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- 1. Bringing Dollars to the Bottom Line Through a Better Benefits Structure
- 12. 2011 Small Business Health Care Tax Credit Illustration 35% of Health Insurance Premiums $23,100 net increase in cash Before Tax Credit After Tax Credit Gross Profit $ 500,000 $ 500,000 Health Care Expense $ (100,000) $ (65,000) Other Business Expense $ (300,000) $ (300,000) Pre-Tax Profit $ 100,000 $ 135,000 Tax (34%) $ (34,000) $ (45,900) After Tax Profit $ 66,000 $ 89,100 Health Care Tax Credit none $ 35,000 Total Profit & Credit $ 66,000 $124,100
- 25. What Does the new benefits environment look like to the employer? No Benefits Healthcare Only Complete Benefits Sales $1,500,000 $1,500,000 $1,500,000 Salary (500,000) (500,000) (471,500) Pre-Tax Benefits 0 0 (28,500) FICA (7.65%) (38,250) (38,250) (33,890) Other Variable Expense (500,000) (500,000) (500,000) Gross Profit $461,750 $461,750 $466,110 Health Care Expense 0 (100,000) (65,000) Other Business Expense (300,000) (300,000) (300,200) Pre-Tax Profit $161,750 $61,750 $100,910 Tax (34%) ($54,995) ($20,995) ($33,568) Health Care Tax Credit 0 0 35,000 401(k) Tax Credit 0 0 500 After Tax Profit $106,755 $40,755 $102,842
- 26. What does the new benefits environment look like to the employee? No Benefits Healthcare Only Complete Benefits Gross Pay $50,000 $50,000 $50,000 Pre-Tax Medical 0 0 0 Pre-Tax 401(k) 0 0 (4,000) Pre-Tax Voluntary 0 0 (750) FICA (3,825) (3,825) (3,462) Taxable Income $46,175 $46,175 $41,788 Income Tax (27%) ($12,467) ($12,467) ($11,283) Take-Home Pay $33,708 $33,708 $30,506 Medical Insurance ($12,000) Retirement Savings ($4,000) ($4,000) 0 Voluntary Benefits ($1,500) (1,500) 0 Benefit Neutral Pay $16,208 $28,208 $30,506
- 27. Employer Options Employer and Employee Pay 50% No Benefits Healthcare Only Complete Benefits Sales $1,500,000 $1,500,000 $1,500,000 Salary (500,000) (500,000) (471,500) Pre-Tax Benefits 0 0 (28,500) FICA (7.65%) (38,250) (38,250) (33,890) Other Variable Expense (500,000) (500,000) (500,000) Gross Profit $461,750 $461,750 $466,110 Health Care Expense 0 (50,000) (32,500) Other Business Expense (300,000) (300,000) (300,200) Pre-Tax Profit $161,750 $111,750 $133,410 Tax (34%) ($54,995) ($37,995) ($44,618) Health Care Tax Credit 0 0 17,500 401(k) Tax Credit 0 0 500 After Tax Profit $106,755 $73,755 $106,792
- 28. Employee Options Employer and Employee Pay 50% No Benefits Healthcare Only Complete Benefits Gross Pay $50,000 $50,000 $50,000 Pre-Tax Medical 0 0 (5,000) Pre-Tax 401(k) 0 0 (4,000) Pre-Tax Voluntary 0 0 (750) FICA (3,825) (3,825) (3,079) Taxable Income $46,175 $46,175 $37,171 Income Tax (27%) ($12,467) ($12,467) ($10,036) Take-Home Pay $33,708 $33,708 $27,135 Medical Insurance ($12,000) Retirement Savings ($4,000) ($4,000) 0 Voluntary Benefits ($1,500) (1,500) 0 Benefit Neutral Pay $16,208 $28,208 $27,135