For many small businesses, the struggle to compete with larger companies for talent is an uphill battle — particularly when it comes to benefit offerings. While you know recruiting and retention is important, you may not be sure if the benefits you offer are a selling point to your potential employees. This list (and their definitions) can help; compare the 16 types of employee benefits we’ve listed here to what you currently have available, and see if you’re offering things prospective employees are really looking for.
There are four major types of employee benefits many employers offer: medical insurance, life insurance, disability insurance, and retirement plans. Below, we’ve loosely categorized these types of employee benefits and given a basic definition of each.
Health / Medical
1. Medical insurance — Medical insurance is likely a no-brainer—it’s one of four major types of benefits most employers offer. It covers things including hospital and doctor visits, surgeries, and prescriptions. Employers usually cover a portion of this premium.
2. Dental insurance — Most dental policies emphasize prevention and diagnostics, typically covering annual exams and cleanings, X-rays, and sometimes fluoride treatments. (Bankrate.com)
3. Vision insurance — Vision insurance is designed to help your employees cover and budget for ongoing vision care expenses like routine eye exams, prescription glasses, and contact lenses.
4. Flexible Spending Account (FSA) — According to Healthcare.gov, a Flexible Spending Account (also known as a flexible spending arrangement) is a special account employees put money into that they use to pay for certain out-of-pocket health care costs. Employees don’t pay taxes on this money, which means they save an amount equal to the taxes they would have paid on the money you set aside. As an employer, you may make contributions to your FSA, but you aren’t required to. The amount you elect must be used in that plan year.
5. Health Savings Account (HSA) — Sometimes referred to in the same conversation as an FSA, an HSA is a savings account that lets employees set aside money on a pre-tax basis to pay for qualified medical expenses. Using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses can lower overall health care costs. An HSA can be used only if employees have a qualified High Deductible Health Plan (HDHP). HSA funds roll over year to year if employees don’t spend them. An HSA may earn interest, which is not taxable. (Healthcare.gov)
6. Health Reimbursement Account (HRA) — Sometimes called Health Reimbursement Arrangements, these are group health plans funded by you, the employer, from which your employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. Employers fund and own accounts. (Healthcare.gov)
7. Cancer insurance — This is an insurance policy that pays only after cancer has been diagnosed. Cancer insurance is supplemental insurance, and most types pay policyholders a lump sum upon diagnosis with a covered cancer, while others offer supplemental payments for healthcare costs. (MAACenter.org)
8. Critical Illness insurance — Critical Illness insurance, also referred to as Critical Care insurance or Critical Illness coverage, provides a lump-sum cash benefit to help cover expenses associated with a qualifying serious illness. (UHC.com)
9. Hospital insurance — Hospital insurance also known as hospital indemnity insurance pays out
10. Life insurance — In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death. Most employer-sponsored programs are term policies. Employers may provide a basic amount of coverage at no cost, with the employee having the option to buy more. When the employee changes employers, the policy terminates; some policies offer a conversion right, but the premiums will increase. (NerdWallet)
11. Accidental Death & Dismemberment insurance — Accidental death and dismemberment, according to NerdWallet, ”pays out if you die or get seriously injured in an accident, such as a car crash. The payout for injuries is limited to cases where you lose a limb or finger; lose sight, speech or hearing; or suffer paralysis or coma as the result of an accident. The coverage overlaps a little with life insurance and disability insurance, but it shouldn’t be considered as a replacement for either one.”
12. Disability insurance — Disability insurance pays a portion of an employee’s income if they can’t work for an extended period because of an illness or injury. There are two types of disability insurance that are typically offered: short-term and long-term. This NerdWallet article explains the differences between short-term disability insurance and long-term disability insurance.
13. Accident insurance — Pays for the medical and out-of-pocket costs that you may incur after an accidental injury. This includes emergency treatment, hospital stays, and medical exams, and other expenses they may face, such as transportation and lodging needs. (eHealthinsurance.com)
14. 401(k) & 403(b) plans — A 401(k) or a 403(b) is a retirement plan named for the section of the tax code that governs it. A 401(k) plan can be an important tool for a business to attract and retain employees. When administered correctly they should not pose much of a risk to the plan sponsor, but we have seen and heard too many stories of small business owners getting in trouble for issues they could have avoided. It is critical to make sure you are partnering with an advisor who specializes in 401(k). A 403 (b) plan is available only for employees of public schools and certain tax-exempt organizations.
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There are several other types of retirement plans including Defined Benefit where an employer employer promises a specified pension payment, lump-sum (or combination thereof) at retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service and age. These plans are increasingly rare.
15. Employee Assistance Program (EAP) — According to SHRM, “An employee assistance program (EAP) is a work-based intervention program designed to identify and assist employees in resolving personal problems (e.g., marital, financial or emotional problems; family issues; substance/alcohol abuse) that may be adversely affecting the employee’s performance.”
16. Pet insurance — Pet insurance helps cover the costs of veterinary treatment in the event of illness or injury. Some policies will also pay out if a pet dies, is lost or stolen, causes injury to a third party, or damages a third party’s property.
Aside from the 16 types of employee benefits listed above, employers interested in recruiting and retaining the best talent should consider offering benefits that include the following:
- Time-off benefits.
- Phone and internet reimbursement.
- Health and wellness benefits, including gym memberships or reimbursement, wellness programs, etc.
- Scholarships or tuition reimbursement.
- Student loan repayment.
This article is reposted from GenesisHR Solutions.