Employee benefits guide for HR professionals

Benefits aren’t just add-ons — they’re make-or-break. In fact, 73% of employees say a richer benefits package would keep them from jumping ship (MetLife, 2024). In a world where talent is picky and competition is fierce, your benefits program can be the reason someone joins — or leaves — your company.

Whether it’s flexible hours, mental health support, or career development perks, today’s employees want more than the basics. And as an HR professional, you’re at the front line of delivering that value.

This guide gives you a complete, no-fluff breakdown of the benefits landscape — what’s trending, what’s essential, and what makes a difference. Let’s build a package your people won’t want to walk away from.

What Are Employee Benefits?

Employee benefits are non-wage offerings provided to workers in addition to their regular salary. These can include health insurance, retirement plans, paid time off, parental leave, mental health support, and flexible work arrangements, among others. While traditionally seen as “extras,” benefits have become a core part of the employee experience — and a key factor in workplace decision-making.

They’re also business-critical. 69% of employees say having a wider array of benefits would increase their loyalty to their employer, according to MetLife’s 2024 U.S. Employee Benefit Trends Study. Strong benefits packages help companies attract top talent, reduce turnover, and support better well-being — all of which contribute to higher productivity and engagement. In fact, research by SHRM found that organizations with strategic benefits programs reported increased employee performance and satisfaction by up to 60%.

Why Are Employee Benefits Important?

Types Of Employee Benefits

1. Commuter Benefits

Commuter benefits help employees cover transportation costs to and from work. These can include transit passes, parking subsidies, or reimbursements for eco-friendly travel options.
Why it matters: The IRS allows employers to offer commuter benefits tax-free, saving both the company and employee money.

2. Health Insurance

Health insurance is a benefit that helps employees cover medical expenses for doctor visits, hospital stays, prescriptions, and preventive care.
Why it matters: The Kaiser Family Foundation reports that 90% of large employers offer health insurance, and it remains a top priority for job seekers.

3. Life Insurance

Life insurance provides financial protection to an employee’s beneficiaries in the event of their death. Policies typically pay out a lump sum to help cover expenses like debts, funeral costs, or living expenses.
Why it matters: This benefit offers peace of mind and is especially valued by employees with dependents.
Insurance plans are great ways to show your employees you care about them.
The organization pays specific amounts to cover an employee's medical care. These include insurance for losses from accidents, disability, sudden death, and dismemberment. Other types of medical care involve dental checkups, biometric screening, etc.

4. Dental Insurance

Dental insurance is a type of health coverage that pays for dental care, including checkups, cleanings, and procedures like fillings or root canals.
Why it matters: The CDC notes that poor oral health is linked to conditions like diabetes and heart disease — making dental coverage a wellness must-have.

5. Disability Insurance

Disability insurance provides partial income replacement for employees who are unable to work due to illness or injury. It typically comes in short-term and long-term options.
Why it matters: The Social Security Administration estimates that 1 in 4 current 20-year-olds will become disabled before retirement.

6. Paid Time Off (PTO)

PTO includes vacation days, personal leave, and sick days — all paid. Some companies offer a flexible PTO policy, while others allocate a fixed number of days.
Why it matters: According to SHRM, companies with strong PTO policies see improved morale, lower burnout, and higher retention.

7. Employee Assistance Programs (EAPs)

EAPs offer confidential counseling and support services for employees dealing with personal or work-related issues such as stress, mental health challenges, or financial concerns.
Why it matters: EAPs can yield an average ROI of $3 to $10 per $1 invested, according to the Employee Assistance Trade Association.

8. Flexible Work Arrangements

Flexible work includes options like remote work, hybrid models, or adjustable work hours that allow employees more control over their schedules.
Why it matters: According to Gartner (2023), 82% of employees say flexibility is a key factor in staying with a job.

9. Mental Health Support

This includes services like therapy sessions, mental health days, meditation apps, or dedicated counseling resources to support emotional well-being.
Why it matters: The American Psychological Association found that 81% of employees say mental health support is a key consideration when choosing an employer.

