I would be absolutely delighted if some of my employees declined health coverage as it would save $10k a year for family coverage. We do not force our employees to take our health coverage. However, your guess about group rates is partially correct - we have to have a certain minimum percentage of our employees on the plan.
It’s not the employer that is not ‘allowing’ you to decline, it’s the insurance company. I sell group health insurance and our requirement is that 70% of all eligible employees be covered by group health insurance or the business is not eligible to buy/maintain a plan.
I am actually surprised at the range of %s quoted here. I am not an HR person, but handle accounting for several contracts. Our company has an above average benefits package. I had heard that the rock bottom fringe rate-no benefits, minimal overhead, just taxes and required payments (insurance, workman’s comp, etc, the legal requirements) amounted to almost 40%. Through on a minimal benefits package of retirement etc and it goes above 50% pretty quickly. I thought that was typical-from these posts apparently not. But I noted not everyone factored in taxes. Seems unrealistic-it isn’t like they are optional. Hire someone and pay all the associated expenses-how much do you put out?
I have negotiated for more money by declining coverage and I got a few thousand dollars a year out of it.
Let me tell you how this system is generally supposed to work although some people get lucky. Your agency may be billing you for $100 an hour or more. That means that you could be costing the company $200,000 a year just to have you. You may be thinking sweet, they can pay me a bundle and still save money over the prior arrangement. Unfortunately, it isn’t supposed to work that way. They don’t usually care what the total bill for you was. They care how much you were actually making. Now contracting is supposed to pay more per hour than many equivalent permanent positions and they know that. You are expected to take some kind of pay cut for the stability and benefits. How much is a big question. If I had to guess, they would want to pay somewhere between 55K and 62K for the position.
I have been around awhile and seen this type of thing over and over. I just went through it myself and I wasn’t pleased with the results financially speaking but I have a permanent job now.
Do you pass on any of the cost to the employee?
Thanks S.Nasty! That reply gives me some hope. I didn’t want to go from making $68K a year to $34K.
Unless you mean something other than income tax, no I didn’t account for tax, but I don’t see the need to. It goes without saying that whether you are an employee or on contract you will be paying income tax. I think almost anyone would assume that if I said I made (example only) $60,000 per year it was before tax regardless of my employment status. The concern here is the benefits that an employee gets as part of his employment but that a contractor has to pay for (if he wants them) that are over and above what is customarily assumed when you talk about making $x/year.
When I was doing grants application work, either the grant or the local matching funds would entail a percentage of the time of a salaried municipal employee attributed to managing the work the grant was funding. In calculating this, we were told to allocate a fixed percentage of his/her time by salary and then add a prescribed percentage for fringe benefits. E.g., 20% of a DPW Superintendent’s time at $60,000/year salary would be $12,000. Add to that, in that particular case, 34% for the cost of fringe benefits, or $4,080, for a gross figure of $16,080 for his time. The figures for fringe varied from program to program, where they were taken into account at all, but were nearly always around 1/3 of the salary or wages, ranging from 29% to 38% for different grants programs.
Yes and no. We offer two levels of coverage - basically different levels of deductible and co-pay. My company covers the whole cost of the cheaper one for the whole family. If an employee wants the higher level of coverage, they pay the difference.
Add Source Control to your project:
- Open up explorer, and type in \deviis01\vss$ in the address bar
- Run netsetup.exe through to the end, default options. The CD Key needed is 335-3353356.
- Open up non-source controlled project in Visual Studio.
- Right click on the solution and choose “add to source control”
- use \deviis01\vss$ as the database, leave username the default (should be your network username),
password is currently blank - Click on the “PIQuote” folder in the list of folders, then delete the Project name from the text box at the top of the window and click “ok”
- Project uploads to the server and is now source controlled. Right click on files to check in/check out, right click on solution to check in/out all files.
I think you are getting a lot of different numbers here because some numbers for Benefits and Taxes, etc are Percentage based, and some are fixed.
Here is how it breaks down for me, USA, state of IL:
This is all employer side taxes I have to pay:
7.5% Social Security + Medicare (employee pays same amt)
4.2% of 1st $10,000 into State Unemployment (% varies by industry - this is for Software Consulting)
$56/yr to Federal Unemployment (its a actually a %, but credit is given for state contributions, so you only have to pay like like .1% up to $5600, something like that)
Those are all the required employer side taxes in Illinois, so if I gave no benefits I would pay <12% in taxes.
You would then need Workers Compensation insurance, which varies based on industry, but is % based - for Software consulting the number is pretty low, bringing the total required by law above and beyond what you see on your paycheck to <15% for my industry.
