Many companies regularly offer a great employee benefits package to full-time workers and managers, but these benefits can vary from one company to another. While they can be different in many ways, there are common benefits that you can typically find with most of these packages. You may be wondering what are the four major types of employee benefits, and a closer look may help you to develop a great benefits plan for your business.
What Are Employee Benefits?
Before you can create a benefits plan that is effective and advantageous, you need to ask what are the four major types of employee benefits. Essentially, these are extra benefits that employees may receive in addition to their salary or hourly rate. Because of how significantly these benefits can impact your employees’ quality of life as well as their overall financial situation, many job seekers will actively compare employee benefits plans when receiving multiple job offers. In some cases, they may opt for a position with a lower salary if the benefits package is substantially better than another option with a higher salary. As you can see, your benefits package plays a direct role in the talent that you are able to attract and retain, and this can have a major role on the overall success of your company.
Why Employee Benefits Are Important
When you ask what are the four major types of employee benefits, it is important to understand who uses these benefits and how they are used. Employee benefits are used by employees to attract and retain top talent. They can be used as a negotiating tactic to help you encourage experienced and educated professionals to work for your company rather than another company, and they can keep these individuals happier with their positions over the years.
Employees use these benefits for a wide range of purposes. For example, paid time off improves an individual’s quality of life while also making it easier to manage finances when they need or want to take time off of work. Insurance helps individuals navigate through unexpected events and issues, such as a serious health issue or a disability. Retirement plans help workers prepare for the future when they no longer want to work or are no longer able to work. You can see why a great benefits plan is so important to workers.
Ways in Which Employee Benefits Help Your Business
Now that you have explored what are the four major types of employee benefits and you understand how they are used, you may be wondering how they can help your business. In addition to helping you attract and retain exceptional talent, employee benefits can also be used to help your valued team focus on the tasks at hand during the workday and to reduce their stress level. Remember that financial stress, health concerns and more can negatively affect job performance and productivity. Health insurance can help your team to seek medical treatment as needed with minimal concern for cost. Retirement benefits ease financial concerns about the future. In addition, paid time off can be used to recuperate from an illness or injury without financial concerns, and this can prevent illnesses from spreading through the office. These are only a few of the many ways a great employee benefits package can help your business.
4 Types of Employee Benefits
It is important to take a closer look at common benefits before you create a benefits package or to revamp an existing package for your office. These are the most common types of employee benefits offered today.
1. Medical Insurance
Medical or health insurance is perhaps the most common type of benefit offered by employers today. Because of how expensive insurance can be, many workers prefer to get coverage through a group plan offered by their employer. However, the level of coverage can vary from company to company. Ensure that you set up a great plan that has a reasonable co-payment and deductible. The premium may be paid partially by the company and partially by the employee, or the employee may be entirely responsible for paying for the discounted group rate.
2. Life Insurance
Many companies also offer a discounted rate for life insurance, and some companies even buy a policy for their employees. For example, employees may be able to purchase an affordable policy through the company’s benefits, or the company may pay for coverage in the amount of one or two years’ worth of the individual’s salary or total compensation. Some companies also offer a higher death benefit if the individual is killed while at work, such as while traveling for business.
3. Disability Insurance
When you look at what are the four major types of employee benefits offered, you will see that disability insurance is another common benefit that employees receive. This benefit is almost standard for individuals who work in high-risk or dangerous positions, but even those who work in a relatively safe desk job may receive this benefit. It may pay benefits equivalent to the individual’s salary for one or several years, or it may have a fixed limit of benefits.
4. Retirement Benefits
It is also common for employers to offer retirement benefits to their employees. Pensions were once the most common type of retirement benefits offered, but 401k and IRA plans are increasingly popular now. Many companies offer a matching contribution benefit as well. For example, the company may match the employee’s contributions into the retirement account up to two to three percent or up to a specified dollar limit each year. This can help employees to more easily reach retirement goals, so it is a benefit that many jobseekers look for when searching for a new job.
After you learn what are the four major types of employee benefits, you may be ready to create a benefits package or to revise an existing package. A great starting point is to determine what your budget for benefits is. Then, you can explore the options and shop around to find the best products available.
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