Employee Benefits Package: Definitions, Types and Tips

Updated March 10, 2023

If you're applying for jobs or starting a new one, you may be interested in learning what types of benefits your prospective employer provides. In most cases, a benefits package is an extension of your compensation, so it's important that you review it closely and understand the value it provides. Knowing about common benefits employers offer can also help you determine if a job you're considering meets your needs.

In this article, we explain what a benefits package is, describe what a comprehensive one includes, list the different types of packages and offer helpful tips.

What is a benefits package?

A benefits package is the additional perks and benefits a company provides to its employees in addition to the employee's base wage or salary. Benefits can vary tremendously from industry to industry and company to company, depending on the desires of the employees and the capabilities of the organization. Common inclusions in a benefits package are various insurance programs, retirement packages and paid time off for illness and vacation.

What is a comprehensive benefits package?

A comprehensive benefits package is a collection of the most commonly provided and sought-after employee benefits. In most cases, a comprehensive benefits package should include these components:

Health insurance

Health insurance is usually one of the foundational benefits of a comprehensive benefits package. With health insurance, you're able to see doctors and receive treatments at a highly reduced out-of-pocket rate. Since health insurance is often most affordable through an employer-provided plan, you'll want your new job to offer health insurance as part of your benefits package. In addition to health insurance, many employers also provide these additional health-related elements:

Dental insurance: Many employers include dental insurance as an add-on to the provided health insurance plan. In most cases, it's highly affordable for you, the employee, through your employer, and allows you to see a dentist or other dental professional for preventative and emergency treatment.
Vision insurance: Vision insurance often functions like dental insurance — it's a health insurance add-on policy that allows you to seek vision care and purchase contact lenses and glasses at reduced rates. Usually, you can add family members like a spouse and children to all your health insurance plans, so they also receive healthcare benefits.
Flexible spending accounts: Some companies offer, in addition to health insurance plans, health care flexible spending accounts. This cash account allows you to pay for medical expenses like co-pays, prescriptions and other health-related expenses without using your own income or savings.

Paid time off

Paid time off offers another foundational component of a comprehensive benefits package. Some companies provide a specific number of sick, personal and vacation days, while others give a set number of hours employees can use to take time off work without explanation. Some companies even offer unlimited time off to their employees. Most companies also provide paid holidays and bereavement or funerary leave as needed.

Disability insurance

Disability insurance usually comes in two forms — short-term and long-term. Both policies are important and used for different situations. Short-term disability insurance provides you with a percentage of your pay if you're unable to work because of a short-term injury or illness, usually categorized as 12 weeks or fewer off work. Often, short-term disability includes childbirth coverage. Long-term disability, by contrast, provides some income in the event of an injury or illness that keeps you from working for a long period, like several years.

Life insurance

A life insurance policy provides a death benefit to your selected beneficiaries, usually a spouse, children or other immediate relatives, in the case of your death while working for the company. Many companies also include accidental death and dismemberment insurance with life insurance that provides a payout to an employee's loved ones.

Retirement package

The final foundational component of a comprehensive benefits package is the retirement package. Many companies offer 401(k) or other similar retirement options for their employees. Most provide matching, meaning whatever amount you choose to contribute to your plan, the company matches, helping you save for retirement faster.

Types of benefits packages

Benefits packages can include several elements and perks that comprise the common components of a comprehensive plan. All employees are entitled to a few legally mandated benefits, and some companies choose to offer additional perks beyond those included in a comprehensive benefits plan:

Legally mandated employee benefits

Employers must offer these benefits to their employees:

COBRA: COBRA, which stands for Consolidated Omni-Budget Reconciliation Act, is legislation that requires employers to provide former employees with continuing health insurance for some time following their departure from the company.

Workers' compensation: Every state has its own regulations for workers' compensation, but it's a required benefit for many employers. Workers' compensation protects employees who are injured on the job.

FMLA: FMLA, which stands for Family and Medical Leave Act, allows employees to take unpaid time off without losing their jobs to assist with family care, like the birth of a baby, an adoption or care for an ailing relative.

Minimum wage: The Fair Labor Standards Act dictates employers must pay their employees at least a set minimum wage. There is a federal minimum wage, but many states have their own minimum wage laws, and whichever has the higher wage overrides the other.

Overtime: The Fair Labor Standards Act provides information about overtime regulations for employees. Like with minimum wage, some states have their own overtime rules that override the federal rules.

Unemployment benefits: Every state requires that employers offer unemployment benefits to its employees, though the specifics of those benefits vary from state to state.

With any federal or state regulations, it's best to check the specifics of your situation with your local government office or with a law professional to best know and understand your rights.

Potential additional benefits

Some employers provide additional benefits to their employers beyond the legally mandated benefits and the common comprehensive benefits package components:

Tuition reimbursement: Some employers offer job tuition reimbursement to pay for some or all of an employee's tuition to earn an advanced degree or certification in their field.

Student loan repayment: With student loan repayment, the employer usually pays a portion of the employee's student loan debt for them.

Stock options: In most cases, stock options are a specific type of retirement benefit, often reserved for high-level executives. Some publicly traded companies allow their employees to take part in stock option plans, however.

Profit-sharing: Like stock options, profit-sharing is a retirement benefit often provided to high-level executives and many newer companies are offering this option to all employees. With it, the company provides a portion of its profits to all shareholders regularly.

Telecommuting: A telecommuting benefit allows employees to work remotely occasionally or full time rather than working out of a central office.

Child care assistance: Some companies help their employees with child care costs by providing on-site child care at a reduced cost or giving employees a stipend to assist with child care expenses.

Wellness benefits: A new benefit some companies are offering is a wellness benefit. Usually, this includes giving employees a stipend to use for a gym membership or other wellness-related activities to encourage physical and mental fitness.

Commuting assistance: For employees who spend a considerable sum on commuting, some companies offer a stipend for commuting to help reduce those costs.

Housing assistance: Another potential benefit is housing assistance. Companies provide employees with a stipend, usually calculated based on cost-of-living in the area, to help employees pay for safe housing.

Relocation benefit: If you need to move for the sake of your job, most companies offer a
relocation benefit to cover the cost of the movers and potentially closing costs if you purchase a home.

Benefits packages tips for employees

Use these tips to help you evaluate and finalize your specific benefits package when considering or accepting a new position:

Negotiate: Often, when you negotiate your salary, you also have a chance to
negotiate your benefits package. Use that negotiation time wisely to ensure you receive the benefits you need.

Consider total compensation: You may not need every aspect of the offered benefits package. For example, you may already have health insurance through your spouse. Ask for additional compensation elsewhere, like in your salary, since you can save the company money by declining a benefit.

Look at each component: Consider each component of the proposed benefits package to see if there are specific details you want to change or discuss.

Customize your package: Ask your human resources representative about flexibility within your benefits package to ensure the package meets all your needs.

Please note that none of the companies mentioned in this article are affiliated with Indeed.