Rethinking Employee Benefits: New Solutions for a Changing Economy with Zach Schmidt, Waypoint Wealth Management
Faced with reduced revenues and a shaky economy, business owners are looking for ways to conserve cash. But slashing employee benefits without a bigger strategy can undermine company culture and cause good workers to leave. Zach Schmidt, Financial Advisor at Waypoint Wealth Management in Bozeman, has helped many Montana tech leaders add value for employees while lowering costs. In this free webinar, you’ll learn how to:
Retain key employees you can’t afford to lose
Design programs that encourage upward financial mobility
Find creative solutions for retirement
Navigate trends in healthcare - one of the biggest cost centers for companies
Leverage benefits strategically to ensure the long-term health of your business
Full transcript:
Christina: Welcome. I'm Christina Henderson, Executive Director of the Montana High Tech Business Alliance. Welcome to our webinar, Rethinking Employee Benefits: New Solutions for a Changing Economy with Zach Schmidt. This event is part of a series the Alliance is hosting with resources to support our members. You can find details of these sessions at mthightech.org/events. Zach Schmidt is a financial advisor at Waypoint Wealth Management in Bozeman. He's worked with many Montana tech leaders and business owners. After Zach's presentation we will also open the floor for Q&A with the audience. So during the session, if you have questions or comments, you can either type it in the chat or turn on your microphone if you'd like to speak. And today's presentation will be recorded and shared so everyone who registered with us will be able to review this afterwards and also share it with your colleagues. I'd now like to turn the floor over to Zach to get us started.
Zach: All right. Well, thank you. I was talking to Christina recently. And just before this, she said that not a lot of questions come in. So we're going to change that hopefully today. And you guys can chime in with any questions on the chat function, or just, we can make a conversation, there's not a lot of us on this call today. But hopefully we'll answer any questions that you may have. And if you guys have any experiences that you wanted to talk about, or with each other, I'd love to do that as well. So I'll get into my slide deck here. But stop me with any questions or thoughts or comments. Okay, so, the purpose of today's meeting was to talk a little about how employee benefits work in our changing world. And what we're seeing not only from an advisor standpoint, but from a consumer standpoint, and how it would work moving forward.
And boy, this is changing quickly, isn't it? The world we live in is much different than it was six months ago. And I don't need to preach about that. In Bozeman, they just announced that school's not going back until November, if you're younger and January for a little bit older kids. So I know we're all dealing with that. However, as it comes to employer/employee relationships, one of the things we want to just really talk about is how are we going to compete, especially in this increased global market space? What types of benefits or business owner clients are finding valuable and their employees are finding valuable as well.
So here's a little bit about what we'll be chatting about today. First, a little bit about how culture is in a changing environment and how we're rethinking that as employers, what are we doing to retain employees who can't afford to lose? How are the employers we're working with designing and encouraging benefits that create upward mobility for their employees? What are we doing around health care and how are we navigating those trends and those cost centers? And what type of benefits strategically are we looking at and thinking about the long term health of our business and organization?
Sound about right? Okay. Well, yesterday, Tim Cook was at a conference, the Atlantic, and he talked about how a lot of Apple's employees, about 85 to 90% of these employees, are still working from home. And he said that, I don't believe that we'll return to the way we were. Because we found that there are some things that are working really well virtually. And in the presentation, he talked about how a lot of his employees will be able to stay home and work remotely. As a small tech firm or mid-sized or even a large tech firm in Montana, we have to consider these pressures and how it might affect us, not only from the standpoint of global competition, but competition in Silicon Valley and things of that nature.