10. Childcare Assistance

Childcare assistance refers to financial support or services provided by employers to help working parents manage childcare responsibilities. This may include on-site daycare, childcare subsidies, or partnerships with local childcare providers.
Why it matters: According to Bright Horizons, 62% of working parents say childcare responsibilities have negatively impacted their careers (2023).

11. Parental Leave

Parental leave allows new parents to take time off work to care for a newborn or adopted child. It can be paid or unpaid, depending on company policy and local laws.
Why it matters: A 2023 McKinsey report shows that companies offering paid parental leave are 25% more likely to retain new parents.

12. Professional Development

These are opportunities for employees to grow their skills through courses, certifications, workshops, or tuition reimbursement.
Why it matters: LinkedIn’s Workplace Learning Report (2024) found that 94% of employees would stay longer at a company that invests in their development.

13. Retirement Plans

Retirement plans, such as 401(k)s, allow employees to save for their future, often with employer-matching contributions.
Why it matters: According to Fidelity, employees with employer-sponsored plans are 15 times more likely to save for retirement.

14. Vision Insurance

Vision insurance helps cover costs related to eye care, including exams, glasses, and contact lenses.
Why it matters: Regular vision checkups can detect underlying health issues early, contributing to overall wellness.

15. Wellness Programs

Wellness programs are initiatives designed to promote healthy habits, such as fitness challenges, health screenings, and nutrition support.
Why it matters: A RAND Corporation study found that wellness programs can lead to reductions in sick days and healthcare costs over time.

Legally Mandatory Benefits

Under U.S. federal and state laws, employers are required to provide certain benefits to ensure basic protections for employees. These are non-negotiable and apply regardless of industry or company size (with some exceptions based on headcount or classification).

1. Social Security and Medicare (FICA Taxes)

Definition: Employers must contribute to Social Security and Medicare through payroll taxes under the Federal Insurance Contributions Act (FICA).
Who It Applies To: All employers and employees, with few exceptions.
What It Provides: Social Security offers income support for retirees, disabled individuals, and survivors of deceased workers. Medicare provides health insurance for people aged 65+ and certain disabled individuals.
Stat: As of 2024, the total FICA rate is 15.3%, split equally between employer and employee (IRS).

2. Unemployment Insurance (UI)

Definition: A state-administered benefit funded by employer-paid taxes that provides temporary financial assistance to eligible workers who lose their job through no fault of their own.
Who It Applies To: All employers must pay into their state’s unemployment insurance fund; employees must meet state-specific eligibility criteria.
What It Provides: Weekly payments during periods of unemployment, typically up to 26 weeks, though this varies by state.
Stat: The U.S. Department of Labor reports that unemployment insurance kept over 5 million people out of poverty in 2021.

3. Workers’ Compensation Insurance

Definition: A mandatory insurance program that provides wage replacement and medical benefits to employees injured or disabled on the job.
Who It Applies To: Required in all states (except Texas, where it’s optional), with employer obligations varying by size and industry.
What It Provides: Covers medical treatment, partial wage replacement, and rehabilitation services. In some cases, it also provides survivor benefits.
Stat: According to the National Academy of Social Insurance, over $60 billion in workers’ comp benefits were paid out in 2022.

4. Family and Medical Leave (FMLA)

Definition: Under the Family and Medical Leave Act (1993), eligible employees are entitled to unpaid, job-protected leave for specified family or medical reasons.
Who It Applies To: Private employers with 50+ employees, and all public agencies; employees must have worked 1,250 hours over 12 months.
What It Provides: Up to 12 weeks of unpaid leave for childbirth, adoption, serious illness, or to care for a family member.
Stat: According to the DOL, only 56% of U.S. workers are eligible under FMLA due to employer size or job tenure limitations.

