Comprehensive Benefits Package: What’s In It? (With Examples)

By Matthew Zane - Jan. 12, 2021

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When it comes to deciding how attractive a job offer is, salary plays a pivotal role. But savvy job-seekers know that base salary, while important, is just one piece in the decision-making process. To get a complete picture of what your employment contract is worth, you also have to look at what benefits the employer offers.

In this article, we’ll go over common elements of a comprehensive benefits package, legally required benefits, and extra benefits that are growing in popularity.

What Is an Employee Benefits Package?

An employee benefits package is the set of policies and services that an employer provides for the sake of their employees’ mental and physical well-being, financial security, and family needs. This package makes up a part of an employee’s total compensation.

Most large companies and almost all government employers provide comprehensive employee benefits packages. Small businesses typically offer fewer benefits than large ones, but there are still mandatory benefits that all employers must offer.

Businesses have significant leeway in determining what benefits to offer their employees. Creating an attractive company culture and retaining top-talent require an organization to offer generous benefits to employees at every level of the company.

Mandatory Benefits

Before we get into the fun and trendy benefits some employers offer, let’s first discuss the benefits that the law mandates. Note that some states have more stringent laws regarding benefits than federal guidelines set out, so be sure to check your state’s laws for items on this list.

In general, state laws will only serve to bolster benefits that are already federally mandated:

  • Family and Medical Leave Act (FMLA). The FMLA states that employers with more than 50 employees must provide up to 12 workweeks of unpaid leave during any 12-month period for specified family and medical reasons. These weeks needn’t be consecutive, and they also needn’t be paid.

    However, California, New York, New Jersey, and Rhode Island require paid parental leave under certain conditions – check with your state government for further information.

    When the employee wishes to return to work, the employer must provide the same job or a similar position with equal pay and benefits as before they left. Health insurance benefits remain in place for the duration of the leave.

    For an employee to be eligible to take this leave, they must have worked for at least 1,250 hours over the past year. Employees can take this leave for the following reasons:

    • Maternity or paternity leave (30% of companies offer paid paternity leave, while 34% offer paid maternity leave, as per a study by SHRM)

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    • To care for an immediate family member with a medical condition

    • To deal with a personal medical issue that prevents work

    • To take care of an emergency regarding an active military family member

  • Minimum wage. Covered by the Fair Labor Standards Act (FLSA), the federal government mandates a minimum wage of $7.25/hour.

    However, states often set a higher minimum wage than this. Since the federal minimum wage is the baseline, states’ minimum wage can only be higher than $7.25/hour.

  • Overtime. According to the FLSA, nonexempt employees must be paid at least time and a half (1.5x normal hourly wage) for each hour they work over 40 hours in a workweek. Again, state guidelines can be more generous to the employee, so check your local laws for more exact information.

  • Unemployment. Unemployment benefits are handled solely at the state level, and there’s a wide discrepancy between what some states offer employees (and in what situations) as opposed to others.

    However, at a minimum, an employee who is terminated through no fault of their own (like being laid off) is entitled to unemployment pay for some period of time. Each state decides the amount, duration, and required conditions of this pay.

  • Consolidated Omni-Budget Reconciliation Act (COBRA). All employers with 20+ employees must continue providing medical benefits to former employees for up to 18 months. These benefits must also continue to cover the former employee’s family.

    Again, states have their own sub-laws regarding COBRA (and again, they can only be more generous than federally mandated), so be sure to check what your state’s guidelines are.

  • Workers’ compensation. Every state has its own set of requirements for workers’ compensation. Every state requires that employers meeting certain conditions (usually having “x” number of employees) must have workers’ comp insurance.

    If an employee is injured or becomes ill as a result of their work or work environment, she can file a workers’ compensation claim and receive partial wages and receive aid in paying for medical expenses.

    Typically, an employee will receive two-thirds of their normal wages and have eligible medical expenses covered by workers’ compensation insurance.

  • Short-term disability insurance. If you live in New York, New Jersey, Rhode Island, California, Hawaii, or Puerto Rico, then short-term disability insurance is mandated (though terms and conditions differ state-by-state).

    This is similar to workers’ comp, but it does not require that the illness or injury be sustained in the workplace or as a result of work.

    Short-term disability insurance covers a portion of the employee’s salary (typically between 40-60%) while they are on leave coping with an injury or illness. Note that this benefit does not directly cover medical expenses; it only serves to continue some portion of your income during your leave.

    While only a handful of states mandate short-term disability insurance, many more employers offer it of their own volition.

  • Health insurance. Under the Affordable Care Act (ACA), employers with 50+ employees must provide healthcare plans to its full-time employees (in this case, employees who work 30+ hours a week) or else pay a fine.

    Some companies offer part-time workers health insurance as well, but it is not part of the employer mandate. The quality of these plans is not guaranteed, but it does serve as a minimum baseline that all large employers must abide by.

Optional Benefits

All right, that’s all the boring stuff out of the way. Now let’s get to the unlimited vacation policies and foosball tables. The optional benefits an employer chooses to provide its employees are a critical factor in the company culture, corporate priorities, and employee attraction, retention, and satisfaction.

Note that some of the “mandatory benefits” above could be included in this section (just far more generous versions of each). For the sake of brevity, we’re skipping those for this list.

