Employee benefits are non-wage compensations that employers provide to their employees in addition to their salaries or wages.
Employee benefits are not only important for attracting and retaining talent, but also for enhancing employee satisfaction, engagement, performance, and loyalty. According to a survey by Glassdoor, 57% of job seekers consider benefits and perks as a top factor when deciding whether to accept a job offer.
In this guide, we will cover some of the most common and best employee benefits that you should know about. We will also explain how they work, why they matter, and how to compare them.
Medical Coverage
Medical coverage is the most common employee benefit that employers offer. It covers costs associated with doctors’ appointments, regular checkups and basic medical procedures. It also covers emergency room visits and many types of surgical procedures.
Medical coverage can help employees stay healthy, prevent or treat illnesses, and avoid paying high medical bills out of pocket. It can also reduce absenteeism and increase productivity at work.
There are different types of medical coverage plans that employers can offer, such as:
- Health Maintenance Organization (HMO) plans: These plans require employees to choose a primary care physician from a network of providers and get referrals for specialist visits. They usually have lower premiums and deductibles, but less flexibility and choice.
- Preferred Provider Organization (PPO) plans: These plans allow employees to visit any provider they want, but they pay less if they choose a provider from a preferred network. They usually have higher premiums and deductibles, but more flexibility and choice.
- High-Deductible Health Plan (HDHP) with Health Savings Account (HSA): These plans have low premiums but high deductibles, which means employees pay more before the plan starts to cover expenses. However, they also come with an HSA, which is a tax-advantaged account that employees can use to save and pay for qualified medical expenses.
Dental Insurance
Dental insurance is another common employee benefit that employers offer. It covers routine dental exams, cleanings and X-rays and dental procedures like root canals, fillings, and oral surgery.
Dental insurance can help employees maintain good oral hygiene, prevent or treat dental problems, and improve their appearance and confidence. It can also reduce the risk of developing other health issues related to poor oral health, such as cardiovascular disease, diabetes, and infections.
There are different types of dental insurance plans that employers can offer, such as:
- Dental Health Maintenance Organization (DHMO) plans: These plans require employees to choose a dentist from a network of providers and pay a fixed copayment for each service. They usually have low or no premiums and deductibles, but less flexibility and choice.
- Dental Preferred Provider Organization (DPPO) plans: These plans allow employees to visit any dentist they want, but they pay less if they choose a dentist from a preferred network. They usually have higher premiums and deductibles, but more flexibility and choice.
- Dental Indemnity plans: These plans reimburse employees for a percentage of the cost of any dental service they receive, regardless of the provider. They usually have higher premiums and deductibles, but the most flexibility and choice.
Vision Insurance
Vision insurance is another common employee benefit that employers offer. It covers eye exams, prescription lenses, ocular procedures and routine checkups for eye health.
Vision insurance can help employees protect their vision, correct their vision problems, and prevent or treat eye diseases. It can also improve their quality of life and performance at work.
There are different types of vision insurance plans that employers can offer, such as:
- Vision Benefits Plan (VBP): This is the most common type of vision insurance plan. It works like a PPO plan for vision care. Employees pay a monthly premium and a copayment for each service. They can choose any provider they want, but they pay less if they choose a provider from a preferred network.
- Vision Discount Plan (VDP): This is a type of vision insurance plan that offers discounts on vision care services rather than covering them. Employees pay an annual fee and get access to a network of providers that offer reduced prices for various services. They do not pay any copayments or deductibles.
- Vision Savings Plan (VSP): This is a type of vision insurance plan that combines features of both VBP and VDP. Employees pay a monthly premium and get access to both covered services and discounted services from a network of providers. They pay copayments for covered services and reduced prices for discounted services.
Life Insurance Policies
Life insurance policies are another common employee benefit that employers offer. They provide financial protection to the employee’s beneficiaries in case of death. Often, these life insurance policies are group-term life insurance, which means the insurer provides the employer with a master contract that extends life insurance coverage to all staff members and is in effect for a certain time period.
Life insurance policies can help employees secure their family’s future, pay off debts, cover funeral costs, and leave a legacy. They can also provide peace of mind and reduce stress.
There are different types of life insurance policies that employers can offer, such as:
- Basic life insurance: This is the most common type of life insurance policy that employers offer. It usually covers one or two times the employee’s annual salary. The employer pays the full premium and the employee does not have to pay anything or undergo any medical exam. The employee can also choose the beneficiary of the policy.
- Supplemental life insurance: This is an optional type of life insurance policy that employers offer. It allows employees to buy additional coverage on top of the basic life insurance. The employee pays the full premium and may have to undergo a medical exam. The employee can also choose the beneficiary of the policy.
- Dependent life insurance: This is an optional type of life insurance policy that employers offer. It covers the employee’s spouse, children, or other dependents. The employee pays the full premium and may have to provide proof of dependency. The employee can also choose the beneficiary of the policy.
Prescription and Pharmacy Benefits
Prescription and pharmacy benefits are another common employee benefit that employers offer. They cover the cost of prescription drugs and medications that the employee may need.
Prescription and pharmacy benefits can help employees treat their health conditions, manage their symptoms, and improve their well-being. They can also save money and time by avoiding expensive or unnecessary trips to the doctor or hospital.
There are different types of prescription and pharmacy benefits that employers can offer, such as:
- Formulary: This is a list of drugs that are covered by the plan. It usually includes generic drugs, preferred brand-name drugs, and non-preferred brand-name drugs. Each category has a different copayment amount that the employee has to pay when filling a prescription.
- Mail-order: This is a service that allows employees to order their medications online or by phone and have them delivered to their home or office. It usually offers lower copayments and larger supplies than retail pharmacies.
- Specialty pharmacy: This is a service that provides employees with access to specialty drugs, which are high-cost, complex, or rare medications that require special handling or administration. It usually offers personalized care and support from pharmacists and nurses who specialize in these drugs.