Taking care of your employees by offering comprehensive and inclusive employee benefits is now more important than ever. That’s because benefits are one of the best ways to improve employee satisfaction and retention.
But what if you don’t have the time to build and manage a benefits package? This article will explain personalized benefits and how to set up your employees’ benefits program in one hour or less.
What is an employee benefits program?
An employee benefits program allows your organization to provide employee benefits such as health or life insurance and retirement plans. These programs can include traditional group health insurance policies, dental and vision insurance, and employee perks.
Offering attractive employee benefits helps your business stand out from your competition in a tight labor market, especially in the wake of the Great Resignation. You can attract and keep the best talent with an employee benefits package.
However, there’s been a shift away from traditional benefits and toward personalized benefits in recent years.
Today, there are five different generations in the workforce, each with unique wants and needs. Traditional employee benefits such as group health insurance don’t allow employees to control their benefits and how they use them.
Personalized benefits empower employees to use their benefits in the best way for them. This is accomplished by allowing your employees to choose the benefits and perks that are most meaningful to them. Usually, this is done by setting aside a monthly allowance to reimburse employees for eligible expenses.
Which personalized employee benefits are available?
Many traditional benefit options are available for organizations of all sizes, including small group health insurance. But, more organizations are finding that personalized benefits better fit their employees’ needs than the traditional choices.
There are many types of personalized benefits available for organizations. This includes offering a health savings account (HSA), a flexible spending account (FSA), health reimbursement arrangements (HRAs), employee stipends (also called fringe benefits or perks), and transportation benefits, just to name a few.
HRAs enable you to provide your eligible employees with tax-free reimbursements for their individual health insurance premiums and qualifying medical expenses.
Three of the most popular types of HRAs are:
- Qualified small employer HRA (QSEHRA)
- Individual coverage HRA (ICHRA)
- Group coverage HRA (GCHRA), also known as an integrated HRA
QSEHRAs are specifically designed to be a standalone health benefit for small businesses with fewer than 50 full-time equivalent employees (FTEs), while businesses of all sizes can utilize an ICHRA. Simply set a monthly allowance for your employees and approve their reimbursement requests for eligible expenses.
You can also use a GCHRA to supplement your existing group health insurance policy by reimbursing employees for out-of-pocket medical expenses.
HRAs are great options for organizations looking to offer a health benefit without the costs and complexities of a group health insurance plan.
With a QSEHRA or ICHRA, your employees can purchase the individual health insurance coverage that works best for them. This gives your employees more power over their healthcare so that they can receive personalized care.
Another popular type of personalized benefit is an employee stipend. Employee stipends are taxable benefits often provided to employees through expense reimbursements. They’re sometimes referred to as fringe benefits, employee perks, or lifestyle spending accounts (LSAs).
Employee stipends come with fewer regulations than other types of benefits. However, they are taxable for both the employer and employee.
We’ll dive into a few of the most popular employee stipends in the next section.
Popular employee stipend benefits
There are many employee stipends available for your organization. Some of the most popular employee stipend options are health, wellness, and remote work.
A health stipend allows you to reimburse your employees for their insurance premiums and medical expenses, much like an HRA.
Because stipends are taxable, you can offer your health benefit to employees who receive advance premium tax credits without affecting their eligibility in the program. You can also provide health stipends to more employees, such as international workers, than you can with an HRA.
With a health stipend, your employees can purchase and get reimbursed for their own individual health insurance policy that best fits their needs. Or, they can use their stipend on out-of-pocket medical expenses. The choice is theirs as long as it fits your health stipend benefit design.
Wellness stipends are sometimes confused with health benefits, but they aren’t the same. A wellness stipend, sometimes called a physical activity stipend, reimburses employees for other wellness expenses such as gym memberships or fitness classes.
A wellness stipend doesn't cover health insurance or other medical expenses. Instead, you can reimburse your employees for various activities, programs, and apps that support overall wellness.
Like other personalized benefits, a wellness stipend gives your employees the power to decide how they want to use their benefits. For example, if you provide your employees with a $100 monthly allowance each, they can choose which of your selected expense categories (such as exercise classes or mobile wellness app categories) to get reimbursed in.
If you allow reimbursements in all categories, then your employees can choose to get their gym membership reimbursed, or they could save their monthly allowances to buy their own exercise equipment in a few months.
Offering a wellness stipend as part of your employee wellness program can improve the overall well-being of your employees, boost productivity in the workplace, and reduce employee stress.
Remote work stipend
If you have remote employees, you can offer them a remote work stipend. A remote work stipend reimburses your employees for their work from home expenses.
For example, you can reimburse an employee for their home internet bill. This ensures that they’ll have a stable high-speed internet connection to perform their duties.
How to set up an HRA
Are you interested in offering an HRA to your employees? Setting up an HRA with benefits administration software is easy.
You can create an HRA benefit in just a few steps:
- Design your benefit
- Add your employees to the benefit
- Employees submit proof of incurred expenses
- Review and approve expenses for reimbursement
How to set up your organization's employee stipend benefit
Now that you have an idea of the most popular employee stipend benefits, let’s see how you can easily set up your new employee benefits.
Here are the steps to creating an employee stipend benefit:
- Select a budget
- Choose which benefits and categories you’d like to offer to your employees
- Create eligible employee classes (optional)
- Add your employees to the benefit
- Reimburse employees for their eligible expenses
1. Select a budget
Start by choosing your budget. This will help you decide what monthly allowance you can afford per employee.
It’s alright if you don’t have a large budget for employee benefits. You can still create an impact on a small budget. However, there are a few ways for you to stretch your budget.
Here are a few ways that you can increase your benefits budget:
- Reallocate funds from underutilized or unused employee benefits to the new benefit
- Eliminate any existing employee benefits that your employees don’t use (Hint: this includes in-office perks)
- Offer employee benefits instead of a raise this year
Your benefit isn’t set in stone. You can always start small and increase your monthly allowance or benefits offerings in the future.
2. Choose which benefit and categories you'd like to offer
Employee stipends are fully customizable. You can create a personalized benefits package that’s tailored to you and your employees.
You can choose to offer just one stipend, such as a wellness stipend, or a combination of stipends to cover your employees’ physical, mental, and financial wellbeing.
3. Create eligible employee classes
If you want, you can offer your employee stipends to different classes of employees. You can base benefit eligibility on class membership as long as you use job-based criteria such as full-time or part-time. You can’t use a class to discriminate against an individual.
4. Add your employees to the benefit
Now that you’ve created your personalized employee benefit, it’s time to add your people! Once you’ve added everyone to the benefit, let them know. Hold a company meeting or announce your new benefits through email or some other form of official communication.
Ensure your employees know how the employee stipend works and what expenses they can be reimbursed for. Then, let them know how to submit their expenses for reimbursement.
Your employees are now ready to start using their benefits!
5. Reimburse employees for their eligible expenses
Once employees make eligible purchases, they can submit their expenses for reimbursement. You’ll approve or reject the expenses and then reimburse your employees through payroll, check, or cash.
That’s all there is to set up an employee stipend benefit. Keep in mind that you’ll need to ensure that your benefit is compliant with any applicable laws or regulations.
Creating a personalized employee benefits package doesn’t have to be complicated. By following the steps in this article, you’ll be able to create a benefits package that empowers your employees to use their benefits the way they want to.
Are you ready to offer personalized benefits to your employees? PeopleKeep can help! WorkPerks is our latest software solution that helps organizations like yours to easily offer reimbursable employee stipends for health, wellness, and remote work expenses.