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Folks can experience financial problems at any time — problems that muck up their credit reports and hamper their access to new credit. However, a well-written letter of explanation attached to a credit application can make a big difference.

Many lenders will go the extra mile to accommodate consumers that can explain past problems and offer assurances that the problems have been remedied. But first, it’ll be a good idea to check and see whether you have bad credit at all. When’s the last time you checked your credit score? Check with each of the three major bureaus to get a complete view of your financial profile, as the information reported to each bureau by creditors may vary.

Do’s and Don’ts

To be effective, a good letter of explanation needs to observe certain rules:

Be Honest

The letter must be true — don’t over-exaggerate or lie. Simply state the facts, including your understanding at the time, the roles others played and, ultimately, why you were unable to pay your bills on time. Additionally, be sure to write the letter yourself; letters written by your loan officer or another party will hold less weight than one written by you.

Take Ownership

To the extent that you were at fault, own up to your mistakes. If you truly were innocent or victimized, describe what steps you took and to whom you reported the incident.

At the same time, don’t wax poetic or hop onto your soap box; keep your explanation short and sweet, without a long, drawn out story you hope will garner sympathy.

Don’t Blame the Creditor

Blaming your creditor is a very bad idea, since you are trying to arrange credit from, well, a creditor. They will have little patience for a person who trashes one or more previous creditors.

Include Documentation

Show receipts, letters, insurance policies, contracts and any other documents that will shed light on the problem and support your claims. Always send copies — keep the originals in a safe place.

Promise to Avoid Further Problems

To the extent you made avoidable mistakes, promise to never repeat them again. Additionally, demonstrate to your new creditor the lessons you learned — and the concrete steps you’ve taken to prevent problems from occurring again.

Sample Letter #1

Here is a sample letter you can use as the starting point for the one you create:

To Whom It May Concern:

I am sending you this letter and the attached documents to explain my late medical bill payments to XXXXX Hospital. This applies to late payments dated 5/1 to 6/15, 2012 for a balance of $45,971.

When this situation occurred, I found myself with a serious health challenge and inadequate health insurance. At the time, I worked for [company] and suffered a heart attack. Unfortunately, I had a pre-existing heart condition and the health insurer, XYZ Health Insurance, denied my claims for surgery and care related to the heart attack.

The illness drained most of my savings, and I was unable to pay my medical bills on time. The hospital graciously worked out a repayment plan with me, and I have not missed a monthly payment since we reached agreement.

I have taken the following steps to avoid this problem from ever happening again:

I have purchased health insurance policy through an Affordable Care Act marketplace that covers all pre-existing conditions. Please see the attached copy of the policy, which covers 80 percent of all costs.

I have opened and funded a Health Savings Account to help pay for my portion of future medical bills. Attached is a statement showing contributions to the HSA.

I have lost 150 pounds (please see before and after photographs), changed my eating habits and work out every day in the gym. My blood pressure is excellent, and I am in the best health of my life.

I have always taken great pride in my financial responsibility and hope you agree that I have executed the steps necessary to avoid a recurrence of this unfortunate incident. I hope you will approve my credit application, and I will be happy to provide any further information.

Sincerely,
[Your Signature]

Sample Letter #2

Or, Have a Professional Handle it for You

You can always go the easy route and have someone do it for you, like a credit repair service that will also help to get your finances and credit back on track. Lexington Law is available to take your call, and, on average, their past clients have seen 10.2 negative items removed from their credit reports in four months.

Advertising Disclosure: Some of the links in this post are from our sponsors. We may get paid when you click a link. We strive to introduce you only to unbiased and honest recommendations; however, any opinions, analyses or reviews that may be presented are those of the author’s alone, and have not been approved or otherwise endorsed by FutureFuel.io.

What Are Flexible Benefit Plans? [And Why They’re Important]

For years, many employers have been on the fence about whether they should offer flexible benefits plans to their employees.

And they have every right to be.

For business owners of both large and small businesses, taking of the staff should be a priority.

You want to ensure that your organization meets the needs of your employees.

