When it comes to structuring your employer benefits as a small business owner, think about what your competitors are doing. You may discover what the most common small business employee perks are and select those that are appropriate for your company’s needs and budget.
What Many Small Businesses Offer as Benefits
Since President Obama signed the Affordable Care Act, healthcare insurance has been a major area of discussion. Therefore it’s possible that it’s the first type of coverage you consider offering your workers. Consider additional health-related employee benefits, such as dental and vision coverage. Most small businesses, however, do not offer extra health advantages. The important types of health policies to have are listed in the sections below.
Health Insurance
Many small firms choose to offer health insurance, despite the fact that the Affordable Care Act’s employer requirement does not apply to businesses with fewer than 50 workers. In fact, a study finds that 82% of firms with 25 to 49 employees offer health insurance. At the same time, they may also offer coverage for their employees’ dependents. Healthcare insurance can have several advantages for your staff and your company. 87% of small business owners think offering health insurance is essential in attracting and retaining good employees.
One of the most common and significant employee benefits, health insurance, is also one of the most beneficial to an organization. Job satisfaction and productivity may be improved through assistance in this field. Employees who are pleased with their health insurance benefits have a 90% job satisfaction, and those that are satisfied are twice as productive at work, according to studies.
Paid Time Off
Paid vacation and time off are the most commonly provided employee benefits. Over 60% of small businesses with less than 50 employees offer it. Many of these small businesses also provide paid time off for sick days, jury duty, and funeral attendance. Knowing how much PTO small enterprises in the United States provide may be useful when developing an employer benefits package.
Retirement Benefits
Small businesses with fewer than 50 workers have an average employee participation rate of 46% and offer a retirement plan. Defined benefit plans, also known as pensions, and defined contribution plans like a 401(k), are the two most common methods for providing retirement benefits. With a pension plan, your company puts up all the cash. With a defined contribution plan, employees contribute most of the money, and you match it up to a certain amount.
Many businesses have reduced or eliminated pension benefits because defined benefit plans cost them more money. However, this does not mean you shouldn’t consider a pension as an employee benefits small business plan. According to the Department of Labor, a simplified employee pension (SEP-IRA) is a type of pension plan that may be suitable for your small business since it has low start-up and running expenses.
If you have at least one eligible employee, you can establish a SEP-IRA. If you’re searching for a defined contribution plan that will work best for small organizations, there are a few on the market that may suit your needs. The following are some of the most popular options:
- Simple 401K – Best for companies with 100 or fewer employees,
- Small business owner 401K – Best for companies where all the employees are owners.
- Simple IRA – Best for firms with fewer than 100 employees.
In a poll comparing how employees felt about retirement benefits and medical insurance, health insurance was a close competitor for the reason they joined and continue to work there. The appeal of retirement benefits may be that a job-based retirement plan, which deducts money from employees’ paychecks and offers matching contributions, is more convenient for saving.
Life Insurance
Many individuals put off purchasing life insurance because they feel it’s too expensive or because they don’t believe they need it. One of the reasons is because of new regulations on life insurance, which has caused many people to stop purchasing it. According to LIMRA, people are getting life insurance through work rather than on their own. Given this, it’s likely that only some Americans have life coverage as a result of their employment. Life insurance employer benefits are accessible to 36% of small company employees. Employees who buy into the plan for at least 10 years will be eligible for this coverage, which is typically provided through a group term life policy, which you can offer as a “free benefit” or require that workers contribute to the premium. Employee life insurance policies frequently provide a $50,000 average death benefit.
You may also offer life insurance (as well as other sorts of supplementary coverage) as a voluntary reward or enable staff to purchase personal policies. Employees must pay the entire premium for these alternatives. You may work with an insurance agent who can assist you in determining the optimal way to provide coverage that fits your budget and satisfies your employees’ demands.
Disability Insurance
Disability insurance helps employees recoup lost income if they become unemployed due to a disabling illness, injury, or accident. Short-term disability is available at 26% of small businesses, and long-term disability is accessible at 20%. Employees also get disability benefits through social security, but 65% of applicants are usually denied. Furthermore, social security payments may not be enough to cover workers’ monthly costs as the average is usually $1,666 a month. It can be even lower at $700 a month for younger employees. You’ll give your workers increased peace of mind about paying obligations if they become sick or disabled, and they’re more likely to be pleased with their work when you invest in disability insurance.
Dental Insurance
Only a small fraction of very small firms, those with less than 50 workers, provide dental insurance. Why isn’t this number much larger? It’s possible that many small companies are unaware of how essential oral health is to their employees’ productivity. MetLife’s research on small business employee perks revealed that dental coverage was the most desired medical benefit, with 74% of those who don’t now receive dental benefits wanting to obtain it.
According to a survey conducted by the American Dental Association, over half of small business employees had concerns about their dental health, and more than one-third reported missing work or not completing tasks due to their financial situation. Around 30% of these people said that their productivity decreased as a result of having to put off receiving medical or dental care. According to the CDC, over 100 million hours of work are collectively missed because of dental issues. Furthermore, 38% of small-business workers say having dental coverage is one of the most important reasons they continue working there.
Vision Insurance
Although a majority of small businesses have dental or medical plans, only 14% provide vision coverage. Offering vision insurance, like health and dental coverage, is also beneficial for employee retention. According to a recent survey, 34% of small company employees said having eye benefits was important in their decision to stay at their firm. When people have comprehensive vision protection, they are less likely to suffer work-related losses of time. This is due to the fact that individuals who obtain full eye exams for critical medical issues are less prone to file a claim. An eye exam can detect a variety of illnesses, including cancer, diabetes, and high cholesterol.
This article was written by Sam Rakestraw.
