fringe benefits and employee perks in form include different kinds of non-monetary compensation offered to employees as well as their regular salaries or wages. In most cases, the terms “fringe benefits” and “benefits” are used interchangeably. Such instances where an employee exchanges regular wages or salary for any other form of fringe benefit is usually referred to as a “payout” or “cash out” arrangement. The two major types of such fringe benefits are retirement and accident benefits. Retirement benefits are usually non-taxable and come in the form of deferred annuities. They may not be taxable depending on the agreement signed between the employee and the company concerned.
Accident benefits are generally tax-free and are intended to cover medical expenses and rehabilitation costs of employees who become injured while at work. Such insurance coverage and the associated benefits are a fringe benefit because they are not taxable. However, the tax treatment of these benefits is different from that of other fringe benefits. Most employers consider accident benefits a part of the overall insurance package and therefore are required to obtain from the insurance policy.
Another type of insurance-related fringe benefit for employers are health insurance premiums paid by the employee. Health insurance premiums can be expensive but there are a number of schemes available to attract highly skilled professional workers who may not be able to afford standard health care coverage. These benefits are considered an employer’s obligation. In most states, the premium payments are deductible from the workers’ paycheck.
Another fringe benefit often provided is life insurance for employees. This particular benefit does not have tax implications in most states. Life insurance is intended to provide protection and financing for named dependents during the employee’s life and can also be transferred between spouses. This benefit should be considered by the worker as an important investment. Since life insurance premiums paid by the employee contribute to his or her Social Security income, it can also reduce the overall cost of the employee’s retirement.
There are fringe benefits that can’t be reduced, such as paid vacation and bonuses. The fringe benefits package should be reviewed annually to see if the savings opportunities have increased. It is important for companies to keep the number of employees consistent with their profits. Many times, a company will have more than one type of position. One of these positions might offer a lucrative wage and another would require more skills. Both positions, although at the same level, would require fringe benefits.
Many businesses attempt to provide employees with fringe benefits but fail to meet their claims. A company that has failed to properly calculate its fringe benefits could be subject to a lawsuit. Therefore, any reduction of benefits should be done carefully and thoroughly. The best way to get a fair and accurate assessment of your company’s benefits is to hire an accountant who specializes in benefits. These accountants have extensive experience in providing these services and can provide you with the most accurate assessment of the value of your fringe benefits.