We get asked all the time, especially when we first engage with an employer or when we are helping an employer startup a program for the first time, what are the most common forms of employee benefits that are out there, so in this article, I want to share some insights that we see from our clients and business partners to possibly give you some ideas on things you could do to help attract and retain good employees.
Health Insurance: I start with health insurance because this is typically the #1 thing an employer will be asked about when they start trying to recruit employees from other businesses. After salary is discussed, the next question is usually about benefits and health insurance. The absence of a health insurance program typically leads an organization to start a benefits program. This is often the first pillar in that program, sometimes even starting by itself out of the gate.
Dental Insurance: Dental insurance is a very common benefit we see among most of our clients, but that is in part because we partner with some very competitive and flexible companies that allow us to help smaller businesses with customized, affordable programs. Not all insurance companies want to work with smaller businesses. You can usually determine their appetite by looking at the benefits and pricing they make available for a given market. If you are being charged or told that you need to spend $40 or $50 for an employee for dental, you need to find a different provider.
Vision Insurance: Vision is another benefit, similar to dental, that I consider very touchy-feely, meaning it’s a benefit that many employees will need and use, similar to health insurance. Still, it doesn’t come with the giant price tag. A good vision plan should be less than $10 a month for a single employee and can be even more affordable if the employer is willing to chip in. We normally recommend at least a 50% contribution from the employer to get some deeper discounts on the pricing.
Time Off / PTO / Vacation: Most people don’t really think of this at first, but this is also a very important benefit and one that you can use to get creative and really tailor to your workforce. Giant companies like Netflix have gone to having unlimited PTO, whereas some have an increasing PTO balance based on tenure. Internally, we also give time off for bereavement and voting and have two floating holidays that employees can take whenever they want. These costs are rolled into the salary you are paying already, so a good PTO policy and one that speaks to your employee base can be super valuable and help your company’s culture.
Retirement Plan / 401k: As we all know, the days of pensions and company-sponsored retirements are mostly gone, so giving your employees a platform to help them save towards their retirement, even possibly with a little matching program from your company, can go a long way. We normally see this setup a little further down the road. This is a benefit that will help attract talent and, without it, could prevent some people from being willing to come to work for your company.
Health Savings Accounts or Flexible Spending Accounts: These are both tax-favored spending accounts with some similarities as far as what you can pay for with the accounts. Still, their actual setups and durations are very different. High level, an FSA is a use it or lose it type program, so an employee needs to be sure what they put in they can spend in the given timeframe allowed. An HSA is a bit of a different animal, where this is an actual bank account that the employee owns that has no use it or lose it feature, but you do have to be on a qualified health plan to be able to have one and fund into it. HSA’s are sometimes referred to as a health 401k. As long as you are okay with a plan that goes with an HSA, the use and maxing out of this type of account can be a wonderful long-term savings strategy.
Dependent Care FSA: You can normally roll one of these out alongside a traditional FSA, BUT these are unique in that they are intended to help an employee pay for dependent care with dollars that are not taxed. For those that don’t realize it, childcare is NOT cheap.
Ask any of your employees who have to pay for daycare, so often, this is just a tool to help employees lower their taxable income a bit if they are, in fact, paying for childcare. Not something everyone will use or want, but those that can use it will certainly appreciate your company making it available. I remember several years back, we were very excited when our daughter went into kindergarten because we could STOP paying for her daycare as she entered into public school.
Telemedicine programs: Most insurance providers have telemedicine bundled in, but often you have to pay the same copay you would pay in a doctor’s office when you call in. Remember, the insurance companies are paying claims for these calls, so they want their claims costs to be as low as possible. However, on the other hand, usually for around $10 a month or less per family, depending on the provider you are working with, you can get a direct telemedicine contract that has $0 copays when you call in. These, in some situations, can make a lot of sense.
These can also be offered to part-time employees or 1099’s or certain segments of your workforce that maybe can’t afford or who don’t get access to traditional health insurance. This is not insurance, so it’s not nearly as regulated, so you can get creative here. Want to brainstorm on this? Give us a call, we’d love to.
Short and Long Term Disability: Disability insurance, simply stated, is a way to ensure your pay. If you get sick or injured and can’t work, disability insurance will kick in after the initial waiting period and will start to replace your lost income. These amounts are usually in or around 60 – 65% of your pre-disability earnings but will normally be important to management level and above employees. The #1 claim on short-term disability is maternity. If you have a younger, vibrant workforce, many of whom are in the stages of their life where they want to start a family, you might get questions specific to short-term disability. These programs are both relatively affordable compared to health insurance, but they need to make sense and be lines of insurance that your staff needs or cares about.
You can get creative here as far as the offerings and benefits as well. Many employers will be for all of the LTD but maybe only a portion of the STD, etc. There’s no one single approach. Just like all people are different, so are all employers and their benefits programs.
Life Insurance: Last but not least is life insurance. If you have a staff of younger employees, chances are they are not carrying any life insurance on themselves whatsoever. It’s pretty common for an employer to have a small term policy for all of their full-time staff, usually somewhere in the neighborhood of $50K or less. Nobody will get rich off of that if something happens to someone, but that amount would certainly help out an employee’s family if something tragic were to happen and an employee were to pass. Most life insurance providers will also let employees buy additional life insurance, usually up to 5x their salary on top of what the company offers.
This is a great way for employees to get some add’l financial protection but have very little to no underwriting compared to what they would have to deal with in the individual market.
Thank you all so much. I know this list went a little long, but I didn’t want just to list out these items without any context. I hope this list gives you some good food for thought, and as always, if we can help with any of the above or even if you’d just like a good brainstorming session, we’re here and love to talk shop. Please let us know what we can do to help. Talk soon!