Types of company health benefits to offer employees

MUNGKHOOD STUDIO // Shutterstock It’s easy to think that workers care the most about pay–after all, that’s typically why they work. But equally important to most workers are the company’s health benefits. In fact, 73% of small business owners said offering competitive benefits is critical to their company’s survival, reports Thatch.  Employee benefits like health insurance, retirement accounts, and paid time off aim to help employees stay healthy, financially stable, and able to succeed.  Those that offer strong benefits often see higher employee retention, improved morale and productivity, and lower costs (and less time) devoted to acquiring talent.  In this article, Thatch discusses common types of company health benefits, how those plans differ by the size of your business, and how you can successfully set up an employee benefits program to retain top talent. TL;DR Company health benefits, like insurance coverage, retirement plans, and paid time off, help increase employee productivity and well-being. The ACA requires large companies (over 50 employees) to provide health insurance, while small businesses don’t have to. A strong benefits package helps companies attract top talent and increases employee retention, engagement, and job satisfaction. Beyond simple medical insurance coverage, employee benefits plans can include dental and vision insurance, various types of retirement plans, and supplemental options, like flexible or health spending accounts. What Are Employee Benefits? Employee benefits are non-salary compensation offerings from a company to its employees. Benefits packages may include health insurance, retirement plans, paid time off, professional development opportunities, and more. The overall goal is to support workers’ well-being, future financial security, and general job satisfaction. Why Offer Employee Benefits? Employee benefits serve both the company and its employees in several ways:  Easier talent attraction: Excellent benefits can make an organization more enticing to potential employees. This reduces recruiting time and costs, as well as the burden of having roles open for long periods.  Stronger employee satisfaction and loyalty: Employees receiving a strong benefits package will likely feel appreciated and cared for, increasing their satisfaction and company loyalty. Better employee retention: When employees feel they’re taken care of adequately, they’re more likely to remain for the long term.   A more inclusive workplace: Providing benefits that meet employees where they are, whether regarding their health or other areas, makes it possible to grow a more inclusive organization. A healthy workforce: Enabling employees to take care of their health–both mental and physical–results in healthier, more productive employees. Common Types of Employee Benefits Thatch There are various types of employee benefits, some required by law or industry standards and some quite rare. Some legally required benefits include Social Security, unemployment insurance, and Family Medical Leave Act, or FMLA, leave. While these are government benefits, organizations must withhold taxes to ensure employees can access these programs.  Below are some of the most common types of benefits including health benefits, dental and vision benefits, retirement plans, and PTO. Group Health Insurance Thatch Group health insurance is an insurance plan purchased by the employer and offered to employees. It’s a popular option because group rates enable a lower cost per person compared to individual plans. In most cases, the employer picks one or two insurance providers the employee must use.  Health Reimbursement Arrangements (HRAs) Health reimbursement arrangements, or HRAs, are employer-paid plans that reimburse workers for medical expenses and, sometimes, insurance premiums. These arrangements also offer flexibility for employers with specific health care needs or preferences.  However, they don’t directly cover medical services, allowing employees to use dedicated funds for medical costs instead. Individual coverage health reimbursement arrangements (ICHRAs) allow organizations of any size to reimburse their employees for individual insurance premiums instead of covering a group policy. ICHRAs differ from group plans in that they offer more flexibility–which can be favorable for companies and employees alike. Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) cater specifically to small businesses (under 50 full-time employees). This type of plan lets companies reimburse employees for health premiums and expenses up to a set limit.  Health Insurance Stipends A lesser-used option is to provide employees with a health insurance stipend, where you provide a specific amount of money (or a defined contribution) to workers, which they can use for health expenses like insurance premiums.  This arrangement can offer more flexibility, letting employees choose the plan or service they want, and it’s also simpler and more cost-effective for the employer than offering a full benefits plan.  