Otherwise, chances are, they’ll be handing you their resignation letters faster than you can blink your eyes.

Just look at a 2018-study from the American Institute of Certified Public Accountants (AICPA).

Last year, findings from the AICPA report proved that 80% of Americans valued perks given by their boss even more than just a 30% salary increase.

Workers appreciate the non-monetary add-ons you give them. That’s clear.

Therefore, it’s only natural for you to be a bit hesitant before deciding on one of the many benefit plans out there.

If you don’t know what flexible benefits plans are or whether you should offer them to your employees, you’ve come to the right place.

In this guide, I’ll teach you all that you need to know about these plans.

Let’s get right to it.

What are Flexible Benefits Plans?

Flexible benefits plans are compensation systems offered to employees that give them the power to modify their salary and benefits package based on their personal preferences.

The executive management team approves these packages and presents them to employees. Employees pay for flexible benefits through payroll deductions from pre-tax income.

Flexible benefit programs are not to be confused with voluntary benefit plans.

The difference is that with voluntary benefits schemes, employees have to pay extra for the perks or insurance plans that your offers: with flexible benefit programs, they don’t.

Instead, employees can either:

Keep their current salary and select a combination of benefits that don’t cost them extra money
Lower or increase their base or take-home pay by taking more or fewer benefits

These modifications to salaries enable beneficiaries to cover their perks using their gross income (i.e. the money an employee gets before taxes are deducted).

Businesses base their flexible benefits plans on perks that their employees would appreciate.

These include:

Life Insurance
Health Insurance
401K Contributions (Retirement benefits)
Reimbursement accounts such as HRA that employees can access for -approved out-of-pocket expenses
Health Savings Account
Dental/Visionary insurance
Adoption assistance
Childcare services
Vacation days
Care for the elderly

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The benefits listed above are just some of the more common offers that companies make to their employees. A business is free to decide on the benefits that it believes its employees would prefer.

Types of Flexible Benefits Plans

As I mentioned before, flexible employee benefits enable staff members to cover business-approved expenses with their pre-taxed income.

Because they’re so flexible, there is more than one type of plan that employers can use to facilitate the benefits given to their workers.

Here they are:

Premium Only Plans (POP) – Premium Only Plans are the most basic flexibility benefit programs out there. In simple terms, these types of plans subtract insurance premiums (deducted from a ‘s payroll) from each staff member’s gross pay and not his or her net pay. In other words, it’s a tax saving way for employees to pay for the benefits that you have offered to them. This is because they pay for coverage under the various programs you offer using their pre-tax salary, allowing them to save on their expenses.
Flexible Spending Accounts (FSA) – With FSA plans, employees can allocate a piece of their salary (before the income tax) to cover out-of-pocket expenses like childcare/daycare or health care. Based on the amount the employee decides on, you create an annual payment plan which the employee pays monthly. As the employer, you put the funds in a safe and secure place until a member of your staff submits a claim. Once that claim has been approved, you release the funds from the safekeeping account to the employee.
Medical Flexible Spending Account (MFSA) – Employees can only submit claims on qualified medical expenses. To know which health care expenses qualify for this health plan, please refer to the IRS Publication 502 (Medical Expenses). Just like with FSAs, whatever amount the employee puts aside from their salary is held in a special account. That money will be refunded to the employee once the claim is approved.
Child/Dependent Care Flexible Spending Account – Employees can dedicate a portion of their salary to the cost of caring for their kids, elder care, and disabled spouse. Navigating the legal intricacies of these types of plans can be challenging. For that reason, I recommend that you speak to your tax advisor to know more about non-taxable benefits and your taxable income. In the meantime, you can familiarize yourself with the IRS Publication 503 (Child & Dependent Care Expenses).
Full Flex Plans – Also called “Cafeteria Plans”, Full Flex Plans are variations of the standard Section 125 plan, just like FSAs and MFSAs. With these, employees are awarded a fixed of ‘flex credits.’ With these credits, your employees can pick the benefits that they want coverage for. Each benefit costs a certain of credits. When the employee has selected all of his or her preferred benefit(s), if there is a surplus of credits, that worker is entitled to the equivalent in taxable cash compensation.
Pretax Transportation Plans – This type of plan permits employees to use part of their salary to cover expenses related to transportation. These expenses can be for parking, mass transit, or the cost of fuel. The great thing about these plans is that an employee isn’t boxed into a year-long payment. Whatever monthly allocations the employee doesn’t use can be rolled over until such time when he or she submits a claim.

