Understanding employee benefits: A guide for HR professionals

Employee benefits play a crucial role in attracting job seekers, retaining skilled workers, and motivating a talented workforce. As an integral component of total compensation, these benefits go beyond basic salary to include health insurance, retirement benefits, paid leave, and various other perks. For human resource management professionals, a deep understanding of employee benefits is essential to effectively manage and support an organization's employees.

In today's competitive job market, the strategic design and implementation of a comprehensive benefits package can set an employer apart, fostering employee satisfaction and loyalty. The landscape of employee benefits is continually evolving, with an increasing focus on addressing the diverse needs of the workforce. One significant trend is the growing emphasis on women's and family health benefits. This shift reflects a broader recognition of the importance of supporting employees' work-life balance and overall well-being.

For HR professionals, staying abreast of these trends and understanding the intricacies of employee benefits is not just about compliance and cost management—it's about fostering a supportive and inclusive work environment that meets the needs of all employees.

What are employee benefits?

Employee benefits are various forms of workers' compensation provided in addition to the regular salaries or wages of employees. Employee benefits packages are designed to enhance the overall compensation package and contribute to job satisfaction, well-being, and financial security. Employee benefits can be broadly categorized into two types: statutory benefits and fringe benefits.

Understanding the difference between statutory benefits and fringe benefits is crucial for HR professionals. While statutory benefits ensure basic protection and compliance with state or federal law, fringe benefits provide additional value and differentiation in the job market. By effectively managing both types of benefits, HR professionals can create a compelling employee benefits package that meets legal obligations and supports the diverse needs and preferences of their workforce.

Statutory benefits are legally required benefits. Employers are obligated to provide these benefits to their employees. Examples of statutory benefits include:

• Social security
• Medicare
• Unemployment insurance
• Workers' compensation
• Disability insurance
• Family and medical leave

Then there are fringe benefits. These are voluntary benefits offered by employers at their discretion, often used as tools to attract and retain employees. Fringe benefits can vary widely from one employer to another but employee benefits examples include:

Health insurance

Health insurance covers medical expenses for employees, including doctor visits, hospital stays, surgeries, and prescriptions. Health insurance is a fundamental benefit that promotes employee health and well-being, reducing financial strain from medical costs, and is ranked as one of the most popular employee benefits for 80% of American employees.

There is no federal law that dictates employers must provide their employees with health insurance. However, according to the Affordable Care Act, if an employer has 50 or more full-time employees they must provide a minimum essential coverage health insurance plan. Many organizations choose to offer health insurance above and beyond this as a way to improve workers' health, increase productivity and reduce absenteeism and turnover.

Retirement plans

Retirement plans, such as a 401(k) or pension, help employees save for their post-employment years. These plans often include employer contributions to an employee's account, providing long-term financial security and incentivizing employees to stay with the company.

83% of Americans believe that all workers should have a pension, and offering retirement savings plans to employees has numerous business advantages. One study found that having a retirement plan reduced the risk of quitting by 40% during an employee’s first year. Another revealed that providing a retirement benefit increased employee tenure by 2.7 and 5.8 years, depending on the type of plan.

Paid time off

Paid time off (PTO) includes vacation days, sick leave, and holidays. It allows employees to rest, recover, and spend time with family without losing income, which enhances employee satisfaction and productivity.

Nearly 70% of employees say their overall job satisfaction improves if they take regular vacations. Further, a study found that employees who take their annual leave are 40% more productive than those who don't.

Family and medical leave

The Family and Medical Leave Act (FMLA) stipulates that employers must provide eligible employees with unpaid, job-protected leave for serious health conditions, childbirth, or family care. This leave supports work-life balance and ensures job security during critical life events.

However, as unpaid leave, it can create significant financial strain for employees. Organizations can bridge the gap by enhancing employee benefit offerings with paid parental leave, medical leave and family leave.

Women's and family health programs

These programs offer specialized healthcare benefits focusing on women's health and family wellness, including maternity care, fertility treatments, and childcare support. They address unique health needs and support employees in balancing work and family responsibilities.

