Learn what flexible benefits are and how they can help you attract and retain top talent.
- Employers can offer a variety of benefit options for employees to create customized flexible benefits plans.
- Flexible benefits allow employees to choose the benefits they value most, which is great for employee recruitment and retention.
- The disadvantages of offering a flex benefits package pertain to time, resources, communication and cost.
What are flexible benefits, and should I offer them?
What are the cons of offering flexible benefits?
- It requires time and administrative resources. When you offer employee benefits, you must continually make sure that each one complies with the current federal, state, and local laws and ...
- It requires exceptional communication. Communication is a crucial part of successfully deploying a flexible benefits program. ...
- It can be costly.
How flexible benefit plans can help employees?
What are the potential drawbacks to a flexible benefit plan?
- Exemptions. Tuition assistance and other fringe benefits are exempt from the plans, even if they are not taxable.
- Complicated Administration. Perhaps the hindrance with flexible plans as opposed to traditional, one-size-fits-all benefit plans, is that flexible plans are more complicated to administer.
- Adverse Selection. ...
What are the advantages of being flexible?
To remain viable, employers can no longer take a hands-off approach. They must be willing to address mental health issues in the workplace and take an active role in helping employees manage their financial, physical, and emotional well-being.
What is a flexible benefit plan in a salary breakup?
- assuming you will take 100% of eligible HRA as HRA (when you use old tax regime)
- after statutory deductions like contributions to provident fund, income tax, professional tax, gratuity, etc.
- If you would like to save some portion of income tax, you would be required to make investments on insurance policy / PPF / VPF, or other such avenues, but ...
What is the downside of a flexible benefit plan?
Flexible benefits allow employees to choose the benefits they value most, which is great for employee recruitment and retention. The disadvantages of offering a flex benefits package pertain to time, resources, communication and cost.
What are some advantages of flexible benefits plans?
What are the pros of offering flexible benefits?It increases employee recruitment and retention. ... It gives employees control over their benefits. ... It eliminates the guesswork of choosing your employee benefits.
How do flex benefits work?
In a flex benefits plan, employees have the same amount of money allocated to their total compensation, regardless of whether they apply it to benefits (on a pre-tax basis) or receive it in cash as part of their taxable salary.
What is flexible benefit plan in salary India?
In India, Flexible Benefits Plan (FBP) in salary structure is a facility for employees in which they can modify components of CTC (Cost to Company) such as medical expenses and conveyance. CTC contains all the elements of salary; HRA (House Rent Allowance), Medical Expenses, Basic Salary, DA (Dearness Allowance), etc.
Why do companies introduce flexible benefits?
Flexible benefit packages allow employees to choose the benefits that fit their needs and wishes. This saves you money, but also increases how much employees appreciate what they receive: it doesn't feel like a one-size-fits-all-deal, but rather like a tailor-made package.
Are flexible benefits taxable?
Income tax rules specify that certain allowances that are paid by employer and attributed to business needs are exempt from income tax. These are popularly known as Flexible Benefit Allowances (or flexi allowances).
Will opting for a flexible benefit plan in salary reduce the take home pay?
Factoring in these components can help the employee separate this on the payslip from their basic salary on which tax is calculated. Thus, by doing this, take-home salary is not affected.
Is annual base pay and CTC same?
Usually, the basic salary is 40% to 60% of CTC (Cost to Company). The statutory components: bonus, PF, gratuity and other benefits are determined based on the basic salary. An increase or decrease in the basic salary calculations can affect the employee's CTC.
What is meant by Flexi pay?
Flexipay is a facility offered to existing SBI credit cardholders to convert their big purchases into easy monthly instalments. Any SBI Card holder, with a transaction greater than ₹ 500 can convert the said transaction into Flexipay within 30 days.
What is this CTC?
Cost to company (CTC) is a term for the total salary package of an employee, used in countries such as India and South Africa. It indicates the total amount of expenses a company (organisation) spends on an employee during one year.
Q: Is my premium payroll deduction deducted before or after taxes?
Ans: Your premium payroll deduction is done before taxes
Q: How can someone enrol for the FBP?
Ans: There are no forms to fill out on paper. When you are first eligible, within 30 days of a Qualifying Life Event (QLE), such as a loss of cover...
Q: I'm a new employee. When will I be able to start participating in the plan?
Ans: As a new hire, you can start participating in the plan on the first of the month after your start date. If your start date is the first of the...
Q: Who is eligible to take part in the FBP?
Ans: FBP is open to all full-time employees who are scheduled to work 20 hours or more each week. Employees who work fewer than 20 hours per week a...
Q: What do you mean by "flexible benefits"?
Ans: Section 125 of the Internal Revenue Code permits you to deposit pre-tax earnings into an account to pay for a licenced daycare provider or qua...
What is a Flexible Benefits Plan?
The Flexi Benefit Plan's main goal is to allow employees to make their own decisions. A Flexi or Flexible Benefits plan is a tax-saving strategy that incorporates the following elements:
Advantages And Disadvantages Of Flexible Benefits Plan
Employee expectations are becoming one of the most important aspects of both small and large businesses. Recognising that each employee has different needs, a benefits plan that covers everyone might not be as effective as it was deemed once. Because every employee is different, more companies are opting for a flexible benefits plan.
