20 Types of Employee Benefits For Employers and Employees

As an employee or employer, you must know the types of employee benefits. Every company or organization offers employee benefits packages.

Although not every employer does not offer the same employee benefits, most companies offer some common types of employee benefits.

In modern words, now employees seek a high paying salary and consider benefits packages for better work and life balance.

So, now it’s essential to know the different types of employee benefits, employee benefits required by law, and four major types of employee benefits.

What Are Employee Benefits?

Employee benefits are a non-wage compensation that is given to employees by the employer in addition to employees’ normal salaries.

Mainly companies provide employee benefits to get better results from the employees because that leads to company success.

Employers choose the appropriate employee benefits packages for their employees. And employee benefits packages are also different by country. Read the complete guide about employee benefits.

Types of Employee Benefits

Types of employee benefits depend on the company because employers choose employee benefits programs. Medical insurance, life insurance, and retirement plans are the most common types of employee benefits. There are also some employee benefits that are not required by law.

types of employee benefits

Here is the list of types of employee benefits and perks:

  1. Disability Insurance
  2. Retirement Plans
  3. Health Insurance
  4. Life Insurance
  5. Paid Time Off (PTO)
  6. Wellness Programs
  7. Tuition Reimbursement
  8. Family And Medical Leave (FMLA)
  9. Employee Assistance Program (EAP)
  10. Dental Insurance
  11. Vision Insurance
  12. Employee Relocation Package
  13. Flexible Spending Account (FSA)
  14. Unlimited PTO
  15. Employee Stock Option (ESO)
  16. Mental Health Coverage
  17. Paid Vacation Time
  18. Remote Work Flexibility
  19. Pet Insurance
  20. Workplace Flexibility

1. Disability Insurance

Disability insurance has different types of names, such as disability income insurance, DI, or income protection. Disability insurance prevents a beneficiary’s income from long-term and short-term disability.

Most companies offer their employees disability insurance. Disability insurance is one of major employee benefits, and employees value this employee benefit more. Disability insurance is also a great employee benefit to be considered.

There are two types of disability insurance:

  1. Short-term disability insurance
  2. Long-term disability insurance

1. Short-term disability insurance

Short-term disability (SLD) insurance prevents your income when you are out of work for a short period of time.

Some short-term disabilities like accidental injuries, illnesses, pregnancy, surgery, and more. Short-term disability can last between three to six months long.

2. Long-term disability insurance

When companies have employees unable to work for a long time due to accidents, illnesses, or injuries, they include Long-term disability (LSD) insurance.

2. Retirement Plans

retirement plans

Whether you call it a retirement plan or pension plan, both are the same. Retirement plans cover you from running out of money after retirement, and this employee benefit is necessary part-time and full-time employees.

Various types of employee retirement plans are out there, such as 401(k) plans, SEP plans, 457 plans, Profit-sharing plans (PSPs), and more, but 401(k) plans are the most popular retirement plans given to employees by companies.

Retirement planning is another common type of employee benefit available through most employers. So, your organization might also have a retirement plan.

3. Health Insurance

A health insurance benefits package is essential to satisfy and secure employee life. Employee health insurance benefits protect employees’ health and welfare.

Employees are now judging employee benefits programs to get a job, especially health insurance benefits. Health insurance is one of the most popular types of employee benefits and also an expensive one.

Typically, health insurance covers employees’ hospitalization coverage, including pre and post-hospitalization expenses, prescription drugs, wellness care, and more.

In the United States, companies with more than 50 employees must provide health insurance to 95% of full-time employees.

4. Life Insurance

life insurance

A life insurance policy is committed to paying a sum of money on the insured person’s death. Life insurance beneficiaries get the whole money, and they can use that money for any purpose. 

Employee life insurance lasts as long as an employee works for the company. You can also buy life insurance for yourself, your parents, for anyone you want.

According to LIMRA’s 2020 Insurance Barometer Study, 54 percent of people are covered by any type of life insurance in the United States.

Employers usually offer employees group-term life insurance plans, not individual life insurance, because group-term life insurance plans cost less than individual life insurance policies.

5. Paid Time Off (PTO)

paid time off (PTO)

Paid time off (PTO) is another useful and common employee benefits program. Paid time off allows employees to schedule their personal days off from work.

Although the law does not require PTO employee benefits, but most employers offer Paid time off (PTO) employee benefits for employee attraction.

PTO policy generally covers the absence of employees’ vacations, personal circumstances, and sick days. Paid time off employee benefits customization depends on the company.

6. Wellness Programs

Employers offer wellness programs to prevent employees illness by improving general employee health. Organizations are investing huge sums of money in employee wellness programs because employee health and work output are connected.

Companies offer various types of employee wellness programs such as discounted gym membership, stress management or resiliency education access, and more.

When an employee’s general health is fine and well-being, they typically work more and do creative work. That’s why employee wellness programs are important.

7. Tuition Reimbursement

Tuition reimbursement is also known as tuition assistance. Although Tuition reimbursement is not one of four major employee benefits, but many employers offer tuition reimbursement.

Tuition reimbursement employee benefit is when employers pay for an employee’s educational expense, tuition reductions, scholarship grants to the employee’s spouse or children.

In the U.S., 56% of companies offer tuition assistance as employee benefits. Typically tuition reimbursement covers undergraduate or graduate school tuition.

8. Family And Medical Leave (FMLA)

family and medical leave (FMLA)

Family and Medical Leave (FMLA) is also an employee benefit that is required by United States labor law. Family and Medical Leave or FMLA is when an employer gives their employee unpaid leave for qualified medical and family reasons.

