Government Contractors & Fringe Benefits…
One the least liked and hardest parts of government contracting is fringe benefits. It’s a top reason many prevailing wage contractors choose not to work with the government.
Employees typically prefer cash-in-lieu of benefits and when coupled with the challenges compliance reporting presents, most contractors would rather be doing anything else.
What most contractors overlook is that fringe dollars can be used as a tool for the benefit of employees and address compliance- all while improving contract profitability and competitiveness.
What Really Are Fringe Dollars?
First, stop and realize fringes are in a way free money from the government to give employees benefits and in a time where benefits are more important and expensive than ever.
With a handful of simple tweaks to your fringe management and compliance strategies you can increase your profits, your employee’s satisfaction, and stability, and all without having to change your broker.
Fringe dollars can be the hidden advantage that you have been looking for.
Three Ways Contractors Waste Finge Dollars
DO NOT provide cash fringes, ever! Remember contractors decide how they want to disburse fringe dollars/benefits and ARE NOT required to provide them as cash (unless stipulated by a CBA).
Contractors practicing cash-in-lieu of benefits are at a serious disadvantage compared to those providing benefits. The additional tax burden eats directly into profit margins.
Contractors must also be wary of other fringe vendors (TPAs). While they may claim to know the industry and needs of contractors, more often than not… they don’t. It takes someone, like a government contractor, to really understand the space and challenges government contractors face. If a fringe vendor tries to sell you they’ll handle your compliance if you buy XYZ product with them… that should be a sign. WATCH OUT!
Most of these vendors “eat up” all the fringes with a “one-size-fits-all” plan which includes extensive fees/commissions, and no guarantee if the Department of Labor comes knocking.
Is your benefits package desirable? No, that’s not a trick question. While most employers providing benefits think their offerings are ‘decent’, more often than not that’s not the case. It’s also one of the main reasons employees want cash fringes instead of benefits.
Be sure to work with someone with the experience and knowledge to maximize those fringe dollars fora competitive benefits package the doubles as a recruiting and retention tool.
Improving Contract Profitability
Few contractors know that compliance and fringe benefit administration can be paid for with fringe dollars. That’s right, you can use your fringes to remove your compliance burden.
By subcontracting compliance reporting, a contractor can increase profit margins 1-3% on each award, every year. Over multiple contracts, the savings can really add up.
With proper consultation and fringe management, contractors and their brokers can create a more robust benefits package. One that increases employee loyalty/productivity, as well as, better protect employees and their families.
About AXIM Fringe Solutions Group
We can help you leverage the true power of fringe benefits. Contact us for a quick call to discuss the many advantages of maximizing your fringes.
- We are a government contractor
- AXIM lowers total G&A and overhead
- Compliance Guaranteed- or we pay the fine
- 24/7 access to H&W statements, individual elections, and benefit info from any device
- Unique voluntary benefit offerings exclusive to government contractors