1. Business size and structure: The number of employees and your business structure (e.g., sole proprietorship, partnership, corporation) can influence the suitability of different plans. However, don’t let size be your reason for avoiding a plan altogether. The Employee Benefit Research Institute found that a business that is too small or not established enough was the most cited reason for not offering a plan. In many cases, this isn’t true.
2. Employee needs and preferences: Understanding your employees’ retirement goals and preferences can help you choose a plan that meets their needs and encourages participation.
3. Budget and administrative capacity: Consider the costs of setting up and maintaining the plan, including administrative fees and required employer contributions.
4. Tax benefits: Assess the tax advantages of different plans for the business and employees.
5. Flexibility and customization: Some plans offer more flexibility regarding contributions, investment options, and plan features. Determine how much flexibility you need to meet your business and employee needs.

By understanding the different types of retirement plans available and their respective benefits and limitations, you can select a plan that not only helps you attract and retain top talent but also provides valuable financial security for you and your employees.

The good news is you don’t have to do it alone.

A professional employer organization (PEO), like GMS, can transform your small business’s retirement plan offerings. With a proven track record of helping over 3,500 companies with p and 401(k) plans, GMS delivers cost-effective solutions that rival larger firms.

Ready to elevate your retirement benefits? Click here to learn more about how GMS can help you set up a retirement plan best suited for your small business.

While it’s crucial to foster a positive work culture and build a reputation as a caring employer, evaluating the benefits you offer is equally important. With inflation and the rising cost of living, nearly 79% of Americans believe the country is facing a retirement savings crisis, and 55% are concerned with securing enough financial stability for their retirement.

Financial insecurity can be a major stressor. It can affect productivity, leading to disengagement and absenteeism in the long term.  You can alleviate some of this stress by offering a 401(k) plan to help your team prepare for retirement. Most people aim to spend their later years comfortably enjoying their retirement, so providing a quality 401(k) plan can help your business attract and retain quality employees.

Avoid Financial Confusion: Educate Your Group

Retirement is not always straightforward, as financial choices can be intimidating and confusing for many employees. However, understanding retirement plans like a 401(k) is critical. Ensure you’re taking the time to review educational resources or training with your team to eliminate confusion and simplify choices.

What is a 401(k) Plan? 

Seven Elements Of A Competitive 401(k) Plan

1. Generous employer match

A generous employer match is one of the most sought-after features in a 401(k) plan. An employer match is when an employee contributes a portion of their salary to their retirement account, and the employer matches a certain percentage of that contribution, effectively adding free money to the employee’s retirement savings. According to Vanguard’s annual report on investing behavior, employers’ average match was 4.6% of pay, while the highest percentage was 6.99%. 

A higher match not only demonstrates that you value the long-term financial wellness of your workforce but also serves as a powerful incentive for employees to contribute more to their retirement accounts. It effectively doubles the impact of their contributions, making it a highly attractive benefit. Employees view a strong match as a direct investment in their future, which can be a critical factor in recruitment and retention. By offering a generous employer match, you can differentiate your company in a competitive job market and build a stronger, more loyal team.

2. “Day one” eligibility

“Day one eligibility” refers to a policy where employees are eligible to participate in certain benefits, such as a 401(k) plan from their first day of employment. This means that new hires do not have to wait through a probationary period or a set number of days before they can begin contributing to a retirement plan. Providing new hires with immediate eligibility helps ensure they don’t lose ground in terms of saving. Seventy-four percent of plans now allow workers to make pretax contributions immediately after hire. In addition, 53% of plans have corresponding immediate eligibility for employer-matching contributions, while 50% of plans that offer a non-matching employer contribution allow immediate eligibility.

3. Immediate vesting schedule

An immediate vesting schedule allows employees to gain full ownership of employer contributions from the moment they are made. Unlike traditional vesting schedules, which may require employees to stay with a company for several years before they can access the full benefits of their employer’s match, immediate vesting grants instant control over contributions. It gives employees the peace of mind that the contributions made on their behalf are truly theirs to keep, regardless of their tenure with the company.