Flexible-Benefit-Plans-3

As you can tell, there are lots of plans that you can offer to your staff. Be sure to carefully weigh the pros and cons of each one before you make your decision.

Flexible Benefits Plans: Why You Should Get On Board

Want to know what’s in it for you and your staff when your organization rolls out? Here’s what you can expect:

Employee Benefits

Satisfy Their Needs – With flexible benefit plans, your staff is largely responsible for the benefits that they want. This is especially true for Full Flex Plans. By giving them this option, you can be sure that they are satisfied with the combination of perks that they choose.
More Comfortable With Their Plan – In getting a thorough breakdown of the various plans that your organization offers, your employees get to better understand the plans that you have. What’s more, they also see even more clearly the benefits of each one of the perks offered. All of this contributes to raising your organization’s transparency as well as developing a positive attitude among your workers toward their job.
Self-Empowerment – Employees get to feel that their opinion is valued and that you appreciate their input in the decision-making process.

Employer Benefits

Increased Personability – By offering these plans, it shows consideration to your employees. In turn, it will help them to see you in a more humane, personable light that fosters a better working environment.
Helps To Keep Your Staff – If the flexible benefits that you put on the table are appealing and competitive, members of your staff will be less likely to quit.
Helps You Organize Your Finances – Because the plans remunerate employees at fixed prices, employers can organize their expenses in a clear and concise way.

Apart from these benefits listed above, there is another perk you can have up your sleeve as a major incentive to employees: student loan repayment benefits.

Why You Should Offer Student Loan Repayment Benefits

Assistance in student loan repayment is the best benefit you can offer an employee.

Last year, Forbes was just one of the many sources that reported and confirmed this.

Earlier this year, Forbes released a report indicating that stats showed a $1.5 trillion student debt crisis in the US.

44 million borrowers are held responsible for student loan repayments that can go up to almost $40,000 a borrower.

One of these borrowers could be your employee.

If you want to reel in recent graduates, you need to widen the range of perks you give as employee benefits. That means including some type of assistance to those employees who need help climbing out of student debt.

It also means aligning yourself with a reputable that offers a compelling package that you can outsource to handle your employees’ student debt. That’s where FutureFuel can help.

What is FutureFuel?

Founded by CEO Laurel Taylor, FutureFuel is a whose primary goal and focus is to help student repay their loans.

Plain and simple.

The achieves this by making student loan benefits accessible to employees through employer-sponsored benefits programs.

Having worked extensively in the field of student loans as an Active Contributor on the Student Debt Task Force, Laurel uses her experience to propel her and her team to realize her ‘s goals.

By 2021, FutureFuel expects that a successful partnership with employers within the private sector will enable them to knock off over $30 billion in student debt.

Partnering with FutureFuel: Benefits

FutureFuel has an interactive, user-friendly SaaS (Software as a ) platform that makes it easy for employers to navigate and retrieve data at a moment’s notice.

More importantly, with FutureFuel’s loan-crushing strategies, you can give your debt-riddled employees what they have been yearning for: a solution to their debt.

are some of the additional benefits of partnering with FutureFuel:

Return-On-Investment Calculator personalized for your ‘s specific needs
Secure & encrypted platforms
Mobile-friendly applications
Interactive, engaging, and easy-to-use interfacing
Real-time payment notifications

FutureFuel equips you with the tools needed to retain employees. Having to replace an employee is costly.

Just check out FutureFuel’s Employee Churn Cost Calculator. With this tool, you’ll learn just how much money you’ll be losing when an employee walks out the door.