Employee Benefits: A Key Tool For Financial Security

October 2022

Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension

Many employers offer their workers tax-free benefits in addition to a paycheck. Benefits are generally no or low cost and include products or services that workers would otherwise have to pay for out-of-pocket or do without.

Employee benefits have never been as important as they are today in the wake of high job turnover (i.e., the "Great Resignation") and the subsequent "war for talent," as many employers struggle to fill job openings.

Below is a brief description of common employer benefits to consider in today's competitive labor market:

1. Health Insurance- Some employers offer a choice from among several group health plans (e.g., high- and low-deductible plans) while others provide only one. Other health benefits include dental coverage, vision care, and a prescription drug plan. Increasingly, mental health benefits are also a key feature of worker health benefits.
2. Flexible Paid Time Off (PTO)- Employees rank flexible PTO as the second most important benefit after health care. PTO can be taken any time for a worker's birthday, court dates, and even occasional "mental health days."
3. "Flex-Time" and Telecommuting- Some employers allow flexibility in work hours and/or location, which reduces employees' stress, commute time, and costs. Certain "core" work hours may be required, however.
4. Commuting/Parking Benefits- Some employers provide subsidized bus, train, and/or cab fare or reimbursed mileage and/or parking for employees to get to work. A recent twist is gas stipends in light of high inflation.
5. Tuition Reimbursement- Generally, employees pay for courses and employers reimburse them if they receive a passing grade. College/university employees may get free or reduced tuition for themselves and/or family.
6. Child/Elder Care- Benefits can include an on-site childcare center, childcare stipends, emergency care (e.g., a sick child) PTO, overnight dependent care for business travel, and resource and referral services.
7. Employee Discounts- Common examples include store discounts for retail workers and free travel for airline employees. Many other types of employers also provide employee discounts on their products and services.
8. Retirement Plans- Benefits include defined benefit pensions (mainly government workers), matched savings for defined contribution plans (e.g., 401(k)s and the TSP), and employee stock ownership and profit-sharing.
9. Group Term Life Insurance- Benefits are generally a multiple (e.g., 3x) of a worker's salary. Benefits end when a worker leaves the employer but some policies may have an option to convert to individual coverage.
10. Legal and Financial Counseling- Some employers provide pre-packaged legal or financial planning services, periodic seminars about financial topics, and/or programs designed to increase awareness of employee benefits.
11. Incentive Stock Options- This benefit is increasingly being offered to non-managerial workers, as well as top managers, and allows employees to buy company stock at a discounted price after a specific length of service.
12. "Cafeteria" Plans- Also called Lifestyle Spending Accounts, employers provide a specific benefit amount, and a list of covered expenses, and workers decide how to allocate this money based on their needs and lifestyle.
13. Errand ("Concierge") Service- Some employers try to reduce stress in employees' lives by providing services at the workplace such as shopping, car washing, dry cleaning, auto maintenance, and shoe repairs.
14. Other Employer Benefits- These include adoption benefits, group auto and long-term care insurance, paid sabbaticals, a company car, paid time off for community service, and discounted mortgages.

Bottom Line: If you are looking for a job in today's competitive labor market, consider employee benefits.