Employee benefits: Programs and types to offer in 2025

15 common types of employee benefits

Now that you understand the four major benefit categories, let’s explore some of the most popular specific types of benefits offered by organizations today. Here are 15 of the most common employee benefits and the key considerations your company should keep in mind when evaluating them.

1. Retirement plans

Retirement plans help employees save for the future. The most common employer-sponsored retirement plan in the U.S. is the 401(k). These plans allow employees to contribute pre-tax or post-tax (Roth) dollars from their paycheck. Some employers offer additional, matching contributions as an additional incentive, typically up to a percentage of the employee’s salary. These matching contributions boost employees’ savings while acting as a powerful retention tool.

Beyond 401(k) plans, some employers — particularly in the public and nonprofit sectors — offer alternative retirement savings options. 403(b) plans serve employees of public schools and tax-exempt organizations, while 457 plans are often available to government workers. Pension plans, though less common today than in the past, provide guaranteed income in retirement based on years of service and salary history.

When evaluating retirement benefits, your organization should consider cost, administrative complexity, and the level of employee education needed to encourage participation. A PEO or HR outsourcing provider can help with streamlining plan administration and maintaining compliance with important regulations like the Employee Retirement Income Security Act (ERISA).

2. Health Insurance

Everyone understands the value of health insurance, so it’s no surprise that sixty-eight percent of employees say that employer-covered healthcare is the benefit they want most. Employees rely on employer-sponsored plans to cover preventive care, prescription medications, and other medical expenses.

Health insurance is regulated by a number of state and federal regulations, including the Affordable Care Act (ACA). Under the ACA, companies with 50 or more full-time employees must offer health insurance or face penalties. Some states, like Hawaii, have additional mandates, requiring employers to provide health insurance even if they have fewer than 50 employees.

However, healthcare isn’t getting any cheaper. Health insurance has become the single most expensive cost for businesses in Hawaii, other than base compensation. To manage costs and complexity, businesses often turn to HR outsourcing providers who can negotiate better group rates, streamline plan administration, and stay compliant with relevant laws.

There are two main types of health insurance providers: health maintenance organizations (HMOs) and preferred provider organizations (PPOs). HMOs require employees to choose a primary care physician and obtain referrals for specialists, usually resulting in lower out-of-pocket costs. PPOs, on the other hand, offer greater flexibility in provider choice, but they typically come with higher premiums and copays.

3. Dental and vision insurance

While health insurance covers major medical expenses, it often excludes dental and vision care. Whether it’s preventive cleanings, fillings, or contact lenses, both dental and vision insurance  appeal to employees of all ages.. Employers can choose to fully or partially cover dental and vision-related premiums,  but many offer these plans as voluntary benefits. Employees then receive  access to discounted group rates while employers keep business costs low

4. Profit-sharing plans

Profit-sharing plans (PSPs) let organizations share a portion of company profits with their employees. Unlike 401(k) plans, where employees contribute their own funds, PSPs are entirely employer-funded.  Employees appreciate PSPs because they provide additional retirement savings without requiring personal contributions. And employers can adjust contributions based on profitability from year-to-year, making PSPs a feasible option for businesses with fluctuating revenue.

5. Life and disability insurance

Life and disability insurance offer financial protection for employees and their families in the event of hardship. Employees value life insurance more highly than any other benefit, other than health insurance.

Life insurance policies generally fall into two categories: term life insurance, which covers a set period, and whole life insurance, which accumulates cash value over time. Employers often provide a basic level of life insurance at no cost, and employees can then purchase additional coverage as a voluntary benefit. 

Disability insurance replaces a portion of an employee’s income if they are unable to work due to illness or injury. Short-term disability plans cover temporary conditions and last no longer than a year at most. Long-term disability (LTD) kicks in after a waiting period and then generally pays out for a number of years. Just as with dental and vision insurance, employers can contribute directly to the cost of these plans or offer voluntary, employee-funded options.

6. Mental health benefits

Mental health benefits have become an increasingly important part of benefits packages. Employers increasingly recognize that supporting mental health improves employee well-being while enhancing productivity and reducing absenteeism. Organizations can support their workforce by offering insurance plans that cover mental health services, establishing employee assistance programs (EAPs), and providing mindfulness training and other wellness resources. EAPs give employees access to confidential counseling services, financial and legal advice, along with mental health resources that can help them manage stress, anxiety, and other personal challenges.

