10 Dec Types Of Employee Benefits To Secure For Your Employees
As a small business, the quality of employee benefits you offer is directly proportionate to the quality of employees you’ll get. Therefore, you’ll find that you have to provide competitive benefits to attract outstanding talent and compete with the big corporations in your industry.
There are three main types of employee benefits: benefits required by law, benefits that are not just a legal requirement but are also industry standard, and fringe and perks offered by employers.
Some of the benefits required by law are a requirement of the federal government, while other legal requirements will differ according to the state in which your business operates. Therefore, to select a benefit, you have to understand the legal requirements of both the federal government and your state requirements to be fully compliant.
Furthermore, you have three main options when it comes to benefits administration. The first is doing it yourself, where you handle sourcing and administration of employee benefits in-house. The second option is working with an Administrative Assistant Organization (ASO), to whom you outsource all the administrative aspects of managing your employees, including benefits administration.
Your third option is working with a Professional Employer Organization (PEO), to whom you not only outsource your benefits administration but contract the PEO to serve as the employer on record. As an employer on record, the PEO takes up the risks of employee administration, including non-compliance liabilities.
In this article, you will find:
- Your complete list of employee benefits.
- Other employee perks small businesses can offer.
- Pros and cons for outsourcing benefits administration.
- How MartinoWest can help with benefits administration.
Table of Contents
Your Complete List of Employee Benefits
Below is a list of employee benefits you should secure for your employees.
Businesses should offer their employees an assortment of health insurance coverages, which may include:
- Medical Insurance – Covers doctor consultations, prescriptions and surgeries. Both the employer and the employee contribute to the premium.
- Dental Insurance – Depending on the service provider, the policy may prioritize prevention and diagnostics, including annual exams, X-rays and fluoride treatments.
- Vision Insurance – Typically includes eye examinations, prescription glasses or contact lenses.
- Health Savings Account – Provides a structure for employees to save a part of their pre-tax income for qualified medical expenses, including deductibles, co-payments and co-insurance expenses. The employee is only eligible to save HSA if they have a qualified High Deductible Health Plan (HDP). The funds roll over year to year and, in some cases, attract nontaxable interest.
- Flexible Spending Account – FSA, also referred to as the Flexible Spending Arrangement, is an account for employees to deposit money for out-of-pocket health care costs. The savings are not taxable, and the employees save the amount equal to the taxes payable on the money saved. The amount saved must be used within the year, and it is optional for the employers to contribute to their employees’ FSA.
- Health Reimbursement Account – Also referred to as the Health Reimbursement Agreement, this a collection of plans you fund as an employer. The account is used to give employees tax-free reimbursements for qualified medical expenses for a fixed amount every year. Unused money is rolled over to subsequent years.
- Cancer Insurance – Supplemental insurance payable after a cancer diagnosis. Policyholders are paid a lump sum or extra health care cost payments, depending on the provider.
- Critical Illness Insurance – Also known as critical care insurance or critical illness coverage, this provides a lump sum cash payment to help cover qualified, serious illnesses.
- Hospital Insurance – An insurance policy that covers qualified employees’ hospital costs.
Employee Assistance Programs
Personal problems, such as family or marital problems, workplace interpersonal conflict, depression, substance abuse, and a host of other legal and financial issues, are covered under EA
Employers may also take up an accidental death and dismemberment insurance if the insured employee dies or is seriously injured in a car crash or other types of accidents. For injuries, the payout is limited to cases where there is a loss of limb, finger, sight, speech or hearing or cases of paralysis or coma resulting from the accident. The cover overlaps with life and disability insurance but is not provided in place of either one of the two.
Disability insurance pays a percentage of an employee’s income if they cannot work for extended periods owing to a disability. There are two types of disability insurance: short- and long-term insurance. Both pay a percentage of an employee’s monthly salary up to a cap usually prescribed in the insurance policy. The differences between the two covers are as follows:
Short-Term Disability Insurance
Long-Term Disability Insurance
Usually replaces 60% – 70% of the employee salary.
Replaces 40% – 60% of the employee salary
Payout is every month for a period of up to one year.
Payout of benefits is as long as the disability persists. There are plans with a payout for a certain number of years, or up until the employee’s age of retirement.
It has a short waiting period, typically two weeks before the first payout is made.
The waiting period before the first payout may be up to 90 days after disability.
You can opt to provide accident insurance to your employees, which covers out-of-pocket expenses for accidental injury. Workers’ compensation is another type of accident insurance offered to employees who suffer an injury during their employment. The cover is provided in exchange for the employee giving up the right to sue the employer in case of an accident.
401(k) or 403(b) Retirement Plans
Even though only 401(k) plans apply to a small, for-profit business, I’ll go over both so that you understand the differences.
