Benefits that are important to employees: A review of employee benefit programs

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1 March 2016

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When employees look for employment compensation is important. However, employee benefits programs can be the deciding factor when it comes down to decision making; accept or decline a job offer. Having a “good benefits package” is the most desired attributes in an employer and it attracts human talent (Conlin, 2008). Even the decision to stay with at an organization or to leave, the topic of employee benefits resurface. Human Resource Managers are tasked with the responsibility of administering the company’s benefit program. This includes keeping track of the benefits, giving the basic overview, managing enrollment period just to name a few which can be time consuming not to mention costly. Employers provide benefits to attract the best talent, to retain or incentivize employees for high performance, and because some benefits are required by the law (Bohlander & Snell, 2010). But employee benefits makes up a large part of administration cost in terms of payroll thus creating an expense and major concern to the employer (SHRM, 2011). Employees want great benefits because of the security it provides by lowering their out of pocket expenses and preparing them for the unknown yet immediate future. A common theme, on both side of the spectrum for employer and employee is “expense” or “cost” and for that reason this research paper will evaluate what benefits are important to employees and what are employers doing about it; a review of employee benefit programs.

Employee Benefits Program Available and HR
There are many benefit programs available to the employee from the basics like healthcare, to benefits in form of employee service like prepaid law. However, a good and competitive benefit program aligns strategically with the goals and objective of the organization which may differ depending on company. Additionally, the benefit program needs to cover the desires of the employee while meeting the demands of the law. Last, the benefit program must be managed properly to work and be cost effective. Human Resource intranet system (HRIS) allows the organizations to save money on administrative cost, empower the employee through self-service, relieves managers of time-consuming administrative work, and it’s an effective communication tools (Kumar &Pandya, 2012). Technology advances and globalization has made HRIS somewhat a standard in many but not all organizations. The word benefit has several meanings which many applies in terms of employee benefit program.

Merriam-Webster defines benefits as an advantage; promoting well-being, it’s a financial help when sick, old or unemployment and as in health insurance as service or a right the employers provide in addition to wages or salary (Merriam-Webster, 2012). Organizations strategic plan for employee benefits considering today’s dynamic in the workforce, again may vary by industry. But some objectives that may be popular are improving employee work satisfaction, draw and influence employees, retain top-performing employees and maintain competitive edge (Bohlander & Snell, 2010). Benefit program offered by the employer should be decided by the employees needs while considering the organization’s objectives of meeting their goals thus fostering flexibility. Minimum Employee Benefits mandated by Law

A required benefit implies that certain services must be done by law. There are two categories; mandated employer benefits and employer offered option compensation. Employee benefits that are required by law are social security, unemployment, workers’ compensation, and disability insurance (, 2012). These four benefits are forms of insurance therefore the employer can get group coverage for them at a premium. Social Security Insurance (SSI) permits the covered individual to have income security in event of loss earning such as retirement or disability ( Many of the millennials fear that by the time they retire there will be no social security; this adds to the importance of employees having good benefits (Conlin, 2008). If an employee is laid off, and paid into social security then the employee is eligible for up to 26 of unemployment benefits. Worker’s compensation is usually state mandated and can be private or funding through the state in case an employee is injured on the job (, 2012). Disability insurance is only required in 5 states and Puerto Rico. Consolidated omnibus budget reconciliation act (COBRA), family and medical leave act (FMLA), and older workers benefit protection act (OWBPA) are acts in place by law under employee benefit. They are employer offered option compensation (, 2012). Benefits Important to Employees and Cost

Many of the benefits that are important to employees are optional such as healthcare, paid time off, retirement programs. Continuous rising cost of healthcare makes it the most important employee benefit to both employer and employee (Smerd, 2007). Annually, employers are spending $300 annually on health insurance for employees and their families with the numbers expected increase (Weatherly, 2004). Over the years health care cost increase due change in the law, Medicare, baby boomers causing a greater need for health, technological advances, elevated cost of malpractice insurance, prescription cost and misuse of health care services; just to name a few (Andrews,2004). The constant increase in cost and changes within healthcare legislation makes cost containment a priority in the HR department and the organization (SHRM, 2011). There are many cost containments companies are doing to lowering cost of healthcare such as reducing the benefits, including or increasing deduction and premiums, adding copays, and coordination of benefits (Bohlander & Snell, 2010).

In the last few years, health saving account (HSA), flexible saving account (FSA) are becoming more common and is a form of cost efficiently (Johnson, 2012). There is a growing interest in in HSA due to the low cost on CDHP plan with high deduction (Thomas, 2004). It’s important to note the 3 different medical delivery systems that aid in cost control and they are health maintenance organization (HMO), preferred provider organization (PPO) and consumer-driven health plan (CDHP). HMO’s regulators cost having the primary care physician (PCP) who coordinates the patients care within a close network and referrals are needed. PPO’s are a similarity however provides greater freedom and there is no referral need for specialist, nor do the patients have to choose a PCP. Consumer-driven health plan is newer than HMO’s and PPO’s and it pro’s and con’s. CDHP appears to work better with wellness programs and HAS because it a lifestyle change in behavior to focus on health (Johnson, 2012).

