The term “portable benefits” is most commonly used in finance to describe monetary perks or plans that are established for an employee under one employer, but move with the employee should he or she change jobs. Retirement accounts and structured pension plans are some of the most common portable benefits, though health plans are also sometimes included. A portable benefit is the opposite of a “fixed” or “traditional” benefit that must generally be surrendered on departure.
Benefits are fixtures of many different employment arrangements. Most of the time, they are designed to be perks that will both attract quality candidates and retain hired talent. Benefits that are portable belong to the employee individually, even though they are usually vested in, held by, or paid into by an employer. They are usually structured such that employees can take them, in either whole or part, should they leave their job before retirement.
Portable financial benefits are some of the most common. These include retirement plans, employer-sponsored savings accounts, and certain types of pension plans. Employees typically pay into these allocated benefits while they are employed, so that the assets grow in value and in many cases become a specialized sort of employee savings plan. Many companies will match employee contributions in whole or part to encourage growth, as well. Employee-initiated retirement savings often reduces later retirement costs to the company.
It is often the case that people leave jobs before retirement, however. How retirement planning accounts should be handled in these circumstances becomes a major question. When the accounts are structured as portable benefits, employees can usually simply transfer the assets in them to a new employer, or to an individually-held retirement savings account. Otherwise, they are must usually be surrendered.
The mechanics of how portable financial benefits can be transferred is often dictated by local law. Many jurisdictions offer certain tax benefits and exemptions to money in growth-based retirement accounts, but these usually prohibit withdrawal before the account holder reaches the statutory retirement age. There are usually steep penalties for simply liquidating the account. As a result, portable benefits are not usually completely exploitable: they will travel with the employee, but there are almost always restrictions on where exactly they can be moved.
Portable health insurance benefits are often a bit less complex. More flexible health benefits are most common in the realm of contract and freelance employees who do not typically qualify for standard health care or insurance benefits because they are not full-time, permanent staff. Companies can often save money by making these sorts of hires, but sometimes find it hard to recruit the right people. Lack of health benefits can make freelance positions unattractive or even unapproachable for certain people, no matter how talented they are or how good they would be for a certain job. Employers can often attract top contract workers by promising limited portable benefits for health care.
In most cases, portable health benefits often take the form of a group health insurance plan. Contractors must usually pay into this plan at a specified group rate, but unlike a traditional health insurance scheme, coverage will not terminate when the job term expires. Rather, the contractor will be able to continue making payments and receiving coverage no matter where he or she works next. These sorts of portable benefits are usually administered through outside insurance companies and contract specialist organizations.
Flexible spending accounts are also examples of portable health benefits and can be more wide-reaching. FSAs, or flexible spending accounts, are structured benefit plans that allow employees to set aside certain money, before taxes, to be used for qualifying medical expenses. Not all FSAs are designed to be portable, but the majority are. There are usually time limits and restrictions on how stored money can be spend, but in most cases, anything contributed belongs to the employee regardless of employment status.