We’ll try to start with the more common benefits and work our way back to the wonderfully strange ones:

  • Paid time off. The vast majority of employers will offer paid time off (PTO). While benefits packages can differentiate between paid holidays, sick days, personal days, and vacation days, more employers are implementing policies that do away with these distinctions.

    PTO days are typically accrued over a certain duration, and employees with a longer history at the company usually receive more PTO than their newer counterparts. Some companies even opt for unlimited PTO policies. For those that don’t, employees are typically paid for any unused PTO, or that PTO rolls over to the following year.

  • Retirement plan. Planning for retirement is crucial for most employees, and many companies offer assistance in this regard as a benefit. Often, companies will match contributions to a 401(k) or similar retirement plan up to a certain amount or percentage.

    This basically acts as a pay bump for employees because it’s free money – as long as they can wait until retirement to actually touch those contributions.

    Along with health insurance and PTO, these retirement plans are a cornerstone of any genuinely competitive benefits package.

  • Health insurance. We know we said that health insurance falls under the “mandatory benefits” section, but for employers with 50 or fewer employees, this benefit is technically optional.

    However, any employer worth their salt knows that offering generous health insurance options is key to attracting and retaining the best of the best.

    According to SHRM, the most common plans are preferred provider organizations (PPOs), which have higher premiums but more flexibility in coverage than their health maintenance organization (HMO) counterparts.

  • Dental/vision insurance. Dental insurance is another hyper-common benefit, with vision insurance being only slightly less prevalent. These plans, respectively, help cover the costs of dental procedures and checkups and a percentage of the cost of vision-correcting hardware and examinations.

  • Alternative healthcare options. Complementing employer health insurance plans, alternative healthcare options are a popular benefit. These include things like flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs).

    FSAs are typically employee-funded (primarily; some employers may contribute a little), tax-free accounts that can be used for copayments, deductibles, and any other out-of-pocket costs.

    HRAs, on the other hand, are entirely employer-funded, and employees can be reimbursed for healthcare costs not covered by their insurance.

  • Life insurance. Life insurance policies are meant to provide your beneficiaries with money in the event of your death. For employer-provided life insurance plans, the company pays for all or some of the premiums, and the policy covers the group of employees that sign up for it.

  • Disability insurance. While some states require short-term disability insurance for certain employers, others don’t. However, it’s very common for employers to offer both long-term and short-term disability insurance.

  • Bonuses. Bonuses take a number of forms (annual anniversary, referral, spot bonus, incentives, retention bonuses, signing bonus, stock options, etc.) and are a powerful tool in any benefits package toolbox.

    For some jobs, bonuses can make up a substantial proportion of an employee’s income.

  • Tuition assistance. With the rising costs of higher education, more and more companies are starting to offer tuition reimbursement or assistance to attract young talent saddled with mountains of debt.

  • Company car. Some businesses will lease cars for certain employees, which can translate into huge savings.

  • Employee discounts. A surprisingly large percentage of employers (42%, according to the SHRM study) offers employee discounts on services or products.

    Depending on the nature of the company and the employees’ interest in using their products or services, this can be an exceptionally attractive benefit.

  • Paid parental leave. As we said, some states (California, New York, New Jersey, and Rhode Island) mandate paid parental leave in addition to the regular FMLA requirements.

    However, roughly 30% of employers include some element of paid leave for expectant and new parents. The SHRM study does not indicate what proportion of those employers are in one of the states where such a policy is mandatory, so it’s hard to gauge how prevalent this practice is outside of those states.

  • Telecommuting. Ah, it’s 2020, and the world is all about remote work and telecommuting options. Although the global pandemic has certainly sped up this process, it had already been going on for years.

    You can expect the benefit of part-time, full-time, or ad hoc telecommuting options to continue rising, as employees really (really) seem to love this option.

  • Flexible scheduling. Fostering an environment that appreciates and supports work-life balance is a big part of creating an attractive company culture. One way companies show their support for work-life balance is by offering flexible schedules.

    As organizations move towards results-focused metrics of success, the importance of clocking in from 9-5 every day has dwindled. In conjunction with work-from-home options, expect this perk to continue increasing in popularity.

  • Severance packages. While not exactly a benefit an employee ever hopes to need, a severance package is a good safety net that everyone appreciates. If a company isn’t doing so hot and needs to lay off some employees, a severance package helps ease their transition into a new job.

    Severance packages are not required by any federal laws. Still, some states (Idaho, Maine, Massachusetts, and Rhode Island) do mandate certain practices depending on the notice an employee receives when being laid off. Severance packages typically offer continued pay (or a portion of it) for a predetermined length of time.

    They usually also offer continued health insurance coverage (beyond the COBRA requirements listed above) and the ability to use any other employer-based healthcare funds (such as an FSA or HRA).

Final Thoughts

No two employee benefits packages are identical, so it’s essential to carefully consider what exactly your employer is offering. While some benefits are standard, and others are a bit more fringe, each benefit’s value is up to each employee.

For instance, a recent college graduate may value tuition reimbursement more than a generous healthcare plan, while a working mother may consider health insurance the most essential benefit.

No matter who you are, or what priorities you have, understand that an employee benefits package is a crucial factor in understanding your total compensation. Base salary doesn’t tell the whole story, so keep these benefits in mind if you’re considering job offers.

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Matthew Zane

Author

Matthew Zane

Matthew Zane is a teacher, writer, and world-traveler. He writes articles to help people at every stage of the career life cycle. He completed his masters in American Literature from Trinity College Dublin.

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