When thinking of benefits, many people first consider health care, but there is much more to it. Keep reading to find out: 

• What are the different types of benefits?
• Why benefits are important to you and your employees.
• Which benefits you should offer your employees. 

What Are Employee Benefits?

Benefits are services that employees receive in addition to their salary. As an employer, the benefits you offer can play a big part when it is time for an employee to choose your business and stay with it.

Why Are Employee Benefits Important?

The importance of employee benefits is twofold:

1. They increase employee satisfaction.
2. They are a huge bonus for potential employees that are considering working for you.

What Are the 6 Types of Employee Benefits?

1. Benefits Required by Law
2. Medical Insurance
3. Life Insurance
4. Retirement Plans
5. Disability Insurance
6. Fringe (Fun) Benefits

Nowadays, there are more benefit options than simply healthcare. Here are the six types of employee benefits you should consider offering your staff.

Benefits Required by Law

Each state has different guidelines for the benefits required by law. You will always want to be compliant, so the first thing you’ll need to do is research the laws of your state. 

When looking further into required benefits, examine Social Security taxes, worker’s compensation, disability, leave, and unemployment. 

These are the benefits that are generally required but do vary. Another aspect to consider is the size of your small business. Some small businesses employ more than fifty people. 

If this applies to you, other requirements you need to consider are:

• FMLA: The Family and Medical Leave Act protects employees who must take leave for childbirth and childcare. It ensures care for spouses, children, or parents with serious illnesses or conditions. The FMLA also covers any illness or condition that prohibits employees from completing their jobs. 
• ACA: The Affordable Care Act, also known as Obamacare, includes different types of coverage, but at its base level covers medical services, such as hospital care, prescription drugs, mental health, and pregnancy. 

Medical Insurance

Keep in mind that employees will most likely expect “medical” to include dental and vision. Many insurance carriers tailor plans for small businesses. While almost every provider will require you to contact them directly for a custom quote, below are some ideas for companies to consider:

• Blue Cross Blue Shield: They offer side-by-side comparisons of plans that include options for HMO, PPO, and more. You can also choose from rates of over twenty national carriers.
• Aetna: This company advertises savings, stability, simplicity, and speed. Aetna offers online benefits, stop-loss insurance, and tax savings. Aetna’s Funding Advantage plan provides the opportunity to self-fund, which has not always been possible for small businesses.
• Kaiser Permanente: Kaiser will allow you to build your plan based on your needs. It will first ask you which state you need coverage for, offer you four categories of coverage, and provide you with information about HMO, PPO, HRA, and HSA plans. From there, they will offer you one-on-one service with an agent to help you find the best plan for your business. 

Life Insurance

Offering life insurance sets you apart from other small business employers. Because having and offering life insurance is optional, many small businesses do not include this in their employment packages. 

While life insurance policies will vary by state, it is still helpful to understand the advantage. As a business owner, life insurance allows you federal income tax-deductible premiums, employee incentives, reduced turnover, and more security for your employees. 

Retirement Plans

Retirement plans are an investment in your future, and your employees will also appreciate that you care about their future. Benefits to consider for your business are:

• Tax-deductible employee contributions
• Tax-free growth of plan
• Employee incentive and retention

Benefits for your employees to consider are:

• Reduction of current taxable income
• Contributions are not taxed until redeemed, and they are transferable from one employer to another
• Interest accrual 

Disability Insurance

Disability insurance provides employees with financial assistance should they become unable to perform their job due to work-related illness or injury. It is important to note that five states require short-term disability insurance by law: 

1. California
2. Hawaii
3. New Jersey
4. New York
5. Rhode Island

Along with other types of insurance and plans, disability insurance offers employees huge peace of mind that they are protected in the workplace. Below is more information on the two types of disability insurance:

• Short-Term Disability Insurance: This optional covers injury or illness for three to six months. Depending on the plan, short-term disability usually compensates employees for up to 70% of their income. 
• Long-Term Disability Insurance: In terms of time, long-term disability plans vary, but they usually deal in many years. These plans cover a longer time but generally cover less employee income — about 30-70%.

Disability insurance plans tend to be one of the more complex types of plans. They are a wonderful incentive to motivate employees to work for your small business, but the plans also take great consideration. Make sure to research more detailed information on these plans to decide what is best for you, your employees, and your business. 

Fringe (Fun) Benefits

Fringe benefits have become commonplace among large companies. These “fun” benefits attract employees and boost overall company morale. While it might not be possible as a small business owner to offer every benefit that a large corporation might, there are still plenty of options that you can wrangle together, like: 

• Gym memberships
• Office snacks
• Performance bonuses or gift cards
• Monthly activities: happy hour, yoga, lunch

Does Your Business Need to Offer All Six Types of Benefits?

No, your business does not need to offer all six types of benefits. Again, make sure you offer the benefits that you are required to provide by law. It is also up to you what is best for your business. 

Remember, what is best for your business now, doesn’t mean it will be what’s best in the future. If you are just starting, it might not be possible to offer all the benefits now; however, in the future, that might change. 

You can add benefits as you go, based on what your business can handle financially. 

What To Do Next

So, what’s next? It’s time to do a bit more research on your state requirements. In addition to that, take stock of what will work with your business plan. Benefits are a valuable strategy for attracting and retaining employees, so it is a consideration that can aid you in the long run. 

Break down what is best for your business and future possibilities. Then, get out there and make it happen.

Sources:

Family and Medical Leave Act ⎸ U.S. Department of Labor

My Organization Just Reached 50 Employees—What Do I Need to Do? ⎸ Employers Council

Long-Term Vs. Short-Term Disability Insurance – What's the Difference? | Guardian