Benefit Allowance

AAA

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.

INVESTOPEDIA EXPLAINS '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. Tax Benefit

    A tax benefit is an allowable deduction on a tax return intended ...
  2. Benefit Period

    The benefit period is the length of time during which a benefit ...
  3. Certified Employee Benefit Specialist

    A professional designation available in both the United States ...
  4. Accumulated Benefit Obligation

    An approximate measure of a company's pension plan liability. ...
  5. Target-Benefit Plan

    A benefit plan that is similar to a defined benefit plan since ...
  6. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
RELATED FAQS
  1. Why should investors research the C-suite executives of a company?

    C-suite executives are essential for creating and enacting overall firm strategy and are therefore an important aspect of ... Read Full Answer >>
  2. What is the difference between a direct and an indirect distribution channel?

    A direct distribution channel is organized and managed by the firm itself. An indirect distribution channel relies on intermediaries ... Read Full Answer >>
  3. What is Substantial Gainful Activity (SGA) and why is it important?

    Substantial gainful activity (SGA) is what the Social Security Administration (SSA) measures to determine work, income and ... Read Full Answer >>
  4. How can an investor determine a company's annual return from looking at its financial ...

    The funds in a share premium account cannot be used for a company's general expenses. These funds are restricted in terms ... Read Full Answer >>
  5. How does the always be closing (ABC) strategy benefit a salesperson's sales funnel?

    It is good practice in sales to always be closing, because it's common for a salesperson's sales funnel to be leaky. When ... Read Full Answer >>
  6. Will a hike in the minimum wage result in deadweight loss to businesses and labor?

    There have been studies which show that hikes in minimum wage create deadweight loss to business and labor. It is possible ... Read Full Answer >>
Related Articles
  1. Retirement

    An Overview Of The Pension Benefit Guaranty Corporation (PBGC)

    Find out how this "retirement lifeguard" can save drowning plans, and why it's unlikely to be a long-term solution to the pension problem.
  2. Retirement

    Is Your Defined-Benefit Pension Plan Safe?

    Your plan may not last in a rocky market. Find out whether your savings will be affected.
  3. Home & Auto

    Selecting The Right Mix Of Insurance Benefits

    Choosing employee benefits involves weighing the probability you will need them against taxes and cost.
  4. Retirement

    Variable Annuities With Living Benefits: Worth The Fees?

    Added features can make a variable annuity suitable for certain investors. Find out if it could work for you.
  5. Options & Futures

    Benefit Issues When Your Employer Goes Bankrupt

    There are some safeguards in place to ensure that health benefits don't just disappear when a plan is canceled.
  6. Budgeting

    The Demise Of The Defined-Benefit Plan

    Experts are making bleak predictions for your post-work years. Be prepared and plan for your future.
  7. Retirement

    Benefits for Members of the Armed Forces

    If your plans have been affected by your time in the combat zone, fear not!
  8. Economics

    What is a Business Model?

    Business model is the term for a company’s plan as to how it will earn revenue.
  9. Personal Finance

    Are You In The Top One Percent Of The World?

    If you live in an industrialized country, cracking the top one percent of income earners isn't as difficult as you might think.
  10. Personal Finance

    The Most Competitive Industries For New Graduates

    Graduating from college is an exciting yet uncertain time for many students, as the overall job market is becoming more complex as time goes on.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. 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 ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center