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15 Benefits to Include in Your Small Business Employee Benefits Package

by Casey Johnson, on November 23, 2022
In today’s ultra-competitive hiring market, offering the right benefits to current and prospective employees is more important than ever. The benefits you offer can make or break whether current employees choose to stay, and whether new talent decides to join your company.
A small business benefits package should include a variety of benefits that cover the full range of employee needs. Benefits such as paid time off (PTO), retirement savings options, and wellness programs positively contribute to an employee’s emotional, financial, and physical well-being.  
Our guide below covers what benefits you should offer employees to attract and retain the best talent.

Table of Contents

  1. What Benefits Should I Offer My Employees?
  2. Required Benefits  
  3. Health Insurance
  4. Social Security and Medicare
  5. Workers Compensation
  6. Family and Medical Leave (FMLA) Coverage
  7. Disability Insurance
  8. Standard Benefits
  9. Retirement Savings Options
  10. Paid Time Off (PTO)
  11. Life Insurance
  12. Supplemental Insurance Dental and Vision
  13. Fringe Benefits
  14. Additional Compensation Opportunities
  15. Pet Insurance
  16. Wellness Programs
  17. Educational Expense Reimbursement
  18. Employee Assistance Program (EAP)
  19. Flexible Work Arrangements
  20. Set Up and Optimize Your Employee Benefits with LandrumHR

What Benefits Should I Offer My Employees?

The answer to this question can vary based on factors such as the location of your business, what industry you’re in, competition and more. Despite the various influences, some universal benefits should be offered to all employees, regardless of the situation.
Typical benefits that should be offered to employees include:
  • Health insurance
  • Retirement investing plans
  • PTO
  • Life insurance
  • Bonus compensation opportunities
  • Employee Assistance Programs (EAP)
While our guide below covers required, standard, and fringe benefits that should be included in a small business benefits package, it’s best to develop a unique plan that’s just right for your employees.
A competitive analysis should be conducted to understand what benefits your current and potential employees want. An experienced Professional Employer Organization (PEO) like LandrumHR can assist you in identifying what benefits similar businesses are offering to ensure that what you’re offering is on par or better.
Not sure what a PEO is? Check out our blog What is a PEO? to learn the basics of PEOs and how they can support your business.

Required Benefits

Before getting into what benefits you should offer to employees, there are some you may be legally required to provide that must be discussed. It’s worth noting that some of the required “benefits” listed below may not even be considered benefits by many people due to their mandatory nature.
Covering the appropriate cost and providing the necessary coverage to employees for these employment requirements can’t be overlooked. In many cases, failure to comply with the applicable requirements can lead to significant penalties and fines.

1. Health Insurance

Considered by many to be the most crucial benefit, health insurance is a must for most employers. In most cases, employers with 50 or more full-time or full-time equivalent (FTE) employees are required to offer health insurance to employees or pay a per-employee fee. There are specific guidelines regarding the level of coverage that an insurance plan must provide to meet the requirement.
Most businesses with fewer than 50 employees aren’t required to provide health insurance However, if your business has more than one legal entity, you may be required to aggregate employees to determine if you have 50 full time equivalent employees.  Companies with less than 25 employees may qualify for tax credits if they choose to offer insurance.
Eligibility for the tax credit is based on several factors including:
  • Average employee salary
  • Percentage of costs paid by the employer
  • Type of plan offered
Regardless of your company’s category, offering competitive health insurance with a robust network of providers in the area where your employees are located should be a priority. The choice of health insurance plans you offer can be the deciding factor in a high-performing worker choosing to join your business or a competitor. Conversely, some workers may consider health insurance a low priority.
A safe approach is to offer a variety of insurance plans. Providing multiple choices to current and potential employees ensures your business will appeal to employees regardless of the level of importance they place on health insurance.