Some FMLA employee benefits examples are pregnancy leave, adoption or foster care, for a sick family member, the birth of a new child, and more.

Eligibility for FMLA Leave:

  • Employees must work for covered employers.
  • In the past 12 month period, employees need to work at least 1,250 hours.
  • Employees must work for the employer for at least 12 months.

9. Employee Assistance Program (EAP)

employee assistance program (EAP)

Employee Assistance Program shortly EAP is an employee benefit program that is designed to assist employees with personal and work-related problems.

The Employee Assistance Program is now becoming a popular employee benefits program. The EAP employee benefits program is important because of employee’s better work performance.

Problems like employee’s financial, family issues, mental health, alcohol addiction, and more are included in Employee Assistance Programs (EAP).

10. Dental Insurance

dental insurance

To maintain good oral health, dental insurance is necessary. Companies also offer employees dental insurance to help employees’ costs of preventive dental care.

Many employers include dental insurance as part of medical benefits, but some employers make dental insurance separate employee benefits.

Dental insurance typically covers fillings, crowns, root canals, and oral surgery, but every dental insurance has limitations. In some states, the law does not require dental insurance employee benefits.

11. Vision Insurance

Vision insurance or Vision care insurance also offers employees a benefit. Vision insurance employee benefit is an employee wellness plan that reduces costs of routine eye health.

Vision insurance covers employees’ eye routine checkups, prescription eyeglasses, eye contact lenses, and more. Normally, vision insurance employee benefit is always separated from employee health insurance.

12. Employee Relocation Package

Employee Relocation package is an employee fringe benefit that assists employees in moving from one location to another for the job requirement.

Employee relocation package employee benefits cover home-selling assistance, temporary housing, paid-for-hours hunting trips, and more. Some certain job positions mostly need employee relocation packages.

13. Flexible Spending Account (FSA)

A flexible spending account (FSA) is also known as a flexible spending arrangement. Employers also offer their employees flexible spending account benefits.

Employers establish flexible spending accounts for employees. A flexible Spending Account (FSA) is a tax-advantaged financial account that pays certain health care costs for employees.

Flexible Spending Account (FSA) benefits cover employees’ prescription drugs, vision, pharmacy expenses, and more.

14. Unlimited PTO

unlimited PTO

Unlimited Paid time off, or Unlimited PTO, is an employee benefit program that allows employees fully paid leave. Employees can take unlimited days off instead of a specific number of days.

Not every employer offers Unlimited paid time off; a small number of companies offer unlimited PTO employee benefits. But, in the future, this employee perk will be more enhanced and popular.

15. Employee Stock Option (ESO)

employee stock option (ESO)

Employee Stock Option (ESO) or Stock Option is a type of equity compensation granted by employers to employees. Employees can buy the company’s stock at a pre-set that reduces the stock price.

Many new companies and start-ups often offer Employee Stock Option (ESO) programs to their employees so employees can invest in the company at an early stage and get a huge benefit.

16. Mental Health Coverage

Mental health coverage employee benefits assist employees with mental health counseling and therapy. Nowadays, companies are taking serious steps to improve employees’ mental health.

Some employers included mental health coverage in the Employee Assistance Program (EAP).

17. Paid Vacation Time

paid vacation time

Paid vacation time is also an employee benefit that employers provide to their employees. Generally, paid vacation time is included in paid time off (PTO) but some companies offer paid vacation time separately.

Paid vacation time benefit allows an employee to take a break or vacation from work. Many employers also add more advantage features on paid vacation time employee benefits.

18. Remote Work Flexibility

Remote work flexibility allows employees to do their work from anywhere in the world. Remote work flexibility as an employee benefit gradually became popular.

World’s top companies like Google, PayPal, Facebook, and more offer their employees remote work flexibility. In the U.S., more than 90 percent of senior executives are now expected to work from home.

For better Work-Life Balance and location independence, employees are demanding remote work flexibility. Remote work flexibility makes employees more productive and more focused.

19. Pet Insurance

pet insurance

Pet insurance protects employees’ pet’s medical and wellness costs. Employers provide pet insurance to let their employees know that their pet’s health is also an employer’s concern.

Now not many companies provide pet insurance, but its rate goes up. As of 2017, nearly 10 % of companies are offering pet insurance as an employee benefit. So, as an employee or employer, you should also keep pet insurance in your mind.

20. Workplace Flexibility

Workplace flexibility gives the employees ability to choose where and when they do their work. Workplace flexibility is another type of employee benefit that is not required by the law.

Workplace Flexibility as an employee benefit helps employees to work with calmness and attention. So, in the long run, this employee benefit develops employees’ engagement and productivity in their work.

What Are The Four Major Types of Employee Benefits?

Every employer commonly offers the four major types of employee benefits. For a company’s long-term success and staying in competition providing these 4 major types of employee benefits are essential.

Here are the four major types of employee benefits:

  1. Medical Coverage
  2. Disability Options
  3. Retirement Plans
  4. Life Insurance

What Are The Employee Benefits Required By Law?

The law requires not every type of employee benefits, but companies must provide some mandatory employee benefits to their employees. 

The list of employee benefits required by law:

  • Health Insurance
  • Disability Insurance
  • Tuition Reimbursement
  • Family and Medical Leave
  • Retirement Plans
  • Paid Vacation Time

Wrapping up

Now you know all types of employee benefits that an employee and employer must know. Different types of employee benefits are meant to improve employees’ different aspects of life.

Health insurance, disability options, life insurance, family and medical leave, and retirement plans are the most common employee benefits and the four major types of employee benefits.

Employee benefit is very important for a company’s success, and equality is crucial for employees’ Work-Life balance. You must choose the best employee benefits for your job and position.

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