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Navigating employee benefits: A comprehensive guide for growing businesses

navigating employee benefits

Launching a successful benefits program in your workplace calls for a savvy employee benefits strategy.

Here, we’ll cover everything you need to know about employee benefits. After all, despite the significant costs for employers associated with benefits, an attractive benefits package is important for:

  • Establishing the prestige and competitiveness of your workplace
  • Recruiting top-tier talent in a challenging job market
  • Boosting employee engagement and satisfaction, and therefore retention
  • Demonstrating that you care about employees’ health and wellness
  • Promoting employee productivity while mitigating absenteeism
  • Maintaining compliance with federal and state laws

Nowadays, the cost of not providing benefits outweighs the costs of the benefits themselves.

Common employee benefits

Here’s a list of the employee benefits that should be on your radar. At a minimum, these are the benefits you should offer to employees to meet their expectations and be able to compete with other companies vying for talent. In fact, you may be required by law to provide some of these benefits to employees.

1. Health insurance

Health insurance aims to assist employees with the costs of obtaining medical care. This is one of the most critically important benefits to employees, given the generally high costs associated with medical care. (Optional dental and vision care are usually offered alongside health insurance for an added fee.)

The U.S. Affordable Care Act dictates whether your business is legally required to provide health insurance and what your health care plan must cover based on its size.

2. Other types of insurance

If an employee loses their ability to earn an income on a temporary or permanent basis, certain types of insurance can help protect their families and livelihoods.

These benefits offer employees a great deal of peace of mind:

  • Life insurance, provides a set payment to the employee’s beneficiaries in the event of their death.
  • Disability insurance, provides employees with replacement income and pays for medical bills if they become disabled and are no longer able to work.
  • Workers’ compensation insurance provides employees with replacement income and pays for medical expenses if they are injured or become ill on the job. In exchange for this benefit, employees give up their right to sue their employer over their work-related injury, regardless of which party is at fault.

To confirm your company’s legal obligations for these types of insurance, check the laws in your particular state.

3. Retirement plans

Employees want to be able to save for retirement and plan for their futures. The financial wellness of your workforce is especially critical given economic conditions, record-high inflation and high levels of household debt, leading many workers struggling to save enough money.

In a 401(k) plan, the most common type of retirement plan, employees can save up to a certain amount set by the U.S. Internal Revenue Service (IRS) each year. Many employers match their employees’ contributions to boost their savings.

In addition to considering key questions when selecting a retirement plan provider, the recent passage of the SECURE Act of 2022 has made it even easier for employees to save more in 401(k) retirement plans and has given employers more incentive to offer these plans.

To confirm your company’s legal obligations for retirement plans, check the laws in your particular state.

4. Employee leave

Paid time off (PTO) is among the most popular and sought-after employee benefits, giving employees time to rest and recharge, attend to personal obligations, spend time with their families and take vacations.

Most employers offer their employees PTO – usually between 10 to 14 days per year at minimum. As you build a PTO program, you’ll want to consider key questions, such as whether to:

  • Combine sick leave with PTO
  • Offer a standard set of PTO days or unlimited PTO days
  • Offer a tiered PTO system in which the number of PTO days increases with employee tenure
  • Allow PTO days to roll over year after year

To further enhance your company’s competitiveness, you may want to consider other, lesser-known types of employee leave.

4. Employee wellness programs

Especially since the COVID-19 pandemic, employee wellness programs have skyrocketed in popularity. After witnessing the many stressors placed on employees over the last few years, employers recognize the importance of prioritizing employee wellbeing, which encompasses:

  • Physical health
  • Mental and emotional health
  • Social health
  • Financial health

Wellness programs aim to:

  • Provide educational resources on wellness-related topics
  • Promote healthy behaviors that employees can practice on an ongoing basis (and may even help lower health insurance costs!)
  • Make it easier for employees to prioritize their own health with on-site screenings or clinics
  • Connect employees with tailored resources and professional expertise through an employee assistance program (EAP)

An EAP is one of the most important components of a wellness program. It can act as a convenient, one-stop place for employees to confidentially seek help with a variety of personal needs at no cost or a reduced cost. The main benefits of these programs are that they:

  • Encourage employees to seek help for certain issues unburdened by social stigmas or surprise costs
  • Enable quicker resolution of issues that could become bigger distractions down the road, thus maintaining productivity

Employees can seek advice, get questions answered, forge connections with specialized resources and obtain services related to areas such as:

  • Finances and taxes
  • Legal issues
  • Home and family life issues
  • Substance abuse
  • Counseling for everything from trauma to grief
  • Stress management
  • Wellness and nutrition

Or, an employee assistance program could help with everyday, common employee needs, such as identifying:

  • Care providers for elderly parents or young children
  • Contractors
  • Nearby local activities and events

The appeal of employee assistance programs is incredibly broad and diverse!

Employees appreciate employers who take the extra step of openly demonstrating care for their wellbeing. Having such a program may set your company apart in the job market.

5. Flexible spending accounts (FSAs) and health savings accounts (HSAs)

HSAs and FSAs can help employees better prepare for medical expenses and, in the case of HSAs, even help employees enhance their retirement savings.

An HSA is a savings account into which employees who are enrolled in high-deductible health plans (HDHPs) can transfer funds to help cover eligible medical expenses tax-free. The IRS sets an annual contribution cap, but ultimately there is no limit to the funds that can accumulate over time in an HSA—and the funds can roll over year after year. (Funds can be withdrawn for non-eligible expenses, but they will be taxed.) Once an account reaches a certain amount (usually $2,000), the funds can be invested, which makes an HSA a long-term, tax-free investment for retirement.

An FSA also helps employees set aside funds for eligible medical expenses, but it’s an employer-sponsored plan. For employees, this means that they don’t have to participate in a certain health insurance plan and employers will reimburse them up to the full annual elected amount, regardless of how much the employee has contributed. These funds do not roll over year after year. The IRS also places an annual contribution cap, but employers may elect a lower cap.

Which option is better depends on your workforce, but either can be a great option for promoting financial stability.

6. Additional perks and incentives

Fringe benefits are one of the strongest ways to establish your company as an employer of choice and differentiate it from competitors in the job market. Sometimes, a job candidate’s decision to accept a position can come down to the extra, less common benefits that a workplace offers. These could include any number of services or programs that enhance employees’ quality of life and working conditions, ranging from educational assistance to achievement awards and options for greater workplace flexibility, including remote work.

Managing employee benefits

So, how do you:

  • Select the right benefits for your workplace?
  • Get started with an employee benefits strategy?
  • Manage a benefits program over time?

Setting priorities and goals

Employee benefits are not only one of your heftiest expenses as an employer, but what you offer can make or break the employee experience at your company.

Be strategic about your benefits offerings. Consider:

  • What will make your company most competitive to job candidates
  • What your current employees want and expect
  • The goals you are trying to accomplish in terms of morale, engagement and retention (the “why” behind any benefit)
  • Which benefits are required according to federal and state law
  • How benefits fit into your employees’ total compensation picture


As you put together your benefits offerings, be realistic about what your budget can accommodate. Be as competitive as possible without sacrificing fiscal responsibility.

To obtain the full cost of a benefit, evaluate all these factors:

  • Premiums
  • Employee contributions
  • Dependent coverage
  • Deductibles and cost-sharing
  • Regulatory compliance
  • Broker or consultant fees

Often, health insurance is the single largest benefits cost for employers. According to the U.S. Bureau of Labor Statistics (BLS), private-sector employers spend an average of $2.86 per hour, per employee, to provide health insurance to their workforce (as of December 2023). The smaller a company is, the more consequential these numbers get.

More than other benefits costs, health insurance costs also tend to rise consistently each year, largely due to:

  • Rising cost of care (medical inflation)
  • Expanding regulatory requirements
  • Your company’s plan usage and claims history over the prior 12 months

To minimize your company’s health insurance costs, helpful tips to consider when buying group health insurance include examining HDHPs—characterized by lower premiums and higher deductibles and out-of-pocket maximums—coupled with HSAs.

When it comes to benefits cost containment and negotiating renewal rates, small and medium-sized businesses may need additional assistance. (See more information about how a professional employer organization can help below.)