Now, something we're seeing here happen is changes happening quicker and quicker and quicker for the employees and employers we work with. And I think things of the ones have changed and the outside pressures will see influencing our decision making will continue to change. We're seeing a lot of firms rethink everything that they do around benefits. For example, in some major large-size tech firms we work with, or manufacturing firms, there used to be really good gourmet coffee. Well, it's hard to get that when you're working from home. But most employers have a budget for these expenses. Thirdly, the ones that we work with, who do this, well, whether it be, you know, half day Fridays, or free lunch, these things are all scheduled and expenses that we thought about and have budgeted for. Things that are changing and taking places might be things that an employer starts thinking about, but very rarely do we see that there's a collaborative process. A lot of the executives we work with, or employees who work for some of these tech firms or businesses around the state mentioned to us this process and how our benefits are changing as of late doesn't feel like a collaborative process. So one thing we wanted to stress today is to make sure that we're changing that paradigm. A lot of the employers that we're working with who are having success, are talking a lot about how did focus groups, or small. So I took a diversity inclusion group that we spoke about pre-call, you know, just to make sure that employees are feeling heard about what's important to them. And what's not. That's going to trickle down to the retirement benefits and profit sharing for the firm's are certainly operating in positive this year. And we'll talk a little bit more about some profit sharing plans for a little bit.
Some of the things that we wanted to talk about too, is block scheduling--a lot of employers that we're working with who are having some success are really dealing with this. Well, my last name starts with S. My kids are going to be at home Monday through Wednesday. Thursday, Friday, they're in school, I might have more time. You know, a lot of folks in the communities are working spouses, work that's very common anymore. So how are we switching, working with our employers, to encourage them to rethink how normal workday looks? Certainly, you can work anywhere. And if you can work anywhere, can you work at any time? And how do you have teams who work at different times so that there is some camaraderie and communication? That's a challenge. Certainly, I think it's an area of opportunity for a lot of the firms we work with. This last point, childcare, is along those lines. This is actually one of the questions I think that you had, Christina, is that what are we seeing around childcare?
A few years ago, my wife who works at the hospital, went to the board and said, hey, wouldn't it be great if we had a health care or childcare facility on campus? Wouldn't that make a lot of sense? They did some studies around if that would work. But how do we make sure that in this environment where we might be homeschooling kids, and finding people are tutors to homeschool or children, or just learning how to do algebra, we can focus on a way to have child care that makes sense for all of us. So some employers that we're seeing her doing this well, what they are doing is they are having small groups encouraging employees to connect if they have similar age children, certainly, if they're comfortable with that. We're also seeing other small groups work for childcare for daycare, drop off times, along with that point before block scheduling, if that makes sense.
So then we talked a little bit about how to encourage and design programs to encourage upward financial mobility for the people we work with. These are all the classic options for different sorts of retirement plans, insurance plans, profit sharing plans that are available for most of us. Most of us know of, I guess the few that I would want to touch on based on the current environment. And where we're seeing changes is the student loan repayment, paid family leave and wellness, and professional development. The employers that we're working with, they're really having success in this space, are encouraging people to take care of themselves. A statistic coming out of the Gallatin valley that I heard recently was, and I'm sure I'll butcher this, and this is recorded, so somebody's gonna fact check me. But Haven, for example, which is a local domestic shelter, saw a 1,000% increase in need over the first nine months of the year. So that's a scary statistic. But what type of wellness benefits are we working with, with our employees and employers? Are there places for them to have, you know, counseling or flex plans on their health insurance to make sure that we're all taking care of ourselves? Professional development is another one. We're seeing organizations understand that there's pressures from outside of Montana and the Gallatin Valley, certainly, employers that we're seeing that are having success in this space are finding ways to use some of the dollars that they've already accounted for, for coffee, or free lunch, or, you know, snacks, is instead using a large portion of that budget, to continue to encourage their employees to earn a designation, or to go back to school. Or they're using those dollars that were already budgeted for student loan repayment programs. If they go out and are able to, you know, earn a degree or credential.
Paid family leave, I think is a big one. And, you know, obviously, this is a hot button issue for a lot of folks, I think a lot of organizations, especially larger tech have been leaders in this space. But small and midsize tech firms, certainly in small midsize businesses, this is a big barrier of entry-is how do you have the paid family leave program? How do you justify, you know, making sure that your employee if they need to stay home, because an employee is sick, or a family member is sick, they can work from home and have money coming in so they're financially solid? The number one reason why people fail financially is because of medical debt. And so it's really important, I think, for us to be good stewards for our employees, think about how we are making sure they have space to be healthy? Don't see any questions come in on chat yet, but if anyone has any questions, feel free to jump in, we're rolling along here. A couple pieces on here that I wanted to talk about that I think are underutilized, that I think are good benefits that a lot of competition of yours may not have is a lot of old 401k plans don't have a Roth option on them. That's a big benefit. If you can defer more money income tax free, especially for your mid to higher level income earner employees, that's a big benefit.