Employers must provide the same stipend to all workers, regardless of any demographic differences. Though these funds may not be enough to cover all health costs, they’re considered taxable income for employees.  Supplemental Benefits Some companies strive to create a well-rounded package by including additional supplemental coverage with their healthcare plans. These may include the following: Flexible spending accounts (FSAs): Employees can set aside pre-tax income to pay for qualifying medical costs. Health saving accounts (HSAs): Employees often receive HSAs in conjunction with a high deductible plan. The HSA offers tax-free withdrawal for medical costs and may be funded by the employee, employer, or both. Employee assistance programs (EAPs): Employees can use EAPs for additional mental health support, financial planning, or legal help, often at no cost for a specific number of services. Telemedicine or virtual care: Employees can access medical care virtually. Dental and Vision Insurance  Most companies provide dental and vision coverage as part of their benefits plan, along with medical insurance. Standard dental insurance covers preventative services like exams, cleanings, and X-rays and usually provides 50%-80% coverage for more in-depth treatments like fillings or root canals.  While typical dental insurance plans don’t cover orthodontia, some companies offer employees the chance to sign up for a costlier plan that will cover orthodontics. Vision insurance covers annual eye exams and usually covers a specific dollar amount for vision hardware such as glasses or contact lenses. Retirement Plans  Retirement plans are a common employee benefit that enables financial security for workers’ futures. There are different types of retirement plans a company may offer, including: 401(k) plans: Employees contribute income (either pre-tax or, in the case of a Roth account, post-tax) to a retirement investment account. These tend to be the most common type of plan, and many employers match worker contributions as additional compensation. 403(b) plans: Similar to the 401(k), but usually offered by not-for-profit organizations. Pension plans: Guarantee a monthly benefit based on the employee’s years of service and salary. These plans are becoming less common as employers are focusing more on retirement savings options where employees can save, invest, and manage their own funds. Simple IRA and SEP IRA plans: Frequently used by small businesses because of their lower costs and ease of setup compared to other plans. Paid Time Off Paid time off, or PTO, refers to time an employee may take off work without cost or penalty. Some companies offer a separate bank for vacation time and one for sick leave, while others include everything under the same umbrella.  Most companies offer paid time for workers to take holidays off, as well, and some organizations provide additional personal time or flexible days.  It’s been standard for companies to offer a set number of hours, which may increase over time based on employee tenure. More recently, some organizations have begun offering unlimited or flexible vacation, meaning there is no specific limit to how much time off an employee can utilize.  Additional Employee Benefits  In addition to the legally mandated and standard employee benefits, many companies provide additional benefits, such as: Parental leave: Parental leave is not required by federal law, and only a minority of states require it. Many companies choose to offer paid parental leave, which employees can use alongside FMLA leave if they’re eligible.  Mental health coverage: To foster a healthy workforce, some organizations include mental health coverage in their health insurance packages or offer separate mental health coverage. Extra health benefits: Some companies take on an additional cost burden to provide extensive health benefits, such as fertility treatments and gender-affirming care. Wellness programs: Companies may offer some combination of funds toward healthy habits, incentives for healthy behaviors, or free or discounted memberships to gyms or fitness classes. Commuter benefits: If a company can’t or doesn’t wish to offer remote or flexible work, they might instead offer compensation toward an employee’s commute, whether that means paying for parking or providing a pass for public transit.  Professional development/education stipends: Employees can use these dedicated funds to further their formal education, attend industry conferences, or complete relevant certifications.  