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A Stock With Benefits

Stocks in this article: WAGE

If you have ever worked at a large company, you know what a lot of dizzying choices you can face when it comes to health care and retirement benefits. Well, the human-resources folks at companies feel the same way, and that has allowed a large business to emerge that is focused on helping everyone make good choices and interact with vendors efficiently.

One of the leaders of the niche is WageWorks (WAGE), which calls itself an "on-demand provider of tax-advantaged programs for consumer-directed health, commuter and other employee spending account benefits." These are all generally referred to as consumer-directed benefits (CDBs), and they include flexible spending accounts (FSAs), health savings accounts (HSAs) and health reimbursement arrangements (HRAs), as well as employee transit and parking programs.

When a corporation looks to offer access to CDBs to its employees, WageWorks provides a highly scalable delivery model that employers and their participants can access through any web browser or mobile device. This type of on-demand model eliminates the need for employers to install and maintain onsite hardware or support staff to manage its offerings.

For employers across the country, WageWorks has become a fixture in recent years, as it provides services to 42% of Fortune 100 and 26% of Fortune 500 companies. The San Mateo, Calif., company was founded in 2000 and is now headed by CEO Joseph Jackson. He spent more than two decades at the payment processor First Data before arriving at WageWorks in 2007.

So what's the advantage for employers in offering tax-advantaged benefits such as FSAs and HRAs? Well, in addition to the ability to offer employees a variety of additional benefit options, increased participation and account funding in these plans lowers the company's realized benefits cost. So even after fees paid to WageWorks, most firms would see a reduction in payroll taxes that exceeds any costs associated with the benefit offerings.

The benefit to employees and their families is the option to save money by using more pre-tax dollars to pay for healthcare and commuting expenses that they would be paying for anyway.

WageWorks consistently generates participation rates that routinely run 50% higher than the national average by providing one integrated platform that gives employees full access to all their benefit options from a single website.

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