Why Spousal Benefits Are Key to Employee Retention

Employee retention can be challenging for small and mid-sized businesses, especially in a competitive job market where employees have more choices than ever. While salary is important, benefits also play a significant role in whether employees feel supported and motivated to stay at your company long term.

For many workers, employer-sponsored benefits and perks aren’t just for them. By offering benefits to employees’ spouses, you can reduce their stress, enhance their financial security, and improve their well-being.

This article explains why spousal benefits matter and how small and mid-sized organizations can leverage them to improve their employee retention rate and keep their staff satisfied.

In this blog post, you’ll learn:

• What employer-sponsored spousal benefits are, and the most popular types that businesses can offer their employees.
• The many advantages of providing spousal benefits at your workplace.
• How small and mid-sized businesses can support their employees and their spouses with a flexible, cost-effective health reimbursement arrangement (HRA).

What are employer-sponsored spousal benefits?

Spousal benefits are company benefits that an employer extends to their employees’ legally married spouses (and sometimes domestic partners) as part of their overall compensation package. Most commonly, spousal benefits refer to employer-sponsored health benefits, but they can also include other perks and voluntary benefits.

Even if your employees’ spouses don’t work at your company, it’s still a good idea to offer benefits that they can use. Simply put, it helps your compensation package feel more inclusive, family-friendly, and attractive, which can positively impact employee morale and retention.

Plus, offering spousal benefits is the norm for employers. According to KFF’s 2025 Employer Health Benefits Survey, “nearly all firms” with 200 or more employees and 96% of smaller businesses that offer health benefits provide some sort of family coverage¹. By not offering health coverage and other benefits to your employees’ spouses, you may have trouble competing with other employers for top talent.

What are popular types of spousal benefits?

Offering spousal benefits can be an effective way for small to mid-sized business owners to stay competitive in their industry, attract and retain top talent, and support their employees’ entire families.

Below is a list of some of the most common employer-sponsored spousal benefits:

• Group health insurance benefits: Most employers that offer traditional group coverage options allow employees to enroll their spouses in their employer-sponsored health insurance plan, resulting in cost savings for the entire family’s medical care.
• Health reimbursement arrangements (HRAs): Employers can use HRAs to reimburse participating employees tax-free for eligible out-of-pocket costs and, with a stand-alone HRA, health insurance plan premiums.
  • You can extend an HRA to your employees’ spouses and dependents, provided you and the plan administrator outline this in your benefit plan details, and the spouse meets the coverage requirements for the specific type of HRA you offer.
• Flexible spending accounts (FSAs): FSAs often allow employees to use pre-tax dollars for eligible medical expenses incurred by themselves, their legal spouses, and their dependent children.
• Health savings accounts (HSAs): Like FSAs, employees and their spouses can make tax-free withdrawals from their HSAs to pay for qualified healthcare costs.
• Dental and vision health plans: Offering dental and vision benefits to spouses encourages preventive checkups and overall family well-being.
• Life insurance benefits: Optional or employer-paid life insurance benefits provide employees and their families with financial security and peace of mind.
• Employee assistance programs (EAPs): Many EAPs allow spouses to access mental health support, financial counseling, and other resources that help lower stress both at home and at work.
• Wellness programs: Spouses may be eligible to participate in workplace wellness initiatives to reinforce healthy habits, such as health coaching and wellness challenges.

How does offering spousal benefits improve employee retention?

Benefits play a vital role in how employees evaluate their employer and long-term career decisions. For many workers with families, spousal benefits can be a deciding factor in whether they remain at your company or seek new opportunities. Below are a few reasons why offering spousal benefits can help you achieve a greater retention rate and a happier workforce.

1. They improve job satisfaction

When a potential employee is considering a job offer, they’re likely going to look at how well your benefits package will support their entire household. If you offer spousal benefits at your company, employees are more likely to feel that you genuinely care about their well-being beyond the workplace.

Higher satisfaction with their employee benefit options can lead to greater trust in their employer and fewer worries about their family’s health and security. The more support you offer, the less likely your staff will seek opportunities elsewhere, even if a competitor offers a higher salary.

2. They reduce financial and personal stress

Health coverage is one of the biggest expenses for many families. According to KFF, in 2025, the average annual premium for a family plan was $26,993, an increase of more than $9,000 since 2015¹. Offering spousal benefits and sharing the cost of the premium helps reduce the financial burden on employees who might otherwise have to buy a costly health plan for their families on their own.

When employees aren’t preoccupied with worries about medical bills or financial hardship, they’re more engaged, less stressed, leading to greater productivity and increased retention.

