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Health insurance, retirement plans and paid time off packages are among the list of most common voluntary benefits offered to employees. — Getty Images/ BlackSalmon

For most businesses, compensation goes beyond the employee’s salary and includes numerous benefits, including employer-sponsored health insurance, retirement savings plans, life insurance, paid time off, and more.

While the exact cost of your benefits program will depend on the number of employees you have, where you’re located, and the specific plans you choose to offer, you can generally expect to pay several thousand dollars per employee in voluntary benefits each year.

Here’s a breakdown of some common voluntary employee benefits offerings and typical cost ranges for each.

Health insurance

Employer-sponsored health care coverage is one of the most common benefits offerings. In fact, 55% of employees consider health insurance the most important benefit when rating job satisfaction.

Medical, dental and vision coverage all fall under this umbrella, and can be offered for individual employees, employees and spouses, or employees and all dependents (family coverage).

Health insurance premiums vary based on number of employees; types of plans and coverage levels (i.e., Health Maintenance Organization (HMO), Preferred Provider Network (PPO), High Deductible Health Plan (HDHP), etc.); whether you sponsor or contribute to an employee Health Savings Account (HSA); employee demographics; and location.

The following are estimated costs for medical, dental, and vision plans under a group insurance policy:

  • Medical: On average, group medical costs approximately $500 or more per month per employee, and nearly $1,500 per month for family coverage.
  • Dental: Dental insurance premiums may range from $20 to $50 per employee per month. This often covers preventive care and co-pays for basic services and/or major dental procedures.
  • Vision: Vision insurance may cost you, which covers an annual eye exam and a limited allowance for frames and/or contact lenses.

While many employers cover a portion of the employees’ premiums to reduce their financial burden, an alternative strategy for smaller businesses is to allow employees to purchase their own health insurance plans and reimburse them up to a certain amount each month.

In fact, 55% of employees consider health insurance the most important benefit when rating job satisfaction.

Retirement savings plans

In lieu of traditional pension programs, many employers now offer their employees the option to set aside a portion of their paychecks for a dedicated retirement savings account, such as a 401(k) or employer-sponsored individual retirement account (IRA).

Estimated cost: Employers typically cover the initial setup and maintenance fees for employee retirement savings plans, which may range from $1,000 to $3,000 per year, depending on how many plan participants you have. Depending on the type of plan you offer, you may also be required to match employee contributions up to a certain amount.

Other employee insurance and assistance programs

Life insurance, accident insurance, employee assistance programs (EAPs), and even pet insurance are all additional types of voluntary coverage you can offer your employees.

The specific plans and providers you choose will determine your costs. Many of these plans are priced per employee, per month, so the more employees who participate, the higher your cost will be.

Estimated cost: EAPs may cost between $10 and $50 per employee per month, plus flat annual fees. Life insurance premiums can begin in the $20 per month range for younger employees and go upwards of $300 per month for older employees.

Paid time off and paid holidays

Nearly every employer has some sort of paid time off (PTO) policy for their full-time employees. There are a few different ways you can structure your PTO program, but most companies offer

(1) an accrual system,

(2) a set number of days per calendar year, or

(3) unlimited PTO.

Employers also typically offer paid holidays throughout the year.

PTO packages should come with little to no cost, since you have already budgeted to pay the employee for 40 hours a week in their salary. Any “cost” of PTO comes in when coverage is needed during that employee’s absence.

Estimated cost: $0, if done properly.

Do I need to offer voluntary employee benefits?

There are no specific federal regulations dictating which benefits you must offer to your staff, though, depending on size, you may be required to offer group health insurance.

However, many job seekers make the decision to accept a job offer based on the employer’s total benefits package. If you’re offering market-value salary but fewer benefits options, you risk losing top talent to a competitor with better perks.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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