This support minimizes gender and race health gaps by improving access to quality care and reducing financial barriers. For example, 6 in 10 women with endometriosis and 2 in 10 women with PCOS are not diagnosed. Black and Latina women are less likely to seek fertility treatment than White women and Black women also take longer to seek fertility treatment. However, when financial hurdles are reduced, Black women increase their use of assisted reproductive services. Also, employed women in the United States face $15 billion higher healthcare costs than employed men and are more likely to step away from their careers due to caring commitments, impacting their overall financial well-being.

Wellness programs

Wellness programs promote healthy lifestyles and overall well-being through activities and resources such as employee assistance programs (EAPs), fitness classes, mental health services, and nutrition counseling. These programs aim to improve employee physical and mental health, reduce healthcare costs, and boost workplace morale.

The importance of employee benefits

Offering employee benefits is not only advantageous to individual employees; a competitive compensation package also has a positive impact at an organizational level.

Employee benefit plans contribute significantly to employee retention. Three-quarters of employees say they are more likely to stay with their current employer due to the types of employee benefits they receive.

Further, overall job satisfaction is affected by employee benefits, with 60% of employees rating benefits as a very important contributor. Tailored employee benefits can boost productivity too, with 69% of employees saying they would work harder for an employer who provides employee benefits that support their individual needs.

Your employee benefits package can also set you apart in the job market, making your organization more attractive to prospective candidates. 78% of job seekers say that an employer's benefits package is a very or extremely important factor in their decision to accept or reject a position, with 69% stating they'd choose one job over another if it offered better benefits.

In addition, certain employee benefits can lead to specific positive outcomes:

• Organizations that offer mental health support report a 30% lower turnover rate.
• Two-thirds of employers report that health benefits helped improve the health of employees, and almost 60% believe they reduced absenteeism.
• Employees who feel secure about their finances report significantly higher levels of happiness and engagement.
• 77% of workers say the availability of fertility support would affect their tenure at their companies.

Core types of employee benefits

There are many types of employee benefits. They can be broadly categorized based on the area of an employee's life they contribute to. A comprehensive and generous benefits package should encompass all of these types of benefits:

Health and wellness benefits

Health and wellness benefits go beyond what is offered by health insurance companies to include a range of resources and initiatives that improve the physical and mental health of employees.

They can include medical insurance, dental coverage, eye care but also extend to wellness support such as gym memberships, nutrition education, advice from a sleep specialist, and on-site physical health screenings.

Women’s and family health benefits are an important form of health and wellness benefits that can help improve outcomes through proactive and preventative healthcare that identifies risks early and prevents costly complications. For example, Maven members see up to 20% lower C-section rates, up to 28% lower NICU admission rates and up to 31% reduction in unnecessary ER visits.

Financial benefits

A recent survey revealed that 92% of employees would like additional financial resources, with 58% of employees living paycheck-to-paycheck and a third expressing the need for more support for unexpected expenses and medical bills.

Financial benefits vary but can include:

• Retirement plans such as 401ks and pensions
• Stock options and profit sharing
• Financial planning and counseling services
• Life insurance
• Employee discounts
• Fertility treatment reimbursements

Employers can further contribute to employees' financial well-being with less direct and more unique employee benefits. For example, 31% of employees are currently expecting a child or possibly planning to grow their family in the next one to two years. However, family building and childcare costs are significant. The U.S. Department of Agriculture estimates that a middle-income, two-child, married-couple family will spend nearly $13,000 a year to raise each child. For those who need fertility assistance to become parents, the cost of a single IVF cycle can range between $15,000 and $30,000.

Family-building benefits can help reduce such costs through personalized preconception care, access to specialists, and flexible expense management.

Work-life balance benefits

82% of employees expect support from their employers in achieving a work-life balance, with 43% stating that flexible working hours have the greatest impact on employee well-being. 21% feel flexibility regarding work location is important, and 33% would like more vacation days.

Parental leave and family support are also crucial in fostering a good work-life balance given that nearly 90% of families with children have at least one working parent. A survey by the Pew Research Center found that 27% of respondents felt that being a working mother or father had made it harder for them to advance in their role, and 38% said it made it more difficult for them to be a good parent.

In addition, among working mothers with children under 18, 53% say they have taken a significant amount of time off from work and 51% say they have reduced their work hours to care for a child or other family member.

Parental leave and family support improve job satisfaction, employee retention, engagement, productivity and recruitment efforts. Moreover, such work-life balance benefits also result in more diverse teams and more women in high levels of leadership.