2. Social Security and Medicare

Social Security and Medicare could be considered delayed benefits as many employees aren’t eligible to take advantage of them for many years. Yet, employers are required to contribute to both programs. Employers must also withhold and allocate a percentage of an employee's wages to Social Security and Medicare.  
As of August 2022, employers and employees are both required to contribute 6.2% of gross wages to Social Security and 1.45% to Medicare. An additional 0.9% towards Medicare is required for some employees whose income exceeds a certain threshold.
Failure to pay/withhold the appropriate amount can result in IRS penalties ranging between 2% and 15% of the amount owed. Additional penalties can apply based on the severity of the infractions.

3. Workers Compensation

A benefit that workers hopefully never have to utilize – but is significant – is workers’ compensation. This coverage, which protects employers if workers are injured on the job, is fully paid for by the employer.
The specific requirements for workers’ compensation differ for each state. For most states, businesses must purchase workers’ compensation insurance regardless of the number of individuals they employ. The premium for workers’ compensation coverage typically is paid via an employer’s payroll. Business owners in most states have the option to purchase coverage from a state fund or a private insurer.
Ohio, North Dakota, Washington, Wyoming, and Puerto Rico require employers to purchase a state-funded program.

4. Family and Medical Leave (FMLA) Coverage

Like workers’ compensation, FMLA is another important benefit that supports employees in certain situations. Unlike workers’ compensation, however, most requirements come from the federal level. According to the U.S. Department of Labor (DOL), businesses that employ 50 or more employees in 20 or more workweeks must provide FMLA coverage.
Unlike the other benefits discussed thus far, there’s no direct cost to the employer or employee to be eligible for FMLA coverage. However, there are specific rules and processes that employers must follow when an employee goes on FMLA leave. Failure to abide by the guidelines can result in lawsuits from employees along with potential penalties and fines.
It should be noted that a handful of states have specific requirements regarding who is responsible for paying for Employee & Employer Paid Leave Program.
  • Connecticut- Employee paid
  • Washington DC- Employer paid
  • Massachusetts- Employee paid; Employers with over 25 employees also pay
  • New Jersey- Employee paid (taxes included in addition to disability)
  • New York- Employee paid (taxes included in addition to disability)
  • Washington- Employee and Employer paid

5. Disability Insurance

Another required benefit is disability insurance. This coverage supports employees suffering from an injury or illness that forces them to miss at least one week of work. Employees receive partial wage replacement under the coverage after completing a mandatory waiting period.
It should be noted, California, Hawaii, New Jersey, New York, and Rhode Island have disability insurance requirements

Unlike workers’ compensation, which must be fully funded by the employer, disability insurance can be a shared cost between the employer and the employee. Even in states where disability insurance isn’t a mandated benefit, it’s wise to include it in a benefits package. Giving employees peace of mind that their job and finances are secure when they’re unable to work boosts their confidence in your company.

Standard Benefits

With the required benefits covered, let’s look at some of the benefits that many employees consider to be standard or expected in today’s workplace.

