The easiest explanation is; Employee Benefits is any benefit offered to an employee by an employer above and beyond the employee’s basic wage / salary.
Health insurance and a 401(k) are considered employee benefits – so are free energy drinks in the break room. Both cost the employer money and are a benefit (perk) to the employee. Let’s break it down even further. I don’t use phrases like “tangible vs non-tangible” ( I mean.. is time off tangible?). I will try and describe it like this;
Employer Centric -VS- Employee Centric.
- Usually high cost, backed by an insurance, financial or other gov’t regulatory body
- Examples are: health insurance, 401(k) etc..
- Some of these are mandatory by law, I.E. social security and medicare.
- Think of benefits where employees DO NOT get a card in the mail – but it does cost the employer money. This can be an added lifestyle or mental health benefit
- Examples are; paid time off, remote work and free energy drinks in the break (did somebody free food, I’m in 🙂
WHO (using health insurance as an example)
The main 3 incumbents – Employer, Employee, Broker and/or Entity Underwriting the Benefits
- Has the legal W-2 relationship with the employee
- Sets the tone, culture and budget for overall type of benefits being offered
- Can determine a financial contribution strategy
- To a certain extent – can be legally responsible
- Has a level of choice
- Can elect or decline benefits (within certain time frames)
- Should take ownership in understanding their benefits – working with HR or benefit broker to get questions answered
Benefit Broker / Vendors
- We recommend a seasoned Employee Benefit Consultant who works on behalf of you, The Employer.
- It is their job to recommend the proper solution, financially structure the benefit plan and manage all vendors
- The insurance company (carrier) is the vendor that finances the risk. Your employee benefit broker should convey all this to you, your risk as an employer and all terms / conditions
Do you want employees? Bottom Line: To attract and retain talent.
At the time of this writing we are dealing with a unique phase in our great nation’s path forward. From COVID era changes, business closures, remote work and what people are coining The Great Resignation. According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July 2021. More and more we are reading stories about employees gaining the upper hand, having more choices and more freedom. One influential method to attracting and keeping talented employees is to offer a competitive employee benefit package.
I Love Talking Benefits. Have Questions, Comments, Concerns? Reach Out Anytime.
David Johnson, Founder | Fortis Life Group
Podcast @ The David Johnson Show