On short and long term disability. Being that a lot of employees that we work with, and employers we work with, are concerned about COVID and getting sick. One of the questions they'll have for us is what is my disability insurance cover? If I'm out of the office, because I'm sick with something like COVID-19? Most plans do cover this. That's a pretty, pretty cheap option, and it is very affordable. Another nice thing about short term disability insurance plans is that it covers maternity leave. So that's a big benefit I think that people don't utilize. We're seeing more and more retirement partner Employee Benefits plans include 529 College Savings Plan contribution options. After your retirement accounts, and save a little bit for a rainy day. Most folks want to take care of or help their kids with education, especially with the rapid rate in which those costs are increasing. However, very rarely do we have a plan in place and time for that. A pretty easy, cost effective way to set up a deferral plan for your employees is to say, okay, hey, let's bring in a financial planning firm to help set up a salary deferral program for 529 dollars. Your employees usually receive a tax break for funding it. We don't see a lot of matching programs in this space, but it seems to make a lot of sense.
Voluntary benefits we're seeing more and more right now just because I think a lot of people are nervous about costs that we work with and what the future holds. So there's a pullback on some benefits with some firms involved. Benefits would be your Aflac, your Colonial type of insurance, cancer policies, things of that nature. And a good way to dip your toe in the water around employee benefits--if you're thinking boy, what do we want to start with is there's these things out there called multi life discounts, where you can go out and sign up for a disability insurance policy, for example, for your group, and not pay. But by setting up a group plan, and allowing your employees to opt in, they receive reduced prices up to some as much as 25%, on a disability insurance policy, or a life insurance policy, or something of that nature.
I gotta move my Zoom here, so you can see the top of my screen. So it's some creative ways that I wanted to touch on to have retirement planning make sense for our employees. The one I want to start with is this fourth one. So a few years ago, Google actually decided, boy, for our highly compensated employees, we're really finding it tough to make this job desirable. They're working a ton of hours, we're paying them well. But how do we encourage them to stay and see the benefits of working for us, so they really spent a lot of time designing retirement plans, and they've been a leader in this space. One of the things they did was help, or able to help keep in place, that there's this Mega Roth IRA, it's referred to in the industry, and that's a Google term, it's not mine. But how it works is for folks who certainly have the ability to in a 401k plan, you can save $57,000 a year in 2020, that's a big chunk of change. But the problem is, if it all goes into dollars, that are taxable, when we take them out, such as your normal 401k plan, it really doesn't put us in a better tax position in the future, we really just kick the can down the road quite a ways. So for Google's employees in this situation, they said, hey, well, what if we have a 401k plan with a Roth option, that'd be really great. So let me do a little math here. So if you're under 50, you can defer $57,000 into 401k. Plan online in between matches, you could put in our 19,500, you could differ as a rough, including match and say your matches, you make $100,000. And your match is 3%. Well, that means you can defer $22,500 in the plan, and anything remaining, you could contribute in a non deductible after tax portion, that after tax portion can immediately be deferred into a Roth IRA, which means almost all of your 57,000 or in this scenario $54,000 a year to go into a Roth IRA. For the highly executive, highly compensated executives that we work with, this is a really big deal. It helps them get into a lower tax bracket later, most of those folks are okay with paying some tax now, as long as it means if and when taxes go up in the future, they have more money in their pocket. So that's a solution I think that more and more folks will work with, will ask about and think about. And certainly when I have a client who moves from Silicon Valley or, you know, working with Amazon or something of the sort, they say, Hey, can I just have this firm? So this is something I think we'll hear more and more about.