Benefits Plan Considerations by Business Size Companies looking to set up a benefits plan should consider multiple factors: company size, existing budget, employee needs and desires, and any regulatory requirements. Companies With 2-50 Employees Thatch Under the Affordable Care Act, or ACA,, companies with a staff of fewer than 50 have no legal requirement to offer health insurance benefits for employees, but providing such benefits is a key way to attract talent. It’s most helpful to consider: Cost: Because small companies and startups often have small budgets, finding a plan that covers the essentials without breaking the bank is crucial. This is where options like HRAs or QSEHRAs can come in handy. Ease of administration: As small businesses may not have large (or any) HR teams, it’s best to select a plan that is simple to administer and doesn’t require complex knowledge. Working with a benefits broker can be an excellent choice. Flexibility and customization: Most small businesses plan to grow over time, so it’s helpful to choose a plan that can easily be updated as needed. Another way to save costs is by setting up a customizable plan, meaning employees can opt into the coverage they need, reducing costs for what they don’t. Companies With 51 or More Employees In addition to the considerations of small businesses, larger companies should consider: Regulatory requirements: Companies with 51 or more employees must provide employee health benefits per the ACA. While dental, vision, and other benefits are not legally required, they often complement medical benefits and are expected by most employees. Medical coverage: The more workers an organization employs, the more varied their needs will be, so a plan that covers a wide range of medical needs is best. Network: Especially if a company employs workers across states, it’s crucial to find plans that cover a variety of providers and hospitals.  Employers of all sizes should be mindful of the premium cost to employees –the more affordable, the more attractive the benefit. Businesses should also select insurance plans that are easy for workers to use and have an efficient claim process. How to Set Up a Successful Employee Benefits Program  To get started with setting up a successful employee benefits program, follow these best practices: Analyze employee needs: What benefits will your staff consider the most valuable? What would be ideal but is not necessary? Find out by gathering feedback via surveys or discussions.  Focus on inclusion: Provide a package that is inclusive of all backgrounds, including age, family situation, gender, and health needs. Consider costs: Budget is an important factor for employees and companies alike. Figure out what your organization can spend on a benefits program and what sort of plan(s) would work best. Also, consider the cost impact on employees and try to find options with lower premiums. Know the law: Take time to understand any local and federal regulations that apply, and stay up to date with policy changes. Consulting with a benefits expert or broker can be especially helpful here. Roll out the program: Ensure employees understand the available benefits, how to enroll, and how to use them.  Assess over time: Once you’ve rolled out a program, take a pulse on how it’s working by regularly seeking feedback from employees. Company Health Benefits FAQ Am I required to offer employee benefits? Businesses with fewer than 50 full-time employees are not obligated to provide health benefits per the Affordable Care Act.  However, any business employing more than 50 workers has to offer employee health insurance. For companies of any size, a competitive benefits package will attract higher-quality talent. What health benefits are typically available to employees?  Typical health benefits include medical insurance, dental insurance, vision insurance, and often mental health coverage and other wellness programs. Some companies provide additional support for employee health expenses in the form of health savings accounts (HSAs) or flexible spending accounts. Employees can use these accounts to pay for qualifying medical expenses with pre-tax dollars. How do company health benefits work?  Employers choose and fund health insurance plans, then give employees the option to enroll upon joining the company, experiencing a qualifying life event, or during annual open enrollment. Typically, employees pay a portion of the premium through deductions from their paychecks, while employers cover the rest of the premium cost. What are the top five types of employee benefits?  The top five standard types of benefits for employees are health insurance, paid time off (which includes vacation time, sick time, holiday pay, and more), retirement plans such as 401(k), dental insurance, and vision insurance.  These benefits comprehensively support employees’ physical, financial, and mental well-being.  What is not covered under a health benefit plan?  Standard health insurance plans do not typically cover treatment they consider elective, such as cosmetic surgery, experimental medications or procedures, or alternative therapies.  Standard plans may not even cover weight-loss treatment, gender-affirming care, or fertility treatment.  Do most employers include healthcare as a benefit?  It’s overwhelmingly common for employers to include healthcare as a benefit, especially as it is the standard for Americans to receive their healthcare coverage through employment.  A robust benefits package can make your organization more attractive to prospective employees and can create a workforce that’s healthier, happier, and ready to perform at the top of their game. This story was produced by Thatch and reviewed and distributed by Stacker.