7. Paid time off

As noted above, offering various types of PTO, including vacation days, sick leave, and personal days, is a core part of many organization’s benefit offerings. Pew Research found that 62% of workers say having enough paid time off is extremely important to them – a higher percentage than for either health insurance or retirement programs. But while offering sufficient PTO is essential, ensuring employees feel comfortable using it is just as important. Many employees hesitate to use their PTO due to concerns about heavy workloads, workplace expectations, or fear of falling behind. A stark 36% of employees haven’t taken a vacation in more than 12 months.

Employers can support a healthy time-off culture by keeping workloads manageable, ensuring adequate coverage during absences, and training managers to model work-life balance. Some companies even implement mandatory PTO policies or unlimited PTO to reinforce the importance of taking breaks.

8. Dependent care benefits

Balancing work and caregiving responsibilities can be challenging at the best of times, making dependent care benefits a valuable offering. Employers can provide on-site or subsidized child care, which is particularly beneficial for working parents. Flexible work arrangements, such as remote work and adjusted hours, help employees manage their caregiving responsibilities more effectively as well.

Employers can also offer dependent care flexible spending accounts (FSAs), which allow employees to set aside pre-tax dollars to cover child care or elder care expenses. These benefits reduce financial strain and help employees stay focused at work.

9. Workers' compensation

Workers' compensation provides financial benefits to employees who suffer work-related injuries or illnesses. It helps cover medical expenses, lost wages, and rehabilitation costs, ensuring employees receive the necessary support while recovering. Workers' compensation is a legally required benefit in every state other than Texas, and employers must adhere to their state’s regulations to avoid penalties and ensure proper coverage for their workforce.

To qualify for workers' compensation, an employee must demonstrate that the injury or illness occurred on the job or as a direct result of their work duties. In exchange for these benefits, employees typically waive their right to sue their employer for negligence.

Businesses can manage costs and risks by implementing strong workplace safety programs, ensuring compliance with state laws, and partnering with an HR outsourcing provider that can help navigate claims and regulations. The best HR outsourcing companies can assist with workers' compensation by streamlining management, reducing costs, and improving safety.

10. Employee stock options

Employee stock options (ESOs) provide team members with the opportunity to purchase company stock at a predetermined price, usually below market value. This benefit aligns employee interests with company success, motivating workers to contribute to long-term growth. Startups and high-growth companies frequently use stock options as a recruitment and retention tool, especially when they cannot offer highly competitive salaries.

However, ESOs come with some potential drawbacks. Employees may face tax implications depending on when they exercise their options, and stock values fluctuate, which means the benefit’s real value is uncertain. Employers must ensure team members understand the risks and mechanics of stock options, including vesting schedules, exercise periods, and tax obligations. Companies offering ESOs should then provide educational resources or financial counseling to help employees make informed decisions.

11. Unemployment insurance

Unemployment insurance provides temporary financial assistance to employees who lose their jobs through no fault of their own. This benefit helps individuals cover essential expenses while they search for new employment. Unlike some other benefits, unemployment insurance is mandatory — businesses must pay into federal and state unemployment insurance programs through payroll taxes.

Each state sets its own eligibility criteria, benefit amounts, and duration of coverage, which can impact both employers and employees. Businesses must ensure compliance with unemployment insurance laws and maintain proper records to handle claims effectively. Outsourcing payroll and HR administration can help employers stay on top of changing regulations, ensuring smooth processing and minimizing potential disputes over claims.

12. Family, medical, and parental leave

The Family and Medical Leave Act (FMLA) requires certain employers to provide up to 12 weeks of unpaid leave for employees dealing with a serious medical condition, caring for a family member with a health issue, or welcoming a new child through birth or adoption. FMLA applies to public sector organizations and private companies with 50 or more employees, and workers must meet eligibility requirements, including a minimum tenure of 12 months.

While this leave is unpaid, it offers job protection, ensuring employees can return to their roles after their leave period. And many companies go beyond FMLA to offer paid parental leave as a benefit, which is particularly attractive to younger employees planning to start or grow their families.

