Why Do Employee Health Benefits Matter and How to Get Started?

Are you an employer looking for some employee health benefits to engage your employees in the organization? Do you want to attract top talented candidates and increase the retention rate of your existing employees? Well, you have landed in the right place!

A study suggests that organizations that do not realize the significance of employee health benefits, are in danger of mass resignations, decreased employee productivity, and loss in the market.

This statement means one thing: employees are a company's holding pillar. This suggests that employers need to better meet employees' requirements, and employee benefits play a pivotal role in this process.

Many companies treat these employee benefits as optional. But they are a significant part of major organizations around the world. According to Forbes Advisor, 47.8 million people in the U.S. quit their jobs in 2021, a 33% hike from 2020.

Another survey projected that 31.3% of employees would like private medical coverage. But according to first-hand statistics, only 12.6% of small and medium-sized firms offer it.

Therefore, in this blog piece, we will uncover what employee benefits are, why companies need them, and how to plan them out.

What are Employee Health Benefits?

Employee health benefits are compensation packages that employers offer their employees. These include health insurance, wellness programs, family health coverage, tax benefits, and others.

These benefits usually consist of packages of mandatory and voluntary programs and offerings. They engage existing employees and attract new candidates to the organization.

The law in the U.S. obligates certain employers to offer employee benefits. According to the Affordable Care Act (ACA), 2010, signed by then-president Barrack Obama, if an organization has more than 50 full-time employees, it must provide them with affordable health insurance.

In the U.S., some employers must offer employees full-time affordable health benefits. Affordability is a contribution from the employee's income up to a certain percentage.

Why are Health Benefits Important to Employees?

"Employer-provided insurance is the cornerstone of the U.S. healthcare system, covering over 150 million Americans and spurring innovation that helps improve the overall health care marketplace."
– David Cordani, president and CEO of Cigna.

Employers are always looking for ways to engage their employees in the organization. Research shows that U.S. companies lose up to $1 trillion annually due to employee turnover. When interviewed, the exiting employees said they left looking for better employee benefits.

Therefore, affordable and simple employee health benefits can turn this situation around. Let's look at some major merits of these incentives.

1. Attracts and Retains Top Talents

A 2024 survey by PeopleKeep projected that 92% of the employees preferred a company that offered health insurance. Another survey showed that 55% of U.S. employees said health benefits were a major deciding factor in keeping or quitting their jobs.

This data indicates that employers need to offer better employee benefits. These benefit packages attract new candidates and keep existing ones engaged.

Employees' productivity and workability increase when they feel valued and taken care of. Employers can enhance the packages by including employees' immediate families.

In addition, employees tend to stay on despite lower wages, as long as they have other benefits.

2. Lowers Stress Levels

Can employee health benefits lower stress levels at work? No, it can’t directly lower work stress level. But it can increase the motivation and satisfaction of the employees to make them feel less burdened.

Various factors cause stress, such as workload, illness, or any personal situation. Employee benefits do not directly solve the issue. However, they can reduce the intensity of the stress or leverage the employee's emotional well-being.

Having access to a meditation app or a mindfulness program such as Head Space and Vantage Fit during a crisis can help. Also to be able to avail yourself of some monetary help during a health-related crisis can be beneficial. Employee health benefits do not always have a direct impact, but they help in several ways.

3. Increases Employee Productivity

Health benefits for employees are directly linked to their productivity level. If employees' health is covered, they will receive better treatment and fall sick less.

A healthy employee will be more productive than a sicker one. This ensures that the work is quality and on time. It will also result in reduced absenteeism, workability, and a much-improved work culture.

4. Increases Employee Satisfaction

Data has repeatedly backed up the fact that employees look for job satisfaction. A Conference Board Survey shows that only 62.3% of U.S. employees are satisfied.

This shows that almost half the workforce in the U.S. prioritizes job satisfaction. That said, employee benefits can be crucial in achieving employee satisfaction.

Employees feel more motivated and satisfied when they receive benefits with their salary. Therefore, affordable health insurance or any other health benefit is bound to pay off well.

5. Offers Tax Benefits for Employers

Employers often charge their employees for the health benefits or insurance they offer. These include the cost of premiums paid and HSA contributions. This benefit is earned even if employers pay the money to the employees to buy healthcare plans instead of providing them themselves.

Small businesses with less than 25 employees can also qualify for The Small Business Healthcare Tax Credit. It covers up to 50% of the cost employers pay for their employees' premiums.

What are the Different Types of Employee Health Benefits?

"Companies must focus on improving care navigation – including pointing people to primary care as a first step – to move the needle on this issue. Those that don't will continue to experience productivity losses and other negative outcomes that can result from poor workforce mental health."
– Dan Schawbel, Managing Partner, Workplace Intelligence.

Health benefits vary from company to company. Some employers choose to provide less, while some include extra benefits. Let's discuss some prominent types of health benefits that employers can include.

1. Health Insurance

Health insurance is the most common type of health benefit. It covers doctors' fees, hospital stays, medicine prices, and other medical services the employee bears.

This health coverage varies between companies and is based on premium costs, income deductions, and the provider.

2. Eyecare Insurance

This type covers the cost of complete eye care for employees. It can include optometrist visits, medicine costs, and glasses or lenses if required. Most of the time this is included in one single package.

3. Dental Care Insurance

Dental insurance covers the costs of dental services provided by a dentist. This can include costs like root canals, fillings, and other dental care. Again, dental insurance amounts vary from company to company and provider.

4. Paid Time Off or Sick Days

One of the main health benefits for employees is paid time off or sick days. These days allow sick employees to get the rest they need or see a doctor. They don't have to worry about salary deductions.

Paid sick leave can help the employee recharge and get well. It also makes the employee feel satisfied and valued in the company.

5. Mental Health Programs and Coverage

According to a new study by One Medical, 64% of U.S. employees struggled with mental health problems at work or workplace depression. It further showed that the work of 91% of them was affected.

Mental health majorly affects corporate employees. Therefore, it is crucial that employers consider providing relief for these conditions. Mental health programs and coverage include free mental health counseling, therapy, and courses.

6. Life Insurance

Life insurance provides a monetary benefit to an employee's beneficiary in the event of death. In this kind of insurance, a trustee or a nominee is chosen who receives the amount after the death of the employee.

Suggested Read: The Importance of Financial Education for Employees

7. Insurance for Specially Abled

This health benefit covers the costs of treating employees who develop any disability. It is for treatment so the work they do is not hampered in the long run.

8. Wellness Programs

Employers can also include various wellness programs in health benefits for their employees. These can include free gym memberships, yoga, Zumba, and others. These programs can result in the employees' holistic wellness.

The Vantage Fit App is one such platform that can motivate employees to go the extra mile for their health and earn points in return. It has inbuilt features like heart rate tracker, water intake tracker, and many other aspects that can work wonders in employee health and betterment.

How do Employers Contribute to Their Employee Health Benefits?

Employers can contribute to their employees' health benefits in many ways. The quality and quantity of these benefits usually depend on their profit and budget.

Some employers choose to pay for their employees' HSAs and HRAs. Large enterprises include all the health benefits mentioned above in a single insurance plan.

Health benefits are a major deciding factor for workers when choosing to take or leave a specific job. They look for flexible health insurance and benefits alongside a decent pay package.

Suggested Read: 6 Employee Health Goals You Must Plan For 2024

How to Build an Employee Health Benefit Plan?

Building an employee health benefit plan is crucial for your organization's future. However, a fruitful collaboration with your provider will only occur if you choose the right provider.

Vital components are essential to an effective healthcare insurance plan. Let's review this detailed guide on how to build a plan for your organization.

1. Figure Out Your Organization's Needs and Goals

Before you make your employees happy with the news, you must define your goals. What do you want to achieve with the health benefits plan? Is it to engage your existing employees or to attract new talents? Maybe it is both.

Well-defined goals and requirements are the foundation of a successful health benefit plan. it ensures that you have financial back-up for the plan when more employees join, or costs increase.

2. Survey Your Employees' Age, Wants, and Needs

How well do you know your employees and what they want? This will be pivotal in devising a health benefit plan for them.

Conduct a survey and assess what they want and need. Employees' needs and wants also depend on their age, family size, and marital status. A one-size-fits-all approach may be inapplicable if your business is large.

You can also ask them which benefit they value the most. This will help you meet your employees' needs while sticking to a budget.

3. Set Your Budget

This is the heart of the whole benefits plan. How much funds can you spare for this investment? How will you maintain the plan if your employees increase in the future? Setting a budget is crucial for the plan.

If you are unsure about the plan's future, you might want to consider cost-sharing options. Cost-sharing with your employees may prove fruitful if they are keen on or concerned about their healthcare.

4. Choose the Right Type of Plan

Choosing the right plan provider is also part of the budget. The right plan and premium costs will help minimize the cost for you.

• Traditional Group Health Insurance: A group insurance plan is the most common health benefit type. It provides the same amount of coverage for all employees regardless of age or medical condition.

• Customized Plan: Customized plans can be expensive for employers. They are based on the different medical requirements of individual employees.

• Direct Taxable Payments: Many employers choose to pay an extra amount for the healthcare of their employees with their salary. This spares them spending time and resources on choosing a plan.

Are You Required to Provide Healthcare Benefits to Employees?

In the U.S., there are two health care reform regulations that every enterprise needs to abide by.

1. Employer Mandate

For some employers, offering health benefits to employees under the Affordable Care Act is mandatory. This applies if your business has more than 50 FTEs or full-time employees.

Large businesses that do not offer the minimum value to 95% of their employees must pay a penalty. This is an employer shared responsibility provision (ESRP) penalty.

2. COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a 1986 Act. This allows employees and their families to access group health insurance even after they leave employment.

While it is required by the law, there are some requirements, such as voluntary or involuntary job loss.

3. 12 Weeks of Unpaid Leaves

The Family and Medical Act of 1993 also obligates employers for some health benefits. This requires an employer with more than 50 employees to provide 12 weeks of unpaid leave to handle any family-related situation.

These situations include the birth of a baby, any family medical emergency, or any other medical care.

Suggested Read: 7 Steps To Become a Corporate Wellness Program Manager

How Much Do Health Benefits Cost Per Employee?

Inflation hiked the cost of health benefits for employees by 5.2% in 2023. According to several surveys, it has reached more than $15,000.

Smaller companies with 50 or more employees have experienced a sharper cost hike. Their average cost summed up to $16,464 in 2023.

Are Employee Health Benefits Taxable?

The short answer is no. In the U.S. employers pay for accidental injuries or long-term health insurance for employees. This is not subject to social security, Medicare, or federal income tax withholding.

A Recap

Employee health benefits are a great way to start if you want to retain and engage your employees. Years of research and surveys reveal that employees seek more than just good pay.They look for extra benefits and perks.

Giving your employees extra benefits can attract new employees and retain existing ones. This enhances their job satisfaction, which in turn improves your reputation as a brand. The above-mentioned health benefit types, planning, and other tips can help you build a successful employee benefit plan and boost engagement in your organization tenfold.