How to Set up an Employee Benefits Program for Small Businesses

Cody Cromwell
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Quick Tips When Developing Your Employee Benefits Program

By offering a comprehensive benefits package, employees are encouraged to adopt a healthier approach to fitness. Employers can further encourage employee wellness through the creation of a wellness policy. There are two popular types of wellness policies: outcome and activity.

An outcome-based wellness program evaluates employees on a series of risk factors (and sometimes health indicators) to determine which employees may be at a higher risk of developing certain illnesses, and therefore can be target for early intervention.

An activity-based wellness program evaluates participation in a certain level of wellness activities (e.g., fitness programs, educational programs, etc.) and rewards employees for their participation. Both types of wellness programs rely on using a combination of employee input, assessment and biometric data.

Regardless of the type, it is important that employers develop an integrated employee wellness program that not only addresses risk factors, but also focuses on lifestyle behaviors (e.g., smoking, drinking, exercise, etc.). Effective programs also address general behavioral health and wellness concerns (e.g., stress and job satisfaction) and include employee assistance programs.


Once a program has been put in place, employers will need to come up with a way to evaluate employee participation in the program.

6 Steps to an Awesome Employee Benefits Package

Traditional benefit programs are typically only required to be created for what are considered to be, "Wellness Private Pools" – usually defined as exercises, treatments, special diets, etc…

But there are a couple of requirements that every company needs to be aware of when considering how to set up an Employee Benefits Program for your small business.

While other benefit plans – such as those for dental and vision – are typically covered under the corporate umbrella's employee health and vision & dental insurance plans; there are several plans that a small business COULD offer that should be considered for offer as a separate plan.

These include a "Gym & Yoga" program, an "Estate Planning" program; and of course a "Wellness" program.

Learn Legally Required ‘Employee Benefits’ You Must Offer

You could create a big, fancy benefits program that offers Epic Group Insurance for your employees’ families, free health screenings, and a monthy pizza party. Or you could just turn your back on it and your employees might take that as a sign that you don’t care about them. Your hard-working staff deserves a decent benefits program — and not just any benefits program — one with a few legally required benefits. After all, you’re an employer and your role is to take good care of your employees, not just expect them to do the same for themselves.

Budget for Your Benefits Program and Win C-Suite Alignment

As the Chief Human Resources Officer for a large, global financial services corporation, I’m always thinking about budgeting for and reducing the costs of employee benefits programs. I’m also often asked by friends, trade partners and colleagues how our small business should set up and budget for a similar program. I try to keep this advice brief and to the point, since we just don’t have the time to survey and interview every business to assess their needs and formulate an ideal project to consider.

There are several very good reasons why you should assess the business owner or executives in your company to see where they are on the maturity scale toward establishing a group health, 401K or other benefits program. All too often, small business owners assume that they cannot afford a formal employee benefits program because they are cash strapped. A more likely reason is because they either have not yet come to the attention of or have not been engaged with the CEO and the C-suite.

Question 1

Why do you need an employee benefits program?

Employee benefits programs offer a wide range of benefits, like health insurance, life insurance, disability coverage, retirement plans, and more. In addition to offering excellent employee benefits , they are free for small business owners to implement and can help their employees focus on their business rather than on worker’s compensation claims.

Employee benefits programs allow small business owners to attract, retain and motivate their employees, while meeting the requirements of employee benefit plans, elected officials and relevant statutes.

Employee benefits programs also provide needed benefits to employees by allowing them to focus on their business rather than worker’s compensation claims.

Employee benefits programs also provide convenience to business owners by helping to ensure they have a healthy workforce and a happy, proactive employee base.

Employee benefit plans can be used by small business owners to attract and retain employees between their current and new businesses.

Employee benefit plans can be used by small business owners to offer better benefits between employees of the same organization.

Employee benefit plans also provide the needed benefits to employees by ensuring they are protected for business-related injuries and work-related illnesses.

Employee benefit plans also provide the needed benefits to employees by helping protect them from business-related lawsuits.

Which statement describes you best?

I know more about employee benefits than my employees do.

I’m the kind of person who gets bored very easily.

I get tired of running around trying to find office supplies.

I’m the kind of person who really appreciates automated systems.

Someone told me that I should start an employee benefits program.

Question 2

Why do I need an employee benefits program?


