Contractors have a unique relationship with fringe benefits that puts them in an advantageous position. Through employee fringe benefits, contractors have the opportunity to maximize the fringe and (through a long-term benefit plan) drive the ultimate competitive edge. Read on to learn more about how contractors can harness the power of fringe benefits to their advantage!
Harnessing the Power of Employee Fringe Benefits
Contractors have a unique advantage over private companies that must provide employee benefits out of their overhead. The government or contracting entity, in a way, reimburses the contractor to provide employee fringe benefits by way of the health and welfare fringe rate. Developing a fringe benefit plan can allow employers to look at long-term strategy. In a time of rapidly rising inflation and healthcare costs, the best strategy is the one that keeps the future in mind.
Employer paid benefits – utilizing the flexibility of fringe dollars – tend to drive more competitive programs in the long-term. Harnessing the power of employee fringe benefits to pay the medical premium will drive participation and reduce instances of adverse selection. That’s a win-win.
Offering employee fringe benefits has benefits beyond setting up your benefit programs for long-term success. Fringe benefits offer cost predictability over time, with the advantage of a highly sought-after healthcare offering for employees.
Understanding Adverse Selection
Adverse selection describes the phenomenon of high-risk or unhealthy individuals being more likely to enter into a voluntary benefits program, placing greater risk on the program. When a healthcare benefits program is voluntary, it’s expected that healthy individuals that do not feel they will reap the benefits of enrolling will opt out whereas unhealthy individuals or those with risk factors are more likely to enroll. Designing a better benefit plan relies on balance.
Boon’s Contractor Solutions
The ultimate goal of Boon’s fringe benefit solutions for contractors is compliance. Our contractor clients are regulated by the Service Contract Act, the Davis-Bacon Act, the Healthy Terminals Act, prevailing wage and living wage ordinances, and more! Boon’s niche knowledge and expertise in the government contracting space and within these specific areas become an advantage to our clients, with compliant solutions tailored to the unique needs of their business.
Since our founding in 1982, Boon has been sharing our knowledge of fringe benefits and government contracting to help our clients be top competitors. The health and welfare fringe rate is just one of many constantly evolving factors in the industry. We help contractors engage with the fringe in a way that maximizes results for long-term success.
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