Employee Benefits: Types, Cost & Examples

Employee benefits are an important aspect of every successful organization. Understanding the different types of employee benefits will also help in deciding which ones are essential for your organization.

To offer such benefits, you’ll need to know enough and also consider the costs of each of them and what your company is capable of. For a start, insurance benefits are common, and deciding on which one to offer depends on your company’s ability.

Want to know more? We got you covered. In this article, we will explore the details of employee benefits including the definition, types, and costs.

What are employee benefits?

Employee benefits are defined as additional tangible and intangible compensation that is given to employees asides from their normal salary. These benefits range from health insurance to paid time off. They play a crucial role in making employees happy and satisfied.

Some of the importance of employee perks include; they give satisfaction to employees; they make employees feel valued, companies can get the attention of top talents by highlighting them in job ads, and employees can handle the costs of managing their well-being through insurance plans.

We can go on and on. These benefits are compulsory if you want to increase the productivity of your employees within your organization. However, you’ll need to know the different examples of employee benefits to go further.

Types of Employee Benefits

People often confuse the different employee benefits and combine them into one. However, for clarity, we will group them based on how similar they are to one another. These benefits include:

1. Financial Benefits: The first type of benefit is the financial aspect. These benefits include the ones that cover anything finances for employees. These plans cover the aspects of an employee’s life where solutions can be offered. Examples of these benefits include retirement plans (such as 401(K), ESOP, etc), reimbursement plans for travel or tuition, employee bonus, paid time off (PTO), and many more.
2. Insurance Benefits: This is the most common type of employee benefit. They play a role in making job ads attractive too. These plans are often referred to as health benefits as they cover health-related issues. They serve an important purpose in the life of an employee. Some examples of these benefits include health insurance, life insurance, disability insurance, accident insurance, and many more.
3. Well-Being Benefits: As the name implies, these benefits focus on the well-being of an employee. They have increasingly become more popular these past few years as employees battle with taking good care of themselves. These plans are helpful in ensuring that employees stay healthy. Some of them include employee assistance programs (EAP), remote options, flexible work hours, training and development programs, snacks provision, and many more.

The Cost of Employee Benefit

According to the Bureau of Labour Statistics 2021, employee benefits cost about 31% of the total compensation given to an employee in a year. While this may be accurate, it’s important to note that companies offer several benefits, and depending on the organization, there could be few or more. Either way, employers must understand that these benefits play a huge role in employee satisfaction and motivation. Many employees prefer to work for an organization that offers a medium salary alongside perks than organizations that offer competitive salaries alone.

Things to Note When Selecting Employee Benefits

Before you begin deciding on what benefits to offer your employees, you must consider some factors. Firstly, there are legally required benefits that employers must offer their employees depending on state laws. So before you make a decision, revise your state laws and see what benefits you must include. Secondly, startups can consider opting for low-cost benefits for their employees. These could include offering remote options, flexibility, employee bonus, and so on. Above all, ensure that federal and state laws are obeyed.

Now that you have a good understanding of what the meaning and types of employee benefits are alongside their approximate costs, you can decide on the right ones for your organization.

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