Five questions employers should ask about payroll savings programs

Programs that claim to lower payroll cost while improving benefits sound like a contradiction. Sometimes they are. Sometimes they are a Section 125 cafeteria plan with pretax elections, and the math is specific to your company.

Before you enroll anyone, ask five things.

One: Does this replace our major medical plan? If the answer is yes, stop. Complementary benefits are a different conversation from a health plan replacement.

Two: What happens to take-home pay if an employee elects the benefits as designed? You should see the paycheck math, not a slogan.

Three: Who administers compliance, and what remains the employer's job? Cafeteria plans have rules. The administrator's work and your payroll responsibility should be written down.

Four: What does the company analysis use as inputs? Headcount, payroll, current benefits, and participation assumptions should be yours, not a national average.

Five: What is the exit if it is not a fit? A first conversation should cost you an hour, not a contract.

We work with employers that have 10 or more W-2 employees. We run the company's numbers, put the projected economics in writing, and ask you to review tax and legal details with your own advisers. Healthy skepticism is welcome. It is how the wrong programs get filtered out.