5. Health Insurance (for Large Employers – ACA Requirement)

Definition: Under the Affordable Care Act (ACA), employers with 50 or more full-time employees are required to offer health insurance that meets minimum coverage and affordability standards or face penalties.
Who It Applies To: Employers with 50+ full-time equivalent (FTE) employees.
What It Provides: Access to minimum essential health coverage, often including preventive services, emergency care, and prescription drugs.
Stat: According to the Kaiser Family Foundation, 89% of large employers offered health insurance in 2023 to comply with ACA regulations.

Fringe Benefits

Fringe benefits are non-wage compensations offered by employers to enhance the overall employee experience. These optional perks go beyond the basics, often serving as competitive differentiators that help attract and retain top talent. They support various aspects of an employee’s life — from health and wellness to financial and lifestyle needs.

Examples of fringe benefits include:

• Gym memberships
• Tuition reimbursement
• Employee discounts
• Wellness stipends
• Free meals or snacks
• Pet insurance
• Financial counseling services

According to SHRM’s 2024 Employee Benefits Survey, 61% of employees said fringe benefits influenced their decision to accept a job, and companies offering creative perks reported up to 20% higher engagement.

Many organizations are now leveraging employee benefits platforms like Vantage Perks, integrated within Vantage Recognition, to offer a flexible, self-serve approach where employees can choose the perks most relevant to their needs.

In short, fringe benefits may be “extra,” but their impact is anything but. When done right, they help build a workplace people are proud to be part of.

Best practices to effectively manage employee benefits

1. Tailor Benefits to Employee Needs

Use surveys, stay interviews, or pulse tools to understand what your workforce actually values. According to MetLife’s 2024 U.S. Benefits Trends Study, 65% of employees say personalized benefits increase their loyalty to an employer.

2. Benchmark Against Industry Standards

Compare your offerings with similar companies in your industry and region to stay competitive. SHRM data shows that companies with above-average benefits packages have 24% lower turnover.

3. Ensure Clear Communication

Use onboarding sessions, benefits guides, and internal campaigns to explain benefits in simple terms. A LIMRA study found that 41% of employees don’t fully understand their benefits, which can reduce perceived value.

4. Offer a Mix of Core and Optional Benefits

Provide essential benefits like health insurance and retirement plans, while adding optional perks such as wellness programs or professional development. This balance supports both compliance and customization.

5. Review and Update Regularly

Conduct annual reviews to keep your benefits relevant and compliant with changing regulations. The Bureau of Labor Statistics reports that nearly one-third of employers updated their offerings in response to employee feedback in 2023.

6. Prioritize Equity and Accessibility

Design benefits that support diverse employee needs — across age, family status, income levels, and roles. Inclusive benefit design has been linked to higher engagement and a stronger sense of belonging (Harvard Business Review, 2023).

Your Benefits Strategy Is Your People Strategy

Employee benefits are no longer just nice-to-haves — they’re a strategic investment in your people and your culture. From healthcare to flexible work to wellness perks, the right mix of offerings can boost retention, improve morale, and position your organization as an employer of choice.

In fact, 78% of employees say they’re more likely to stay with an employer because of their benefits package (Willis Towers Watson, 2024). And companies that take a proactive, people-first approach to benefits report up to 56% higher engagement (Gallup, 2023).

In today’s workplace, offering competitive pay is just the beginning. A well-crafted benefits package shows that you’re listening — and that you care.

“Take care of your employees, and they’ll take care of your business.”
— Richard Branson

Ready to rethink your benefits strategy?
Start by listening to your employees, benchmarking your offerings, and evolving with their needs. The best benefits aren’t just generous — they’re relevant.

Lupamudra is a content marketing specialist at Vantage Circle, where she focuses on creating thoughtful, research-driven content on employee engagement and workplace culture. She enjoys connecting ideas with impact and aims to make complex topics easier to understand and relate to. For editorial inquiries, contact editor@vantagecircle.com. You can also connect with Lupamudra on LinkedIn to engage in discussions on HR trends and digital marketing.