Employee Fringe Benefits
Working in human resources, we’ve all discussed employee benefits at some point in our careers. And you’re sitting there, totally in sync with the conversation, until someone throws out the phrase “fringe benefits.”
Soon, you find yourself asking, “What are fringe benefits? How are fringe benefits different from general employee benefits? What should I know about fringe benefits?”
The fringe benefits definition is, “An extra benefit supplementing an employee’s salary, for example, a company car, subsidized meals, health insurance, etc.” You may also hear them referred to as “perks.” Long story short, fringe benefits aren’t actually any different from the classic benefits we’re used to talking about.
That said, managing these employee benefits is still no easy task, and the numerous terms floating around in the ether referring to the same thing are just one example of why.
But no fear, we created this fringe benefits guide to help you.
So, how do fringe benefits work? Let’s explore in more detail.
Salary and fringe benefits are the two main aspects that make up an employee’s “total rewards” package. Salaries, of course, are the total amount of money that employees are paid each year or one of the payments they receive each month as part of this payment. Fringe benefits are non-wage compensation provided to employees in addition to their normal wages or salaries.
That means that fringe benefits are not directly part of an employee’s salary, but they do have some similarities to their salary.
For instance, are fringe benefits taxable? And are fringe benefits deducted from paycheck totals?
Yes, fringe benefits are taxable and must be included in the recipient’s pay unless the law specifically excludes it. For instance, adoption assistance as a fringe benefit is exempt from income tax, as is most health insurance, but bonuses and company-provided vehicles will be subject to fringe benefits tax.
What is a Fringe Benefit Package?
There are so many types of fringe benefits that employers can offer including: health insurance, life insurance, tuition assistance, 401K, EAPs, learning and development stipends, childcare reimbursement, cafeteria subsidies, below-market loans, bereavement leave, discounts, stock options, and personal use of a company-owned vehicle.
In short, a fringe benefit is really any form of payment for the performance of services outside of the regular salary.
Is a Bonus a Fringe Benefit?
What are the Advantages of Fringe Benefits?
There are many advantages of fringe benefits, but they really all come down to the most important aspect of any business: its people. Fringe benefits, even just standard fringe benefits, help companies recruit top talent, retain high-quality employees, and motivate workers to perform at higher levels.
Why are fringe benefits important?
Good fringe benefits can mean the difference between a high performing company and a failing one. Here’s why: when employees feel supported and taken care of by their employers because of their fringe benefits packages, they’re much more likely to perform well at work and to stay at the company longer.
And not only do happy, engaged employees perform better, but they are also cheaper in the long run. U.S. employers spend $2.9M per day looking for backfull workers, stacking up to a whopping $1.1B per year.
Needless to say, fringe benefits are massively important for every company. But they’re not always easy. In the next section, we’ll explore some tools companies can use to simplify building fringe benefits plans and administering fringe benefits to their employees.
Fringe benefits can be complicated: what are the highest impact benefits? Which are taxable? And which, of the many out there, should your company offer?
With Namely’s Managed Benefits, you don’t have to choose between experienced brokers with deep industry expertise or modern benefits administration technology—you get it all. Offer amazing employee benefits while simplifying the way you evaluate, administer, and run your fringe benefits program.
Our fringe Benefits Consultants have years of experience working with businesses of all sizes across every industry. We help you craft innovative and cost-effective plans that align with your unique goals.
We work with the nation’s leading carriers and innovative companies. From traditional health insurance to supplemental plans and new options like telehealth, offer the benefits your employees want.
But don’t just take our word for it! Check out these case studies to learn more about how leading companies partner with Namely to offer the right fringe benefits.