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The days are long gone where an employer pays you a salary for 50 years then gives you a pension after you retire. Now, companies and organizations offer employees contracts with a wide range of benefits. Some benefits are required by law, while others aren’t essential but basically expected. Then there are those that are just nice to have. If you’re in the process of looking for a job or negotiating a new position, then it’s a good idea to become familiar with the wide variety of employee benefits that are out there.
With a competitive job market, a generous benefits package is key for attracting and retaining top candidates. If there are benefits that you could be taking advantage, but aren’t aware of, you’re practically leaving money on the table. It’s important to know the different types of employee benefits and which are available to you by a particular employer. With that in mind, we’ll look at 9 common benefits worth learning about before job hunting.
What are employee benefits?
Employee benefits are essentially the different types of non-salary compensation that employers offer to their staff and potential candidates. These benefits vary from company to company and are provided in addition to a salary, to help create a competitive package for the potential employee. Employee benefits are most commonly offered to full-time staff members at a company or organization, where part-time employees generally won’t have a benefits package included with their pay. However, part-time jobs will offer the government-mandated benefits such as workers’ compensation insurance, Social Security, and short-term disability insurance.
From an employee’s point of view, a strong benefits package increases the value of the work itself, contributing to their overall wellness and their families. For an employer, good benefits keep employees happy and committed, lowering the chance of them leaving and working somewhere else. In recent years, employers have started to offer less traditional benefits that contribute to not only an employee’s work environment and culture, but rather their life as a whole.
Why are employee benefits important?
According to the U.S. Department of Labor, employee benefits account for just under 31% of a total compensation package. Offering comprehensive employee benefits has several advantages for small businesses along with larger organizations. It shows that a company recognizes that their employees have needs beyond the workplace, and it helps to differentiate themselves from competitors within the hiring market.
Employee benefits also go hand in hand with employee retention, which is more important now than ever post-pandemic. Companies with benefits packages that include more than financial compensation have a competitive edge and it shows they prioritize a healthy work-life balance.
Types of employee benefits
Employee benefits can fall into three categories: benefits required by federal or state laws, industry-standard benefits and fringe benefits or perks. Let’s take a look at each of these benefit types.
Required by law
There are a handful of employee benefits that employers are required by federal or state law to provide to their employees. All employers must offer them in order to stay compliant with the U.S. Department of Labor laws.
Here are some of the federally required benefits that must be offered in the U.S.:
- Worker’s compensation insurance
- Social Security and Medicare contributions
- Medical benefits (Corporations with over 50 or more full-time employees must provide medical insurance to 95% of their full-time employees.)
- Minimum wage requirements
- Unemployment insurance
- Disability insurance
- Family and Medical Leave (FMLA)
Now that we’ve covered the legal requirements for employee benefits, let’s look at the benefits that aren’t required by law, but are standard across most industries. A lot of companies offer the following benefits to some extent:
- Medical/dental/vision benefits
- Life insurance
- Flexible Spending Account (FSA)
- Health Savings Account (HSA)
- Retirement plans
- Paid time off (PTO)
- Paid holidays
Fringe benefits and perks
Many companies have expanded their benefits to offer fewer mainstream options to stand out and attract candidates. These benefits can vary between industries, meaning things like remote work arrangements can be viewed as an industry standard in fields like tech or project management, but not for those working in a field such as healthcare. These additional benefits are also sometimes referred to as fringe benefits. Fringe benefits are essentially any additional perks an employer will offer that is not required by law, but considered an added bonus. These perks can include:
- Wellness programs
- Tuition reimbursement
- Commuter benefits
- Remote work options
- Bonuses and profit sharing
- Employee stock options
- Childcare benefits
Examples of employee benefits
Let’s take a look at 9 of the most common employee benefits an employer may offer. Consider these when you’re looking for a new job.
1. Medical insurance
Medical insurance is a no-brainer and one of the most popular employee benefits offered by companies. Again, because of the Affordable Care Act (ACA), employers with more than 50 full-time employees must offer medical insurance through their employee benefits programs to full-time employees only. A medical insurance plan will cover your typical health needs, excluding vision and dental, which usually have their own plan or package that is offered.
Some companies will cover the total cost of your medical insurance premium, but most likely you’ll have to cover some of it on your own. If your company offers different levels of coverage, choosing the right plan for your situation will depend on a number of factors, such as the state of your health or the number of family members on the plan.
It’s also important to find out when your coverage will begin when starting a new job. Some companies require an employee to work for at least 90 days before being able to utilize coverage.
2. Retirement plans
Retirement plan options are another common benefit nearly every employee benefits package will offer. The most common types of employer-offered retirement accounts are 401(k)s and 403(b)s, depending on whether your employer is a for-profit or nonprofit business.
Many employers offer their employees a 401(k) plan, which provides a tax-advantaged way to save for retirement. The Internal Revenue Service (IRS) allows you to contribute up to a set maximum, which changes from year to year. When analyzing the 401(k) plan that your company offers, find out what percentage of your salary you can set aside and what your investment options are as well. Also, many employers will provide a 401(k) match, which matches employee contributions up to a certain amount.
3. Life and disability insurance
Life insurance is another benefit employers offer that will cover funeral expenses and other costs in the event of an unexpected death. Sometimes this is automatically available when you start working at a new company, and other times you will have to sign up for this benefit yourself. You can also find out how much of a premium your employer will cover and if you’re eligible to purchase additional coverage. Remember that the company you work for is ultimately the policy owner, so if you leave your job, you’ll likely lose that coverage.