13. Flexible work arrangements

With the rise of remote and hybrid work, employees now expect an additional level of flexibility in when and where they get the job done. Offering flexible work arrangements can improve job satisfaction, reduce burnout, and increase productivity. These arrangements take many forms, from adjustable work hours, to compressed workweeks, to the option to work remotely on a part-time or full-time basis.

Employers should establish clear guidelines and expectations when implementing flexible work policies. For example, they might set core working hours to facilitate team collaboration while still allowing employees to customize their schedules. Providing the necessary technology and support for remote work, like reimbursement for home office equipment or access to collaboration tools, also helps your employees stay productive while giving employees greater control over their work-life balance.

14. Bonuses and rewards

While salary forms the foundation of an employee's compensation, bonuses and rewards provide an additional incentive that can boost motivation and engagement. Performance-based bonuses, retention bonuses, and annual incentives recognize employees' contributions and help companies retain top talent. A structured bonus program can align team goals with company success, encouraging high performance and commitment.

Beyond financial bonuses, employee recognition programs enhance workplace culture and morale. Many companies implement points-based rewards systems, where employees receive points on a monthly or quarterly basis to give to colleagues who demonstrate outstanding work. These points can then be redeemed for rewards, such as gift cards, extra time off, merchandise, or fun experiences. With even a relatively small investment in a recognition program, your business can create a culture where employees truly feel valued and appreciated.

15. Continuing education

Supporting professional development is tangible evidence of your company’s investment in its employees, and it contributes to a more skilled, higher performing workforce. Continuing education can take many forms, from company-sponsored training programs, to industry certifications, to tuition reimbursement for college or graduate courses. Some employers offer access to online learning platforms, allowing employees to develop new skills at their own pace. Others provide stipends for attending conferences, workshops, or professional networking events relevant to an employee’s field.

Companies that support continuing education can attract ambitious employees looking to advance their careers. However, your organization should establish clear guidelines for these benefits. For example, tuition reimbursement programs often require employees to stay with the company for a certain period after completing their coursework. Your company should also align educational opportunities with business goals whenever possible, ensuring that employees gain skills that contribute to both their professional growth and your organization’s success.

How to manage employee benefits and keep costs reasonable

The fundamental tension at the heart of any benefits package is balancing a competitive, valuable suite of benefits against the need to keep costs for your company at a reasonable level. The challenge for small and medium-sized businesses is especially daunting. Without help, they often lack the expertise to effectively navigate the many benefits available to them, and they don’t have the purchasing power to obtain lower group rates for key benefits like health insurance. 

That’s why many companies decide to outsource benefits administration to a professional employer organization (PEO). These HR outsourcing providers are staffed with experts who have years of experience handling benefits selection, compliance, and management. Your in-house HR team can then focus on key strategic initiatives to better engage employees and meet strategic business goals, rather than spending time on benefits minutiae.

A PEO can help your organization access healthcare plans at a reduced cost while letting employees choose from a wider range of voluntary benefits. Organizations can save up to $2,000 per employee per year and get back 15+ hours per week that were spent on administrative tasks. Outsourcing also lets your company maintain legal compliance without dedicating internal resources to keep up with complex, changing regulations.

When selecting an outsourcing partner, you should look for PEOs with local expertise and a track record of successfully managing benefits for organizations of your size and industry. They should have pre-existing, strong relationships with the key health insurance providers in your area, so you can secure the best rates. Exceptional customer support is also a must, as there's little as likely to frustrate your employees as key benefits questions going unaddressed.

Find the best types of employee benefits for your company

The right employee benefits can help recruit the best talent while boosting employee satisfaction and productivity. However, establishing a winning benefits package requires navigating the complexities of healthcare, retirement plans, paid leave, and more. That’s where ProService comes in.

ProService helps companies build cost-effective, high-value benefits packages tailored to their workforce’s needs. Whether you need assistance selecting health insurance options, optimizing retirement plans, or implementing flexible work arrangements, our team of experts provides guidance and administrative support to simplify the process. We help businesses secure better rates, ensure legal compliance, and reduce the administrative burden of managing benefits — allowing you to focus on running your company.

Let’s build a benefits package that works for your business and your employees. Contact ProService today to learn how we can help you offer the benefits that matter most.