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Uncategorized

Flexible Benefit Plans Give Employees More Options

by Inoventive Solutions
March 31, 2026

One way you can give your staff more choice in the employee benefits they receive is to offer them a cafeteria plan, which allows them to put together a benefits package that works best for them.

Employers fund these flexible benefit plans with funds that are deducted from their employees’ salaries on a pre-tax basis. Since the salary reductions are not received by the employee, they are not considered wages for income tax purposes.

Cafeteria plans are particularly good for participants who have regular expenses related to medical issues and childcare.

The worker can choose from a menu of options into which they want to funnel the funds, and how they want those funds allocated. Options can include:

  • Health insurance,
  • Voluntary benefits premiums (like vision and dental),
  • Life insurance,
  • 401(k), and
  • Flexible spending account.

Besides the fact that your employees use money that hasn’t been taxed to pay for these benefits, the payroll deductions for them also reduce their taxable income while raising take-home pay.

A cafeteria plan is especially attractive because it lets them choose which benefits they want. This is great since one size does not fit all in the world of employee benefits.

Set-up and tax implications

Cafeteria plans are also called Section 125 plans because they were created by Section 125 of the IRS Code.

When a plan is created, the benefits are available to employees, their spouses, and their dependents. Depending on the circumstances and details of the plan, Section 125 benefits may also extend to former employees, but the plan cannot exist primarily for them.

Section 125 plans offer a number of tax-saving benefits for employers. For each participant in the plan, employers save on the Federal Insurance Contributions Act (FICA) tax, the Federal Unemployment Tax Act (FUTA) tax, the State Unemployment Tax Act (SUTA) tax, and workers’ compensation insurance premiums.

Combined with the other tax savings, a Section 125 plan usually funds itself because the cost to open the plan is low.

Also, it’s estimated that participating employees can save 20% to 40% of every dollar put into the plan. The employee chooses how much they want to put into the plan each year and this is deducted from their paycheck automatically for each payroll period.

Remember: Flexible benefit plans are not without their drawbacks. But if you want to attract and retain key personnel with competitive benefit packages while keeping your own costs low, they can be an attractive alternative to standard benefit plans.

Call us for more information on how you can set up a flexible benefit plan for your staff.

There are several types of flexible benefit plans, including cafeteria plans and flexible spending accounts.

Flexible spending accounts

An FSA lets your employees pay for medical-related expenses and dependent care that may not be covered by their health plan. They can later use these funds to pay for an array of expenses such as:

  • Out-of-pocket medical costs,
  • Acupuncture, chiropractic services and the like,
  • Medical equipment,
  • Day-care provider fees,
  • Elder care.

Also, employers can allow the employee to carry over a portion of the funds in an FSA to the first few months of the next year. The maximum permitted carryover amount is $550.

"Umbrella
Uncategorized

Are Your Benefits Enough to See Employees Through a Crisis?

by Inoventive Solutions
March 3, 2026

Middle-class families — those with incomes of between roughly $50,000 and $180,000 per year (depending on where they live) — are becoming increasingly reliant on workplace benefits to ensure their financial well-being in case of a disability or critical illness.

Simple health insurance is insufficient to carry the load. The loss of a breadwinner’s or caregiver’s financial contribution through death or disability is often devastating.

A recent survey by benefits provider Guardian indicates that families in this category are struggling when it comes to achieving their financial goals. Of those workers surveyed only half believe they would be able to manage if the household lost an income due to death or illness.

Caught in the middle

Families with incomes significantly above $100,000 per year are generally able to create at least some financial cushion against the possibility of death or disability. They also receive a good deal of advice from financial advisors, accountants and insurance agents in managing their financial affairs. 

Working class families – those with incomes below about $50,000 – are often able to access various parts of the social safety net in times of crisis.

The “middle market,” in contrast, must make do without the advantages of the more affluent, with fewer privately owned insurance products and services, and without the same access to the social safety net afforded to working-class families.

Workplace benefits are critical 

According to Guardian’s researchers, the middle-market population is overwhelmingly reliant on the quality and breadth of the benefits they receive at work, over and above cash compensation.

Over 80% of middle-market respondents report that they got their health insurance, disability insurance and retirement plan all through their employer.

Meanwhile, six in 10 have no life insurance in place outside of the workplace. This means that the solid majority of working families are relying entirely on workplace benefits to see them through the death of a family breadwinner.

