Small business benefits planning - I need help!!

[robr]

I've just accepted a position with a software development startup and I'm responsible for opening the office and one of my tasks is to put together a benefits package. Since we won't have dedicated HR or benefits people, what I'm looking for is one of a couple of things.

Either a one stop company that will handle payroll, medical, dental, life, 401k (BTW, I've tried newsgroups for small business but they're just filled with spam and I haven't found a good support forum to ask these sorts of questions in so pointers please if you have some resources!!!)

or I can go to someone like ADP for payroll and maybe a small business group to handle medical and just carry the extra administrative overhead of multiple outsourcings. One of the things I'm not even sure about is 401K. I've heard differening information about what it takes for a small business to qualify to open a 401K (one piece of info I have is $50K total minimum contributions annually for all employees - that's what one of the investors told me, but I need to find out if that's accurate, I suspect either it's not, or there are ways around that by joining a small business group that can pool between businesses).

Also any info on industry standard practices on company contributions for health and 401k would be great.

Any help appreciated! Thanks.

 

[nsx2tall]

As far as one stop shopping, you've already mentioned ADP. Paychex would be the other national brand for this. I think Fidelity may actually offer some bundled products as well (see below for more on Fidelity)

In my company of about 45 employees we had used Paychex for payroll but switched to Ameripay (local Chicago) for about half the price. An insurance broker can handle the health (we use Blue Cross/Blue Shield). Obviously the better the benefit, the higher the cost. You should also consider short and long term disability. They're not very expensive and can be a real safety net for employees who don't have enough savings to weather an extended leave for sickness or surgery.

I recommend Fidelity for 401k, they can do everything you'd ever need over the phone and the web. When you consider the cost of a 401k plan, make sure to look ahead to when you have more substantial assets. Some programs are asset based (1.5% of assest per year, with minimum). Fidelity is fixed, based on your participants, so you won't get killed with fees if/when your plan grows. However, it might be a bit more expensive for a small plan. I found them to be thorough and informative when starting the plan. Try visiting http://www.401k.com an see if their small business program suits you.

If you'd like more insight into the programs we have at our plant, you're welcome to call me at the office 630-690-9360 x103.

Regards
Randy Johnson

 

[robr]

thanks for the hints, i've been looking at the fidelity stuff (since your post) and it does appear they may be a one stop shop for everything. i also appreciate the offer to give you a call, and if i hit some roadblocks i may take you up on that, but let me do a bit more research and make use of the resources you've provided first. thanks!

 

[SilverStone05]

I was just going to say to contact Fidelity

 

[druby]

My business is employee benefits. While I am not licensed in your state you can go to www.nahu.org and find a broker close to you. People that are members are likely good people that can help. To give you an idea in my company we handle everything you are looking for except the payroll. Companies like ING and Transamerica will do the small 401k plans. A broker can show you multiple plans and givce you the good and bad points of each plan. My understanding is that Mass is a tough state due to state laws so there may not be a lot of health carriers to work with.

Good Luck!

 

[robr]

thanks for the further info druby. i think i'm going to go through a small business org for all the insurance. im loaded with info on that now. i spoke with fidelity today and they said we're too small for a 401k with them, so i'll try the resources you listed.

one thing im looking for now, perhaps you know where i could get some info? i'm trying to determine what the average subsidy is that companies pay toward insurance. the company i'm at now pays 90% of health, but that seems abnormally high to me. i need to have some data to pass on to the board when i make this recommendation so if you know of any studies i'd appreciate the pointer. thanks!

 

[nsx2tall]

Employee contributions for health care is very industry specific. In a white collar high tech firm, I'd expect to pay no more than 5-10% of costs, with top shelf coverage, low deductible and copay. In my manufacturing business, an employee pays about 5-10% of cost on an HMO plan and about 25% of a PPO plan.

I don't know of any resources off hand other than talking to other businesses or perhaps a trade group in your industry does wage/benefit surveys for comparison. The simplest rule of thumb is to pay what you need to attract and retain good employees. You may find that just having benefits is enough if no other employers offer them.

You should also consider employer contributions for spouse and family coverage. Some companies require higher % employee contributions when they add spouse or children for coverage.

regards
Randy

 

[druby]

The percentage varies from industry to industry. The minimum is usually 50% of employee premium. Physicians, attorneys and achitects normally pay closer to 80% of employee. Non profits pay the highest to make up for low wages. It depends on how tight your job market is. I do not receommend paying much towards dependents as people put spouse's on the plan that don't need coverage just because it's cheap. You don't get double benefits having two plans but you do pay double premiums. If you want to give me a call I'll be happy to give free advice. My number is 912-352-0820. Just ask for David.

 

[steveny]

There is a company here in NY that I use. They are Support Services Alliance or SSA. I am not sure if they are in your area. They do everything from processing CC's to payroll and health insurance. Really good company and low cost to me so I don't have to deal with all the BS.