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Is it really the responsibility of employers to provide employee benefits?
While employers are buried with the cost and administration of offering employee benefits, it is actually not a part of their basic business activity. It might be far more efficient to allocate "benefit dollars or credits" to the employees and empower them to become informed consumers. Thoughts?
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5 Answers
I would absolutely love to give employees their money and help them understand what to do with it. However US labor law does not allow for that. Responsibility or not, our government has made benefit provisioning an employer obligation, and it has therefore logically evolved into a primary means by which companies compete for the best talent.
That said, every manager and owner ought to understand benefits are not an extra something they have to pay out over and above salary. They ARE part of employee salary, and overall employee load. I am transparent about this with my employees as well. They all know what their total load is, and what is required for them to have value that justifies that load.
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Belldon Colme
belldoncolme@gmail.com
it all comes out in the wash. that "investment in people" will end up being diverted elsewhere most likely. the biggest factor, though: given our current healthcare insurance environment, the employer is in the best position to provide their employees affordable plans because of their buying power and pooled risk. until that changes, it will be more expensive for the employee to get the same level of coverage elsewhere.
The answer is specific to the nation and the state. The U.S. tax code was created with specific incentives in the 1940s for employers to subsidize health care. Those rules are scheduled to change in the near future. This question is far behind the curve because Congress has already legislated their answer in the Affordable Health Care Act (http://www.healthcare.gov/law/full/index.html) which contains requirements and options.
Technically, fringe benefits like health care have always been an optional component of total compensation which American employers have been free to offer or eschew. While hourly pay or weekly/annual salary may be the regular "guaranteed" rate of pay, health and life benefits subsidized by the employer were "extras" that could be provided tax-free to the worker. That made them popular, but it also drove up the cost of health care in the United States at double-digit rates for a decade and has caused payroll costs to balloon.
Health care is NOY salary but temporarily remains an optional perquisite or employer-specific fringe benefit, for the time being. Because the tax-exempt benefit costs to the employer were not shown to the employEE, they never saw the effect the benefit charges had on their taxable salaries. Options are disappearing and the choices are narrowing.
Efficiency has been redefined by the new federal rules, where they will decide what is best.
Two answers might fit this question:
1) benefits are one part of the negotiation between employers and employees to attract and hire good ones.
2) in some areas, health insurance being the best example, the government has intervened to make the employer the provider of choice. In the case of health insurance, only employer provided or reimbursed insurance can be deducted. If that weren't true, health insurance could be purchased by the employee or by ad hoc groups to which employees belong, and included in the compensation package as cash. If that change made individually purchased insurance deductible, or the converse, neither employer or employee provided insurance deductible, then the playing field would be level and the insurance industry could focus on providing the best policies no matter who buys them instead of (as currently) focusing on attracting large companies to huge group policies that often aren't best for the individual employees.
No, but the caveat is that you get what you pay for. If a business decides to not offer benefits, then they will be competing for talent with without a full arsenal. In addition, not only will this business have trouble attracting talent, but turnover will be greater, thus costing the company more in the long run in lost talent and training replacements.
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