While it might seem counterintuitive, offering an immediate vesting schedule can be a powerful tool to attract top talent, especially in competitive industries. It signals a commitment to your team’s financial security. It shows that you’re confident in your business’s value without the need to tie employees down with restrictive vesting terms. Additionally, it can lead to greater employee satisfaction and loyalty, as workers feel more secure in their financial planning and more appreciated by their employer.

4. Low, transparent plan fees

Typically, 401(k) plans have administrative fees that charge you to maintain the account. Admin fees cover record keeping, accounting, legal services, and investor education services.  Investment fees on the other hand cover expenses associated with managing the plan’s funds.

Both types of fees are deducted from your employees’ 401(k) assets. Finding plans with lower fees and educating your employees on how the fees are being applied can help set your company’s 401(k) package apart from your competition.

5. Investment options

When finding a 401(k) plan, select only a handful of investment options. This can include individual mutual funds, asset allocation funds, and target-date funds, many of which automatically become more conservative as the employees approach retirement. 

While offering choices is beneficial, it’s important not to overload your team. It’s possible to present employees with too many options. Researchers have found that for every 10 options added to your plan, participation drops by 1.5-2%. To avoid overwhelming your employees, be selective in the choices you put in front of your team.

6. Automatic enrollment and raises

Automatic 401(k) plan enrollment has gained popularity for its ability to simplify retirement savings. With automatic enrollment, employees are enrolled in the company’s 401(k) plan by default, often with a pre-set contribution rate, unless they choose to opt-out.

Automatic enrollment can significantly increase participation rates in 401(k) plans by nearly 15%, particularly among younger or new employees. It eliminates common barriers to entry, such as the initial sign up or the uncertainty about how much to contribute. By making retirement savings the default option, you can help your staff build financial security from day one.

In addition to automatic enrollment, including automatic contribution raises (often referred to as automatic escalation) further enhances the effectiveness of a 401(k) plan. Automatic raises typically increase an employee’s contribution rate by a set percentage each year, usually aligned with annual salary increases or at the start of a new plan year.

7. Give employees access to expert financial resources

Providing employees with access to expert financial resources is essential to a well-rounded 401(k) plan. Many employees, especially those new to investing or retirement planning, may feel overwhelmed or uncertain about maximizing their 401(k) options. By providing access to financial advisors, educational workshops, and online tools, employers can empower their workforce to make informed decisions about their financial future.

401(k) Plans With GMS

If you’re looking to offer a competitive retirement plan but don’t have the time or energy to dedicate to finding one, we can help. Partnering with a professional employer organization (PEO), like GMS, ensures you can offer the best plan for your team without the hassle. Our retirement experts will help you find the best options for you and your team to remain competitive in today’s tightening labor force. Contact us today and connect with one of our experts!

Retaining top talent is crucial for the success of any small business. High employee turnover leads to increased costs, operational disruptions, and a negative impact on both productivity and workplace morale. Of the average 3.8% turnover rate, more than half are employees voluntarily leaving their positions. Common reasons for voluntary departures include inadequate benefits, limited career growth opportunities, and poor work-life balance.

As a business owner, you have significant influence over employee retention. A comprehensive benefits plan can address key turnover-related factors, providing more financial support and nurturing a more stable workforce. By incorporating options like Flexible Spending Accounts (FSAs) into your benefits package, you offer employees a valuable tool to manage their expenses with tax advantages. This financial benefit not only reduces out-of-pocket costs but also boosts overall job satisfaction and loyalty.

How Do FSAs Work?

FSAs enable employees to reserve a portion of their paycheck into a tax-free account used for eligible expenses, such as medical treatments, dental cleanings, and more. Additionally, employers can contribute to their employees’ FSAs, but it is not a requirement.

There are different types of FSAs tailored to specific needs:

• Health Care FSA: This type of account helps cover medical costs not paid by insurance, including deductibles, copayments, prescription medications, and over-the-counter health items.
• Dependent Care FSA (DCFSA): A DCFSA assists parents and caregivers by allowing employees to use pre-tax dollars for expenses related to the care of children or dependent adults.
• Limited Purpose FSA (LPFSA): Designed to cover dental and vision costs, this account is ideal for those who also have a High-Deductible Health Plan (HDHP) and a Health Savings Account (HSA).

