Are you struggling to compete with larger companies for top talent? Do your employees keep leaving for better benefits elsewhere? Creating an attractive small business benefits package may seem challenging and financially out of reach, but it doesn’t have to be.
As a small business owner, you’re facing a real dilemma. Offering health benefits can feel confusing and expensive. There are lots of plans to choose from, and it’s hard to know what’s right for your team. Health benefits are one of the first things employees consider when choosing where to work and a key reason they stay. Without them, it’s tough to compete with larger companies for top talent.
At Whirks, we help small businesses design benefits packages that attract and retain talent without breaking the bank. In this article, you’ll learn the seven core benefits you should consider offering. Plus, you’ll discover how to create a package that supports both your team and your bottom line.
The 7 Essential Components of a Small Business Benefits Package
Small businesses are the backbone of the American economy and employ about 59 million people nationwide. Even so, a truly effective small business benefits package doesn’t try to match what Fortune 500 companies offer. Instead, it strategically combines the right mix of health coverage, financial protection, and lifestyle benefits that your specific workforce values most. So, let’s dig into those key areas.
1. Medical Insurance: The Foundation of Employee Benefits
The cornerstone of any comprehensive benefits package is medical insurance. For small businesses, several options exist:
- Preferred Provider Organizations (PPOs) offer flexibility with higher premiums.
- Health Maintenance Organizations (HMOs) provide lower costs with network restrictions.
- High-Deductible Health Plans (HDHPs) feature lower premiums but higher out-of-pocket costs.
- Traditional Fee-For-Service Plans (FFS) offer flexibility in choosing providers, but can be an administrative and financial burden.
When selecting a plan, consider these factors:
- Your workforce demographics (age, family status, health needs)
- Your budget constraints
- Provider networks in your geographic area
- Employee preferences based on surveys or feedback
Many variables affect which plan will work best for your employees. This includes the demographic makeup of your team, the size of your company, and which provider networks your local healthcare professionals participate in.
2. Dental and Vision Coverage: High-Value, Low-Cost Benefits
Dental and vision coverage are relatively inexpensive for small businesses. Many medical insurance plans don’t include these benefits. However, they’re essential for the overall health and well-being of your employees.
Small businesses can offer stand-alone dental and vision insurance plans. Or, you can include them as part of your medical insurance package. While generally low cost, these benefits deliver significant value to employees.
3. Health Savings Accounts (HSAs): The Triple Tax Advantage
If you offer a high-deductible health plan (HDHP), you might want to consider providing a Health Savings Account (HSA) option.
HSAs offer three distinct tax advantages:
- Tax-free contributions that lower employees’ overall taxable income
- Tax-free interest accrual on money in the account
- Tax-free withdrawals for eligible medical expenses
HSAs are only available if you offer an HDHP to your employees. However, employees can still enroll in an HSA on their own if they have an HDHP, even if you don’t offer HSAs as an employer. That said, it’s easier for employees to enroll if you offer an HSA option because your payroll system can automatically send contributions to the HSA provider.
4. Life Insurance: Essential Protection
Life insurance provides a critical financial safety net for your employees and their families. This benefit falls into two main categories:
Employer-Paid (Group) Coverage
Group life insurance is typically employer-paid and often coupled with accidental death and dismemberment (AD&D) coverage. These are low-cost options available to all eligible employees. And, employees are usually automatically enrolled since the coverage is fully paid by the employer.
Voluntary (Employee-Paid) Coverage
Voluntary life insurance is a supplemental term life plan that employees can elect for themselves, their spouses, or their children. Typically, employees must first enroll in employee life coverage before electing coverage for a dependent or spouse.
Most voluntary life insurance plans have a guaranteed issue amount. This means employees can elect up to a certain amount without providing proof of good health. Anything above this limit requires additional paperwork from the employee and their primary care physician.
5. Disability Insurance: Support During Health Challenges
Disability insurance is another important benefit. It offers a level of protection in case of an unexpected illness or injury. Short-term disability is the most common type offered by small businesses. This low-cost option can help pay a portion of an employee’s salary (typically 60%) while they are on short-term leave. Since most small businesses don’t qualify for FMLA, offering a paid disability plan adds significant value for employees.
6. Wellness Programs: Preventive Care That Pays Off
Small business wellness programs don’t need to be elaborate to be effective. A good wellness program encourages employees to adopt healthy lifestyles. They can also help reduce healthcare costs for both the employer and employees.
These programs can include:
- Health screenings
- Fitness classes
- Nutrition education
- Smoking cessation programs
Mental health programs have also surged in popularity—and value—in recent years as employers focus on holistic well-being. By investing in employee wellness, you can help your team stay healthy while reducing overall healthcare costs.
7. Employee Assistance Programs (EAPs): Support Beyond Healthcare
EAPs provide confidential support to employees struggling with personal or work-related problems. These programs extend beyond traditional healthcare to address issues that affect general wellness and workplace performance.
EAPs typically offer:
- Counseling services
- Financial advice
- Legal assistance
- Other resources to help employees navigate difficult situations
By providing these resources, you can improve employee morale, productivity, and overall well-being. This creates a more supportive workplace environment.
Attract and Retain Top Talent with the Right Benefits Mix
Creating the ideal small business benefits package doesn’t mean you have to match what large corporations offer. Instead, you can design a program that addresses your employees’ most important needs. You can even get creative. The key is to make sure your plan aligns with your business objectives and budget constraints.
Remember, benefits are about more than just healthcare. They’re a reflection of your company culture and how you value your team members. When employees feel their well-being is prioritized, they’re more likely to be engaged, productive, and loyal.
At Whirks, we understand how difficult it can be to balance great coverage with affordability. That’s why our Benefits Services team offers step-by-step guidance tailored to small businesses.
Now that you’ve seen what an ideal benefits package can include, it’s time to evaluate your current one. Read our article on the cost of employee benefits for small businesses, then take our quiz to find out if you’re overpaying—and how to fix it.
Topics:
