Overview of Employee Benefits

This section provides an introduction and Overview to the broad topic of Employee Benefits, including in-depth discussions of COBRA, HIPAA, HSAs and more. For State-specific information, please visit our State Resources Page. For up-to-date employee benefits news, trends and developments, click here.

• Why Offer Employee Benefits 
• Types of Common Benefits
• Benefits Surveys - Who's Offering What
• Additional Information & Resources
• Information for Plan Participants/Employees 
• Information for Plan Sponsors/Employers

Why Offer Employee Benefits?

Before we begin our discussion of Employee Benefits, it's important to understand why benefits are so important to employers and employees. Here are some of the reasons employers offer their employees benefits:

• To attract and retain capable people.
• To keep up with competition.
• To foster good morale.
• Tax advantages.

Benefits are becoming a more important component of the total employee compensation package. This has become an increasingly important issue to employers, as benefits represent a significant portion of the overall compensation paid to employees. On average, employers spend between 20% to 33% of payroll on employee benefits.

For many employers, a benefit plan is an integral part of total compensation, because employers either pay the entire cost of a benefit plan or have employees contribute a small portion of premium costs for their coverage.

The full range of benefit programs is discussed in this section, including benefits that are required by law, such as Social Security and workers' compensation, as well as voluntary benefits—time-off benefits, such as leaves of absence, vacation and holiday pay; retirement benefits; health and related insurance benefits, and a variety of other miscellaneous benefits commonly provided by employers, including tuition assistance plans, referral bonus plans, adoption assistance plans, and club memberships.

Common Types of Benefits Coverage

• Group Medical Insurance, 
• Group Dental Insurance,
• Group Life Insurance,
• Disability Insurance,
• Defined Contribution or 401(k) Plans,
• Defined Benefit Pension Plans, and
• Cafeteria (or Flex) Plans.

These and other non-statutory (and fringe) benefits are outlined below and are discussed more fully in the section on voluntary benefits.

Medical and Dental Health Plans

A serious illness or injury can be devastating to an employee and his or her family. It can threaten their emotional and economic well-being. Thus, adequate health insurance is important to employees and is part of a solid group plan.

Group Health Plans

• Help attract and keep employees who can make your business a success.
• Relieve your employees of the anxiety of health care costs by providing the care they need before illness becomes disabling, thus helping you avoid costly employee sick days.
• Usually cost less than purchasing several individual policies with comparable coverage. Moreover, there are tax advantages to offering health care benefits: your contribution as an employer may be deductible and the insurance...