Benefits are not % based, which is why there is such a wide variety of %. For my situation:
Family Personal Policy PPO (with HSA), $4000 deductible
$250/mo + $333/mo to fill HSA
I quoted out some group policies, and if I were to have another employee with similar stats to my own (again, younger, family coverage)
$500/mo/family for $1500 dectible Blue Cross PPO
Health insurance is based on an aggregate of stats for your company, and your companies claim history, so while it doesn’t go much lower than this it can go a LOT higher.
Other types of benefits are offered by many companies, but in general don’t make sense unless you would use the full benefit amount each year (such as dental and vision) - and then the “savings” is really only because the policy is with pre-tax earnings.
IE when I looked at dental and vision plans, the monthly outlay was generally pretty close to Max Yearly Benefit divided by 12.
Please ignore the first part of my post- the board was down and I had cut & paste my reply into a text file that obviously had some previous info in it :smack:
Well, I’m a bookeeper whose been working in the province of B.C. for many years, so I think I can give you some more targeted advice than our US dopers here, since the tax system and benefit system is quite a bit different. Most of these figures were taken straight from the CRA website, the rest from personal experience at several companies, including one I owned.
That said, I would like to echo what everyone above me has mentioned. A consultant gets more per hour, even considering benefits, than an employee will. An employee has stability, usually guaranteed hours, benefits, sick days, and maybe company cell phones, x-mas bonuses, birthday cakes (even if you don’t want them) promotion chances … a consultant only gets a check. A consultant also needs to cover their own WCB charges, CPP payments (usually they are EI excempt as business owners) and has to save that money to payoff the taxman and to cover when there’s no work. So it’s a bit apples to oranges.
I’m not giving percentages, since they vary based on the income, as most benefit costs are fixed if you make over $40K a year. But onto the figures …
Depending on the industry, WCB coverage can be a minor expense (Around .2 % per $100 dollars of your pay for office based industries) or rather large (I’ve seen as high as 12% for high risk oil patch jobs, never mind if they deem you unsafe …) The employee also has to match the amount of CPP deducted. (4.95% after the first 3500 up to 38,600 in 2006, or 1737.45 anually if you make over 38.6 K) and has to match 140% of the amount of EI deducted (which is 1.87% up to $39,000, or $1021.02 anually if you make over 39K) And that’s just the absolute basics required for all employees, without any perks whatsoever.
Benefit plans can be a bit trickier. They’re pretty hard to pin down an exact amount, but for a group plan you could ballpark it in the $75 - $175 range for a single person per month. If you have family covereage, double that figure. You will probably have a percentage of that deducted from your check, and the company pays the rest. The $75 plan would probably have a almost useless amount of life insurance (probably one years salary) and a minimal amount of extended health and dental coverage. The $175 plan would have a better life insurance plan, accidental death and disability, full extended medical including perscriptions, full dental with small co-pays, some eye stuff, and some sort of long or short term disability plan. (That’s what I have, it costs the company about $300/month, the top earners are closer to $350 due to higher disability payouts. My bosses rock, which is why my expensive plan is 100% paid by the company) Some companies also pay BC Medical as well, which ranges from $60/month to $110 depending on family size.
If there’s an RRSP plan, the company will usually match it or partially match it up to a certain amount, which also costs them money depending on the employees. The maximum for 2005 was $16,500 so that cost adds up really fast. Most places tend to have a hard cap to prevent that from getting out of hand.
So, all those figures give me a range of $4,500 for a single guy with cheap bosses and no RRSP plan to 13,300 anually for a family man with generous bosses and a $5K RRSP matching limit. That’s assuming a WCB rate of 2% and an anuall salary of $40K. That gives a percentage rage of 11% to 33%. And that’s just the hard figures, it doesn’t include the little things like sick days that can’t be calculated.
Now, in my experience, in the oil patch a consultant would expect to get about 150% of what an hourly employee would. Other industries will probably vary.
Now it’s friday afternoon and I’ve gotta go home, but I’ll check this thread over the weekend if you have any more questions.
Certainly. I agree. But I wasn’t referring to income tax, which is paid by the recipient of the income. The taxes I was referring to (in the US) are SS tax, Medicare tax, etc. As I understand it, the employer pays the gov’t an amount equal to around 12% of the salary. This is partly matched by the SS and Medicare withholding paid by the empoyee. But the gov’t gets their SS tax from both the employer and the employee. Hence the overhead rate being discussed. What I am surprised at is that many businesses here find that the required rates are as low as they are. Certainly everyone is quoting more than 12%, but much less than the 37% rock-bottom number I had heard about. I believe you, and the others, but I am surprised.