New program enables small businesses to provide affordable employee benefits without extra cost

The Daly City Small Business Commission held a regular meeting on February 13, 2025, focusing on innovative employee benefit solutions for local businesses. The meeting featured a presentation on a self-insured medical expense reimbursement program, designed to help small businesses provide valuable benefits to their employees without incurring additional costs.

The program, introduced under the Affordable Care Act in 2013, allows employers to redirect certain payroll taxes towards benefits such as vision, dental, disability, and life insurance. This initiative aims to enhance employee retention and satisfaction by offering essential benefits that employees would otherwise have to pay for out of pocket.

Key points discussed included the program's compliance with IRS, HIPAA, and ERISA regulations, ensuring that businesses can implement it without legal complications. The presenter emphasized that the program is beneficial for companies with as few as two employees, making it accessible to a wide range of small businesses.

The meeting highlighted the potential financial advantages for employers, including a reduction in workers' compensation costs by up to 40% and a decrease in FICA payroll taxes. For example, a business with ten employees could save approximately $145,000 annually in workers' compensation costs alone. Additionally, employees could see an increase in their take-home pay by redirecting tax savings into purchasing benefits.

The program also includes a preventative health care wellness component, which provides employees and their families with access to virtual mental health services and other health resources without co-pays or deductibles. This aspect is particularly relevant in light of the increased demand for mental health support following the COVID-19 pandemic.

Commissioners expressed interest in the program's supplemental nature, clarifying that while it does not replace primary health insurance, it offers essential support for employees, especially those without existing coverage. The presenter reassured attendees that the program is designed to help navigate healthcare options effectively, ensuring employees receive the best care at the lowest cost.

In conclusion, the meeting underscored the importance of innovative employee benefits in enhancing workplace satisfaction and retention. The Small Business Commission plans to explore further opportunities to support local businesses in implementing such programs, aiming to foster a healthier and more engaged workforce in Daly City.