Benefits

Classification of Benefits

How the Chamber of Commerce classifies: There are two common methods of classifing benefits. The Chamber of Commerce method classes benefits as being either (1) security and health benefits, time not worked benefits, or employee service benefits.

Public Policy Classification: Classifiying benefits in this framework yields (1) Benefits that the govenment considers so essential that they are legally required; (2) Benefits that the govenment considers so desirable that they are given favorable tax treatment; (3) Benfits that the government is neutral as regards their offering. Examples of each follow:

Legally Mandated Benefits.

SOCIAL SECURITY (OASDI) Old Age, Survivors, Disability Insurance. Provides benefits in retirement or in the case of disability to the disabled and dependents.

WORKERS COMPENSATION. Provides relief for work related injuries and illnesses. See Workers Comp file on Exercises and Resources page.

STATE DISABILITY. Provides limited income replacement for a time for non work related illnesses or accidents.

REST PERIODS. Your coffee break is required by law. Lunch is a different matter. If you are permitted to eat on the run, your employer doesn't have to give you a lunch break.

PENSIONS. In most cases Social Security is required and employees and employers each contribute about 7.5% of first $64,000 earned each year.

UNEMPLOYMENT INSURANCE. This is required by law and is funded by contributions of employers which are based on the amount of unemployment they produce.

Benefits Receiving Tax Deductions

EDUCATION. Education which maintains ones professional skills are tax deductable.

CHILD CARE. These expenses may either be taken as a deduction or as a tax credit. In either case the amount you pay for child care reduces the taxes you pay.

PENSIONS. Pension provisions such as IRAs, 401(k)s (name of the paragraph in law law providing this tax break), and 403(b)s (for non profits and public employees) are tax deductable.

MEDICAL, DENTAL, AND VISION EXPENSES are tax deductable.

Other Benefits

There are a vast number of other benefits that run from free parking, to credit union membership, to time off of work, which the government does nothing to encourage.

Cost of benefits

Benefits may cost as much as 35 or 40% of salary. You might do some research and calculate the cost of the benefits required by law.

Please e-mail your questions for more detail.

 

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