6. Retirement Savings Options

Establishing and maintaining financial security is a top priority for many workers. One of the main ways this can be accomplished is through an employer-sponsored retirement plan. Offering an attractive retirement plan can be the deciding factor for employees to join or stay with your company.
When deciding what type of retirement plan to offer, providing multiple options is always a safe bet. Depending on where employees are in their careers, their retirement savings needs will differ and be better suited to certain plan types. For example, some employees may want to invest in a 401(k) while others would prefer an Individual Retirement Account (IRA), Profit Sharing Plan (PSP) or another type of plan.
Regardless of what type of savings options you provide to employees, there are a few actions you can take to make your business stand out.
  1. Match a Portion of Employee Contributions - One of the most common incentives is for employers to match a portion of employee contributions up to a maximum percentage. Since annual 401(k) contributions are capped at a certain amount, this approach also allows businesses to accurately budget their potential investment.
  2. Consider Offering Immediate Eligibility - By providing new employees instant access to an eligible plan, you’ll stand out compared to competitors that require a 60-day or more window before becoming eligible. If you have a high turnover rate within the first few months of employment, this option may not be suited to your company.
  3. Offer Target Date Funds - These types of plans are attractive to employees that prefer a simple and quick investment option. Target date funds are labeled by year (ex: 2057 fund) and indicate an anticipated year that an employee is planning or would like to retire by. Employees can simply choose a fund based on the associated year and begin investing.
All investment options and processes should be clearly communicated to current and potential employees. No matter how great your plans are, they'll be wasted if employees don’t understand the benefits that come with them.
It’s important to note that state-mandated retirement plans are beginning to take hold. California, Connecticut, Illinois, and Oregon all have requirements for employers regarding retirement savings plans, either through the state or an existing qualified plan.
Several other states including New Jersey, New York, Virginia, and more are currently developing the guidelines for their states’ required plans. Even more states are actively working on legislation to create the rules and regulations for their plans. Each state has differing minimum employee count thresholds that dictate qualification and exemption for employers.
PTO is another essential benefit that has arguably become a necessity in today’s workplace. While there’s no federal mandate requiring employers to provide PTO to employees, employers recognize its importance. As noted in the FMLA section of our guide, several states are required to provide paid time off for their employees.
While offering and providing PTO to employees seems like a no-brainer, important details like how much time to give and when to offer it can be tricky. Simply offering a PTO plan with little thought as to how it’s structured or executed can quickly turn it into a disadvantage.
Additionally, companies need to have a clear and straightforward PTO policy. Creating and maintaining a PTO policy helps current and potential employees understand the value of the company’s PTO program. The policy also serves as a way for employers to manage how PTO is used to avoid potential conflicts or misunderstandings.
A PTO policy should include:
  • How long after joining the company does PTO eligibility begin
  • How often is PTO accrued and how much is accrued at each interval
  • The process for requesting and receiving approval to use PTO
  • Whether PTO is rolled over from year to year
  • A distinction of PTO for different employee types (full-time vs. part-time)
Lastly, some states have laws requiring employers to pay out accrued time off/vacation time when an employee leaves a company. Failure to pay an employee for their accrued time can result in an investigation by the state’s Department of Labor and possible penalties.
PTO can be an extremely attractive benefit when utilized properly. Our team of experts at LandrumHR can work with you to craft an effective PTO policy as part of an overall benefits package. We work with clients across multiple industries and markets which enables us to provide you with the insight you need to create the perfect system to stand out from your competitors.

8. Life Insurance

Just as workers want to protect their financial future with worthwhile retirement investment plans, they also want to protect their families in case of their unfortunate loss of life. Life insurance provides this protection and is an important cornerstone for many employee benefits packages.
A March 2020 survey conducted by the Bureau of Labor and Statistics (BLS) found that 95% of surveyed employees with life insurance coverage weren’t required by their employers to make contributions in order to be eligible. This data serves as a notice that many workers expect to receive life insurance coverage at the expense of their employer.
However, offering increased plan options that provide additional coverage at an employee’s expense is still a wise decision. Each employee is different in terms of how much coverage will satisfy their needs. Offering just one option will leave some employees disappointed and possibly looking elsewhere for other opportunities.

9. Supplemental Insurance (Dental and Vision)

Dental and vision are an expected benefit for many people. Dental and vision health are viewed by many as key components of overall well-being which is likely why they’re expected in a typical benefits package.
Luckily, employers can usually provide these coverages at a fraction of the costs required for health insurance. Employees also see reduced costs for vision and dental insurance with many individual plan premiums coming in at $5 or less per month.
Even if costs are low, the plans you offer still need to include essential coverages that most employees will expect, including:
  • No-cost routine maintenance - Annual visits such as dental cleanings and eye exams are often fully covered by the employer. If no-cost coverage for routine visits isn’t possible, low-cost plans should be a priority.
  • Specialty care coverage - When employees need to see a specialist, such as an orthodontist, endodontist, or ophthalmologist, they want to ensure they have at least some coverage.
  • Family plans - Employees appreciate the convenience of including their family members on the same plan and not having to purchase separate coverage.
  • High coverage options - Some employees will have increased needs regarding their dental and vision health and will want a plan that goes beyond the basics.
Depending on your industry, local job market, and competition, dental and vision insurance doesn’t always need to be included. LandrumHR can review your situation and help you determine if offering dental and vision insurance is a must for your benefits package or would be a bonus.

