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Employee Benefits Programs
Employee demands for more flexible benefits programs increase compliance concerns
A robust employee benefits program is a key factor in an employer’s ability to recruit and retain quality employees. Although most benefits programs are not legally mandated, employers recognize that job candidates are attracted to companies with good benefits. Benefits programs not only provide employees with financial protection and peace of mind, but they can increase employee productivity and loyalty.
Employees today expect benefits programs to be comprehensive yet flexible. That means more sophisticated, and more complicated, plan designs and a larger array of benefit choices. However, benefits cost money and currently account for at least 30 percent of total compensation costs. So the challenge for employers is to design benefits programs that satisfy their employees but are cost-effective.
Understanding the tax ramifications of a benefits program is critical since many employee benefits are not taxable to employees if certain requirements are met. In addition to tax rules, employers must understand how other federal laws, such as the Affordable Care Act, impact their benefits. Employers also need to be aware of the myriad of rules issued by various governmental agencies about benefits programs as they can face stiff penalties for noncompliance. Consequently, it is important for employers to address the following questions:
- Which benefits are taxable to employees and which are not?
- How are benefits reported on Form W-2?
- What federal rules apply to benefits programs?
- Are there annual reporting requirements to any governmental agencies?
How we can help
The professionals at RSM understand the complex tax and compliance issues impacting employee benefits and can help you evaluate your benefits programs and strategies. Our benefits team can consult with you regarding health plans, cafeteria plans, Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), life insurance, disability plans and various other employee benefits.
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Some common paid time off (PTO) policy features cause taxable income to unexpected parties at unexpected times. Learn more here.