A New Employee Benefit Concept

Reality no. 1: Competition among employers has accelerated the growth of innovative fringe benefits – everything from reimbursing subway and gym expenses to providing pet insurance and long-term care.

More Americans are working than at any time in U.S. history. Unemployment is at a 50-year low. America is now at the 14th consecutive month of job openings outnumbering job seekers, according to the U.S. Bureau of Labor Statistics. As the labor market has tightened, employers must offer broader benefit packages to recruit new employees.

Reality no. 2: These new benefits are costly and time-consuming to administer. A one-size-fits-all benefits package permanently boosts employment costs – while many employees won’t even use the benefits that have been paid for. From the employer’s perspective, that a dead-weight loss. From the employee’s perspective, that waste means less in profit-sharing, less in 401 (k) matches and less for possible raises or bonuses.

Opportunity: A solution that provides a wide range of benefits (which employees could choose from, like from a buffet menu) controlling costs.

Solution: Z Pay.

Here’s how it works: Z Pay provides a special, branded debit card to each employee and provides a flat monthly infusion of, say, $500 to each card. Employees may use the card to choose from an array of benefits. Employees without pets may pass on the pet insurance and select the long-term care insurance or some other benefit.

Once the benefits are chosen, the employee pays the monthly bill with his Z Pay card. He photographs the bill on his phone, using software, to automatically submit the bill as a business expense. Software checks the bill against the approved business expense list and either approves or disapproves it, according to policy. Any disapproved uses are recorded as taxable income to the employee. Approved uses are processed as tax-deductible business expenses.

At year’s end, the employee is given a 1099 for any unused balance and any disapproved expenses. For the approved benefits, no taxes accrue. The employee will also have the option of rolling any unused funds into his retirement or health-savings account, if he has not already hit the legal ceiling for contributions to those accounts. The employee could also deposit the unused funds into an IRA or other investment account. The software will automatically provide him with the appropriate tax documents for any of these uses.

An online dashboard will allow the employee to see usage of the Z Pay card in real-time, including the amounts spent on approved and disapproved activities.

Eliminating Pain Points: Z Pay allows employees to customize their benefits packages without extensive negotiations with their employers. Employers enjoy capped expenses and are free from the cost and trouble of administering a broad range of exotic fringe benefits.

Possible Benefits included with Z Pay: