Optional Employee Benefits

In addition to required employee benefits, businesses can provide optional benefits and incentives that can improve the lives of their employees and families.

This guide will help explain legal and tax implications of these benefits and highlight some common employee incentive programs.

Health Plans

Group health plans

Businesses that offer group health plans must comply with a federal law. Visit DOL’s Health Benefits Advisor interactive Website for a step-by-step guide on how to determine which laws apply to your business.

DOL also provides guides to understanding your fiduciary responsibilities under a group health planand reporting and disclosing employee benefit plans.  For more information, visit DOL’s website.

Affordable Health Care Act

The Affordable Care Act aims to lower health care costs for small business owners and expand coverage options for employees. To learn about the Small Business Health Care Tax Credit and find more resources about the law, visit the Health Care and Health Care Reform page.

COBRA Benefits

Consolidated Omnibus Budget Reconciliation Act (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporarily continue health coverage at group rates. Businesses are required to provide COBRA benefits when employees are terminated or laid off. The following Department of Labor (DOL) resources describe an employer’s requirements under COBRA:

  • An Employer’s Guide to Group Health Continuation Coverage Under COBRA
  • COBRA Continuation Health Coverage Frequently Asked Questions

Retirement Plans and Pensions

The federal government has a wide range of resources to help small business owners select a plan retirement or pension plan for their employees including the following:

  • Small Business Retirement Savings Advisor
  • Choosing a Retirement Solution for Your Small Business
  • Tips for Selecting and Monitoring Service Providers for Your Employee Benefit Plan
  • Small Business Guide to Federal Pension Insurance

Visit the following resources to learn more about specific retirement or pension plans for your small business:

  • Simplified Employee Pension (SEP) Retirement Plans for Small Business
  • SIMPLE IRA Plans for Small Businesses
  • Payroll Deduction IRAs for Small Businesses
  • 401(k) Plans For Small Businesses

Employee Incentive Programs

A small investment in providing incentive programs for your employees can pay large dividends. These programs can help boost morale through engagement and reward, stimulate productivity and encourage group participation in your business success. The following are just a few of many incentive programs your small business can offer employees:

  • Flex time: One of the biggest reasons work-at-home business owners enjoy what they do is not necessarily that they are their own boss, but that they can work the hours that work for them. Likewise, offering the opportunity for flexible hours can be a great incentive for attracting and retaining high performing and motivated employees.
  • Family events: Your business success depends not only on your employees, but also the support of their families. Plan company functions and events that are oriented towards employees and their families such as picnics, movie nights, take your child to work days – the choice is yours and doesn’t need to break the bank.
  • Project completion perks:  Incentivizing employees for goal-oriented project completion is a great way to build a team but also to engage and stimulate your employees to support your business objectives. This can involve recognizing individual achievement or team success. Consider catered lunches, on-site massage therapy, and other perks to keep employees motivated as they work towards a team goal.
  • Workplace wellness programs:  What better way to show your investment in your employees than to help them invest in their wellness? And it doesn’t have to involve a great deal of money or administrative work. Survey your employees’ wellness priorities – whether it’s losing weight, quitting smoking, or enhancing the workplace team environment. From there, compile a calendar or schedule of activities. Wellness initiatives can also be tied to incentives and perks. Incentivize employees to quit smoking by offering a prize or bonus to those who quit or look for ways to encourage other healthy lifestyle choices such as introducing a 30-minute lunchtime team walk.
  • Corporate memberships:  Discounted or free corporate memberships can help promote employee wellbeing (e.g. gym memberships) while also enabling and promoting company goals. Recreational or entertainment memberships can act as venues for client entertainment and can be tax deducted.