Employer Benefits Process and Practices of Employer Offered Benefits

Employer offered benefits are often a major element of hiring packages that keep the best employees and keep the compensation packages of those employees competitive. Yet, "historically, there has been no requirement that any employer provide benefits to its employees (with the exception of statutorily required benefits such as workers compensation, disability in several states and unemployment" (Macpan Media 2012 p 3). Employers are not always forced to provide a number of the benefits that are popular within the contemporary work environment. However, in a very competitive market place, where the best employees demand higher levels of benefits, contemporary employers are finding it a necessity to include a number of benefits in order to keep their arsenal of employees beneficial to the health and productivity of the organization as a whole. From this concept, "in general, if an employer drops coverage, better-paid workers will be worse off" (Volsky 2011 p 1). To keep the best workers it is imperative for employers to provide competitive compensation packages that often include a wide variety of benefits. Essentially, "the bottom line is that most workers' firms will be dominated by workers who will receive better benefits and, through the tax system, better subsidies through employer coverage than through newly created insurance exchanges" (Volsky 2011 p 1).

Yet, there is an intricate process employers...

According to the research, "before a determination is made regarding how employee benefits are handled, an employer needs to undertake a comparative analysis of non-tax considerations as well as the tax advantages and disadvantages offered by different entities" (Macpan Media 2012 p 1). Employers need to create and maintain a plan to avoid a scenario where they are overpaying in terms of what they pay out to employees with lower value levels. Thus the services offered must be in accordance with keeping up employee value. There are a number of elements that have varying costs depending on state and location. Typically, employers often have to pay FICA tax for employees, offer contributions to federal and state unemployment and worker's Compensation. These go along with offerings of medical and dental contributions, 401(k) plans for retirement, and sick, vacation, and holiday pay (Southern Administrators & Benefit Consultants 2005). A typical employer pays fees for benefits that typically equal up to 49.2% of a worker's annual salary (Southern Administrators & Benefit Consultants 2005). Offering more than this decreases employee value and places the employer in a vulnerable position.
An employer also has to choose benefit plans carefully, as to ensure that they are receiving the greatest tax advantages. Fully taxable benefits involve the holiday and paid vacation benefits that are taxable. On the other…