How to Design an Employee Benefits Program for Your Business

In 2023, employee benefits are more important than ever. While the job market finds its footing in a post-pandemic world, it’s still an employee’s market. Workers are looking for flexibility and good benefits when making their decisions on job offers.

As you grow your business, attracting and retaining good workers will build a foundation for success. Offering a competitive benefits package is one way to make your business attractive and competitive in the job market.

Here’s how you can build a benefits program that will draw in top talent, increase your recruitment and retention, and help your business grow.

The Basics: Mandatory employee benefits

Every employee of your business has certain benefits that they’re entitled to under the law. All states require unemployment insurance and some states require workers’ compensation insurance.

  • Unemployment insurance provides financial support to your employees in the unfortunate event of a layoff or termination of employment. With guidance from the federal government, unemployment insurance is managed by each state and funded through employer contributions. When you start your business, your state will give you an unemployment insurance rate.
  • Workers’ compensation insurance provides benefits to your employees if they become ill or injured on the job. You can purchase your workers’ compensation insurance from an authorized private insurer, a public insurance carrier, or you can provide the insurance yourself.

If your business has more than 50 full-time or full-time equivalent (FTE) employees you’re also required to provide basic health insurance under the Affordable Care Act.

What health benefits should I offer to employees?

Employer-sponsored health insurance is one of the most sought-after benefits for prospective employees. There are different tiers of health insurance benefits you can offer to your employees, and each one will have different costs depending on what they cover as well as the deductibles and co-pays.

PPO plans (Preferred Provider Organization) are generally considered the highest quality health insurance program an employer can offer. Through a PPO, you’ll be offering a large healthcare provider network, reasonable pricing, and lower deductibles.

Employer-paid health insurance is generally deductible as a business expense on your business tax return, excluding your share as the business owner. You’ll deduct that expense on your personal tax return.

You can choose to have your business pay the entire monthly premium or share some of the cost with your employees. If you share the cost, your employees can make their premium payments “pre-tax.”

If your business has less than 50 full-time (or full-time equivalent) employees, then your business may be eligible to enroll in the Small Business Health Options Program (SHOP). Through the SHOP program, you can provide affordable health insurance for your employees and your business will qualify for additional tax credits.

Beyond health insurance, there are supplemental insurances you should consider offering to your employees, including life insurance, dental and vision insurance, and disability insurance.

What retirement benefits can employers offer?

Providing retirement options to your employees as part of an employee benefits program is a proven strategy for retention. Most employers offer 401k retirement plans. Here’s a look at what’s included.

Employer versus employee contributions

All retirement plans are funded through employer and/or employee contributions. Most employee contributions to retirement funds are made pre-tax, which in turn reduces your employee’s taxable income. As an employer, you can also contribute to their retirement plan and count those contributions as expenses, which can be deducted from your business taxes.

401k retirement plans

The most well-known retirement plan is the 401k, which is considered the gold standard. For 2023, employees can contribute up to $22,250 (or $30,000 if they’re over age 50) per year into their 401k. Employers can also contribute up to 25% of the employee’s salary.

The total combined employee and employer contributions cannot exceed $66,000 or 100% of the employee’s salary, whichever is less. The limit increases to $73,500 if there are catch-up contributions. Note that employer matching funds do count toward the overall contribution limit.

Using a 401k gives you control over when the contributed funds are vested and your employees can also take out loans against their 401k plan if needed.

If you want to offer a 401k plan to your employees, you’ll want to consider that they are more complex and expensive to administer than IRA plans. However, you can use a broker to set up and manage a 401k plan for your business.

Should I use a PEO for my employee benefits program?

A professional employer organization (PEO) manages important human resources (HR) functions for your business, such as payroll, employee training, and managing your benefit programs. This is a great option if you’re just getting started and don’t have an in-house HR department. The PEO will ensure you’re in compliance with all HR-related requirements.

If you do have an HR department, you can partner with a PEO to take on more complex HR needs and give you insights on how to improve your workplace. 

Customizing your employee benefits program

Apart from the basic employee benefits, the most valuable benefits are often those that you create on your own. Here are just a few examples of what you can do to enhance your benefits package:


Childcare is a major cost for working parents, so anything you can do to offset the cost will have a positive impact for your employees. Employer-sponsored childcare, especially close to your workplace, gives your employees more convenience while improving your recruitment and retention.

Tuition assistance and training

Paying for your employees’ tuition or training costs demonstrates a commitment and investment in their future with your business while boosting morale. Employers that cover employees’ professional development find it results in higher productivity and increased job satisfaction. There are also many tax credits your business can earn when you provide training opportunities to your employees.

Retreats and wellness programs

Hosting retreats to encourage collaboration and communication can be a great way to boost morale! Some small businesses also pay for gym memberships, meditation programs, and yoga. Wellness programs have been shown to improve employee morale and increase employee retention.

Employee Assistance Programs (EAP)

Employee Assistance Programs (EAP) are another great way to provide extra support for your employees. EAPs are designed to improve productivity and lower stress by providing counseling services on a variety of mental and emotional health topics. These programs are delivered at no cost to your employees and are usually offered by private EAP service providers or as part of your business’s health insurance.

Your employee benefits program is only one piece of the puzzle

Building an employee benefits program increases employee retention and gives you a competitive edge when you’re recruiting new employees. If you need funding to invest in your recruitment and retention strategy, talk to Pursuit! Working with us gives you access to 15+ business loan programs and educational resources to reach higher. Contact us today to learn about how we can work together.

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