Fringe Benefits

Now that we’ve got the required and standard benefits out of the way, let’s look at some of the less common benefits that will make your company stand out and improve your overall recruiting and retention efforts.

10. Additional Compensation Opportunities

The amount of money earned is certainly a top priority among a large majority of workers. Giving employees opportunities to earn additional income beyond their base pay has tremendous potential. Like PTO, if developed and implemented properly, a bonus program can be a major difference-maker in retention and recruiting.
When it comes to offering bonuses, there are two main questions that need to be answered:
  1. How often can employees earn the defined bonus?
  2. Is the bonus a flat amount or a percentage based on a predetermined amount like the employee’s income?
Answering these questions and creating a clearly defined bonus program will increase the chances that employees will be motivated by it.
Regarding program details, your employee handbook should clearly state the distinction between bonus wages and permanent salary or hourly pay increases. Creating confusion between the two can lead to conflicts and misunderstandings between you and your employees. Employers also need to be mindful of certain state laws regarding pay equity and transparency when developing any bonus compensation programs.

11. Pet Insurance

An emerging benefit that more and more employees are looking for and utilizing is pet insurance. Many workers are opting to have children later in life (or not at all) and instead pouring their love and affection into their “fur babies.”  Part of this shift includes making sure pet owners can financially support the needs of their pets.
Overall, the pet insurance industry has grown by an average of approximately 16% every year from 2017 to 2022. This growth serves as a signal for employers to adopt this trend and stay ahead of the competition.

12. Wellness Programs

Along the same lines as health, dental and vision insurance, wellness programs are viewed by many as essential to an employee’s needs. Defined broadly, wellness programs typically consist of multiple features that are designed to positively impact an employee’s overall health and well-being. It’s worth noting that wellness programs are funded by the employer in most cases.
The range of options within a wellness program can vary based on availability and cost. Of course, the more benefits you include in your wellness program, the more attractive it will be to current and potential employees.
Common elements in an employee wellness program include:
  • On-site fitness center or off-site gym membership
  • Health lifestyle management (smoking cessation, diabetes support, etc.)
  • Frequent health challenges (weight loss, number of steps per day, etc.)
  • Regularly catered meals
  • Health screenings
Creating the right wellness program for your benefits package will come down to what you’re comfortable spending, benefits availability, and which benefits you feel will appeal to your employees. You also need to ensure your wellness plan is compliant with any state regulations that may apply. It’s best to consult with a qualified advisor to be sure your wellness plan meets all applicable state mandates.
Need to reference it is important to have a qualified advisor assist with any wellness programs to ensure they are set up compliantly.

13. Educational Expense Reimbursement

While more focus has been put on relieving the often-massive burden of student loan debt, employees can still benefit from employer support with educational finances.
The most common type of educational expense reimbursement is a straightforward tuition reimbursement program. In this system, employers typically reimburse employees up to a certain amount each year to cover the cost of tuition according to the employer’s eligibility requirements.  Beyond this overarching rule, employers have a lot to think about regarding the specific details of their program.
An educational expense reimbursement program needs to address:
  • How does eligibility work? Immediate eligibility is an option, or you can require employees to work for the company for a specific amount of time before they’re eligible. Some employers require employees to stay with the company for a certain amount of time after reimbursement to keep the funds.
  • What courses/schools/areas of study are covered? You may want to only provide reimbursement for courses or areas of study that directly relate to an employee’s position within your company or a possible future position.
  • Will the program cover more than tuition? To make your program stand out more, you may want to consider covering the cost of other educational expenses such as technology, books and more.
  • Is eligibility based on performance? Requiring that employees achieve specific grades for classes and meet company performance standards can ensure that employees aren’t “cheating the system.”
After answering the questions above and creating your reimbursement program, encourage your employees to participate. Depending on the level of participation, your company may be eligible for tax savings.
Employers may qualify for a tax deduction of a maximum of $5,250 per employee per year for covered educational expense reimbursement. This savings opportunity combined with the ability to attract and retain high-quality talent makes this benefit a win-win.


