A good salary gets a job candidate’s attention, but a great benefits package gets their signature.
Here’s the thing: job applicants care about total compensation. Salary is important, but if your benefits fall short of the industry standard, you’ll risk missing out on top talent. This resource explores 17 types of employee benefits HR teams should know about if you want to build a dream team.
What Are Employee Benefits?
Employee benefits are the non-wage compensation employers offer on top of salary: health coverage, retirement contributions, paid time off, and more. They fall into two main categories. Legally required benefits, or mandatory benefits, are non-negotiable. Voluntary benefits are not required, but can have a huge impact on recruiting, engagement, and retention.
Why Employee Benefits Matter
When a job seeker gets two offers with similar pay, benefits can tip the scale. And a thin package drives away your best people, no matter how long they’ve been on your team. Studies show 70% of U.S. workers would switch jobs for a better benefits package (The Economist Group).
A strong benefits package represents a huge investment of money and time (especially HR’s time). The most effective HR teams rely on benefits administration tools to streamline their workflows during open enrollment and all year long.
The 4 Major Categories of Employee Benefits
Most employee benefits fall into four categories:
- Insurance (health, dental, vision, life, disability)
- Retirement and financial (401(k) plans, HSAs, financial wellness programs)
- Time off and leave (PTO, parental leave, sick time)
- Voluntary or supplemental extras (pet insurance, legal plans, employee discounts)
Some of these categories contain both mandatory and voluntary benefits, and it’s HR’s job to know the difference.
Legally Required Employee Benefits
Most businesses are required to offer the following mandatory benefits:
- Social Security and Medicare contributions (FICA)
- Unemployment insurance
- Workers’ compensation
- Protected unpaid leave under the Family and Medical Leave Act
- COBRA continuation coverage (20+ employees)
The exact requirements can vary based on your business size, industry, and location. HR needs to follow both federal regulations and state laws, which vary widely and can change quickly. This gets especially complex for HR leaders who run multi-state organizations.
17 Types of Employee Benefits to Consider Offering
As you design your benefits package, make sure to consider these options. Some of them may be mandatory depending on your company’s size, location, and industry. Others are completely voluntary. And when you get the right mix for your unique team, you’ll see huge gains in top HR priorities like engagement, retention, and long-term business results.
1. Health Insurance
Medical, dental, and vision insurance are still the benefits employees care about most. About 86% of private-sector workers get their health insurance through their employer (U.S. Census Bureau). Bigger companies usually choose between HMO, PPO, and high-deductible plans, while smaller employers often lean on HRAs or healthcare stipends to offer coverage without taking on a full group plan.
2. Retirement Plans
401(k) and 403(b) plans, employer matching, and pensions empower employees to build wealth and security. In this era, more and more states are starting to require that employers offer some kind of retirement plan. HR leaders can expect this benefits line item to become a compliance issue in the near future.
3. Paid Time Off
PTO includes vacation, sick leave, and personal days, and how you structure it (accrual-based vs. unlimited) can vary widely. Your strategy tells employees how much your company values their work/life balance, not just their productivity.
4. Life Insurance
Group life insurance costs employers very little but means a lot to workers supporting a family. You can usually offer a base level of coverage for a modest per-employee cost, then let employees buy more coverage if they want it.
5. Disability Insurance
Short- and long-term disability insurance can replace part of an employee’s paycheck if illness or injury keeps them out of work. A few states require this coverage, so find out what’s mandatory where you operate before adding an employer-provided plan.
6. Parental and Family Leave
Under the Family and Medical Leave Act, eligible employees may take up to 12 weeks of unpaid, protected leave in a 12-month period. Some states mandate paid family leave on top of that. To stay competitive in this era of work, many companies offer paid maternity, paternity, and adoption leave. Some are starting to offer leave for new grandparents as well. This is a hugely attractive benefit for employees who are starting or growing their families.
7. Flexible Work Arrangements
Remote work, hybrid schedules, compressed workweeks, and flexible hours have become a benefits category all their own. For a lot of employees, schedule flexibility matters just as much as traditional benefits like health insurance.
8. Employee Assistance Programs (EAPs)
EAPs give employees confidential access to counseling, mental health support, financial planning, and legal advice, all at no cost to them. Different providers offer a wide variety of programs, so be sure to choose the one that best suits your team’s needs.
9. Mental Health Benefits
Beyond a standard EAP, dedicated mental health coverage might mean access to a therapy app, designated mental health days, or expanded behavioral health coverage built into your medical plan. This offering is a key differentiator for Millennial and Gen Z workers, who prioritize mental health care over many other potential benefits.
10. Wellness Programs
Gym memberships, wellness stipends, fitness challenges, and preventive health programs can help employees stay healthy. They’re also hugely beneficial for employers. Healthy employees are absent less often, and when they’re present, they have the capacity to do better work.
11. Learning and Development Benefits
When you support employees’ growth, they’ll continue to grow with your company. These benefits can include tuition reimbursement, professional certifications, training stipends, and internal learning programs.
12. Financial Wellness Benefits
Financial stress impacts productivity. Student loan assistance, financial planning access, flexible spending accounts, OnDemand Pay, and emergency savings programs can help relieve that burden. Make sure to survey your team and learn exactly which benefits would be most helpful to them.
13. Commuter and Transportation Benefits
Getting to the office costs money, but so does setting up a home office. Pre-tax commuter benefits, parking stipends, transit passes, and remote work stipends help on-site and remote employees alike. Make sure to check the IRS’s annual limits on pre-tax contributions before you set your thresholds.
14. Employee Discounts and Perks
Employees feel like they’re making more money when they consistently spend less. You can achieve that by offering corporate discount programs like Paycor Perks. This is an easy way to offer product discounts and voluntary group-rate perks like legal plans, pet insurance, and identity theft protection. Workers get to enjoy lower prices than they’d find shopping on their own, at no extra cost to your company.
15. Childcare and Dependent Care Benefits
Few benefits are as scarce, or as highly valued, as childcare support. Dependent care FSAs, on-site childcare, childcare subsidies, and backup care programs are huge recruitment and retention drivers among employees raising kids. Offering them is still rare enough to make your company stand out.
16. Stock Options and Equity
In some industries (and for most startups), equity often does the job a bigger salary would do elsewhere. Employee stock purchase plans, restricted stock units, and equity grants give employees a real stake in your company’s future.
17. Supplemental Insurance
Voluntary supplemental plans, such as critical illness, accident, hospital indemnity, and pet insurance, let employees choose extra protection at group rates. It’s an easy way to add real value to your package without adding much to your budget.
How to Choose the Right Employee Benefits Package
Start with what’s legally required, then build from there. Benchmark your benefits package against your industry peers to get a sense of the competitive landscape. And don’t just guess what your employees want. Ask them. Employee surveys will give you all the details you need to design a better benefits package.
How Paycor Simplifies Employee Benefits Administration
Managing 17 types of employee benefits by hand gets messy fast, especially once you factor in open enrollment, eligibility tracking, and rules that change by state. Paycor’s Benefits Administration solution gives HR one place to manage every detail. Ready to turn your benefits strategy into a retention driver? Schedule a tour and learn how to support your team.