Considerations for Offering 4 Types of Employee Benefits

If you’re in charge of administering employee benefits there’s a lot to consider. Some employee benefits are like popcorn and candy at the movies — they’re expensive and not always necessary, but they add to the overall experience and make things more enjoyable. 

There are many employee benefits that employers can offer. The most common employee benefits include paid time off, healthcare insurance, and retirement planning. However, not all benefits are created equal. What benefits you provide will depend on what you can afford to offer — and what your employees want. 

In general, there are four types of employee benefits. As an employer, you don’t have to offer every benefit available. Some are required, but others provide an opportunity for you to mix and match what makes the most sense for your employees and your bottom line. 

1. Required Benefits

It only makes sense before you consider adding to your benefits package that you ensure you’re providing what you’re legally required to. While you may not consider some of these benefits, because they are mandatory — they factor into the total cost of your benefits. 

Medicare and social security contributions, unemployment insurance, workers’ compensation insurance, and family and medical leave (under FMLA) are benefits employers must provide. And if you employ 50 or more full-time employees, you also have to offer health insurance. 

In Colorado, employees are also entitled to certain leave or time off, including family care leave, paid sick leave, domestic violence leave, Civil Air Patrol leave, qualified volunteer leave, and voting leave.

Considerations for administering required benefits: 

• Check legal requirements in your state for other benefit requirements based on local laws. If you have workers in multiple states, check benefit requirements for those locations as well. Many states vary when it comes to leave, workers’ compensation, and unemployment insurance. 
• Monitor requirements as you grow — as benefit requirements and labor laws can change based on your company size.

2. Healthcare Benefits

Health insurance can quickly become a steep expense for employers. And the rising cost of premiums isn’t going to slow. Due to the cost, only 30% of organizations with fewer than 50 people offer group health insurance. There are ways to lower the cost of benefits, but when it comes to health insurance, employers are limited in the strategies they can take. 

However, if you can offer healthcare, it’s the most impactful for employees — especially as the pandemic has put heightened concern around healthcare coverage for everyone.

Employers can offer plans or network types that differ based on their monthly premium or deductible costs. Specific plans vary, but typical options are an HMO, PPO, POS, EPO, or HDHP. Most organizations offer a PPO plan, but depending on your company size it isn’t always possible.

Considerations for administering healthcare benefits: 

• Encourage health and wellness among your employees — how healthy they are can impact the monthly and annual costs for healthcare. Monthly costs come from your premiums, and your employees’ routine visits and prescriptions. Annual costs include emergency room visits, hospitalizations, lab work, x-rays, and more. Look for healthcare plans that include wellness programs that integrate with fitness trackers and provide incentives for reaching health goals. 
• Evaluate the levels of richness and tradeoffs in different plans. Rich plans have lower premiums, no or low deductibles, less out-of-pocket costs, and low copays. HMOs often fall into this category but are costly to plan sponsors and can be restrictive. More cost-effective plans have higher out-of-pocket costs, higher deductibles, and copays, but are less attractive to employees who require more healthcare.

3. Supplemental or Voluntary Benefits

Employers can offer a variety of benefits outside health insurance and what is required.  These benefits are usually less expensive but can be just as impactful to your employees’ wellness. Some examples include: 

• Dental or vision coverage
• Retirement planning
• Flexible spending accounts
• Employee assistance program
• Tuition assistance
• Vacation time

It is important to note, Colorado will soon require businesses to provide a retirement savings option for employees through the Colorado Secure Savings Program. Find out if you’ll be impacted by this rule here. 

Considerations for administering supplemental benefits: 

• You don’t have to provide all the voluntary benefits out there. While providing a retirement savings plan is the most common supplemental benefit to offer — adding in one to two additional voluntary benefits can go a long way in rounding out your benefits package. 
• Note that there can be a generational divide on how supplemental benefits are valued. Consider the demographics of your employees — namely, their age or life stage when providing supplemental benefits. For example, an older demographic may appreciate retirement options, while a younger demographic of workers may value tuition assistance or student loan repayment plans.

A Word On Millennials 

The majority of your workforce is likely to be made up of Millennials soon — if it isn’t already. Just a few years ago, Millennials prioritized paid vacation and overtime over other benefits like health insurance. But as the youngest of the Millennials turn 26 this year, they’ll no longer be covered on their parent’s health care plans. 

Though they’re still younger in age and healthcare may not be the most used benefit to them for several more years, it’s worth watching Millennials. Some studies indicate that Millennials don’t take advantage of preventative care as they should and will be less healthy as they age compared to Generation X. 

4. Perks 

Yes — perks are benefits too! Benefits are typically thought of as those outlined above. But they can be so much more than that. Benefits include everything you provide your employees above and beyond their wages.

Perks are additional rewards, incentives, discounts, or activities that provide value for employees on top of their salary. They’re often non-wage compensation but can highlight that you care about your employees and their well-being just as much as traditional benefits. 

Office drinks and snacks, commuting assistance, discounts, awards, wellness programs, and learning credit are just a few examples of potential perks. Review a full list of perks you can offer your employees here. 

Considerations for administering perks: 

• Perks are great low-cost alternatives for employers who want to offer more benefits but may not be able to afford them.
• Your employees and the type of culture you have will determine what perks make the most sense. 

Again — you don’t have to provide every benefit out there. However, to remain competitive and increase your chances of hiring top talent, offering benefits is necessary. To learn more about how to identify the right mix of benefits for your employees and ways to save on costs, download our eGuide on building better benefits.