Table of Contents
Table of Contents
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What Are Employee Benefits?
Benefits are considered any additional perk of working for your company. Benefits normally include paid time off, medical insurance and company parties, among other things.
Required vs Non-Required Benefits
Some benefits are entirely up to the employer, but others are required by state and/or federal law.
Benefits required by law:
- Time off to complete civic duties such as voting, serving on a jury, and performing military service
- Payment of state and federal unemployment taxes
- Compliance with all workers’ compensation requirements
- Contribution to state short-term disability programs.
- Compliance with the federal Family and Medical Leave Act
Benefits not required by law:
- Retirement plans
- Life insurance
- Paid vacation, holidays, and sick leave
- Health plans (required in Hawaii)
- Dental and vision plans
The Importance of Offering Great Benefits to Your Employees
Offering great benefits can be the difference in attracting and retaining top talent. With competitive salaries on the rise, potential employees no longer consider salary alone when deliberating on their next job.
- Attract top talent. When salaries are similar, it’s important to make sure that your benefit package is also attractive.
- Create engaged employees. By offering benefits that employees actually care about (see below for a list), you are more likely to drive overall employee engagement up.
- Take care of your teams. By offering a great comprehensive benefit package to your team, you are taking care of them as you expect them to take care of your customers and clients.
How to Design a Benefits Package That Will Attract and Retain the Best Employees
Companies often stress about how to design a benefits package that is attractive to prospective and current employees. However, the process doesn’t have to be stressful or complicated. If you follow these three simple steps, you can eliminate the stress and worry from your benefit design process.
Step 1: Determine What Your Employees Need
If you don’t know what your employees need, you will never be able to design a complete and attractive benefits package. Start with the basics. Employees need health insurance, dental insurance, and some sort of paid time off. If you aren’t offering these three basic things, you need to overhaul your benefits immediately.
Step 2: Determine What Your Employees Want
Needs must come before wants, but wants are more important in building an attractive benefit package. Common desires are life insurance, unlimited paid time off, sabbatical leave, tuition reimbursement, and even pet insurance. Don’t assume you know what your employees want. Ask them.
Step 3: Determine Your Overall Budget for Benefits
Now that you know what your employees need and want, it’s up to you to decide what the company can afford to offer. Get a budget in place to ensure that you aren’t breaking the bank by offering some of these benefits. If you still want to offer a benefit that you can’t afford, feel free to do so; just make it 100% employee paid (this is common with pet insurance).
Three Popular Benefit Categories to Consider
Below you will find three categories of benefits that we think are at the top of mind for your current and prospective employees.
Category 1: Time Off
PTO (Paid Time Off) is essential for the mental, emotional, and physical well-being of your employees. Give them time to recharge, and they will give you amazing results.
- Accrued time off. Accrued time off is still the standard. This is where an employee banks a set amount of time off every pay period.
- Open PTO. This is still an up-and-coming idea, but it’s quickly gaining credibility amongst employees and leaders. In an open PTO policy, managers essentially trust their employees to get their work completed on time. Employees are free to take as much time off as needed as long as they accomplish their tasks.
- Unlimited PTO. An unlimited PTO policy generally functions more like an accrued time off policy: managers still approve time-off requests and track it, but it doesn’t accrue, and employees have an “unlimited” amount of time off pending manager approval.
- Paid family leave. The U.S. is the only developed country without a paid parental leave policy. Employees yearn for parental leave when they become new parents so they can spend time nurturing their newborn. Fortunately, more and more employers are getting on board to improve their parental leave plans. Family leave policies are also becoming more progressive, with employers giving time off for adoption, foster care, and surrogacy.
Category 2: Health
Health insurance can be extremely expensive for a quality plan, but it’s one of the most important benefits you can offer to your employees (and you may be required to offer it under the ACA). The most common options include:
- Traditional health plans. This is the plan we are all most familiar with. You go to the doctor and pay a copay to receive treatment.
- High-deductible health plan. The biggest difference between a high-deductible health plan and a traditional plan is in the name. With a high deductible plan, you have a higher deductible, but you also get another major perk: an HSA.