There are three reasons why an employee benefits program is necessary for your business:

First, it will allow you to attract and keep top talent. Workers who are able to take care of their health, kids, and families will be more satisfied at work and will be less likely to look for another job. Companies that have an employee benefits program also tend to have a lower employee turnover rate, which costs you time and money to recruit a new employee. With the cloud of employee benefits looming overhead, you’d be unwise not to introduce an employee benefits program that will give your employees the security they need.

Second, an employee benefits program will add value to your products and services. Workers who come to work sick are not likely to do their best. When you are striving to create a great place to work and support your business, you need to make sure that the people who come in every day are as healthy as possible. Workers with healthy minds and bodies are more productive and happier. Having a healthy team ensures that your customers get a healthy product or service at the most affordable price.

Third, employee benefits programs make good business sense. When you offer health insurance to your employees, they are less likely to get sick and take sick days. Your business will reduce its insurance premiums, which saves you money.

Do you have workers in small remote towns?

How much do you know about your employees’ needs? Are they healthy and having a great retirement? Are you giving them benefits that can help them make and save money? What about their health?

The good news is, there’s no reason for small businesses to get by without the right benefits, especially when their employee needs are different from someone working in a big city.

Here at Ouroborous, we’re all about making life easier for business owners. So we want to partner with you to show you how to take control of your employee benefits.

What we’re going to do is walk you through the process of setting up an employee benefits program for small businesses.

It’s going to be a great opportunity to see what Ouroborous can do for you, and how we can help you build a personal program that’s right for your business and your employees!

Take a look below at the 5 steps of creating an employee benefits program for small businesses.

Question 3

Of 3
Who is in the best position to select the benefits that they would like to offer their employees?

The HR department or the administration?

The decision on what benefits are offered to employees in any company has a huge impact as well as an equally high impact on the overall success of the company. To provide a comfortable working experience to employees, the company has to first bear the cost to provide the benefits. This in fact becomes the crux of the entire discussion wherein the employee benefits have to be decided for the betterment of the employees as well as the business.

It is believed that the HR issues the official requests for employee benefits and then the administration looks forward to provide it to the employees. However, the HR department is just the extension of the administration and the decision of providing employee benefits is also vested with the management.

The company finds it advantageous to make employee benefits available to the employees as it can be a differentiating factor between the competition. Besides, as it is one step ahead of the competition, it provides a platform for the company to have the customer-centric approach to initiate the employee-customer relation.

However, it is a common phenomenon that many companies initially provide employee benefits and then remove them from the list of benefits offered. This is mainly due to the changing policies and the provision of employee benefits can be cumbersome. So the management and administration have to monitor the situation closely.

How many employees do you have?

What are the benefits packages that you are offering?

How much do the benefits packages cost?

Are you willing to increase the benefits packages if your employee numbers grow?

Are you willing to match the benefits offered to an employee at a competitor of yours if you lose that employee to them?

If it takes longer than 3 weeks in your business for the paid time off to be subtracted from your tax bill, do you offer paid time off?

If you have yearly bonuses, do you take into account vacation and sick time that was not used or would have been in the following year?

Do you have a means for employees to set aside money in a savings program or a retirement program?

Should you take unused vacation or sick time that is at the end of the year? If not, do you calculate how much vacation time the employee has earned, but not used by using time sheet hours?

Do you have a policy that states that you do not have to match retiree benefits or sign up for benefits that are more generous than what you offer?

If State or Federal guidelines recommend that you be given time off to vote, do you give that time off?

If your company uses a vacation time bank, do you encourage employees to deposit or use vacation time to help get other employees on vacation?

What are the best ways for employees to contact you with questions or problems?

Question 4

Do you have health insurance?

The United States has one of the most expensive healthcare systems in the world. U.S. companies provide health coverage for more than 80 percent of their employees based on minimum benefits set by the Federal Government and the companies themselves. The number of people covered by healthcare is rapidly expanding, and so are the costs. Health costs account for nearly half of all insurance premiums, and contribute to rapid cost increases for most businesses.

However, there are other benefits, such as retirement, sick pay, and vacation pay that need to be taken into account for purposes of calculating payroll costs, as well as other expenses associated with the business, such as office space and utilities.

What are you trying to accomplish by using a PEO? (choose the highest priority)

A) Find the right insurance,.

B) Find a Representative

C) Find a good plan with a competitive price,.

D) Find Someone to Handle the Administration

E) Avoid a check-the-box tax form delivery, yearly filing, and reporting to the IRS.

