Give your compensation a boost
Give Your Total Compensation a Boost with Benefits
Business owners have good reasons to be interested in the results of two recent surveys that demonstrate why benefits should be a key part of total compensation. The 2016 Sanofi Canada Healthcare Survey revealed employee opinions about the importance of health benefits. 43% of plan members see their health benefits plan as something to use for necessary treatment or prevention and 35% look at their health benefits plan as extra compensation. For employers funding a benefits plan, the good news is that employees strongly value their benefits coverage.
The Sanofi study also reinforces one of the key findings from Glassdoor’s Q3 2015 Employment Confidence Survey: 79% of employees indicated they would prefer new or additional benefits to a pay increase. While these studies illustrate the strong link between benefits and employee satisfaction, there are also direct monetary advantages to improving or introducing benefits as part of a total compensation strategy.
Benefits are Cost Effective for Business
Adding or upgrading benefits coverage is not only an easy way to boost total compensation, it may be one of the best ways to go about it. Here’s why:
Unlike wages, dollars paid towards health benefits don’t trigger payroll taxes. For example, let’s say you choose to give your employees $2,000 paid towards health benefits instead of a raise.
With health benefits you’ll save on Employment insurance (EI), Canada pension plan (CPP), workers compensation (WSIB) depending on industry sector, and employer health tax contributions in Ontario. In addition, when the business pays the cost of health benefits for employees, the Canada Revenue Agency (CRA) considers that a tax-deductible business expense.
Benefits Give More to Employees
When balancing benefits coverage and direct compensation within a budget, keep in mind that in addition to boosting employee satisfaction, health benefits are cost effective for employees too.
Paying for health and dental benefits for employees, instead of a direct increase to wages, reduces the employee’s share of income tax, EI and CPP. (Note there are exceptions: employer-paid premiums for group life insurance, AD&D, and critical illness insurance are taxable benefits that must be included on T4s). The claim payments that employees receive from a benefits plan are also tax-free to them. Compared to employees paying for medical or dental expenses with after-tax dollars, benefits coverage puts more cash in their pockets.
Because employees consistently place a high value on benefits, business owners planning on giving raises in the upcoming year should consider spending some portion of those dollars on adding or improving benefits instead. Benefits coverage is a cost effective investment both for the business and for employees, with tax savings on both sides. To learn more about boosting compensation for your business, call Beagle Benefits.
