As far as we’re concerned, fringe benefits are worth their weight in gold. Applying the fringe dollar to employee benefits is a competitive option that provides cost-savings to government contractors in a compliant manner. The benefits extend beyond the employer and their business, and offer obvious advantages to employees as well. Read on to learn about the value of fringe benefits:
What are fringe benefits?
Put simply, fringe benefits are bona fide benefits that are provided within the fringe dollar amount associated with Service Contract Act, Davis-Bacon Act, and local and state prevailing wage contracts. Instead of paying the fringe amount to employees in cash, where it is taxed as compensation, government contractors have the option to use that money to provide a benefit to their employees that also provides a tax benefit to the contractor.
Common examples of bona fide fringe benefits include:
- Disability insurance
- Life insurance
- HRA and HSA plans
The Value of Fringe Benefits
When an employer utilizes bona fide fringe benefits, it puts itself at a competitive financial advantage over a competitor that is paying the fringe amount to the employees in cash as compensation. The savings come through payroll taxes, as well as reduced healthcare spending overall. Providing bona fide fringe benefits has been connected to reduce absenteeism, and increase employee productivity..
In the current market when public health concerns are a high priority and employees are seeking security, fringe benefits can be an ideal employer solution. Certain bona fide fringe benefits come with flexibility that work to the advantage of the employer and the employee.
Simplifying Fringe Benefits
Employers have the option to handle fringe benefit administration themselves, but that’s often a burden that businesses are unwilling to take on. Handling benefit administration requires the expertise and resources to accurately track and account for the fringe dollars at the employee level. This is a major compliance concern and can make providing fringe benefits, and tracking the fringe dollar spend by employee, intimidating for employers.
However, there are third-party administrators who are well-versed in the particular compliance and benefit needs of government contractors. At Boon, we have that expertise and also create benefit plans that meet the needs of a specific contract and employer. Entrusting the administrative needs of a business to a third-party administrator can lower personnel costs and bring down the total bid for a government contract.
Solutions for the Current Market
Bona fide fringe benefits offer value to employers and their employees. The COVID-19 pandemic has created new challenges for employers and has been responsible for significant public anxiety, regarding health care. Fringe benefits are a flexible response to this crisis when employers are dealing with diminished work hour and employee participation.
Offering bona fide fringe benefits can provide flexible solutions to the unconventional workplace of the current market. Additionally, benefits can provide peace of mind to a workforce that is looking out for their health. Competitive employee benefits are a means of attracting top-tier talent. That will be even more true in a post-coronavirus world. In the present and looking to the future, the value of fringe benefits can’t be overstated when it comes to the competitive and cost-conscious contractor.
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