Employee benefits packages made easy: Launching your first program

Offering a competitive benefits package can help your company to hire and retain top talent. In fact, workers value benefits so much that Mercer's 2024 People Risk report revealed that 46% of employees would give up a 10% pay increase in exchange for more well-being benefits.

Unfortunately, creating a benefit package from the ground up can be challenging.

The good news is that this guide will explain everything you need to know to design an employee benefits program that will make people want to work for your business and stay loyal to it for the long haul.

How to design an employee benefits packages and launching your first program

Designing an employee benefits program involves:

• Identifying the needs of your workers

• Understanding the legal rules you'll have to follow 

• Creating a program that's within your budget that offers workers the most value

• Finding the right partners to put your program in place

The high cost of administering employee benefits packages is one of the big challenges small businesses face. Overcoming the challenge can pay dividends. While research reveals only 65% of employees are satisfied with their jobs, the right benefits program can show staff members you care and significantly increase overall happiness. 

Considering this, your ultimate goal should be to create a competitive benefits package that improves employees' lives while aligning closely with company objectives. Here are five steps to make that happen. 

1. Understand the basics

There is a wide range of employee benefits packages. Some companies provide generous perks such as subsidized health insurance, ample paid leave, and employer retirement contributions. Others offer the bare minimum or even no benefits at all. 

To create the right employee benefits package for your business, start by evaluating different kinds of workplace perks that should be part of your plan. Some possible options include:

• Health insurance

• Dental and vision insurance

• Life insurance

• Flexible spending accounts

• Retirement plans (with or without a company match)

• Bonus pay

• Paid time off

• Sick days

• Family leave options

• Use of a business vehicle 

• Gym memberships 

Some of these benefits are called "fringe benefits," a type of pay for performance. Many of the benefits, such as bonuses or business vehicles, are taxable, with the benefit treated as compensation and employees paying their tax rate. However, some benefits, including health insurance premiums and FSA contributions, are non-taxable. 

Certain benefits are also more common than others. For example, the Bureau of Labor Statistics reports that 72% of workers have access to medical benefits through work. By contrast, only around 34% of private industry workers receive long-term disability insurance as a workplace benefit. 

Well-qualified workers typically want to find an employer offering, at a minimum, common perks like retirement plans and health coverage. However, the more benefits you offer as part of your total compensation package, the easier it becomes to find and retain workers.  For example, 59% of employees offered 10 or more health or well-being benefits said their perks made them less likely to seek new work.  

2. Consider your company culture and employee's needs

Most companies can only afford to provide a limited number of benefits, so it's important to identify the most important perks to offer when deciding how to design an employee benefits package. 

The Society for Human Resource Management polled employers to reveal that health insurance, retirement savings plans, vacation time, flexible work opportunities, and family-friendly benefits were among the most important benefits. However, no two companies are the same, and each benefit package should be tailored to the company culture and the needs of workers. 

For example, employees at start-ups may be more likely to value flexible work options, while an established company with older workers may be more concerned about life and disability coverage. The ideal health insurance for startups may also differ from group coverage options offered at a more traditional company, as entrepreneurial-minded workers often prefer more flexibility to find plans that suit their lifestyle.  

Check with competitors to see the benefits packages common in your industry. You could also consider polling employees and potential new hires to find out what benefits are most in demand. Alternatively, you could offer options like a cafeteria plan that allows workers to choose which tax-advantaged benefits they'll take advantage of. 

3. Establish a budget 

Providing benefits is far from free. The Bureau of Labor Statistics reports that while the cost of wages and salaries averages $31.80, the average cost of providing benefits comes in at $14.41. It's critical to assess how much you can afford to pay in total compensation, including these employee benefits, while you remain profitable. 

As you set your budget, remember that investing in comprehensive small business employee benefits packages can also save you money. For example, they can reduce employee turnover and create a healthier, happier, and more motivated workforce. 

One study in 2021 revealed that 66% of employees were waiting to review their company's new benefits package when deciding whether to remain employed. If you can retain top talent and build institutional memory, this has significant value for your business -- so keep this in mind when deciding how much money to devote to company benefits.

4. Evaluate the legal and compliance considerations

Many types of employee benefits are heavily regulated. For example, the Employee Retirement Income Security Act (ERISA) has strict rules for retirement and health plans, while the Affordable Care Act establishes specific standards for minimum health benefits.

You don't want your business to violate the law, so before offering any benefits, explore the regulatory landscape to understand your legal obligations and the estimated costs of complying with record-keeping and reporting requirements. 

HR professionals can help you better understand these issues so you don’t risk opening the business up to legal trouble with the employee benefits package you offer.

5. Find and partner with providers

Finally, working with trusted providers to administer employee benefits is crucial to a successful program. With the right partners to help administer your retirement plan or facilitate health insurance coverage, you can offer your employees’ desired benefits, comply with the law, and keep costs down.

Thatch is here to help you make your company's benefit program a success. Thousands of businesses nationwide have turned to Thatch to provide employees with access to the best health insurance options, from startups to large established companies. 

Thatch streamlines the administration of your health benefits program so you can keep costs down and offer employees the flexibility to choose healthcare coverage that meets their needs. Companies that partner with Thatch save an average of $1,620 annually, and employees can choose a personalized health plan through an ICHRA. 

Set your budget, and Thatch will take care of the rest. To learn more, request a free demo of Thatch.