What are employee benefits?
Employee benefits are defined as any type of non-wage perk offered by an employee to its employees. Common examples include insurance (e.g., health, dental, disability, life, and vision), retirement plans, paid time off, student loan assistance, maternity or paternity leave, and the ability to work from home. Federal law requires employers to provide some benefits, such as payments towards Social Security, Medicare, and unemployment insurance on behalf of the employee.
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What are the most popular employee benefits?
There are many popular types of employee benefits that employers may offer to incentivize their staff, attract job candidates, and ensure their teams are receiving benefits commensurate to their industry’s expectations. Some examples of the most popular employee benefits include:
- Health Insurance
- Dental Insurance
- Vision Insurance
- Disability Insurance, Long- and/or Short-term
- Paid Time Off (PTO, vacation time, and sick days)
- Retirement accounts such as 401(k), or 403(b) for Nonprofits
- Healthcare Reimbursement or Spending Accounts like HSAs, FSAs, and HRAs
- Childcare Benefits
- Tuition Reimbursement
- Wellness Programs & Gym Memberships
- Relocation, telecommuting, or travel assistance
- In-workplace Perks (Flexible hours, snacks, company activities)
Which employee benefits are employers required to provide by law?
In the US and Canada, there are basic employee benefits laws that all employers must follow. These laws center on which benefits employers must, by law, provide for employees. Legally required employee benefits include:
- Worker’s Compensation Compliance
- State & Federal Unemployment Tax Contributions
- Short-Term Disability Program Contributions (vary by state)
- Federal Family and Medical Leave Act (FMLA) Compliance
- Time off to vote, serve jury duty, or perform military service
Which employee benefits are employers not required to provide?
There are many benefits that you may discover are popular among employers and employees alike, but not required by law. Some benefits that aren’t legally required but are still common include:
- Life Insurance
- Dental Insurance
- Vision Insurance
- Retirement Plans
- Paid Vacations, Holidays, or Sick Leave
Although these are not required benefits, an employer who omits them from their employee benefits package may see some repercussions from that choice depending on the popularity of those benefits among professionals in their industry.
When do I need to be aware of employee benefits?
Employee benefits are a key component of an employee's compensation package. Benefits are usually listed in a job description and further detailed during the interview and hiring process. Not all employees receive insurance-based benefits, however, as federal and state legislation only requires some employers, based on the number of employed individuals, to offer certain employees, based on the number of hours they work, health insurance.
What is important to know about employee benefits?
Congress enacted the Affordable Care Act in 2010. This federal legislation contains an "employer mandate" that details specifically when an employer must offer health insurance as part of their employee benefits package. There are some other important items you should know about employee benefits:
- The mandate applies to employers with 50 or more full-time employees (defined as individuals who work at least 30 hours per week) or full-time equivalents.
- If the employer fits those requirements, it must offer affordable health insurance that provides "minimum value" to 95% of its full-time employees, as well as their children up to the month in which the child turns 26 years old.
- For a plan to be considered providing "minimum value" it must pay at least 60% of covered services.
- Should the eligible employer not follow this mandate, it is subject to financial penalties.