How to set up and design an employee benefits program

For employers and HR professionals, setting up an employee benefits program can feel complex. From choosing the right health benefits to managing costs and compliance, there’s a lot to consider.

But designing a strong benefits strategy doesn’t have to be overwhelming. By defining your goals, setting a budget, and offering perks that meet employee needs, you can build a benefits package that attracts and retains top talent.

With the right tools, benefits administration becomes far more manageable. PeopleKeep by Remodel Health’s benefits administration software makes it easy to design, launch, and manage personalized benefits through health reimbursement arrangements (HRAs).

In this article, we’ll walk through how to set up an employee benefits program that works for your organization.

In this blog post, you'll learn:

• How to create a competitive employee benefits package.
• Popular types of employee benefits.
• How HRAs offer cost savings over traditional group health insurance plans.

What is an employee benefits program?

An employee benefits program is a type of compensation package offered in addition to salary.

It can include:

• Health insurance
• Life insurance
• Disability insurance
• Retirement plans
• Paid time off (PTO)
• Parental leave
• Mental health support
• Flexible work arrangements

Some employee benefits are mandatory, such as workers’ compensation and unemployment insurance. Others are voluntary and designed to improve employee satisfaction and well-being. According to PeopleKeep by Remodel Health's 2024 Employee Benefits Survey, 81% of employees consider an employer’s benefits package an important factor when deciding whether to accept a job.

In recent years, there's been a shift toward personalized benefits instead of traditional benefits. Today, there are five generations in the workforce, each with unique wants and needs. Conventional types of employee benefits, such as group health insurance, don't allow employees to control how they use them.

Personalized benefits empower employees to use their benefits in the best way for them. You can do this by allowing your employees to choose the benefits and perks that are most meaningful to them. Usually, this involves providing a monthly contribution or setting aside a monthly allowance to reimburse employees for eligible expenses.

Which personalized employee benefits are available?

While traditional benefits like group health insurance still work for some organizations, many employers are turning to more flexible models.

Common personalized benefits include:

• Health reimbursement arrangements (HRAs)
• Employee stipends
• Health savings accounts (HSAs)
• Flexible spending accounts (FSAs)

Let’s take a closer look at HRAs and employee stipends.

HRAs

Stand-alone HRAs allow you to provide eligible employees with tax-free reimbursements for qualifying medical expenses, including individual health insurance premiums.

The two most popular stand-alone HRAs are

• The individual coverage HRA (ICHRA)
• The qualified small employer HRA (QSEHRA)

Businesses of all sizes can utilize an ICHRA. The ICHRA has no maximum contribution limits. You can cater to diverse employee demographics by varying allowances based on job-based criteria. Employees who opt into the benefit must have a qualifying form of individual health coverage to participate.

In contrast, QSEHRAs are for small businesses and nonprofits with fewer than 50 full-time equivalent employees (FTEs) that don't offer a group health plan. The IRS sets maximum annual contribution limits for QSEHRAs. All full-time W-2 employees are eligible for the benefit if they have a medical plan with minimum essential coverage (MEC).

With a QSEHRA or ICHRA, your employees can purchase the individual health plans that work best for them. This gives your employees greater control over their medical care and allows them to receive personalized care. Simply set a monthly allowance for your employees and approve their reimbursement requests for eligible expenses.

HRAs are great options for organizations seeking a formal health benefit without the high costs and complexities of traditional insurance.

Employee stipends

Another popular type of personalized benefit is an employee stipend. Employee stipends are taxable benefits that employers often provide to employees as a one-time benefit or regularly. They're also called fringe benefits, employee perks, voluntary benefits, or lifestyle spending accounts (LSAs). A stipend is essentially extra money you add to your employees' paychecks.

Depending on your stipend, you can give your employees money for various expenses, like professional development, tuition reimbursement, transportation, and more. Stipends are flexible and easy to offer to many workers, including part-time employees, 1099 contractors, and international workers.