And in the event of disability ending a breadwinner’s income, the situation is even more dire: Only 7% of the middle market owns any kind of disability insurance protection, outside of what they can access via their employer.

Are life insurance benefits adequate? 

For young families, the primary role of life insurance is to replace the income of a deceased breadwinner. But many employers cap life insurance benefits at $50,000 — the maximum figure that allows employers to deduct premiums as a workplace benefit under IRC 7702.

The actual need for many of these families is several hundred thousand to a million dollars, and occasionally more. That’s what it takes to replace the income of a worker who earns $50,000 to $100,000 per year until the children are out of college and a surviving spouse is taken care of.

The cap on group life insurance is often not enough to help a family who loses their breadwinner, and the coverage should be considered a stopgap for a more robust life insurance policy purchased in the private market. 

What employers can do

One solution is to offer voluntary benefits to workers. These include a menu of benefits, such as:

  • Group life insurance
  • Group disability insurance
  • Long-term care insurance
  • Critical illness coverage

Often, many of these benefits can be offered at little or no cost to the employer. 

Premium costs are simply deducted from the worker’s wages and forwarded to the insurance company via payroll deduction. In this way, workers can purchase much more coverage and provide protection for their families – and it doesn’t cost the employer a dime.

In some instances, it can even save on payroll taxes.

To learn more, call us. 

"The
Uncategorized

The Importance of Evaluating Your Benefits Annually

by Inoventive Solutions
August 26, 2025

While traditional benefits like group health insurance and 401(k) plans remain foundational, employers who limit themselves to the same offerings year after year may find themselves outpaced in the competition for talent.

Regularly evaluating your benefits package ensures it stays relevant, competitive and cost-effective — and ultimately supports your efforts to attract, retain and engage employees.

Doing this is increasingly important as the last of the Baby Boomers exit the workforce and more Gen Z workers are hired and put to work. Besides generational changes, workers’ needs may shift due to social trends, medical advances and lifestyle changes.

When employers fail to update their offerings, they risk wasting resources on underused benefits or losing valued employees to competitors with more relevant and supportive programs. Conversely, a dynamic, well-calibrated package signals that you care about your employees’ well-being and are in touch with what they value.

How to assess effectiveness

Measuring the success of a benefits program isn’t always straightforward, but several tools can help:

Employee surveys: Poll your workers about which benefits they use, which they value most and what they wish was included. Use both structured and open-ended questions to gather insights. Consider segmenting responses by demographics to detect differing needs.

Utilization data: Track how often employees take advantage of each benefit. Low utilization may mean a benefit is poorly communicated, difficult to access or simply not valued. High usage, especially when tied to positive outcomes, signals success.

Key performance indicators: Monitor metrics such as employee productivity, engagement scores, absenteeism and turnover. Improvements in these areas may be tied to the effectiveness of certain benefits. There might also be no correlation, but they’re still worth tracking.

Turnover trends: If your organization is experiencing higher-than-usual turnover, especially among high performers, your benefits package may not be meeting employee expectations.

Regular feedback loops: Consider holding periodic focus groups or one-on-one discussions. These offer valuable information that goes beyond survey numbers.

Benchmarking keeps you competitive

Employers should also compare their benefits to industry peers. Resources such as SHRM’s Employee Benefits Survey, consulting firm whitepapers and insurance agency reports can reveal trends and standards in your sector.

For example, more than 90% of employers now offer telehealth options, and an increasing number are extending mental health resources, menopause support and caregiving benefits.

Cost-effectiveness and impact

Not all benefits need to be expensive to make a difference. For instance, flexible scheduling, expanded telehealth access or a wellness allowance may deliver high perceived value at a manageable cost.

For example, a wellness allowance is a fixed amount of money provided by the employer that staff can spend on their health and well-being like gym memberships, fitness classes, mental health apps and more.

Review spending against usage and satisfaction levels, and consider whether reallocating dollars could deliver better outcomes.

We can also help you identify underused or high-cost benefits that may be ripe for replacement — or negotiate better vendor terms.

Takeaway for employers

Just like you measure your business’s performance, ROI, profits and more, you should take time, at least annually, to evaluate your benefits package.

If, based on your evaluation, you plan to make changes to your benefits lineup, including eliminating a benefit, there will always be some staff who won’t be happy about it.

Make sure to be transparent about why and how the decision supports employee needs. This builds trust and demonstrates a responsive, employee-first mindset.

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