Another creative retirement plan is this executive bonus plan. So this for an employer who wants to get around some Arista requirements. It's tough to give all of your employees a raise, I understand that. And for the folks who want to skew the compensation to maybe a manager or an executive, or to some sales leaders, executive bonus plans can really work well and we're seeing these more and more and more, especially if there's few dollars to go around in terms of benefits, and they want to make sure it goes to the right folks. So an executive bonus plan is something akin to what a few years back was set up for President Cruzado at Montana State. And how that works is based on performance, she receives a bonus, those bonuses go into a plan. And that plan has dollars that are received in the future. Income Tax Free, similar but different to a golden handcuffs plan. Golden handcuffs plans are usually tied to performance. A bonus plan is just only that set aside that grows in escrow till a future date.
Another type of retirement plan that we see more and more in the tech space, but certainly in the medical space is a cash balance plan. A cash balance plan would be a plan that is similar to a SEP IRA. And how those plans work is not only can you defer, like a 401k plan, not only can you have some match and profit sharing, but you can also have an additional profit sharing or pension piece. Usually, the most common formula is based on a percentage of someone's salary. So say someone making $250,000 or $200,000, let's say for simple math, you might defer an extra $25,000 or $50,000 into someone's plan, that 25% would be across the board consistent for your employees. So you could get them all an extra 25%. For executives, and business owners that usually allows you to skew or between 200 and $250,000 into a retirement plan for those folks. So on a good here in a very successful business. That seems to make a lot of sense. Now, it has to make sense, from a bottom line standpoint. But if it makes sense, it seems to work really well. And the executives we work with seem to enjoy them.
So we'll spend a little bit of time here on health care. Now that there are a few questions that floated in before the presentation are about this. And there have been some changes in health care and costs. And so I think the biggest thing we can do is just make sure we are well educated and well informed before we jump into things. Health insurance is a tricky wicket, and it's an expensive proposition. But I think it's going to be super valuable for us today moving forward. We're seeing more and more employers around the country and certainly in Montana who have self insured plans. So a self insured plan is different from your normal health insurance plan. Your normal health insurance plan, I like to describe this as a cup, and you put money in the cup or the drug every single month. And no matter what happens, if your group is super healthy, you get a 10% rate increase next year. And you say thank you, you know, BlueCross, BlueShield, thank you PacificSource, thank you to whoever your insurance carrier is. Thanks for protecting us, we're glad to pay the premium. The difference between that and a self insurance or self insured plan is that you take the money and it's kind of like having two coffee cups instead, you have one coffee cup over here. And even a water cup, that's better for you anyway. I can't see very many people's faces. You don't know if you get a joke response or laugh, there we go. This is like my ninth cup today. So if it falters, it's not that strong.
So how self insured health insurance plans work is you say okay, I've got two two vessels. And then the one I'm just putting my premium, I'm 50% every year and 50% over here. It's more complicated than this, but to keep it simple. That's a premium. This is gonna what I'm gonna pay to the insurance company, and no matter what happens, that's their money. But this cap, the good cap, the water if our group is healthier than expected for the year, and your group is underwritten, so there's some offer of acceptance here on a self insured plan. But that cup of water, or in most cases, say maybe 50%--there's different rules. But that money comes back to the organization if your group is healthier than expected. So when you have a spouse, for example versus the hospital, and they say boy, I have to go in to do my health screen, and they give me three benchmark goals to improve on that they do, they're going to give me a $100 gift card to someone. So you think boy, that's really nice of them. They're nice, but they're not that nice. The reason is, is they keep their costs low over here, there's more money that goes around that comes back to the organization. So you can keep your cost low over here, or money's gonna come back to you as an employer. Now, why is this beneficial? Well, usually we're seeing lower rate increases, we're seeing organizations who are receiving real life money come back, you know, we're talking hundreds of thousands of dollars for some of the larger firms, some of the smaller firms, maybe it's, you know, a few thousand dollars, those dollars can be used for premium payments, those dollars can be used for, you know, reimbursed to the employees. So there's a lot of different things you can do there. But it seems to be a really attractive option that we're seeing a lot in the market space. There's a lot of different carriers out there. Some good and some bad, everyone has their pros and cons. However, you know, we're seeing that quite a bit.
