Whether you're starting a new job or assessing your options at a current one, it’s important to understand the benefits your employer offers. Employee benefits can make a big difference in your experience at work and your quality of life.
Let’s take a look at some of the most common types of employee benefits and examine how they work, so you can decide which ones may be best suited for you.
What are employee benefits and how do they work?
Employee benefits are perks and types of compensation your employer provides on top of your wages. These benefits generally include health, dental, and vision insurance, and paid time off (PTO), but can also include supplemental insurance coverage, retirement plans, bonuses, stock options, and more.
If you’re a new employee, some of these benefits may be available from your first day on the job, while others — like stock options or retirement plan contributions — may have a waiting period before they kick in. If you’re an existing employee who wants to make changes to your current benefits, you'll typically need to wait for the designated open enrollment period or experience a qualifying life event.
Open enrollment for employees is typically between September and December each year. But a QLE — a significant change in a person’s life such as marriage or the birth of a child — can occur any time of the year.
Mandatory vs. elective employee benefits
The U.S. Government requires employers to provide certain benefits, known as mandatory benefits, to their employees. These include Social Security and Medicare benefits, unemployment and disability insurance, and worker’s compensation. Additionally, companies with more than 50 employees must provide medical insurance. Any further benefits offered are considered non-mandatory, or elective, benefits.
Why are employee benefits important?
According to MetLife's 2023 Employee Benefits Trend Study, a robust benefits package plays an important role in work-life balance and job satisfaction. It can also help improve employee engagement and productivity. Employee benefits are important to consider – especially when evaluating a job offer – because they can help provide:
- Financial security: Benefits like retirement plans, health insurance, disability insurance, and life insurance can help provide financial safeguards and assistance. They can help you plan for the future, protect your family, and prepare for unexpected expenses.
- Improved health and well-being: Certain employee benefits programs focus on improving your health and well-being. For instance, wellness programs, gym membership reimbursements, and access to mental health resources can help you manage stress and prevent burnout.
- Professional growth and development: Access to professional development and growth opportunities such as mentorship programs, training sessions, and tuition reimbursement opportunities can help you to enhance your skills and progress in your career.
Types of employee benefits
The most common types of benefits employers offer include:
- Health-related benefits (medical, dental and vision)
- Retirement accounts (IRA, Roth IRA, 401K, etc.)
- Time-off and leave benefits (PTO, paid holidays, parental/caregiver leave, bereavement leave)
- Life insurance
- Disability insurance
Most employers offer healthcare insurance — including medical, dental, and vision plans. Medical services could include doctor visits, hospital stays, preventive care, and medications. Dental and vision benefits may cover routine checkups, eyeglasses, or dental procedures. These benefits provide access to healthcare services and can help you manage the costs.
Some employers offer retirement plans, such as 401(k), 403(b), and pension plans. These plans help you save for retirement with pre-tax or post-tax contributions. Employers may match a percentage of your contributions, which can provide a boost to your retirement savings over time.
Time-off and leave benefits
Paid Time Off (PTO) is a common benefit typically used for sick leave, vacation days, and personal days, depending on your employer’s policy. Additional leave benefits may include PTO for recognized public holidays, leave for new parents and other caregivers and bereavement leave if you’ve experienced the loss of a loved one.
Life insurance provides financial assistance to your beneficiaries in the event of your death. It’s designed to provide monetary support and protection to help your loved ones cover things like funeral expenses, outstanding debts, and mortgage payments.
Long-term and short-term disability insurance offer financial support if you become unable to work due to a severe illness or injury. During the disability period, your employer pays you a portion of your paycheck to help you meet your financial obligations — such as mortgage payments, rent, and other monthly expenses.
Additional employee benefits
Even though many standard packages include the aforementioned benefits mentioned above, employees today often look for more than the basics. Additional employee benefits can include:
- Well-being perks (mental or physical health services and subscriptions, mental health days, etc.)
- Employee assistance programs (EAPs)
- Childcare (reimbursement, in-office child care)
- Flexible work arrangements (remote or hybrid work, four-day workweek, etc.)
- Pet insurance
- Legal insurance
- Supplemental health insurance (accident insurance, cancer insurance, critical illness insurance, hospital indemnity insurance, etc.)
- Health savings and spending accounts (HSA, FSA, DC-FSA, LP-FSA, and Commuter Benefits)
- Financial wellness programs (retirement planning assistance, student loan repayment programs, budgeting tools, etc.)
- Scholarships and tuition reimbursement
- Bonus programs
- Home office, phone, or internet stipends
- In-office perks (free lunches, office parties, bring-your-pet-to-work events, etc.)
- Diversity and inclusion initiatives (employee resource groups, diversity training programs, mentorship opportunities, etc.)
What are the best employee benefits?
The best employee benefits package is the one that best fits your needs — not only your current ones but also those you may encounter in the future. Here are some tips to help you identify personal key benefits:
- Assess personal circumstances: Consider your current circumstances and determine how these factors may impact your benefits needs.
- Identify your priorities: Determine which benefits matter most to you. Rank them based on both their immediate importance and how they can help you reach your long-term goals.
- Evaluate your health needs: Assess your healthcare needs and those of your family. Consider factors such as ongoing medical conditions, anticipated medical procedures, and prescriptions. Choose a health plan that aligns with your needs
- Consider the cost implications: Compare the costs associated with different benefit options such as premiums, deductibles, copayments, and out-of-pocket expenses. Enroll in plans that suit your financial situation.