Components of FBP In Salary
Every company provides some components through which employees are paid. These components are known as Flexible Benefits Plan or FBP Components.
Policies Of Flexi Pay In Salary
Every business has a limit on how much an employee can get in allowances in a given year. This total is referred to as the entire FBP. The FBP plan is the framework that an employee chooses for their compensation's monthly and annual components.
Conclusion
Employers can use the flexible benefits plan to create a pay structure that includes various components that would otherwise be classified as reimbursements. Allowing employees to access money ahead of time as part of their remuneration structure improves trust and productivity.
What is flexible benefit plan?
A flexible benefit plan is a benefit program which allows the employee to choose how their benefits are distributed. There are two types of benefits: permissible taxable benefits and non-taxable benefits. The taxable benefits category usually primarily includes cash, while the non-taxable benefits can include anything from vacation time, insurance plans, retirement plans, and child care. This benefit program is regulated by the IRC 125. There is usually a core set of benefits that are already established in advance, allowing the employee to only choose how the rest of the benefits dollars offered by the employer are allocated among several benefit options.
What is taxable benefits?
The taxable benefits category usually primarily includes cash, while the non-taxable benefits can include anything from vacation time, insurance plans, retirement plans, and child care. This benefit program is regulated by the IRC 125. There is usually a core set of benefits that are already established in advance, ...
Is there a core set of benefits that are already established in advance?
There is usually a core set of benefits that are already established in advance, allowing the employee to only choose how the rest of the benefits dollars offered by the employer are allocated among several benefit options. Legal Disclaimer.
What is FBP in salary?
A Flexible Benefit Plan is termed ‘flexible’ because the company can fix or regulate packages as per Govt compliances, company norms, and the employee’s position. Although the organisation/HR generally allocates salary components, companies should also consult employees when allocating FBP in salaries.
Components of FBP
The income tax department considers meals and non-alcoholic beverages offered by the company during office time as a benefit for the employee.
Benefits of FBP for employees
Tax saving: Easy restructuring helps employees reduce their tax burden. For example, food bills, mobile phone bills, and travel allowance are not taxable. Factoring in these components can help the employee separate this on the payslip from their basic salary on which tax is calculated. Thus, by doing this, take-home salary is not affected.
Benefits of FBP for employers
Employee retention: Implementing FBP displays the company’s employee-friendly sentiment. The flexibility factor makes the employee feel valued and boosts employee retention.
How to ensure easy implementation of FBP
FBP is a part of the CTC for the well-being of the employees. Hence, the allocation must be reflective of an employee’s needs and HR professionals must ensure speedy implementation to enhance employee satisfaction.
Policies of FBP
Mutual Exclusion Policy: Under this policy, the employer and the employee may mutually decide what components are supposed to be excluded from the FBP.
It all comes down to this
The flexible benefit plan helps employers draft a salary structure tailored to include a range of components that may otherwise be categorised as reimbursements. Enabling the employee to have access to the funds beforehand, as part of the salary structure, helps improve trust and productivity.
What is flexible benefit plan?
The Flexible Benefit Plan is one such means to authorize this liberty to the employees with respect to the restructuring of their allowances.
What is FBP in business?
What is Flexible Benefit Plan – FBP. Flexible Benefit Plan– FBP can be understood as a payment convenience tool for the employees. Employees are the greatest asset of a company. Conventionally every company had a predefined way of dispatching salary to its employees. But in the contemporary world, companies plan to grant much more liberty ...
What is mutual exclusion policy?
Mutual Exclusion policy refers to the scenario where the employee and the employer mutually define the component to be exclusive. In such a state, all the related components which cannot be declared are also supposed to be defined. Depending on the mutual exclusion policy, the employee is entitled to declare any of the components as mutually exclusive.
What is the FBP total?
Every company has a specific cap to the extent of allowances that can be provided to an employee in a year. This amount is termed as the FBP total. The FBP plan refers to the structure decided by the employee about the amount of money that they wish to allot under the monthly and annual component.
What is a flexible benefit plan?
What is a flexible-benefits plan? A flexible- benefits plan, also called a full-flex plan, is a type of cafeteria plan benefit under Section 125 of the Internal Revenue Code that offers employees a choice between receiving their compensation as cash or as nontaxable benefits such as life and health insurance, retirement plans and child care.
Can employers make pre-tax contributions?
Employers generally make contributions for all plan-eligible employees, and employees use those contributions to buy various benefits. Employees can also make pre-tax contributions toward any benefit that the employer contributions do not fully cover. You have successfully saved this page as a bookmark.
1. Employee Satisfaction
Above all, a flexible benefit plan helps you fulfil employee requirements.
2. Tax Saving
As elaborated in the example of James, a flexible benefits plan helps save taxes. Employees not requiring rented accommodation can benefit a lot if a considerable amount of the salary doesn’t go towards HRA. This restructuring helps employees to reduce their tax liabilities to a great extent.
3. Company Trasnparency
By offering a flexible benefit plan, employees can get a complete breakdown of the perks on offer.
4. Effective Recruitment and Retention
A flexible benefit plan helps you attract and retain talent as appealing and competitive benefits are on offer.