Up until this point, you should have seen a variety of different articles that I have crafted for you from health care and access to capital to taxes. From the House of Representatives, and the U.S. Senate to the numerous Small Business Policy Forum’s panel of experts these articles were written with you in mind, the business owner. I wanted to provide you with a wealth of information that you can benefit from in running your business. If you have missed any of the articles, click here:
In my last article, we will discuss the various aspects of portable benefits (includes healthcare, and retirement). We all know that small businesses have to get creative to acquire and maintain great talent. In order to do this, they must provide an assortment of benefits but should portable benefits be one of them?
Let’s look at this conversation two ways:
- Scenario One: As an employer, you are responsible for a lot of people from your employees to their families but what happens when your employee decides to leave the company? Should you be responsible for their portable benefits? If so, for how long? Or should they be responsible for their own?
- Scenario Two: Your business uses several freelancers and contractors, you depend heavily on their talent and the services that they provide. So what happens when they decide to leave the company? Yes, they are not your employee but should you be responsible for their portable benefits? If so, for how long? Or should they be responsible for their own? Are your answers the same as it would be if they were your employee?
Regardless, of the way that you answer either of these questions, understand that the workforce is shifting. Retirees and millennials are entering the workforce and most are opting to become freelance or contract workers. With this type of workforce, establishing a universal portable benefits system is ideal.
In today’s marketplace contractors and freelancers has a focus on not only getting paid but seeking to assure that their healthcare and retirement benefits are paid, current and available when needed. Having a universal system would also help those employees that decide to leave a company but later determine that they wish to become an independent contractor or freelance worker instead. A portable benefit system should not only provide options to suit several needs but be affordable.
During the Portable Benefits: Creating An Infrastructure for Entrepreneurs to Thrive panel myself and a few other industry experts discussed what portable benefits could mean to small business owners including freelance and contract workers. In all honesty, small business owners want to see that their employees get the best because they are the ones that are helping to make the company profitable.
According to panelist, John Scott, Retirement Savings Director, The Pew Charitable Trusts, “66% of full-time employees are offered portable benefits, 48% of the employers want to help their employees save for retirement, and 22% of employers lack an internal administrative resource that will allow them to start and maintain a portable benefits system.”
For the sake of argument, let’s focus on retirement. While there are a lot of choices out there, there are several types of plans available, let’s explore a few:
- Keogh Plan;
- Defined contribution
- Defined benefit
- Simplified Employee Pension (SEP) Plan;
- 401(k) Plan;
- Individual Retirement Arrangement (IRA) Plan; and
- Other Types of Retirement Plans
For the sake of healthcare should the U.S. adopt a system that is universal for everyone as I discussed in ObamaCare vs the ACA? One thing that is prohibiting more small business owners from offering portable benefits is costs. From administrative setup and upkeep to contributions, should there be some type of subsidy programs in place to help offset these costs?
If so, should the programs be subsidized by the federal government? Or should this be a local or State financial responsibility? “Individuals that wish to do so, should be able to provide their own portable benefits and not be subjected to a specific employer but there must be multiple plans and options available, like a common or shared interest program,” Shilpa Phadke, Senior Director, Women’s Initiative at the Center for American Progress.
With some support, this will allow the new and emerging workforce the ability to take on the responsibility for their own future and not leave these critical pieces in the hands of others, especially since they are not an employee of the company. As a portable benefits plan is being created it should meet the needs of the freelancer or contract worker with minimum financial disruption during their Golden Years. As previously stated we business owners need to get creative in how we acquire and maintain the talent to run our businesses.
There are several ways that companies are becoming creative in their efforts to obtain the deliverables that they require. Below you will see several examples of which the first two companies offer full portable benefits, the third company offers partial portable benefits and the last offers no portable benefits but provides the revenue that freelancers and contractors can use to fund their portable benefits plan:
- Company 1: 26-hour work-week for full-time employees but these employees are paid for a 40-hour work-week. This helps to offset the childcare and costs that these employees may encounter otherwise. By implementing this small step, this small business owner has been able to increase their revenue and productivity while creating an asset for their employees.
- Company 2: One of my clients, offers several company benefits from wholesale catalog discounts; vacation, sick and family leave; and charity contributions matching to other types of personal flexibility. The interesting thing is that the majority of the benefits that this company offers if out of the company’s Profit and Loss (P&L). We all know that normally these costs are what the small business owners use to live off of but instead, this client passes these profits on to their employees.
- Company 3: Employees may not be provided a full portable benefits package but they are instead offered profit sharing and are co-owners of the company that they work for.
- Company 4: I work with several freelance and contract Since I am unable to provide them with portable benefits, I try to look for ways to provide them a long-term Return on Investment (ROI). One option is that I offer them revenue sharing on a project, that has a long-term, steady income flow. In this case, the workers obtain revenue for a number of years, which they can use to invest and fund their portable benefit accounts.
For those small businesses that offer an entrée of portable benefits including family leave should there be tax credits? It is difficult to determine how portable benefits should roll out for small businesses, freelancers or contract workers but it should exist. Here are some other discussions about portable benefits that may interest you:
- Test Driving Portable Benefits
- Portable Benefits for the Indie Workforce
- Portable Benefits for A Shifting Workforce
- Portable Benefits in the Future
- Who Is Eligible For Portable Benefits?
If you have any concerns about how portable benefits will affect you consider the following:
- Contact your local representative or your State’s Senator
- Write a letter to the editor of your local newspaper
- Consider an Op-Ed (Opinion-Editorial)
Once again I thank you for your support and the opportunity to serve you. Subscribe to The JEGroupZone to stay up to date on articles and information about initiatives, programs, and issues that will affect you and your small business. As always, if you have a concern or issue that you would like for me to cover or talk about on your behalf in the near future please feel free to contact me at Jabez Enterprise Group (JEGroup).
“Don’t just stand by, be a part of the conversation.” Vernita Naylor