3. They increase loyalty and company commitment

Providing spousal benefits often results in dedicated employees who are willing to commit to your company long-term, rather than only sticking around for a couple of months. Employees who rely on benefits for their spouse may be less inclined to change jobs, especially if similar benefits are difficult to find elsewhere.

This strategy can be particularly beneficial for attracting experienced or high-performing employees who seek company stability, which can help retain institutional knowledge in the workplace and reduce turnover costs.

4. They help employers stand out in a competitive labor market

Within an industry, many employers may offer similar salaries and benefits for a specific role. While you may not be able to raise your salary offering, providing a variety of spousal benefits can help set your company apart from others. This can be a major deciding factor for candidates with spouses or families when choosing between job offers.

Even for existing employees, knowing that you offer benefits that competitors may not can reinforce their decision to stay at your company.

5. They support employees through major life changes

Life events — such as getting married, a spouse losing their job, or the addition of a child (including adopted or foster children) — can all impact an employee’s stability at work. Employers that offer spousal benefits provide continuity during these types of life changes, helping employees navigate the transition without added unnecessary stress.

By supporting employees through these major life events, employers build trust with their staff and demonstrate their flexibility, which shows employees that their company can grow with them and meet their needs as their lives evolve.

How can small and mid-sized businesses support their employees’ spouses with their healthcare expenses?

Many employers offer group health coverage, which is the traditional way for employees, their spouses, and their legal dependent children to get medical coverage. While group plans may be suitable for larger companies, they can be costly, offer limited plan types, and have participation requirements that can be tricky for small businesses to meet.

An alternative option to group health insurance coverage is a stand-alone HRA. This type of health benefit gives employers a tax-advantaged way to support their employees’ and their spouses’ medical costs. First, you set a fixed monthly allowance. Employees then choose their own health coverage and pay for the premiums and other qualified medical expenses out of pocket. After they submit documentation showing an eligible purchase, you reimburse them tax-free up to their set allowance amount.

Two stand-alone HRAs can work for small and mid-sized businesses:

1. The qualified small employer HRA (QSEHRA). Business owners with fewer than 50 full-time equivalent employees (FTEs) can use a QSEHRA to reimburse their employees for health insurance plan premiums and qualified out-of-pocket costs. While the QSEHRA has maximum contribution limits, there is no minimum limit, and you can vary allowances by age or family status.
2. The individual coverage HRA (ICHRA). Available to businesses of all sizes, the ICHRA is even more flexible than the QSEHRA. There are no contribution limits, and employers can customize eligibility and allowances using employee classes. You can also vary allowances by age and family status. As your business grows, you can use an ICHRA to meet the employer mandate requirements outlined in the Affordable Care Act (ACA).

HRAs can reimburse employees for their spouses’ eligible medical expenses as long as you design your benefit to allow spouses to participate. As long as the employee and their spouse have a legal marriage, IRS-approved healthcare costs that the spouse incurs are eligible for reimbursement, just like the employee’s own expenses.

Eligibility for spouses depends on the type of stand-alone HRA that you offer:

• With a QSEHRA, employees and their spouses must have a healthcare plan that meets minimum essential coverage (MEC) standards to participate in the QSEHRA and receive tax-free reimbursements for qualified medical expenses. ACA-compliant individual health plans (which include self-only and family plans) are a common type of health coverage that provides MEC and is compatible with the QSEHRA.
  • Employees can buy a health insurance policy that provides MEC on a public exchange, such as the Health Insurance Marketplace, or a private exchange.
• With an ICHRA, participating employees and their spouses must have qualifying individual health insurance coverage — such as an ACA-compliant marketplace health plan, Medicare Parts A and B, or Part C — to take advantage of the ICHRA benefit.

Conclusion

These days, spousal benefits are more than just a nice perk to have — they’re necessary for improving employee satisfaction and retention. When you help support your employees’ spouses, you’re showing them you care and highlighting your company as a family-friendly workplace, ensuring your staff stay engaged instead of looking for a new job elsewhere.

For small and mid-sized businesses, offering a health benefit that your employees and their spouses can participate in doesn’t mean you’re bound to a traditional group health plan. With PeopleKeep by Remodel Health, we’re here to help you design and administer an affordable and customizable HRA that you, your employees, and their families will love. Contact our HRA specialists today to learn more!

This blog post was originally published on January 31, 2017. It was last updated on December 26, 2025.

References

1. KFF - 2025 Employer Health Benefits Survey