Both plans are meant to provide a structure for assisting employees to save for retirement and are named after the respective tax code sections that establish the retirement plans. Additionally, both programs allow employers to match employee contributions, although employer matching is not compulsory with 403(b) plans.
Employers with 403(b) plans have to comply with the Employee Retirement Income Security Act (ERISA) to offer a contribution match.
The difference between the two types of plans are as follows:
401(k) Retirement Plans
403(b) Retirement Plans
Offered by private, for-profit business entities to eligible employees.
Offered by tax-exempt entities, such as hospitals, non-profiled organizations, religious organizations and governments.
Offer mutual funds, annuities, stocks and bonds. More expensive and usually have multiple and attractive investment options
Offer only mutual funds and annuities.
Are more expensive for employers.
Are less expensive for employers because of reduced administrative costs.
Other Employee Perks Small Businesses Can Offer
There are other creative perks and benefits you can offer to your employees. Perks and fringe benefits are not required by law and may include:
- Student Loan Assistance – Works especially for entities seeking to attract and retain young employees. Employers who offer student loan assistance usually can limit their assistant to an amount of up to $1,200 per year.
- Transit Passes – If your employees have to commute to work, transit passes are an inexpensive perk that you can offer to employees to bring down their commute costs.
- Flexible Work Schedule – Imagine you could offer customized work schedules to your employees to help them achieve their work-life balance goals. Such a benefit ensures that your employees are motivated to be efficient about the time spent at work.
- Training and Development – You could reimburse your employees for professional development courses or organize in-house courses for your employees. Again, it boosts employee morale and competency.
- Paid Time Off (PTO) – Covers paid vacation, sick days and company holidays, among other days during which employees still receive pay even though they are not on active duty.
- Relocation and Housing Benefits – If you cannot get the right talent within your area of operation, you may be forced to look outside your state or country. Relocation and housing benefits serve as incentives to make it easier for prospective employees to leave their residential area and move to a place in proximity to your business. The benefits may include financial assistance to help your employees move and house hunting support.
- Fitness Opportunities – Employees could benefit from membership access to fitness centers near the office or residential area.
Pet Insurance – For employees with pets, such insurance covers veterinary treatment costs if their pets are injured or ill. Some policies may even pay if a pet dies, is stolen or causes injury to a third party, or destroys third-party property.
Pros and Cons of Outsourcing Benefits Administration
At this point you may be asking yourself what the options are for administering employee benefits. Would you want to administer the benefits in-house, or would you like to outsource? Also, how do you decide whether to outsource to a company specializing only in benefits administration or a PEO?
Advantages of Outsourcing Employee Administration
Freedom to Focus on the Core of Your Business
You don’t want to spend a lot of time worrying about the administration of your business. Ideally, especially for small companies, all your focus should be on the core of your business. Also, benefits administration can be technical and requires an adequate understanding of the benefits industry and players to negotiate the best deals for your company. Do you have relationships? Do you have time to build the required relationships? If you answer no to any of these questions, then you should strongly consider outsourcing.
Get the Best for Your Employees
Working with a specialist, like a Professional Employer Organization, to secure and administer your employee benefits means that you get to have the best from the market.
A PEO has a substantial aggregate number of employees, enabling us to negotiate for better quality deals at reduced prices when seeking out insurance covers and other benefits. Think large group benefits at small group rates.
Compliance and Risk
You don’t have to worry about complying with employee human resource administration’s legal and technical aspects. Furthermore, in the event of noncompliance (which hardly ever happens when working with PEOs), you do not bear the burden of penalties and liabilities associated with noncompliance.
Disadvantages of Outsourcing Employee Benefits Administration
Reduced Control Over Employees
Once you delegate HR and benefits administration to a PEO, you give up complete autonomy when it comes to designing policies or making decisions about employees. Therefore, it is imperative when you’re assessing a PEO to work with that you take time to find one that will understand your business and pay full attention to your needs.
How MartinoWest Can Help with Benefits Administration
MartinoWest offers unique bundles to serve as a single point of service for all your employee-related needs. Our products include payroll, HR compliance, benefits administrations, risk management and so much more.
We take the time to understand your business values, vision and mission, enabling us to design custom solutions suited for your unique business. Working with us ensures that you secure the best benefits for your employees at reduced rates, allowing you to free up resources to finance other crucial aspects of your business.
MartinoWest will also empower you to participate in decision-making by breaking up a solution’s costs in detail and helping you compare to your current expenses. With this approach, you are always confident of your potential savings in terms of time and money achieved from working with MartinoWest.
MartinoWest can also design employee perks and benefits that are cost effective and suitable for your business, your corporate culture and the type of employees you want to attract.