Employee benefits are an essential component of the modern workforce. Employees prioritize perks like healthcare, dental coverage, paid time off, and retirement plans when selecting their employers.

These benefits are not just attractive to employees but also help employers retain talented staff and attract new talent.

Most Common Benefits Offered by Employers

According to a survey conducted by the Society for Human Resource Management (SHRM), the most common benefits offered by employers are:.

Health care (95%)
Paid time off (88%)
Dental insurance (71%)
Retirement savings plan e.g. 401(k) (68%)
Flexible spending accounts (67%)
Life insurance (63%)
Disability insurance (59%)
Other wellness benefits such as smoking cessation programs (43%)
Employee assistance programs (39%)
Child-care assistance (33%)

While these benefits are highly attractive to employees, there are hidden costs of offering them that employers need to keep in mind.

The Hidden Costs of Different Benefits

Healthcare Benefits

Healthcare benefits come with a significant cost to employers, especially for small businesses. The annual cost of healthcare per employee has increased rapidly over the years.

This has made it unaffordable for small employers to offer comprehensive coverage to their employees. The cost of premiums is just a part of the cost that employers have to bear. They also have to deal with the administrative cost of administering the plan, monitoring claims, and handling disputes.

Employers are also required by law to subsidize their employees’ healthcare coverage. The portion of the premium that employers pay on behalf of employees is not considered taxable income.

Employees, on the other hand, have to pay taxes on their portion of the premium. This makes healthcare coverage more expensive for employers while reducing the cost for employees.

Paid Time Off Benefits

Paid time off benefits are a great incentive to attract and retain employees. However, employers may face a hidden cost when employees abuse their leave.

Studies have shown that employees who receive more paid time off tend to take more days off, leading to increased absenteeism. This can decrease productivity levels and negatively impact the employer’s bottom line.

Additionally, when an employee takes a leave, the employer has to either hire temporary staff or redistribute work among the existing staff to cover the gap, which may lead to overtime pay and decreased productivity.

Retirement Savings Plan Benefits

Offering retirement savings plans like 401(k) can be a great way for employers to help their employees plan for their future. However, these plans come with a significant cost to the employer.

Employers have to pay administrative fees and match employee contributions in order to participate in the plan. The administrative fees can range from a few hundred to several thousand dollars per annum depending on the size of the employer’s workforce.

The employer’s annual match is also a significant expense, especially for small businesses with a limited budget.

Dental Insurance

Dental insurance is a popular benefit offered by many employers. However, dental insurance premiums are high compared to other types of insurance.

Employers who offer dental insurance may have to bear the cost of high premiums or choose plans with limited coverage to make it more affordable. Additionally, dental insurance does not cover all costs, and employees may have to pay out-of-pocket expenses such as co-pays, deductibles, or costs related to non-covered services.

Conclusion

While employee benefits are an attractive incentive for employees, it is important for employers to keep in mind the hidden costs associated with these benefits.

Employers should weigh the cost of providing benefits with the benefits they receive in terms of employee retention and satisfaction. They should take time to evaluate their employee benefits packages regularly and ensure that they are offering a good value for money while also staying current with trends and new benefits.