However it can hurt some that are medically vulnerable because CDHP have flexible accompanied with low premiums thus target low-income population who are usually the ones with chronic diseases like diabetes and heart disease (Miller, 2011). 2014 is fast approaching which means health care reform is nearing its effective day and it will have an impact on employee benefits. Effects of the Affordable Care Act and Healthcare reform

March 23, 2010 marks the affordable care act become law and on June 28, 2012 the supreme court decision rendered a final decision to uphold the health care law (, 2012). There are 10 titles to the Affordable Care Act. The act gives individuals, families, and small business owners control over their health care, reduces premiums and provides tax relief to the middle class (, 2012). In terms of the medical and insurance industries, it caps out of pocket expenses, and requires preventive care to be covered without cost. The act allows those without insurance or those who can’t get insurance a change to be insured while keeping insurance companies transparent with its customers (, 2012). The effect of the affordable care act will start in 2014 therefore some organization are looking at how the health care reform will affect the upcoming benefit enrollment in 2013 (Spears, 2012). Cases on different business among many industries reveal that healthcare reform may lead to reduce in cost, ensure healthcare benefits, restructure on existing employee benefits plan (Spears, 2012).

The affordable care act changes may aid in lowering cost of healthcare overtime because it promotes preventive care and capping on the cost medical out-of-pocket ultimately allowing savings in several issues with in healthcare in general. For example, professional services cost for children health care in 2010 is a large portion of healthcare cost 40.3 % (Spears, 2012). The healthcare reform and affordable care act full impact is yet to come however it appears it will have some positive and negative affects depending on how one views it Paid Time off (PTO)

Healthcare benefit has a direct effect on paid time off for example sick time. Paid time off is another important benefit to employees. It includes paid vacation, holidays and sick time. A survey conducted in 2002 shows that 73% of employees was satisfied with the paid time off programs (Thomas, 2004). However, from the employer point of view, it’s delicate balance of cost and employee satisfaction because paid time off is an expense to the company. In effort to offset some of the cost, paid time off is being managed online through HRIS systems to save time and money. For example in 2006 it was reported by EBN quick poll that 59% of HR professional stated their company uses online tracking for paid time off such as absences (Shepherd, 2006). PTO is usually accrued with the employee seniority. But some industry trend setters are awarding PTO in lump sum and based on experience in the industry to attract human talent (Finch, 2011).

Speaking of experience and seniority brings up the next employee benefits; life insurance and retirement programs. Employees work to support their families, care for love ones and themselves if ill, protect and secure their well-being and for these reasons retirement programs and life insurance is essential. Counting on just social security is not enough especially considering that millions of baby boomers are exiting the workforce and the cost of health cost. Therefore many employees utilize retirement benefits to supplement wages lost from no longer working. Baby Boomers were once the largest generation however millennials are expected to exceed baby boomers by 2016 (SHRM, 2011). Younger employees, known as millennials, are concerns that social security dead and gone well before retirement age is attained (Conlin, 2008). Employers and HR professional will have to be creative and think ahead to meet the objectives of the company. No one likes to talk about the unspeakable, death however employees think about love ones that maybe left behind therefore life insurance most be discussed. Life insurance is one of the oldest and most popular employee benefit (Bohlander & Snell, 2010).

Life insurance is popular among employee benefits because some are unable to qualify or afford life insurance without the employer sponsoring it which many employers provide at no cost. Employers usually provide group term life insurance which has a nominal premium because of the amount of people insured. Implications for Managers

Meeting employee needs and balancing cost while meeting the organization’s objectives and goals will always have some challenges. For HR managers to overcome these challenges they should consider:

Monitor and stay aware of trending topic in HR regarding employee benefits

Evaluate current employee benefits annually to ensure its aligned with the business objectives and goals Communicate regularly with employee on what benefits matter most as well as communicate changes early and frequent through the use of HRIS and other tools (Robbins, 2012)

Use cost containment measures for offset the rising cost of health care such as CDHP with high deduction and HAS and promote healthier life choices/well-being programs

Continue to keep the HR managers knowledgeable on changes in the law as it affects benefits

Utilize technology such as HRIS and other online tools to lowering administrative cost

Review pay structure frequently to use employee benefits as a device to negative pay and to stay competitive why attract and retain talent Employers and HR professional need to stride toward an equilibrium regarding employee benefit through flexibility and innovation both parties involve can have a successful outcome.

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StudyScroll. (2016). Benefits that are important to employees: A review of employee benefit programs [Online]. Available at: [Accessed: 5 December, 2023]

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"Benefits that are important to employees: A review of employee benefit programs" StudyScroll, Mar 1, 2016.

"Benefits that are important to employees: A review of employee benefit programs" StudyScroll, 1-Mar-2016. [Online]. Available: [Accessed: 5-Dec-2023]

StudyScroll. (2016). Benefits that are important to employees: A review of employee benefit programs. [Online]. Available at: [Accessed: 5-Dec-2023]

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