The United States spent more than 1.1 trillion dollars on contractual services in 2020, according to USAspending.gov. Government contractors generally receive higher compensation than government employees that perform the same jobs; however, government contractors are not provided with the same benefits. Government contracting companies are responsible for offering competitive salaries and benefits to help attract and retain top talent. They may offer employees a wide range of fringe benefits, perks and other forms of compensation. Here are a list of a few government contractor employee benefits should have.
Under the Affordable Care Act (ACA), companies with 50 or more full-time or equivalent employees must provide workers with health insurance or face hefty penalties. Companies with fewer than 50 FTEs are not required to provide health insurance to employees but are encouraged to do so. Employer-sponsored healthcare coverage is one of the most common methods of employee health coverage. Some employers may choose to pay a portion of their employees’ monthly premiums, while others choose to provide full coverage. Employee enrollment for health insurance benefits is optional.
In addition to health insurance or as an alternative, a government contractor may choose to offer a wellness program to employees. A wellness program is designed to promote better health and fitness and is often used as a preventive measure to help employees avoid illness.
Through a wellness program, an employer may choose to offer a variety of healthcare-related perks, such as gym memberships, premium discounts, cash rewards and similar incentives. These benefits may be related to weight loss, smoking cessation, stress management, medical screenings, immunizations or even company-sponsored sports teams.
A wellness program may also include educational resources that teach employees how to avoid injury and disease.
Vision & Dental
Vision and dental benefits are also popular fringe benefits often offered to employees of government contractors. The cost of dental work and eyeglasses can be expensive, especially if an employee requires frequent vision or dental care. Allowing employees to enroll in group vision and dental insurance plans can make a significant difference in the health and wellbeing of employees.
As with health benefits, vision and dental benefits are deducted on a pretax basis. When these benefits are deducted from an employee’s gross income, it reduces the amount of tax taken from each paycheck.
Another popular benefit offered by many government contractors is employer tuition reimbursement. A tuition reimbursement program allows a company to cover all or some of the costs of an employee’s education if the expenses are eligible based on the guidelines outlined in the company’s specific policy.
Tuition reimbursement is often used to fund a graduate or undergraduate degree program. Related benefits may cover certain job-related skill-building classes or professional development courses. In some cases, employers will fund or partially fund courses that may not be job-related; in either case, tuition reimbursement can be an attractive benefit for employees currently in school or who would like to attend school.
Disability insurance is provided to eligible employees in the event that they become disabled and are unable to return to work. This differs from workers’ compensation insurance which provides benefits including wage replacement if an employee becomes injured while working. Instead, disability insurance provides employees with partial wage replacement if they become disabled or ill while away from work.
Although disability insurance will not generally replace an employee’s entire income if they cannot work, it can usually cover up to 60 percent. These payments can be invaluable for a family when their loved one is unable to continue earning an income.
Retirement plans are some of the most important benefits that an employer can offer to workers. Many companies choose to match employee contributions to a retirement plan which can help workers grow their savings faster. Some employers also make qualified contributions to retirement plans that do not require employees to make contributions themselves.
Offering retirement benefits can also be advantageous for companies as many businesses are eligible for significant tax breaks. Retirement benefits can also give government contractors a recruiting advantage and also help employers themselves save for their own retirement.
HRA And HSA Plans
HRA and HSA plans are both viable options when creating an employee benefits package. However, it is important to know the differences between the two.
Both Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) are used to provide employees with affordable healthcare coverage and help workers pay for eligible healthcare expenses.
The main difference between the two is that the employee owns the HSA and the employer owns the HRA. Under an HSA, an employee that chooses to change jobs can bring the retirement account to the next company; however, under an HRA, any remaining amount in the account defaults to the employer if the employee loses or changes jobs.
Life insurance can be costly for employees to obtain on their own; offering a group life insurance plan can be an affordable way to provide workers with the coverage they want. Some employers may offer life insurance benefits for free or may allow employees to opt in for coverage at a specified cost.
Term life insurance only provides coverage up to a certain age; however, coverage can be extended for an extra cost per month. The amount of employer-provided life insurance is typically structured as a flat dollar amount or is based on a multiple of annual pay set over a period of time.
Speak With An Employee Benefits Consultant About Government Contractor Employee Benefits
Government contractors must offer satisfactory compensation and benefits to remain competitive. Offering benefits to employees is also important to demonstrate that management is invested in the health, future and overall well being of their employees.
An excellent employee benefits package can also boost morale, increase savings for employers and employees and encourage loyalty from employees. When combined with a competitive salary, employee benefits and wellness programs can make a government contractor stand out in the industry.
Interested in learning more about what employee benefits a government contractor should offer to workers? Reach out to the experienced employee benefits consultants at Business Benefits Group to request a consultation.