Benefit Allowance

DEFINITION of 'Benefit Allowance'

Money that a company or government agency provides to an employee for a specific purpose, such as transportation, healthcare costs or a flexible spending account. Benefit allowances administered to employees can be distributed through regular payroll.

BREAKING DOWN 'Benefit Allowance'

Employers can use a benefit allowance to give employees flexibility in creating a benefits package that best meets their needs. Rather than imposing a particular healthcare plan on all employees, for example, the employer could offer a base plan plus a benefit allowance. The employee could use the benefit allowance toward supplemental benefits like dental insurance or coverage for dependents. Employers could also allow their employees to put a benefit allowance toward life insurance, disability insurance, vision care or any number of other benefits. Employees thus receive customized benefits and employers can offer a competitive benefits package that will help them recruit and retain top talent.

RELATED TERMS
  1. Employer-Sponsored Plan

    A type of benefit plan that an employer offers for the benefit ...
  2. Dependent Care Benefits

    Benefits provided by an employer to an employee for use in caring ...
  3. Unit Benefit Plan

    An employer-sponsored pension plan that provides retirement benefits ...
  4. Corporate Pension Plan

    A formal arrangement between a company and its employees - or ...
  5. Withdrawal Benefits

    The rights of an employee who has a qualified pension plan to ...
  6. Accrued Monthly Benefit

    The earned pension benefit that will be paid to an employee at ...
Related Articles
  1. Personal Finance

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  2. Investing

    4 Reasons Employee Wellness Matters

    Employees want more than a paycheck. They want rich benefits that include a health and wellness component. Companies that offer it stand to save.
  3. Personal Finance

    Top 5 Ways to Retain Your Best Employees

    You need to think beyond salary to make the most talented people want to stay on for the long term.
  4. Professionals

    6 Benefits You're Required by Law to Offer Your Employees

    Learn about the benefits that a business must offer to employees, such as family and medical leave, as well as various forms of insurance coverage.
  5. Financial Advisors

    How to Help Clients Navigate Open Enrollment

    With companies trying to pass on more costs to employees, making the right choices during open enrollment is more important than ever.
  6. Personal Finance

    8 Reasons Why Valued Employees Quit

    Salaries are important, but retaining top employees requires more than just providing competitive pay.
  7. Taxes

    401(k) And Qualified Plans: Distributions

    By Denise ApplebyGenerally, the law requires plans to pay retirement benefits no later than the time an employee reaches normal retirement age, and many plans provide earlier payments under certain ...
  8. Retirement

    403(b) Plan: Distributions

    By Denise Appleby Generally, amounts received by an employee as a distribution from a 403(b) account are taxable as ordinary income to the employee. If the distribution occurs when the employee ...
  9. Taxes

    The 401(k) and Qualified Plans Tutorial

    Learn about eligibility requirements, contributions and distribution rules for these retirement plans.
  10. Insurance

    Yes, You Can Still Expect Health Insurance at Work

    A recent report from The New York Times says that health plans offered by employers are here to stay, despite the passage of the Affordable Care Act.
RELATED FAQS
  1. What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase ... Read Answer >>
  2. Are part-time employees eligible for fringe benefits?

    Learn how offering fringe benefits allows employers to entice new talent to join their teams, although part-time workers ... Read Answer >>
  3. How do restricted stocks, treasury stocks and stock appreciation rights benefit employees?

    Restricted stock represents any equity that is conditionally given or sold to an insider as compensation or as part of an ... Read Answer >>
  4. Can LLCs have employees?

    Discover how limited liability corporations (LLC) can have an unlimited number of employees and the legal steps required ... Read Answer >>
  5. What types of companies usually offer fringe benefits?

    Learn what types and sizes of companies typically offer fringe benefits to employees in an effort to recruit as well as retain ... Read Answer >>
  6. How are fringe benefits calculated?

    Discover how employers can account for and calculate fringe benefits, including benefits that may not have an obvious dollar ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center