The Advantages Of Offering FSAs

Integrating FSAs into your plan provides a range of benefits for both your business and your employees, including:

Enhanced benefits package

While health insurance is a valuable benefit, it can still leave gaps in coverage. FSAs strengthen your benefits package by providing employees with extra financial support for costs not fully covered by standard health insurance plans. Not only does this offer employees a practical way to manage their expenses, but it also helps your business remain competitive in attracting and keeping top talent. Adding FSAs to your benefits package shows your commitment to addressing the diverse needs of your workforce, fostering a greater sense of company loyalty.

Cost savings

FSAs can lead to significant cost savings for both employees and employers. Employees can reduce their taxable income by contributing pre-tax dollars to an FSA, resulting in lower taxes and higher take-home pay. Since employee contributions are deducted before taxes are applied, employers can also benefit by saving on payroll taxes. Additionally, FSAs are a cost-effective way to support employees’ medical and dependent care needs, which can help reduce your overall benefits costs.

Flexibility in spending

With FSAs, employees can direct pre-tax funds to a range of eligible expenses, including medical treatments, dependent care, and other essential costs. FSAs aren’t limited to just health and care costs; they can also cover creative uses such as travel-related items and various professional services. This flexibility allows employees to better manage their spending based on their own individual needs. By providing greater control over expenses, FSAs can make employees feel better supported in handling their financial responsibilities, increasing overall satisfaction and morale.

How To Implement FSAs Into Your Business 

Establishing FSAs in your benefits package calls for careful planning and structure to promote a smooth implementation. Consider the following to achieve an effective rollout and deliver meaningful support to your employees:

Select an administrator and ensure compliance

Begin by choosing a reputable professional employer organization (PEO) or third-party administrator (TPA) with expertise in FSA management. Your selected administrator will manage critical functions, including claims processing, account management, and adherence to Internal Revenue Service (IRS) regulations. This choice is essential to uphold legal standards and maximize the benefits of your FSA program.

Establish guidelines and communication

Work closely with your selected administrator to formulate clear guidelines and establish communication channels. This step clarifies roles and responsibilities during the transition, simplifying the implementation of the FSA program. Transparent communication will address concerns and questions promptly while also keeping everyone updated on the program’s features and benefits.

Customize your FSA program

To make the most of your FSA program, adapt it to fit the particular needs and goals of your business. Evaluate your employees’ demographics and preferences to decide which FSAs to offer. Depending on your assessment, you might consider including different types of FSAs, such as . Customization is key to making the program effective and relevant, encouraging employee engagement and satisfaction.

Provide training and information

Deliver thorough training to your HR team to ensure they are well-versed in the nuances and features of your FSA program. Next, hold informative sessions with employees to outline the advantages and practical use of FSAs. By offering detailed resources such as brochures and FAQs, you can further assist employees in optimizing their FSA benefits and enhance the program’s overall success.

Measuring The Success Of Your FSA Program

To determine how well your FSA program is performing, focus on key metrics that reflect its impact. Track employee satisfaction through surveys and feedback to see if the program meets their expectations and specific preferences. Check utilization rates to determine how frequently employees use their FSAs and if they are benefiting from it. Leveraging data and feedback to make informed adjustments will ensure the FSA program continues to align with your employees’ needs and reinforces its role in your retention strategy.

Boost Your Benefits Management With A PEO

Incorporating FSAs into your comprehensive benefits package offers you and your employees significant advantages, such as increased flexibility and potential cost savings, setting your business apart from competitors and demonstrating your commitment to your workforce.

To streamline the management of FSAs and other benefits, partner with a professional employer organization (PEO) like GMS. A PEO provides expert guidance, handles administrative responsibilities, and ensures regulatory compliance. Additionally, employees with FSAs can visit our FSA Store to browse eligible products that can be purchased with their accounts. Contact us today to learn how our services can enhance your benefits program and promote retention.