Although salary will always be an essential consideration for jobseekers, employee benefits are becoming increasingly important for both attracting and retaining talented workers. Offering a well-rounded program demonstrates to employees that the company they work for is invested in their job satisfaction, health and well-being. Businesses that want to stand out need to offer an attractive employee benefits program that goes beyond basic health insurance and embraces some of the lifestyle-related benefits that have become important to modern workers.
A good benefits program can get expensive quickly making it advisable to work with an experienced benefits consulting company. They can determine the best approach to helping employees improve their well-being, work-life balance and productivity in a way that is financially sustainable. Here is a look at the average cost to provide some of the most important employee benefits in 2022.
Employee Benefits Costs
The overall cost of a company’s benefits program depends on many factors, but the size of the business and the scope of the plan play the biggest role. Nevertheless, businesses of all sizes are finding that offering more coverage and benefits is often a valuable investment.
Figures from the U.S. Bureau of Labor Statistics show that the employer cost for a civilian worker averages $38.91 an hour, with wages making up 69 percent of this number. This means benefits account for 31 percent of total compensation. This aligns with the basic model for calculating the cost of a salary plus benefits, which uses a range of 1.25 to 1.4 times the employee’s base salary. In simple terms, this means that an employee who is earning $100,000 per year could cost their company between $125,000 and $140,000 per year once benefits are included in the calculation.
The following is a breakdown of how much businesses can expect to pay for some of the more popular individual benefits companies offer.
Health insurance generally represents the most expensive portion of a business’s benefits plan. The Kaiser Family Foundation reports that employers pay $7,188 on average for single coverage and $20,576 for family coverage each year. Although the cost can vary significantly depending on the business, companies can expect to pay between $5,000 and $30,000 annually depending on how much their employees participate in the plan.
Life insurance benefits can replace an employee’s income in the event of their death making it an attractive option for job seekers who support a family. It is considered one of the most affordable benefits that companies can offer as it costs just a few hundred dollars annually. In addition, the first $50,000 of a group life policy is generally not taxable for the employees, so larger companies often cover workers with life insurance in an amount that equals their yearly salary.
Disability insurance coverage offers protection when an employee is rendered unable to work due to an illness or injury that is not related to their job. Employers can choose to pay for all of the coverage, share its cost with their employee or offer employees access to group coverage.
Disability insurance can be very expensive when purchased as an individual policy, but a group policy allows employers to reduce the cost on a per-employee basis. Coverage can be purchased for several thousand dollars. With just a quarter of American employees reporting that they have access to disability insurance through their employer, including this in your benefits package is a great way to make your offerings more attractive.
Workers compensation is a type of insurance that covers lost wages and medical expenses for employees who sustain a work-related job injury or illness. A complicated formula is used to calculate the cost of workers compensation. However, businesses with a relatively low risk, such as accounting firms, law firms, tech companies and other office jobs can expect to pay a fairly low premium of around $300 per employee per month. Working in high-risk industries, such as those in the line of construction, could cost as much as 10 times that amount. Offering employees workers compensation is a requirement in many states.
The Federal Insurance Contribution Act, or FICA, sets regulations for Social Security and Medicare taxes. FICA contributions are considered mandatory and are shared by employers and employees, with both parties paying roughly 7.65% of the salary.
Retirement and Stock Options
Most employers match their employee’s retirement fund contributions up to a certain amount, which is typically between 2 and 6 percent of the worker’s salary. Some employers, such as startups, may also offer employees the option to purchase a certain amount of stock at a reduced price, such as 10 percent of its market value. This can be highly beneficial for employees if a company is successful and goes public as they can enjoy a nice profit when they sell their stock.
Other Voluntary Benefits
With quality of life benefits becoming increasingly important to job seekers, many businesses are considering benefits such as paid time off, mental health benefits, child care, yoga classes, gym memberships and other wellness programs. It is difficult to provide estimates for the costs of these programs as they can vary significantly depending on the workforce, the company and the chosen benefit.
However, the value that these options can provide to employees often makes them worth the investment. In a recent Staples Workplace Survey of more than 1500 employees, some of the top benefits employees identified as being likely to convince them to stay with their company included regular remote work, employee discounts, flexible hours and paid insurance premiums.
Meanwhile, the benefits that employees identified as being nice to have but not essential were employee discounts, free snacks and coffee, streaming subscriptions, gym memberships and onsite fitness classes.
Contact the Experts at Business Benefits Group
Businesses should consider expanded employee benefits as an investment in their future, enabling them to attract and retain high-quality and productive workers. For more information about benefits that align with your company’s goals and budget, or to speak to an experienced business benefits consultant, contact the experts at Business Benefits Group (BBG) today.