Employee stipends are subject to fewer regulations than other types of benefits. But the IRS considers them taxable income for employees. Additionally, employers may need to withhold federal, state, or local income taxes on stipends.

A health stipend allows you to offer your employees a set amount of money to pay for their health insurance premiums and other out-of-pocket costs, like prescription drug coverage, vision and dental care, mental health benefits, and other medical bills.

Health stipends are flexible, meaning they can work alongside other health benefits like group health insurance coverage, HSAs, and HRAs. Since they're not considered a formal health benefit, they won't impact employees' premium tax credit eligibility. You can also offer them to international workers and 1099 employees.

However, health stipends come with some drawbacks for employers. You can't ask employees for proof of health insurance coverage, and you can't ask employees to prove they used their stipend on any items listed on IRS Publication 502. Additionally, health stipends can't satisfy the Affordable Care Act's employer mandate.

How to set up an HRA

If you decide to offer an HRA to your team, there are six steps you need to follow.

1. Choose which HRA you want to offer

Will you offer an ICHRA? Or a QSEHRA? Or, do you want to keep your group health plan and supplement it with a group coverage HRA (GCHRA)? When choosing the right HRA for your organization, consider your company size and employees' needs.

2. Select a budget

Next, you need to set your budget. This will help you decide what monthly allowance you can afford per employee.

It's okay if you don't have a large budget for several types of employee benefits. You can still make an impact on a small budget.

Here are a few ways to increase your benefits budget:

• Reallocate funds from underutilized or unused employee benefits to the new benefit.
• Eliminate any existing benefits that your employees don't use. An employee feedback survey with benefits-focused questions can show you how your benefits compare.
• Offer popular employee benefits instead of a large raise this year.

Your employee benefits package isn't set in stone. You can always start small and increase your monthly allowance or benefits offerings in the future. No matter how much allowance you offer, you can help ease the financial burden of healthcare for your employees.

3. Design your benefit

HRAs feature many customization options. From differing monthly allowances by family status or employee class to establishing waiting periods, you can tailor your benefit to fit your needs.

4. Pick your start date

You can offer an HRA at any time, not just during Open Enrollment. It's best to give your employees adequate notice so they can start looking at individual healthcare coverage options and decide whether they want to participate in the benefit plan. The federal government recommends giving your employees at least 90 days' notice before their benefits begin.

5. Create the necessary plan documents

An HRA must satisfy federal ERISA requirements. This includes creating legal plan documents and summary plan descriptions (SPDs).

6. Tell your employees about the HRA and reimburse them for eligible expenses

Benefits communication is critical. Employees need to understand how the benefit works, when it begins, and how to use it.

Once launched, you’ll need a system for reviewing expenses, approving reimbursements, and maintaining compliance.

How PeopleKeep by Remodel Health simplifies employee benefits administration

Managing compliance, documentation, and reimbursements manually can be both time-consuming and risky. Partnering with an HRA administrator allows you to offload the heavy lifting. It also ensures your benefit runs efficiently and seamlessly.

PeopleKeep by Remodel Health helps employers:

• Design an HRA
• Automatically generate required plan documents
• Review and approve employee reimbursement requests
• Stay aligned with federal regulations
• Onboard and educate employees

With our benefits platform, employers can offer flexible, personalized health benefits without adding administrative burden.

We also offer in-house health insurance shopping to improve the employee experience. Employees can compare plans straight from their online portal, instead of having to navigate the Health Insurance Marketplace on their own.

Conclusion

Creating a personalized employee benefits package doesn’t have to be complicated. With thoughtful planning and the right tools, you can build a program that supports your team while protecting your budget.

Ready to offer flexible, personalized benefits that attract and retain top talent? Schedule a call with one of our HRA specialists to see how PeopleKeep by Remodel Health can help.

This blog article was originally published on April 20, 2022. It was last updated on February 17, 2026.