14. Employee Assistance Program (EAP)

An EAP can share quite a few similarities with #12 on our list, Wellness Programs. Both benefits are designed to improve an employee’s health and well-being. While wellness programs typically focus on physical health, EAPs focus on mental, financial, and emotional well-being. EAP support is usually available by phone and video conference 24/7, providing employees constant access should they need it.
EAPs often provide:
  • Mental health counseling
  • Financial and legal services
  • Substance abuse support (non-medical)
  • Family and marriage counseling
One key detail of nearly all EAPs is that the support provided through the program is confidential. This means that employers aren’t notified and don’t have access to the individual data of employees using the program. Making sure employees can confidentially use an EAP is critical. Otherwise, employees may fear that their boss or supervisor will use EAP information against them in some way.
Most EAPs still provide usage information that informs you of global statistics such as how many employees utilized the program’s benefits, when the program was used and more. This global information keeps you updated on whether the program is actually being used by your employees.
As far as general ROI for EAPs, SHRM noted a study that found 27% reduced absenteeism, 8% increased engagement at work and 22% improved life satisfaction for employees that used an EAP. Needless to say, an EAP should be a strong consideration for any small business employee benefits package.
Looking to learn more about employee benefits and their ROI? We created a blog on employee benefits ROI that discusses which benefits have been proven to offer the greatest return.

15. Flexible Work Arrangements

Last but certainly not least, flexible work arrangements such as remote work, flex time schedules and reduced work weeks have surfaced as crowd favorites within the last few years. Workplaces had to dramatically change in the wake of COVID-19, which resulted in many companies shifting to remote work permanently or for a significant period of time. As a result, many employees began to prefer alternatives to the traditional “nine to five” approach.
In addition to being a growing want for many workers, another favorable aspect of flexible work arrangements is the often-low cost to implement. Arrangements like remote work and flexible schedules require minimal investment if properly established and managed. However, while cost can be low and popularity high, implementing and maintaining these alternatives can be a challenge.
Three of the biggest challenges related to flexible work arrangements are:
  • Instilling a positive workplace culture
  • Setting and carrying out new communication guidelines
  • Enforcing the same performance standards used prior to the new work arrangement
Before changing to a new work setup, create a specific plan to address the items above. Many companies that don’t currently work with a PEO, choose to do so when shifting to a new workplace arrangement. Partnering with a PEO allows your HR staff to focus more on the elements above, which helps to increase the odds that your new work arrangement will be successful.
If you’re moving to a remote work arrangement and haven’t hired employees outside of your state before, you’ll need to be mindful of multi-state payroll guidelines. For more information, check out our blog on multi-state payroll.

Set Up and Optimize Your Employee Benefits with LandrumHR

If you’re ready to build a complete small business employee benefits package, LandrumHR is here to help. We have over 50 years of experience as a leading PEO with specific expertise in helping businesses with their employee benefits. Not only do we help you obtain and create the right benefits package, but we also serve as your benefits administrator. This means we take care of the tedious, time-intensive work that’s required to efficiently and properly manage a benefits program.
LandrumHR offers a full range of HR services that goes beyond benefits. From payroll processing and timekeeping to employment law compliance, onboarding and more, you can get all your HR needs taken care of in one place.
Have questions or ready to get started? Contact our team today for a free quote. Our experts will gladly answer your questions and walk you through how LandrumHR can support your business with employee benefits and more.
Casey Johnson

Casey Johnson has decades of experience in the insurance industry, with a deep expertise in employee benefits and implementing benefit plans. Prior to coming to LandrumHR, Casey spent time at AON where she specialized in employee enrollments. As the Director of Insurance Services at LandrumHR, Casey oversees the internal insurance team and assists clients by supporting them with critical insurance/benefits decisions. Additionally, Casey ensures clients remain compliant with governing regulations through precise internal controls, processes, and procedures. Casey is licensed as an insurance agent with all the states in which LandrumHR has insurance clients.

View more blogs by Casey Johnson