Think (and Plan) in Terms of ‘Total Compensation’

The total compensation is the combination of all the benefits provided to the employee, including the benefits provided by the employer. Total compensation can be an effective tool used by the employer in the decision process of choosing what benefits it wants to provide to its employees.

Below are the ingredients of total compensation:

Bonus – this is based primarily on the company’s performance and is decided by the management of the company.

Pension/Retirement – this type of benefit is provided by the employer to the employees. It is paid out of the employers’ funds. A pension fund is usually a lump sum payment which is paid at the time of retirement. The types of arrangements can vary considerably.

The Social Security – this is a benefit that is paid by the government to the employees in the form of a check. It is also called a monthly retirement benefit or a weekly benefit because you get a check every week. On the other hand, an employer can also make contributions to Social Security of the employees.

Life Insurance – this is a benefit provided by the employer to the employees. This benefit can also be paid by the employee’s spouse or family members instead of the employer because it is the right to insure and apply the insurance against certain death of an individual.

Survey Employees for Benefits Ideas

Talk to your employees about what kinds of overall benefits they would like. The first step in creating a benefits program for an employee is taking a good look at what they need to ensure a healthy lifestyle. LifeStyle Check up on your employees lifestyle, answers to the following questions may indicate issues employees may be facing.

Do you think you are over weight?

Do you feel you could cut back on your smoking and drinking?

Do you feel your lifestyle is good enough to beat blood pressure, cholesterol and other automatic health issues?

Talk to your employees about benefits they would want and what you can afford if you set up a fund for those.

Group Health Insurance

Group health insurance is the best way of taking care of your health insurance for all the family. It can be easily managed by your family and can be used for medical emergencies. It can be easily maintained and would not be costly because separately the family members would not have to buy their own plans. Employees of a company can contribute to the health insurance fund of the company. It may cost you less than your own health insurance and you can avail a health insurance at an affordable price.

Select Agreed-Upon Fringe Benefits and Assess Costs

The most effective employee benefits program is one that respondents must agree to and that involves the least amount of cost to administer. To achieve this objective, employers must first decide on agreed-upon fringe benefits and assess fringe costs.

Fringe benefits are predetermined benefits that you must select and agree upon with all employees in advance. They are usually free and include free meals, discounts, free services and even free merchandise. They don’t have to be benefits that help the economy or benefit the entire world to still make employees happy.

Communicate Your Benefits to All Employees and Candidates Clearly

As mentioned earlier, the primary benefit of offering your employees benefits is it allows employees to become more invested into your company. If they feel more invested, they will become more willing to go the extra mile to keep their job. This should be the primary goal of any benefits program you choose to offer your employees.

This means that as the boss, you need to take the time to explain to your employees what their benefits are. You need to make it easy for them to learn the details about their benefits. Consider using benefits posters, brochures, or pamphlets to hand out to your employees. Your benefits posters and brochures or pamphlets should clearly outline the different benefits that you’re offering to your employees.

This will help take the confusion out of your employees as they try to decide which benefits they need to enroll once they are offered the opportunity to enroll. And if employees aren’t clear on what your benefits are, they will be less likely to enroll.

Your employee benefits program success can rely on whether or not you are able to clearly communicate the details about your plan to your employees and candidates.

If you are confused about your company’s current employee benefits program, you may want to consider adding an independent benefits adviser to your team. An independent benefits adviser can help you get your employee benefits program back on track.

Employee Demographics to Be Mindful Of

One of the biggest concerns of any employer is benefits. That’s why so many small businesses now offer employee benefits programs as a matter of course. Benefits can be amazing and can help to pay for itself. Yet, those benefits programs can be a headache to put in place, and they can also be ridiculously expensive, especially if you’re just starting a business. So – if you’re on the fence about offering benefits, how do you do it right?

There are a lot of things that you need to take into consideration – employee demographics, how much money you can afford to spend, how to spread the cost, how to deal with claims, etc. Yet, one of the biggest factors to consider when setting up your benefits program is employee demographics. Some demographics should be considered more than others – and some demographics will definitely affect how you set up your benefits program.

Age is a demographic that you should always be mindful of during the benefits process. As part of the process, age will affect what level of benefits you provide, how they are provided, and how much the cost will be as well. Let’s take a look at how age affects each of these.

Employee Benefits by Gender

Your Employee Health Benefits program can impact all aspects of the employees’ lives. If you are looking to recruit the best talent, look for the right benefits plan.This includes both the healthcare and financial benefits for your employees. Large companies offer health insurance benefits to their employees while smaller companies may offer dental insurance and a 401K are popular among employees.