- Health Savings Accounts. An HSA is a savings account that allows users to save money tax-free against medical expenses.You must be enrolled in a high-deductible health plan to be eligible for an HSA. Companies can contribute to an employee’s HSA, and once an HSA hits a certain dollar amount, employees can invest it and essentially treat it like a retirement account.
Category 3: Ancillary Benefits
Ancillary benefits are all of the additional benefits that a company offers. There are too many possibilities to list here, so we have created a list of some of the ones that we feel are most popular.
- Dental insurance. While this often gets grouped with medical or health benefits, it technically belongs under ancillary benefits. It’s an added perk that most employees expect to receive.
- Vision insurance. This may also be a non-negotiable benefit for some employees who have major eye issues or have multiple family members who need glasses or contacts.
- Life insurance. Employers often have a standard group policy that covers all eligible employees. The benefit is payable to a beneficiary upon an employee’s death.
- Disability insurance. When an employee is unable to work due to a medical condition, they can submit a claim to the insurance company for partial recovery of their salary. Short-term disability usually provides 60% of their base salary for up to 12 weeks. Long-term disability is a separate policy that may provide additional payment after the short-term disability is exhausted.
- Pet insurance. To some people, their pets are just like their kids. They want to be sure they are financially able to take care of their pets’ health-care needs.
- Sabbatical leave. A sabbatical is a period of paid leave granted for study or travel. You often see this as a reward for employees who have been with the company for a certain period of time—usually five years. It is a great show of recognition for the hard work and dedication that they have given the company.
- Financial planning resources. Financial stressors can have a serious effect on an employee’s well-being. To help ease their stress, you can offer financial planning resources that include training on debt reduction, asset management, and saving for future needs.
- Childcare services. Due to high costs, many families can’t afford to put their children into childcare; the average annual cost of childcare for infants in the United States is nearly $15,000. Because of this, childcare benefits are non-negotiable for some families.
- Work-from-home options. Giving your employees an option to work from home will help them feel secure and valued, but it will also offer them major flexibility that can come in handy when managing all aspects of one’s life.
- Mental health programs. Millions of people suffer from depression and anxiety. While work can be good for mental health, constant stressors in any work environment can lead to worsening mental disorders. Creating a mental health benefit program can be approached in two ways for HR specialists: minimizing work-related risk factors and creating easier access to mental health programs.
- Student loan repayment programs. Students look forward to a nice job after they graduate so they can start paying off the mountain of debt they accrued with student loans. Some employers offer student loan repayment programs to help their new employees become debt-free faster.
- Professional development. Professional development offers a way for employees to learn and grow within their careers. These development programs can increase their industry knowledge, train them to be future leaders, and help them better succeed in their current roles.
- Gym memberships. Company-paid gym memberships or onsite fitness centers give employees easy and affordable access to exercise. This helps employees stay fit and prevent all kinds of diseases that can come with a sedentary lifestyle. Exercise can also improve employees’ mental health by reducing anxiety and stress.
- Public transportation assistance. Some employees prefer public transportation. Maybe they don’t like driving or it’s more convenient for them to take the bus to work. In some cases, taking public transit may even be faster for employees. So in these cases, assisting with transportation costs can mean more efficient commutes and happier employees.
How to Inform Your Employees of Their Benefits
All employees need to understand their benefits, but the way you educate them is slightly different depending on how long they have been with your organization.
Situation 1: New Hire
This is a great opportunity to connect with your employees and show them how much you care. Explain why you offer the benefits and how they will help your employees and their family members. You want your employees to realize that you have put a lot of thought into your benefits plan and that you understand their needs.
This is also your chance to educate employees about how benefit plans are designed. Never assume that employees automatically understand insurance lingo. Terms like copay, deductible, coinsurance, or beneficiary can be confusing, and employees may be afraid to ask for clarification. Employees of any age could be new to the workforce or to the decision-making process. They will appreciate your educational approach.
Be sure to present benefits in multiple formats so your employees can learn in a way that is best for them. Here are three ideas to consider.
- Give a packet (or a link) with information that summarizes your benefits. This lets employees review the information at their convenience and dive deeper into the benefits that are most important to them.
