When job seekers are looking for a new position, you might think the most attractive feature about a new position would be a higher salary. However, studies show this isn't always the case.
Our 2022 Employee Benefits Survey Report found that if an organization had an extra $200 to give each employee per month, 42% of employees would rather have a new employee benefit than a wage increase.
Employee benefits are any form of indirect compensation paid to employees over and above regular salaries or wages. This can include health insurance plans, retirement benefits, child care assistance, and paid time off, for example.
Employee benefit plans come in many forms and are an essential part of the overall compensation package offered to employees—especially for small and medium-sized organizations that oftentimes can't afford to offer higher salaries.
This article will outline common examples of small business employee benefits that business owners should work into their employee benefits package to better attract and retain top talent.
Employee benefit examples
If it's your first time offering employee benefits, offering the perks your employees want is vital. While ping pong tables and bean bag chairs are fun, they may not be the kind of things your employees care about most.
According to our 2022 Employee Benefits Survey Report, the most popular employee benefits are:
- Health insurance
- Paid time off (PTO), which includes sick time and vacation days
- Retirement plan benefits
- Flexible work schedule
- Dental coverage
- Vision plans
- Life insurance plans
- Paid family leave
- Mental health benefits
- Professional development and education benefits
- Disability coverage
- Commuter benefits
Other popular company benefits you can offer your employees include pet insurance, tuition assistance, financial wellness benefits, education assistance, employee assistance programs, employee stock options, and daycare services.
Part two of our Benefits Survey Report found that the types of benefits your employees value vary by age, gender, and work location (such as remote work). It's important to keep these differences in mind as you develop your benefit plans so your company can maintain a competitive edge.
Example of employee benefits structures
Once you choose your employee benefit offerings, you're ready to decide how you want to structure them.
In general, employers have two different ways to structure, contribute, and offer benefits for employees:
- Organizational-oriented benefits
- Consumer-oriented benefits
Depending on the type of benefits you're hoping to offer, you can offer all organizational-oriented benefits, all consumer-oriented, or a mix of both. Let's go over each in more detail.
Organizational-oriented benefits are the kind of benefits that are employer-owned and employer-selected. You offer your employees a specific or defined benefit of your choosing, and employees simply choose whether they want to opt in or out. Employees don't get any choice in the type of plan or benefit.
Examples of organizational-oriented benefits include:
- A traditional group health plan
- A retirement pension or retirement savings plan like a 401(k)
- A formal wellness program
Consumer-oriented benefits are the kind of benefits that are employer-funded but employee-selected. Here, you'll offer employees a set dollar amount to spend on their own (also known as an employer contribution), allowing them to customize their benefits to what they want and need. This empowers employees to make their own medical care decisions that make sense for them and their families.
Common types of consumer-oriented benefits include:
- A medical expense reimbursement plan (MERP), such as a health reimbursement arrangement (HRA)
- A health savings account (HSA)
- A flexible spending account (FSA)
- Employee stipends for fringe benefits like wellness expenses or education
Personalized consumer-oriented benefits
In recent years, personalized benefits have become increasingly popular options for offering employees a wide array of perks. Every worker is different and has unique wants and needs. Instead of offering traditional one-size-fits-all benefits, your employees are empowered to use their monthly allowances on the things that matter most to them. This makes them highly attractive benefits to both job applicants and current employees.
Personalized health benefits
While medical insurance is traditionally offered as an organizational-oriented benefit, more employers are putting healthcare decisions back into the hands of their employees by offering HRAs to cover their medical expenses.
Through an HRA, you can reimburse your employees for their individual health insurance premiums and more than 200 qualifying healthcare costs with pre-tax dollars.
Three of the most popular types of HRAs are:
- The qualified small employer HRA (QSEHRA)
- The individual coverage HRA (ICHRA)
- The group coverage HRA (GCHRA), also known as an integrated HRA
With an HRA, your employees can reduce the financial burden or costly medical bills and keep themselves and their families healthy and happy.
If you want to create attractive benefits packages that appeal to highly skilled workers and retain current employees, you need to offer a wide range of benefit offerings. A comprehensive benefits package full of traditional perks and wellness benefits can be costly. Thankfully, there's an easier way to offer different kinds of common employee benefits.
With employee stipends, you can give your workers a monthly allowance to cover the costs of expenses such as remote work, gym memberships, tuition, and other perks. With PeopleKeep, you can create custom perks for any expense categories you'd like, such as health or wellness, or offer one allowance for all eligible expenses.
For example, let's say you decide to offer eligible employees a $400 monthly allowance for health, wellness, and lifestyle expenses. Your employees can decide how they want to split their allowance. They could decide to get reimbursed for personal gym memberships, therapy, a spa day, or any other expenses that you allow under your benefits plan that can improve their work-life balance or overall well-being.
This empowers your employees to use their monthly allowance on what matters most to them while you retain complete cost control.
While most reimbursements with a stipend will be considered taxable income, some fringe benefits, such as tuition reimbursement, and certain commuter benefits, like mileage reimbursement, are tax-free. You'll want to consult with a tax professional to determine your tax liability based on the benefits you choose to offer.
While organizational-oriented benefits are more traditional structures for benefits, many small employers are finding personalized, consumer-oriented benefits are of greater value to employees, are typically more flexible, and are also more affordable.
By building out your employee benefits package with the popular benefits listed in this article, you'll be well on your way to recruiting and retaining happy employees.
If you're ready to offer personalized mandatory and voluntary benefits to your staff, PeopleKeep can help. Our benefits administration software makes it easy to set up and manage HRAs and employee stipends in just minutes each month.
This post was originally published on November 8, 2018. It was last updated on December 27, 2023.
Chase Charaba is the content marketing manager at PeopleKeep. He started with the company as a content marketing specialist in early 2022. Chase has written more than 350 blog posts for various companies and personal projects throughout his career. He’s worked for digital marketing agencies, in-house marketing teams, and as the editor for national award-winning high school and college newspapers. He’s also a YouTuber, landscape photographer, and small business owner.