Enrollment and administration processes

Simplify the implementation of your employee benefits strategy by starting early—ideally, giving your company at least one year to fully explore your options for plan details and providers. This increases the odds that you meet employees’ needs while staying in budget.

It also gives you time to plan your enrollment process and avoid any potential issues.

For maximum efficiency in benefits enrollment and administration, it’s helpful to have an online system that both employees and human resource personnel can access. For employees, online enrollment saves time and reduces stress. On the administrative side, an online system guides employees into submitting complete applications and forms, and data entered by employees goes directly to the insurance provider. This eliminates administrative headaches and manual work.

Communicating with employees

Given the broad array of options before them, benefits can be a complex and overwhelming topic for employees. Be ready with a communication plan that can help guide employees through the enrollment process.

Distribute an informational packet or have an internal benefits website that includes:

  • A comparison list of what in-network and out-of-network physicians and hospitals are covered
  • Side-by-side comparison of premiums, contributions and deductibles for each plan option
  • FAQs addressing the most common questions you anticipate
  • Explanation of any changes from previous years

Benefits is a topic that should be covered extensively in any new-hire orientation.

Additionally, hold a meeting for current employees to review new information together and give employees the opportunity to ask questions. If it’s the first time that employees are using an online system to enroll for and manage their benefits, make sure they understand how to use it.

It’s also a good idea to draw the total compensation picture for each employee so they understand and appreciate the full value of what they get from your company. Benefits are, essentially, a “hidden paycheck.”

Issue a report or compensation statement showing the employee’s salary plus:

  • What your company pays each month for their health, disability, workers’ compensation and life insurance
  • The total dollar amount of their paid leave for the year based on their salary
  • The amount your company matches in their retirement account
  • Any other services and resources they have access to for free or at reduced cost, compared to the market rates for those same services and resources

Send employees reminders about when and how to sign up for benefits, increasing the frequency of these reminders as deadlines approach. You may need to follow up with individual employees who have not enrolled to confirm their awareness of upcoming deadlines.

Addressing changes and updates

If your company is making annual changes to any benefits, be sure employees understand:

  • What they had
  • What they’re gaining
  • What they’re losing
  • The next steps

It’s understandable that employees may have significant concerns when changes to benefits offerings happen. Fear of the unknown and a perceived lack of control can make employees anxious. Have a plan in place to allay employee stress, particularly about changes to health insurance.

Evaluating program effectiveness

Feedback is essential to the success of any program so you can make modifications when needed.

Want to know whether your benefits package is contributing to your goals?

Trying to determine if employees are satisfied?

Regularly touch base with employees and solicit their opinions in an annual benefits survey.

Also, stay on top of what your competitors offer through diligent research.

How a PEO can help

Benefits can be overwhelming for employees and employers alike.

At many small and medium-sized businesses, personnel lack the time and resources to research all their vendor and plan options, perform a cost analysis and negotiate rates. Many leaders just simply don’t have the desire to oversee benefits administration either—especially while they’re trying to run a business.

A professional employer organization (PEO) can help by assuming full responsibility for employee benefits. PEOs usually sponsor and administer their own benefits plans, meaning that PEOs research options, negotiate contracts and manage vendor relationships to ensure compliance, cost containment and stability. Because PEOs can pool together all their client companies, PEOs are also considered larger employers and can therefore access the high-quality benefits typically reserved only for bigger companies at competitive rates.

PEOs can also work directly with employees on benefits education and enrollment, and can guide employees in making decisions and answering questions.

Summing it all up

To be competitive with other companies and attract and retain the best talent at your company, you need a thoughtful and effective employee benefits strategy. Of the most common types of employee benefits, make selections based on legal requirements, budget, employee and candidate expectations and what will most differentiate and elevate your company. Give your company plenty of time to evaluate options, make decisions and establish a process. Communicate regularly with employees and make sure they understand the value of the benefits they’re getting, along with when and how to enroll. Promptly update them on any changes to their benefits. It’s also important to continually research and compare your benefits against peer companies and solicit employee feedback so you can make adjustments as needed.

To learn more about building an employee benefits strategy and becoming an employer of choice, download your free magazine: The Insperity guide to employee benefits.