- Record a video about all of your benefits and share the link. This allows employees to hear the same presentation and ensures that the benefits are covered thoroughly and consistently. This also helps employees with visual impairments who may struggle with a packet of paperwork.
- Schedule a group meeting to review the benefits one last time after employees review the benefits summary and watch the video. This allows you to focus on key points and incorporate storytelling into the benefits. Your employees will be more attentive and emotionally engaged. They can relate to the stories and think about how they might feel in similar situations. As a result, they will be more confident in their election decisions and retain more information about the plans.
In addition to reviewing the benefits, make sure to explain how long your waiting period is. This can be very confusing, especially if your health benefits have a 30-day wait but your retirement benefits are longer. You’ll also want to confirm when coverage begins. Some plans are effective the day after the waiting period begins, while others are effective the first of the following month.
If your employees contribute to the premiums for their benefits, let them know how they are withheld from their paycheck. Explain the frequency that they are deducted and whether the deductions are pre-tax or post-tax.
Let employees know if there are any negative consequences for waiving coverage when they are first eligible. This is especially important if your life insurance policies have guaranteed issue amounts. If your employee or their eligible dependents can get life insurance without answering medical questions, you may be solving a problem you didn’t even know existed. Also, let your employees know under what circumstances dependents can enroll in coverage in the future.
Finally, tell employees when they will have opportunities to make changes to their benefits. This is usually annually during open enrollment or when they have qualifying life events.
Situation 2: Qualifying Life Events
When employees have qualifying life events, they have an opportunity to make changes to their benefits. The most common life events are marriage, divorce, birth of a child, and loss of coverage. However, changes to an employee’s status, scheduled hours worked, or significant changes to current cost of coverage are also qualifying life events. These examples are not an all-inclusive list, so it is important to review your plan documents for details.
When these events happen, employees only have a 30-day window to modify their elections. Since this deadline seems to happen quickly, it is important to remind employees of it throughout the year. If you only mention it when an employee is first hired, it can be difficult to remember. However, if you remind employees on a regular basis, the 30-day deadline is something they become familiar with.
Once you are aware of the qualifying life event, give the employee a packet (or a link) with information that summarizes your benefits. It may have been a while since they’ve heard a full benefits presentation, and this lets employees review the information at their convenience. You should also share the link to the video your new employees receive.
Situation 3: Open Enrollment
The most successful open enrollments are strategically planned. Since research has shown how difficult it is to retain facts given during a presentation, you should communicate with your employees using multiple formats. This approach is similar to how you would share benefits with a new employee.
It is helpful if open enrollment communication can focus solely on new benefits being offered, plan design changes, employee premiums, etc. However, employees still need to have a thorough understanding of all the benefits being offered. You can meet this need by having ongoing benefits education throughout the year. Simply provide basic information about one benefit every month. When it is time for open enrollment, your employees will be familiar with their options.
Once again, be sure to present benefits in multiple formats so your employees can learn in a way that is best for them. Here are three ideas to consider.
- Give a packet (or a link) with information that summarizes your open enrollment options. This allows employees to review the information at their convenience and dive deeper into the benefits that are most important to them.
- Record a video about any new benefits you will be offering, and review all changes to existing plans. This ensures employees will hear the same presentation and that the benefits are covered thoroughly and consistently. This also helps employees with visual impairments who may struggle with a packet of paperwork.
- Schedule a group meeting or offer one-on-one meetings to answer any questions employees have before they make their annual elections.
If you can provide more benefits education throughout the year, you will help your employees feel more prepared for open enrollment. Your goal is to make it easy for them to enroll in the plans that will help them live better lives. You also want them to feel understood, appreciated and valued by their employer.
The Power of Storytelling in Employee Benefits
It’s our responsibility to share the perks and benefits of working at our organization, but it’s also our choice how to do it. We often give employees a packet of forms or send an email with links and instructions. However, when we limit ourselves to that, we’re missing an opportunity to connect.
What Is Storytelling?
Storytelling is simply giving details about a situation or an experience to others. It has been done for centuries as a way to entertain or educate. While we may not have witnessed the experience, we can imagine it and learn from it. We can picture the characters, feel their emotions and learn from their experiences.
