Fringe Benefits Examples: Everything You Need to Know
Fringe benefits examples include the way employers now offer their employees a wide-array of benefits to complement their salary compensation. 3 min read
Fringe Benefits Examples
Fringe benefits examples include the way employers now offer their employees a wide-array of benefits to complement their salary compensation. Fringe benefits are generally referred to as “job-perks.” Since these “job-perks” are a cost to employers, they are considered to be a part of the employee’s salary compensation on the employer’s books. This is true even if the benefits are not cash compensation, such as a bonus. Certain fringe benefits are offered to employees depending on the classification of the employer as well as the value place on the employee’s position.
What are ‘Fringe Benefits’?
Fringe benefits are benefits an employer makes available to an employee, partner, or independent contractor and are treated as compensation in addition to any wages or salaries. Access to a company car, housing allowance, medical insurance, pension plan, paid holidays would all be viewed as fringe benefits. Certain fringe benefits may be exempt from taxation if specific conditions are met. If you are a recipient of any taxable fringe benefits you must include the benefit’s fair market value in your annual taxable income calculation. Taxable fringe benefits are subjected to all federal income taxes, as well as FICA and FUTA. Non-fringe benefits are not subject to any of the aforementioned taxes. Any benefits that an employer offers to an employee in return for services rendered would be classified as a fringe benefit.
In fact, one study revealed that 25.2% of respondents indicated that quality of employee benefits was very important to employees. While 31.2% viewed employee benefits as moderately important, 33.8% viewed employee benefits as somewhat important and only 9.8% stated that employee benefits were not important. Employers started to realize that prospective employees attribute a lot of weight to salary being offered for the position. In an attempt to lure qualified individuals to the company, employers started to offer non-salary compensation in addition to the actual salary compensation.
Non-Taxable Fringe Benefits
Non-taxable fringe benefits are advantageous as they are made available to employees without detrimental impact to their tax burden. Perhaps the most commonly offered non-taxable fringe benefit is insurance coverage. Insurance coverage encompasses health insurance, short and long-term disability insurance and employer-paid life insurance. In the event an employer makes insurance available as a fringe benefit, the employer will most commonly share the burden of premium cost with the employee, resulting in savings to the employee through a reduced premium. In fact, some employers may offer insurance coverage entirely at the expense of the employer. Additionally, several employers will even make health savings accounts available to their employees, even matching their employees’ contributions to such plans.
Given that working parents have a responsibility to ensure that their children are cared for while performing their job responsibilities, many employers will offer >dependent care assistance which allows employees to continue to be productive at work. Along these lines, many employers with large workforces offer on-site child care, often at no cost or a discounted price point. While many smaller employers are unable to fund an onsite childcare option, many of these employers still offer a cost-share arrangement for childcare.
Several employers see the value in their employees leading healthy lifestyles. As such, many employers will prioritize access to fitness centers with the hope of promoting a healthy living, which will work to increase attendance and productivity. Several employers even maintain fitness centers on-site, which allows employees to take breaks to exercise. Those employers that may not have on-site fitness centers could offer paid fitness center memberships or memberships at a discounted rate.
Employees often strive to add to their education or skillset. As a result, many employers make education assistance available to their employees in the form of tuition reimbursement. Education assistance usually means that an employer will be flexible with the employee’s class schedule. Given the important role education plays in our employment, this is one of the most popular fringe benefit offerings. In addition, by providing education assistance to employees, employers can benefit from the new job-related skillset obtained by the employees as the employee may be able to work at a higher level or be able to advance into different areas of the company. Given the value of this fringe benefits, most employers will require the employee to commit to remain employed with the employer for a period of time following completion of their education.
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