Career development benefits

Career development opportunities are imperative for employee well-being, with 51% of employees believing they give them more self-confidence. Organizations that encourage employees to learn new skills and offer career development benefits also see numerous positive business outcomes.

59% of employees say that training improves the overall job performance, and employees who get professional development opportunities are 15% more engaged and have 34% higher retention than those who don’t.

Career development benefits include:

• Professional development and training programs
• Education assistance such as tuition reimbursement and student loan
• Mentorship, coaching and shadowing
• Workshops and seminars
• Professional certification
• Networking

Emerging trends in employee benefits

As the workforce evolves, so too do the strategies for providing employee benefits. Employers are increasingly adopting innovative approaches to meet the diverse and changing needs of their employees.

Personalized benefits packages

Personalized benefits packages allow employees to customize their benefits to suit their individual needs and preferences. 54% of all employees say they wish they had personalized benefit recommendations.

By leveraging advanced technology and data analytics, employers can offer flexible options that cater to different life stages and circumstances. For example, a Gen Z employee might prioritize preconception support, a millennial might value access to parenting resources more highly, and a Gen X individual may seek menopause care.

Mental health and wellness support

15% of working-age adults live with a mental health disorder and 92% of workers believe it's important to work for an organization that values their emotional and psychological well-being. Fortunately, the importance of mental health in the workplace is gaining recognition, leading to an increased focus on mental health benefits.

Employers are integrating mental health support into their wellness programs, offering services such as counseling, stress management workshops, and mental health days. This comprehensive approach helps reduce stigma, promotes overall well-being, and improves productivity and employee morale.

Family-friendly benefits

Family-friendly benefits are becoming more prevalent as employers recognize the importance of supporting employees in their personal lives. Six in ten employers say that family-friendly policies have been essential to their talent strategy over the past three years to a great or very great extent.

These benefits include childcare support and services, fertility and family-building support, maternity and newborn care, parenting and pediatric resources, and inclusive benefits for diverse family structures, such as adoption assistance and parental leave for all genders.

Such benefits help employees balance their work and family responsibilities, fostering a more inclusive and supportive work environment.

The role of technology in managing employee benefits

Technology revolutionizes employee benefits management through digital platforms, enabling efficient benefits administration, real-time updates and round-the-clock care.

Employee self-service portals and apps empower workers to access and customize their benefits conveniently while managing personal and professional responsibilities. 60% of employees say that access to virtual healthcare makes it easier for them to work in person.

Additionally, platforms like Maven Clinic offer comprehensive, tech-enabled care, providing virtual healthcare services for employees at different stages of their lives.

This technology streamlines benefits management, ensuring employees receive tailored care when they need it. Maven members can book same-day appointments with providers across 30+ specialities and 35% of our member's appointments occur outside of standard doctor's office hours.

How to choose the right employee benefits for your organization

Choosing the right employee benefits requires assessing employee needs and preferences through surveys and feedback, ensuring the benefits align with what employees value most. While you may believe certain benefits are valuable, they may not resonate with employees so finding out what your workforce needs is imperative to ensuring a good uptake level.

Balancing cost with value is also crucial, providing comprehensive benefits without overextending the budget. Companies who invest in Maven, for instance, see 2 - 4x clinical and business savings.

Collaborating with benefits providers and consultants can offer expert insights and innovative solutions, ensuring a well-rounded and competitive benefits package. Maven's platform allows employers to add extra health plans to their offering with ease as well as implement Maven Wallet, giving members real-time access to benefit balances, reimbursement channels, and claims status.

When employers offer benefits that align with the diverse needs of their workforce, it promotes better health and well-being outcomes for individual employees and drives organizational success.

For employee benefits to be truly comprehensive, they need to go beyond the standard employee assistance program or in-office perks and make a meaningful difference to employees of different backgrounds and at different life stages. Women's and family health benefits are a key way of doing this. Aside from the positive impact they have on individuals, they also improve employee loyalty, motivation and satisfaction.

HR leaders should strive to continuously innovate and adapt benefits offerings to improve the employee experience and their organization's benefits package ROI. You can start today by assessing your current benefits program and exploring new opportunities to enhance employee well-being. If you're an employer who wants to make a real difference to your people and your business, Maven shares your goals. To find out more about working with us, get in touch today.