Why Should We Incorporate Storytelling Into Employee Benefits?
Storytelling is so powerful because it works for all learning styles and abilities. Whether our employees are visual, auditory, or kinesthetic learners, they will be engaged. We can make the experience even more effective when we create videos with subtitles for employees who are hearing impaired or speak English as a second language.
When we incorporate storytelling into benefits, employees are more attentive and emotionally involved. They can relate to the characters and think about how they might feel in a similar situation. This makes it easier to understand the features and how they work. Employees can also retain the information because it is presented in an orderly fashion (beginning, middle and an end) instead of just a list of facts and figures.
Finally, when you share stories from the employees in your organization (while keeping their identities private), you have the opportunity to demonstrate how you care for your employees. Maybe you helped them overcome challenges or found options when they thought they didn’t have any. Life insurance is a great example of this. Many employees don’t realize that they usually have an opportunity to purchase additional life insurance without answering medical questions. However, if they decline the coverage initially, they may never get that same opportunity. When you share this information in a story, it shows you are more than an employer. You’re an organization with heart that cares as much about your employees as you do your goals and objectives.
Who Does Storytelling Help?
Storytelling is good for you, your employees, their families, and your organization!
Knowledge is power. When you educate your employees, they have a better understanding of their benefits and are more confident when using them. They can get the care they need. They become advocates for themselves and others. They can take better care of their families and loved ones. Their friends and their communities even benefit from it.
When we tell stories, it helps us remember details, too. Repetitive storytelling ensures our messaging is consistent and reduces the chances of skipping important facts.
When employees feel valued, supported and appreciated, they are better performers. This ultimately helps your organization to succeed, too.
When Should We Share Stories About Benefits With Employees?
The best time to share stories with your employees is when they are first eligible for benefits and again during open enrollment.
Many employers review their benefits package with employees during their first week of employment. We focus on the features and deduction amounts, but that’s a lot of information to process while learning a new job. However, if we incorporate storytelling into this meeting, employees are more attentive and emotionally engaged. They can relate to the stories and think about how they might feel in a similar situation. As a result, they will be more confident in their election decisions and retain more information about the plans.
This is also the time to talk about qualifying life events that let employees make changes to their benefits before open enrollment. When you share stories about specific life events (marriage, divorce, birth of child, loss of coverage, etc.) and the short window for enrollment changes, it encourages employees to think about what upcoming events they may experience. It also reminds them that there is a deadline and to communicate quickly when life changes for them.
It’s important to share stories during open enrollment as well. Life has seasons and our needs change, but employees rarely think about how their benefits can help with those changes. These examples allow employees to see their benefits as supportive tools and resources to be used.
How Should We Share Stories?
We can share stories in many different ways. You can tell a story during a group meeting or when meeting with employees one-on-one. A common example of this is when employees have a specific question about plan designs.
You can share stories through video. Just spend a few minutes on YouTube to see how stories are used to promote benefits. These videos may be slide decks, animation or interviews. Just make sure your videos reflect your culture, and have fun.
Some of your employees may want to share their stories. Whether they are talking about favorite benefits or when things didn’t work out as planned, their stories can be powerful because it was their experience. These stories can be incorporated into enrollments or just sprinkled throughout the year.
Remember, there is no right or wrong way to tell a story when your goal is to help others.
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Questions You’ve Asked Us About Employee Benefits
Nick is a certified HR professional holding an SPHR and SHRM-CP. Nick has built HR teams from the ground up as well as worked for big corporations. Nick enjoys consulting and training those who are just getting started in HR. When not working, he enjoys spending time with his family.
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Leslie is passionate about training and helping others grow. She has over 20 years of experience in Human Resources and has her SHRM-CP certification. She has worked with small and large businesses, including healthcare, higher education, community agencies and public schools. Leslie’s goal is to help business leaders and HR professionals empower their employees. When employees gain confidence and are empowered, everyone wins. Organizations are stronger and employees are stronger. That strength goes home with them, and our families, schools and communities become stronger, too.
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