Disability insurance is also an important benefit that many companies offer. If you were to get injured in an accident or developed a serious illness, this type of insurance can help replace a part of your income if you’re unable to work for an extended period of time. Some companies may offer long-term and short-term disability insurance.
4. Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA)
Flexible Spending Accounts (FSAs) allow you to put a portion of your paycheck into a spending account that helps reduce your taxable income. The money in this account can then be used for medical expenses and ultimately gives you some tax advantages.
FSAs are available with most health insurance plans, however they come with a “use it or lose it” clause. This means that if you claim $2,000 for the year, but you only use $1,700 of it, you then lose $300.
Health Savings Accounts (HSAs) are more like a savings account for medical expenses — however, you can use those funds whenever you please. The money you put into your HSA is pre-taxed, giving tax advantages as well. The money placed in your HSA builds up over time and you’re allowed to use it forever, even after you switch health plans. The restriction being that the contributions you make are only tax-free when you’re enrolled in a High Deductible Health Plan (HDHP).
5. Paid time off
While not required by law, many employers offer employees some form of paid time off (PTO) to remain competitive with other companies. Paid time off is any time where you aren’t working, but still receiving pay. This can include paid vacation time, sick or personal days, and company holidays.
Your company can separate PTO time by vacation, personal and sick days, or they might bundle it, which means there’s one bank of paid leave you can use. Make sure you’re aware of your company’s PTO policy and if you have to use it all in a calendar year (versus rolling over unused time to the following year).
6. Tuition assistance
Some employers offer tuition reimbursement for people furthering their education while they are working at a company. These reimbursements can help reduce student loan debt for employees who qualify for these programs.
A company might offer a set amount toward continuing higher education, or they may cover a percentage of your tuition to offset some relief. In either case, you’ll probably be required to stay with your company for a certain period of time after you finish your degree, so be sure to read the policy carefully.
These student loan relief programs are ultimately a win-win for both employees and their employers. They help lessen the financial burden on employees and encourage them to pursue advanced degrees. Employees who pursue a higher level of education can bring more value to their current role with the knowledge and skills they are gaining. After all, an investment in your education and future is an investment for your company as well.
7. Remote work and flexible schedules
Remote work options and flexible working schedules are a cost-effective employee benefit that have become more common since the pandemic. More and more organizations are offering flextime, or a flexible start and end time to the workday. Some companies are even working with hybrid in-office and work-from-home arrangements for their employees.
8. Childcare benefits
According to Pew Research Center’s data, over 4 million Americans left the workforce in between February 2020 and February 2021. Working parents also stated that one of their biggest barriers was the lack of accessibility to affordable childcare. As more employees begin returning to the office, childcare benefits can help alleviate some of the COVID-19 burdens on parents.
One way companies are supporting their employees is by providing on-site daycare or tuition discounts to help with the costs of childcare. By offering contributions toward the high costs of childcare, companies can avoid having to rehire or fill positions for those who have to leave due to this hardship.
9. Paid holidays
The law doesn’t require employers to provide their employees with paid leave for holidays. However, many employers make sure that their employees get time off for holidays to spend time with friends and family, and enjoy a much-needed break from work life. Companies choose different paid holidays based on their own discretion.
Holidays such as Labor Day, Thanksgiving Day, and Memorial Day are usually accepted days off, but beyond that, other paid holidays are chosen by the employer. Some employers will even offer floating holidays to their staff in addition to or in lieu of traditional paid holidays.
Reviewing your employee benefits package
The importance of employee well-being is at an all-time high, so it’s the perfect time to consider if a job and its benefits package will be a good fit for you.
We’re all unique, so the benefits you want to consider will depend on what’s important to you. For example, if you want to make sure you have a bigger cushion when retiring, a 401(k) plan may be most important to you. If you have a lot of health issues, a good medical insurance plan may be your main priority. When you’re negotiating a job offer, remember that you can also negotiate your benefits. You may also be able to negotiate things such as a flexible work arrangement or a more extensive PTO plan.
Are wellness benefits considered standard?
Wellness benefits aren’t mandated by law and typically aren’t considered industry-standard either. However, these types of benefits are becoming increasingly common, especially among larger companies, as people continue to prioritize their well-being and overall health.
Is my salary more important than benefits?
There are people who value their employee benefits more than their salary. But, at the end of the day, this depends on what you value as a person and an employee. For one person the amount they’re getting paid month to month may take priority, while for someone else, the benefits offered might be the defining factor.
Are there part-time jobs that offer benefits?
Most part-time jobs don’t offer benefits to their employees as employers usually only offer them to full-time staff. However, some part-time positions can come with a few benefits.
Usually, part-time employees in a larger organization who work over 30 hours a week will receive medical insurance. Part-time employees may also be able to take advantage of retirement plans and paid unemployment, depending on the company policy or rules.
Do government jobs offer better benefits?
In some cases, government jobs might offer a more comprehensive benefits package compared to the private sector. These benefits can include a better health care plan with lower costs, or an exceptional retirement package with a higher return.
Job benefits can get confusing, especially when some companies offer so many different types. Learning what works for your lifestyle is the best place to start as you begin to take advantage of what your employer can offer you, aside from the salary itself.
As some employee benefits are required by law, others are optional. Yet all benefits are an important part of the overall compensation package used to attract new employees, and keep those who currently work for the company. As you’re on the search for new employment opportunities, be sure to keep employee benefits in the back of your mind when interviewing or accepting new offers.