Some of the major benefits provided to your employees are:

  • Flexible work schedules
  • Vacation leave
  • Parental leave
  • 401K
  • Health insurance
  • Dental insurance
  • Insurance discounts

Employees often look for the best benefits, flexible work scheduling being one of the most sought after. Participants in your workplace need to be aware of what the benefits are and how they can be used to their advantage. Benefits can vary and it is imperative that an employee benefits program be crafted to your organization’s culture. Experienced HR professionals can guide you in the process.

Employee benefits plan can mean a lot to an employee and your business. If you are looking to recruit a wider array of talent, then it is prudent to include a good benefits package.

Generational Employee Groups

Most employee plans can be divided into generational groups, often determined by the age of the employee. For instance, Social Security defines two generational groups: the X generation (those born from 1924 to 1942) and the Y generation (those born from 1943 to 1964).

To identify your employees’ generational groups, consider the following factors: 1) ages of employees; 2) attrition rates; and 3) employee turnover trends.

Age of Employees

As a business owner, you can roughly determine the age of your employees by looking at the following guidelines:

{1}. Younger than 25: Young millennials date back to the year 2000, but they include everyone under the age of 25 in the year 2000 and later.
{2}. From 25 to 29 years old: Older millennials include everyone between the ages 25 and 29 in the year 2000 and later.
{3}. 30 to 34 years old: Older Gen X employees are those who were born from the year 1965 to approximately 1980.
{4}. 35 to 39 years old: Older Gen Y employees were born from approximately 1980 to approximately 1993.
{5}. 40 to 44 years old: Older Gen Z employees were born from approximately 1994 to approximately 2005.
{6}. 45 to 46 years old: Older baby boomer employees were born from approximately 1965 to approximately 1973.

Employee Benefits Considerations by Salary

The most common small business employee benefits typically fall into one of three categories: basic, enhanced, and preferred. Basic benefits include medical, vision and life insurance. Enhanced benefits include supplemental life insurance, short and long-term disability insurance, and a medical savings account. Preferred benefits include a company-paid vacation policy and adoption assistance. Employers usually provide these benefits as a package, with employees choosing which combination the can afford. Employers also can consider separate enhanced and preferred benefits for employees.

Beyond basic or enhanced employee benefits, employers can add a few more elements. Specifically, increasing the coverage categories can significantly impact the cost of benefits. However, mandatory elements must be included in the employee benefits package. If an employer offers basic coverage, the employer must also offer vision and life insurance, medical, and long-term disability coverage.

Employees tend to be more receptive to additional benefits programs if these additional benefits are not mandatory in the package. Whether offered as part of a package or separately, employees should have a clear understanding of the parameters of the employee benefits program.

Companies With Unique Employee Benefits

To earn a favorable reputation in a marketplace, it really pays to offer great employee benefits. By creating a distinct workplace culture, you can establish a particularly appealing employee experience.

Employee benefits are among the most important tools available to engage and retain the best talent. From vacation to maternity leave to retirement planning, employee benefits allow you to attract the best employees by highlighting one of your company’s main benefits: employee well-being.

As leaders we need to take this responsibility very seriously. Employing top-notch talent is always challenging … you don’t have much wiggle room when it comes to their total compensation. But by offering world-class benefits, you can inspire loyalty and send a clear message that your business is a desirable place to work.

The most common types of employee benefits include health insurance, paid time off, dental insurance, and retirement planning. While many employees receive these benefits as part of their compensation package, employers also offer some exclusively … and these benefits can affect your company’s reputation in a big way.

Bottom Line

The monthly cost of an employee health benefit plan during a recession should be less than the savings generated by their labor saving devices. Let’s put that statement to the test.

Embrace technology at work as it will increase employee productivity and the bottom line as well. Here is some information on such technology.

Upgrading your company HR software will remove time consuming processes; generate important and relevant health, productivity and financial reports; help you stay ahead of the issues and problems that arise; and provide a 360 degree view of your workforce.

The HR decision making role, traditionally given to HR Directors, should be made HR manager only if the employer has 200+ employees.

E-shortening the distance to travel to your employee benefits provider will save your Chief Financial Officer a lot of stress. Why make your employees work two jobs and still come out on top?

Establishing a simple goal system will clarify job tasks and allow your employees to find loopholes for doing more while actually accomplishing less.

You can ensure that your independent health plan is eating up the costs of long downtimes and prevent them from being too easy.