Let’s face it—employees today aren’t just showing up for free coffee and casual Fridays. They want employee benefits that actually benefit them. And who can blame them? With the cost of living rising and work-life balance becoming less of a luxury and more of a necessity, the stakes are high. According to the 2024 Workplace Wellness Survey by the Employee Benefit Research Institute (EBRI), workers have made it crystal clear: they value employee benefits that protect their wallets, their health, and their sanity.

Are you an employer scratching your head over what types of employee benefits will keep your team happy, keep turnover low, and appeal to job seekers? Keep reading. We’ve got the data-backed insights and smart strategies to help you deliver—and yes, you can afford it with the right tax breaks.

Common employee benefits (and how they contribute to a positive work environment)

According to the 2024 Workplace Wellness Survey by the Employee Benefit Research Institute (EBRI), employees value benefits that improve their financial, physical, mental, and workplace well-being.

The top benefits employees say “contributes a lot” to their sense of financial security are:

• Retirement savings plans (62%). Offering employees a way to save for retirement in a tax-advantaged way can help alleviate concern for their financial future. Bonus points if your retirement benefits include matching contributions or profit-sharing payments.
• Health insurance (62%). Quality health coverage, including medical, dental, and vision insurance, is a cornerstone of employee benefits. These coverages help employees maintain their health and avoid financial troubles when they are ill or injured.
• Paid time off/paid leave (52%). Over half of the surveyed employees value work-life balance and flexibility in their work schedules. Providing generous PTO and flexible working arrangements can improve job satisfaction and reduce burnout.
• Emergency savings accounts (48%). Employers can offer emergency savings accounts (ESAs) to help employees save for short-term unexpected expenses. You can integrate these accounts with payroll deductions and make post-tax contributions to employee accounts to provide an extra incentive for employee participation.
• Financial wellness programs (39%). Employer-sponsored financial wellness benefits give employees the support, knowledge, and resources to manage their financial obligations, build financial security, and work toward financial goals. These programs might include financial literacy programs, financial coaching, or access to a financial planner.
• Life insurance (39%). You may qualify for lower rates (and avoid medical exams) by offering all full-time employees group term life insurance benefits. If your life insurance benefits package qualifies, the cost of premiums for the first $50,000 of group-term life insurance isn’t included in the employee’s gross income for tax purposes.
• Accident, critical illness, or cancer insurance (36%). Accidents, critical illnesses, and cancer diagnoses often mean unexpected costs for employees that aren’t covered by their health insurance. These supplemental policies can help protect employee financial security so they can focus on getting better.
• Disability insurance (31%). Injuries and maternity leave could mean time off of work without pay. Depending on the plan details, disability insurance coverage can ensure employees receive benefits of up to 50% to 70% of their salary while on leave.

Workplace wellness benefits

While workplace wellness benefits weren’t a focus of the EBRI survey, they can also be an attractive benefit for companies and workers. 

Employers often consider workplace wellness programs a nice extra—not a strategic part of their employee benefits package. But according to the Harvard Business Review, well-designed workplace wellness programs can:

• Help companies and employees save on healthcare costs
• Reduce lost work days
• Lower employee turnover
• Reduce lost productivity due to depression and stress
• Strengthen company culture and improve employee morale and engagement

Workplace wellness programs take many forms, but they might include regular check-ins to assess employee well-being, smoking cessation programs, on-site fitness centers, employee assistance programs (EAPs), health screenings, or discounts or reimbursements for gym memberships.

How to afford employee benefits

Providing employee benefits doesn’t have to break the bank. The tax code offers several incentives to make offering employee benefits more financially feasible.

• Tax-deductible contributions. Employer contributions to employee retirement accounts, such as SIMPLE IRAs or 401(k) plans, are deductible as business expenses, reducing overall taxable income.
• Health savings accounts (HSAs). Contributions made by employers to employees’ HSAs are tax-deductible and can lower payroll taxes. These accounts let employees set aside pre-tax dollars to cover future out-of-pocket medical expenses.
• Educational assistance programs. Employers can offer up to $5,250 annually in tax-free educational assistance as tax-free fringe benefits. This means the payment is excluded from employees’ taxable income. Whether used for tuition reimbursement or student loan repayment, these contributions are deductible for employers, promoting a skilled workforce while providing tax benefits.
• Small Business Health Care Tax Credit. Traditional group health benefits are expensive. According to the Kaiser Family Foundation, the average annual premium for employer-sponsored health insurance is $8,435 for single coverage and $23,968 for family coverage. Fortunately, small employers may qualify for a tax credit worth up to 50% of the costs paid for employee’s health insurance premiums. 
• Retirement plans startup costs tax credit. Eligible employers can claim a tax credit worth up to $5,000 for three years when they start a new SEP, SIMPLE IRA, or 401(k) plan. Adding an auto-enrollment feature to the plan increases the maximum credit by $500 per year.

Make the most of your employee benefit offerings

Salary, bonuses, and raises are important for employee satisfaction, but it’s only part of your compensation package.

If you need help creating an employee benefits package that aligns with employee expectations and tax breaks, please reach out. We’d love to work with you and your insurance provider to tailor benefit offerings that maximize tax savings.

Remember, a happy employee is a productive employee. By offering generous benefits and taking advantage of available tax breaks, you can support your team’s well-being without straining your budget.