So there's a quick question, at what employee headcount does self insuring really tend to make sense? Yeah, I mean, so it really depends. And I hate to say that, but boy, we have employers that we work with who have 10 employees who are really healthy. And, you know, they'll go up to Blue Cross, Blue Shield for their plan. And then they'll go to Cigna and get their plan, for example, and the rates will be 20%, less for self insurance. Because if the plan can be underwritten, and the insurance company knows a little bit better about what they're getting into, costs are usually lower. Now, because of that headcount, there's different organizations that may make requirements. So the larger the group, certainly, the less rules and the more frequently, it'll work. You know, I have an organization I was working with recently, and they were going through the self insure process, and they had, I think, 22 employees. Well, it just takes one really unhealthy person in a smaller group. And they had one of those people who was, you know, battling cancer, and taking an expensive biological drug for another ailment, that if it didn't make sense, and the standard health insurance, the BlueCross, BlueShield of the world made more sense. So it's going to depend on group health in the past, and what's predicted for the future. Size, a little bit on where you live, a little bit on things like occupation. But if it used to be that you couldn't have a self insured plan for less than 50, and then it was less than 20, and then it was less than 10. But it really makes sense if you have a healthy group of young people, certainly that's it. That's your sweet spot. Any other follow up questions on that? All right. Cool.
Because we're seeing folks who say like, boy, Zack, we used to buy lunch every Friday, I work with a tech firm to do just that. And because all their employees are working from home, they said, okay, how can we spend these dollars now? Can we give back? And they have a health insurance plan that is able to qualify for health savings accounts. So kind of a fun option we're seeing now is this Health Savings Account matching programs pop up more and more. And this seems to be something that you really write well in your employee manual, but you know, HSA dollars, you can use those when you're 72 or 37. And those dollars are great because you receive a tax deduction for funding it. The employer is going to receive a break for giving it to the employee and if you use them for health expenses, any growth is income tax free.
So, you know, in 2020, I believe you can set aside $4,550 individually for an HSA and as a family. So if you have one dependent or married filing jointly, you can have at $8,100 in 2020. Those amounts go up every year, every other year. And if you're able to set those dollars aside, it really makes a lot of sense. And employees really enjoy seeing their HSA balance in our experience. And some employers it's a nice way to say, hey, here's something extra, here's an extra 50 bucks a month, you know, $25, if you put in it for the first hundred dollars, we'll match it 25 cents on the dollar, not a big cost, but seen as a big benefit, especially for people who have young families. You know, my son fell off his bike this summer and broke his wrist, it's not a huge deal. We're not hitting our total out of pocket individually or on the family side for health insurance. But we didn't use all that HSA money or a good chunk of it. And we felt good about having it. I skipped this next flex and cafeteria plan. But one of the really nice things is there was a time when HSA dollars couldn't be invested in the stock market. And if you're able to do that. It's something that I encourage folks to take advantage of with not all of their HSA money, but some, especially if you're young, and you're healthy, and you're trying to look for your tax deduction. HSA money, as we just talked about, it's a big deal. So another piece we're seeing is employer-sponsoring plans for HSAs that have the ability to be invested in the stock market.
So, as I just mentioned, an HSA, you can find those dollars, they go into your HSA, you get a tax break for funding it, they're income tax free and a distribution if they're used for health care, it's tax free. Also, there's not a lot of better places in the United States tax code to put money. You know, if you're working overseas in a war zone, you get tax free money all the way around, if you save it and put it in a Roth IRA and take it out, income tax free. So this is a big deal. You know, you can set aside $100 and wake up at age, you know, 70, and you have now, four or 5, 6, 7, $800 there to use for a procedure for a medical bill. That's a big one. So, you know, the kind of phrase you'll hear in the industry is the three x tax advantage, or the three times tax advantage on investing HSA dollars, it's a really affordable option to set up if you're an employer, as well as these HSA accounts for your employees. And you can have one plan that's managed by you, or you can allow your employer to set up an HSA anywhere they choose, you just direct the dollars there on their direct deposit. Now, there's some rules and some things around these invested HSAs that you'll want to be careful of, for example, minimum balance invested HSA accounts. So if there's one big injury, one firm, for example, I know the industry won't allow you to have less than $250. Otherwise they start charging you fees. So there's some things to be aware of so that these plans for your employees, if this is something you'd like to sponsor, are out there. So those are some things that I encourage you to take a look at.
