Employee benefits are an additional form of compensation for the employees of a company that helps create job satisfaction. Benefits go above and beyond an employee’s base salary and can come in many forms, including healthcare, life insurance, and paid time off.
While many organizations think a higher salary is more desirable to employees, benefits reign supreme. The benefits package being offered is what helps attract and retain top talent. Glassdoor found that 63% of job seekers consider benefits a top priority when searching for a new job. When it comes to accepting a job offer or advancing in their career, many employees will also seek to negotiate the benefits they’re offered.
The Society for Human Resource Management found that company performance was 24% better for organizations that offered strategic benefits in comparison with those that didn’t. Benefits aren’t just about attracting top talent — they’re about maintaining that talent for years to come. That same study found that companies offering benefits were 17% more likely to maintain their hires.
To be eligible to receive benefits, an employee must meet certain requirements. For example, an employee must work 30 hours or more a week to be considered full time and eligible for benefits. Typically, benefits are offered after a 90-day probationary period that begins after an employee’s first day.
While any company can offer their employees benefits, the Affordable Care Act mandates that companies with 50 or more employees must offer qualified and affordable health benefits or pay a tax penalty under the Employer Shared Responsibility provision.
Here, we’ll discuss the types of benefits an employer might offer and equip you with the level of understanding you need in order to search for a job with benefits that are right for you.
Table of Contents
Employment Benefits Package
State and federal laws require that employers offer a number of benefits. Even self-employed people can obtain these basic benefits, including:
- Social security.
- Unemployment benefits, including state unemployment insurance.
- Workers’ compensation.
Other benefits that an employer is responsible to offer their employees are:
- COBRA: The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) requires employers with 20 or more employees to provide temporary continuation of group health coverage in certain situations where it would otherwise be terminated.
- Disability: While most employers offer disability coverage, not all do. When it comes to short-term disability coverage, only five states have state-mandated disability insurance requirements: California, Hawaii, New Jersey, New York, and Rhode Island. Long-term disability coverage is not required by law, but half of the large and mid-size employers offer this benefit to their employees.
- Family and Medical Leave Act (FMLA): This act protects employees in the event that they need to take unpaid leave for family or medical reasons. The act also protects an employee’s position during their absence.
- Minimum wage: The minimum wage law varies by state, and employers must abide by the minimum wage law in the state where they operate.
- Overtime pay: The Fair Labor Standards Act (FLSA) mandates that non-exempt employees must receive overtime pay for working more than 40 hours in a workweek at a rate not less than time and one-half their regular rates of pay.
Health insurance can help an employee pay for the costs associated with emergency medical care or health insurance plans. Offering a health plan can be one of the most attractive benefits to potential employees. Often, an employee’s spouse and children are covered under an employer-offered plan. When an employer offers healthcare to their employees, that money is not considered wages and is therefore not subject to taxes like Social Security or Medicare.
There are two types of health insurance coverage: Health Maintenance Organizations and Preferred Provider Organizations.
- Health Maintenance Organizations focus on integrated care with an emphasis on wellness and illness prevention. Coverage is limited to specific doctors that are in contract with the HMO provider. Often out-of-network care is not covered unless it is an emergency.
- Preferred Provider Organizations contract with medical providers to create a network of participating providers, allowing the employee to pay less if they use in-network providers. Employees are not limited to the doctors they can use. Providers outside of the network come at an additional cost.
When an employee uses health insurance, there are deductibles and out of pocket expenses that need to be paid. The deductible is the amount you are required to pay before a health insurance plan steps in to cover the costs of a medical bill. Once the deductible is paid, there is typically a copayment or coinsurance charge. After that, the health insurance provider covers the rest.
Deductibles, as well as coinsurance, are considered out of pocket costs to the employee. These are costs that the employee is responsible for paying for.
Employers can offer a range of different plans when it comes to dental insurance, including plans that cover preventive, basic, and major services.
- Preventative dental insurance allows an employee to maintain good dental hygiene with bi-annual dentist visits. Typically, regular cleanings, X-rays, and oral exams are covered.
- Basic dental insurance covers treatments and procedures that are relatively straightforward and don’t involve a significant laboratory expense. This includes things like fillings, root canals, and emergency dentistry.
- Major service covers those more complex procedures that basic dental insurance doesn’t, including implants, crowns, and bridgework.
It’s important to look over the dental coverage your employer offers so that you are not surprised by any hidden fees or costs that arise at your next dental appointment.
What Are Fringe Benefits?
Fringe benefits are extra benefits that an employer is not required to offer by law. Instead, fringe benefits are used to attract top talent to a company. They are subject to income tax withholding and other employment taxes, and they are generally included as part of an employee’s gross income.
Fringe Benefit Examples
A company that offers fringe benefits might provide employees with:
- Gym memberships.
- Tickets to entertainment events.
- Free meals.
- Personal days.
- Stock options.
- Tuition assistance.
What Are Employee Perks?
Benefits cover the basic needs of an employee, but perks are additional benefits that an employer doesn’t have to provide by law. Often, many fringe benefits are considered perks, because a company doesn’t have to provide those either. Perks and fringe benefits are offered for the same reasons — to attract and retain talent.
Perks a company might offer include:
- Flexible schedules.
- Office perks.
- Employee discounts.
- Gym memberships.
- Diversity programs.
- Paid time off to volunteer.
Whether you are an employee with a disability or you’re new to the workforce and have a limited employment history, understanding employee benefits is crucial to your success. Use this guide to help find a company that offers the benefits that are right for your situation and better compare and contrast the benefits packages an employer is offering.
Image Source: https://depositphotos.com/
Want a FREE Credit Evaluation from Credit Saint?
A $19.95 Value, FREE!