How to Set Up Alternative Benefits Packages

One service an employer can offer employees is a customized benefits package, which will have them thinking twice about jumping ship to another company.

Difficulty: Moderately challenging

Instructions

1. Decide on a dollar amount and then offer employees a menu of benefit options they can pick and choose from.

2. Consider an options menu that contains the following: child care credits, car payments, extra vacation or sick leave, and health club memberships. This allows people to choose benefits appropriate for their lifestyle and heads off potential resentment by single employees of family-oriented benefits.

3. Offer benefits that provide convenience to employees, such as credit union membership, direct deposit of paychecks, even picking up dry cleaning. These benefits cost relatively little, but save time for employees.

4. Set up a Section 125 vehicle. This allows employees to set up an account with your company to pay for health care and child care benefits with pretax dollars either at the beginning of the year or on a monthly basis.

Tips & Warnings

• While many employers veer away from Section 125 because it seems like too much paperwork, it's really just one more form at tax time. Contact the Internal Revenue Service for more information.
• Section 125 cannot be used to pay child support or alimony.
• If the money in a Section 125 account is not used by year-end, it cannot be refunded.