Okay, so something new for 2020. That I want to spend a little bit of time on is the Secure Act and 401k plans. So I'm not sure if you guys have talked about this at all, on any of your other webinars? No, no? Well, let's bore you at the end with some tax code. So the Secure Act is passed, and new for 2020, there are some tax advantages for setting up and adding features to 401k plans. So if you don't have a 401k plan, you have about eight days to set one up for 2020. You know, if you want to defer money for this year. If not, we can get you set up for next year. And how these 401k plan tax advantages work as the IRS essentially, it feels like they want us to do more, and they want us to save more and they want employers to encourage their employees to save more. We don't need to be political, but like we're being encouraged to help, which is a good thing. But there's some pretty good tax incentives. So for organizations of more than 20 employees but not all of those 20 are, there's a formula, are highly compensated, but less than 100 employees, the tax credit is $5,000 a year. And that's a dollar to dollar reduction of income.
So that's a, that's a great thing. And that tax credit actually goes for three years for a new 401k plan. So if you say, hey, we're thinking about adding a plan for 2021, and we want to add some money at the end of the year here for employees, we're in a hot, hot water on taxes, because we have all that PPP money that we spent and was granted to us, now we need to cut his income, we need to spend some of this somehow, a 401k plan would be a great way to do that. And in future years, you're gonna receive a tax credit. If you have an old 401k plan that is already in existence, you're out of luck on the $5,000. But there are some tax credits for adding automatic enrollment to your plan. So for example, once someone comes eligible at six months, they just join the plan and have an automatic percentage saved unless they opt out, for example, that might be a 3% match. So if the employee kicks in three, the employer will kick in three, there's a tax credit for that. There's also a tax credit for automatic escalations of income savings. So, for example, one year you start off at 5%, the next year you go to six, the next year you go to seven, you want to encourage your employees to save more. So those are a couple of nice features around. You know, being good stewards of your firm is looking at these tax credits, there's definitely some strategic advantages to help look at the long term health of your business. We don't want to just give it all away. I know, we're all, you know, a couple of good spots by adding these employee benefit plans. You know, we're seeing a lot of firms looking at how we protect ourselves too, especially with health being so precious and all of us looking at that. So I've seen a lot of employers look at disability overhead expense and key person disability insurance as the pivot to say, okay, what's next? What we remember now that we're not, we're not all Superman, how do we protect ourselves? And we're also seeing a lot of terms around employee benefits to look at. And I didn't talk about health care, we're seeing a lot more businesses operate as co-ops, or employee-owned businesses. You know, that's super helpful, in some ways, it helps reduce some costs and help us get around, especially if you had a roofing company, maybe some workers compensation, or if you're manufacturing, maybe some workers compensation.
We're seeing a lot more of the people ask us questions about cross purchase agreements and buy sell agreements, and how do we set up our business for employer stock options, and, and cap tables and things of that nature. So those are things I think that that if you're doing some of these things now might make sense, kind of the last piece of this puzzle to look at, okay, what's next? How do we continue to get back? How do we continue to grow our business? But how do we protect ourselves in case? You know, if Christina and I were in business together, and she became disabled or disenfranchised, or passed away, she becomes deceased, how do we return those shares to the closely held organization? So there's just some things I think that as we look at the long term strategic health business we really want to focus on not to overstate it, but our health is all precious.
Here are a few of the folks on our team. Myself, Carolyn, Megan, we have three others as well. If you reach out with questions, he's one of the three of us who will get back to you within 24 hours ... We are big sales ... fee based and non fee based depending on the setting, financial planning firm, wealth management firm, we specialize working with business owners, tech in the medical field, based in Bozeman here, but I think we have clients in, you know, 40 states now. So, yeah, it's kind of interesting. So that's, that's kind of my spiel. I want to open it up to questions and leave time for that to make sure that we answer anyone's questions and they felt heard.
Christina: Yeah, so if anybody in the audience today has your own specific questions, you can either type in the chat or just turn on your mic and speak up. We'd love to hear from you. We've got about maybe five or six minutes left of our time. One question I have for you, Zach, we have a number of startups in our high tech community. What's been fun for me to see is Ascent Vision Technologies in Bozeman started with the High Tech Business Alliance as a start up six years ago. And they just sold for, you know, huge, like $350 million.
