September 18, 2020

Now’s a good time to re-evaluate employee benefits

In difficult economic times, cost-cutting becomes a necessity — and employee benefits are an easy target. Yet one of the lessons of the COVID-19 pandemic has been the value and importance of benefits. Here are some relatively low-cost options that can keep your offerings competitive for the company and practical for employees.

Expanded health benefits

Many types of employers now offer Health Savings Accounts (HSAs) in conjunction with a high-deductible health plan, as well as Flexible Spending Accounts (FSAs). HSAs and FSAs provide tax deferrals or tax deductions with the money contributed to those accounts for health care expenses. Plus, the Coronavirus Aid, Relief, and Economic Security (CARES) Act has permanently reinstated over-the-counter products as eligible expenses for these accounts.


Through 2021, the CARES Act also allows high-deductible health plans with an HSA to cover telehealth and remote-care expenses — even if participants didn’t reach their deductibles. Telehealth has gained traction with insurers as more medical practitioners have implemented it to remotely evaluate patients during the pandemic.

Employee assistance plans

Continuing uncertainties caused by the pandemic have increased stress and anxiety in employees, affecting health and job performance. An employee assistance plan (EAP) helps employees and their dependent family members connect with professional counselors to deal with issues affecting mental health and emotional well-being.


The annual cost of an EAP for employers tends to range from about $15 to $50 per employee, according to the Employee Assistance Trade Association. The return on investment — reflected in reduced medical, disability and workers’ compensation costs as well as higher levels of productivity — equates to $3 or more for every dollar invested in EAP services, says the organization. EAP services are generally free to employees, though workers who decide to continue certain treatments long-term (such as therapy) may incur costs.

Retirement accounts

Contractors don’t always offer retirement plans to every worker, but it’s worth exploring all the options. For example, smaller construction businesses should consider a Simplified Employee Pension IRA (SEP-IRA) to set aside retirement dollars for the owner and employees.


The accounts allow you to make larger contributions in profitable years and reduce the contribution rate — down to zero, if necessary — during tough times. A SEP-IRA can also shrink the company’s tax bill because contributions are generally 100% tax deductible up to certain limits.

PTO alternatives

Traditionally, paid time off (PTO) is divided into vacation days, sick time and jury duty. But there are alternative approaches to this fringe benefit that may improve employee morale and productivity.


For instance, “unlimited” PTO pools vacation, sick and personal time under one category. Doing so can save administrative time by reducing the number of pay codes that need to be processed. Also, there’s no year-end rush to use up vacation days and no need to reimburse departing employees for banked hours.


Another idea is to set up a PTO bank where employees can donate some of their PTO for co-workers to use. Employees who have exhausted their PTO can apply to the bank to obtain more.

Opposite approach

If project slowdowns or cancellations have hurt your construction company this year, cutting benefits may be among your only options for lowering expenses. But, if feasible, you may want to take the opposite approach.

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