Zach: Pocket change.
Christina: Pocket change. And what was phenomenal is they were also employee owned. So every employee, all the people in Bozeman, who had shares in that company got a check from that sale. So, the way like a startup actually can be an incredible place for a new employee to join and share in that growth and success. But a lot of startups when they're first starting out, it's hard for them to provide competitive benefits with much bigger firms. And in Montana, we do have a lot of thriving tech firms that are able to provide very good benefits nationally. Now with remote work, you have a lot of big firms that are providing very good benefits. If you are a startup or you are advising a startup, where would you advise them to invest first or the most of their benefits for new employees?
Zach: So just so make sure you question correctly, where would I put my money first?
Christina: Yeah how would you prioritize benefits? If you were a startup and had limited resources?
Zach: Yeah, that's a good question. So I think the first thing I would do is not to sound like it's a cop out to the question, but if you're small in your startup organization, the first thing I would do is I want to get the people who are the drivers of this organization besides me, in the room to ask that question. No, I think too often, we're guilty, all of us, of saying, hey, this is what I would do. This is what I would like. And this helps me most on taxes. If the goal is for you to get to an employee-owned firm, that's going to be very different than it is if you're a sole proprietor, or you're a three person organization, who has employees who are cogs in the wheel, but not forever employees. You know, it's tough. The number one reason I mentioned earlier people fail financially is because of medical things. So when I'm sitting down with someone who's, say, 45 years old, and they work for themselves, and their health insurance bill for their families is $1000 to $1500 dollars a month, that's a huge barrier to entry. That's a mortgage payment, in a lot of the communities we work and live in. So I think usually where the conversation goes is the first thing first is how do we take care of our family from a health perspective? So usually, it's health insurance, is what the answer is, however, that might not always be true, because if you have, for example, if you and I had a business together, and we had Jennifer working with us, it's the three of us. And you said, Hey, we want to set up health insurance, and I'm your main person. And if you just did that, I would opt out. My wife works for Bozeman Health, there, you know ... there's not a better feeling. So I think I'd be missing it, right? So I started off first asking him to pull the employees and put it pulling together a focus group. And then second, usually what happens is it's health insurance. Right.
Christina: Do you have any thoughts-- like we had a question in the chat from Mark, can you speak to the options available to solo employees such as a C Corp?
Zach: Yeah, I guess the D. Security does help. First part is employee benefits per sole proprietor. Health insurance is also something that'd be, you know, a great thing because you can pay your premiums pre tax. There's a section 125 plan which allows you to set up pre tax deferral of health insurance premiums, which would be great. You know, the more money that you can hide away in retirement plans is going to grow beyond taxes. If you're a sole proprietor or sole employee that would be, those are a couple of things that I think would make a lot of sense. You certainly wouldn't be as worried about a focus group for yourself. But you know, those would be some things I think that would really make sense is how much if you're in a situation where you're really wanting to defer income, to make sure you have the right employer sponsored plan, even though it's just you, and you're making sure that you're doing in the most tax efficient way possible. Certainly, self insured health insurance isn't normally your best bet in that scenario.
Christina: Mark says he will cancel his focus group!
Zach: You know, that cute one on your shoulders? She might be the one you're asking for, then maybe, no, kidding aside, maybe it's a way for you to find ways to help yourself on taxes, set up a, you know, 529 plan, or making sure you're maxing out an HSA. I mean, there's a lot of things you can still do if you're 10 employees or you know, 75 or 5000.
Christina: Well, that's phenomenal. Thank you so much Zach, I have learned so much today. We've done sessions before on employee benefits, but many of the tools that you've mentioned today I think are either new opportunities or things that we had not yet heard about. So I think this will be very informative for folks who are on the call. Again, a reminder that we'll send the recording out to everybody who has participated in the slides so that you can go back and there will be a transcript over the next few weeks, so that you can go back and dig into some of this great information or share it with colleagues. Thank you again, Zach. And thank you to our audience for joining us and have a great day.