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Better Small Business Benefit Packages: 6 Tips for Recruiting & Retaining Talent

Small Business
male coffee shop owner smiles inside his cafe and plans to build a quality employee benefits package

The job market has become increasingly competitive, fueled by millions of job openings and millions of workers voluntarily leaving their current employers for higher-paying and more flexible work.1

In the current market, it can be difficult for small businesses to retain talent. To help overcome that challenge, attractive small business benefit packages and a good company culture can help. So as a small business owner, how exactly do you build a quality employee benefits package and better employee benefits for remote workers? Here are some helpful aspects to consider.

Key Takeaways

  • Many employees who have been working at home because of the global health crisis now put a premium on remote and hybrid work.
  • Given the current competitive job market, offering employees flexible work schedules and telecommuting options can help you retain good workers. You could offer flexibility in several ways.
  • Many employers now focus on employees' financial wellness. You can do the same by setting up a 401(k) plan for your team.
  • Paid maternity and paternity leave are also attractive benefits you can offer.

1. Understand What Your Employees Value

Many employees who have been working at home because of the global health crisis now put a premium on remote and hybrid work. Ninety-one percent of workers hope remote work remains a fixture even after the pandemic wanes. Some 54% say they'd specifically love a hybrid work arrangement going forward, according to a recent Gallup survey.2

As a small business owner, it's likely your employees share the same sentiment, especially if their work isn't tied to a specific physical location. However, it's still important to solicit their feedback before you make changes to benefits. Use a simple form or survey tool to help learn what matters most to your employees, whether it's flexibility, better health care coverage, more training or more vacation time. This can help you craft better employee benefits for remote workers and your overall team.

2. Provide Broader Coverage

Many small businesses don't offer health care coverage to their employees. According to a survey by the Employee Benefit Research Institute (EBRI), only about 23% of employers with fewer than 10 employees offered health insurance in 2019.3 Given rising health care costs, that number isn't all that surprising.

However, small business owners who want to offer employees more coverage and choice can offer a qualified small employer health reimbursement arrangement (QSEHRA), also called a small business HRA.4 The company can set a monthly allowance and reimburse employees for their health care costs up to this allowance.

A benefit of a small business HRA is that it isn't subject to payroll tax for either the employer or the employees. Small businesses with fewer than 50 employees that don't offer a group health plan qualify for a small business HRA. So it could be a worthwhile option if you wouldn't otherwise be able to offer comprehensive health insurance coverage.

3. Help Employees Prepare for Retirement

Many employers now focus on employees' financial wellness. You can do the same by setting up a 401(k) plan for your team.

401(k) plans have traditionally been too costly for small businesses, but a crop of lower-fee 401(k) providers has emerged to make this offering more affordable. These providers offer an all-in-one solution that streamlines management, integrates with your payroll operations and uses technology to help employees learn more about their investment options and easily make changes to their plan.

Fifty-three percent of businesses with fewer than 50 employees provide retirement or health plans, which means that many employees still must do the research to find a suitable retirement plan and manage it themselves.5 Adding this option to your employee benefits package could reduce this legwork for your employees. That in turn help empower them to save for retirement and may put you one step ahead of other small businesses.

4. Give Employees a Healthy Advantage

Health savings accounts (HSAs) and flexible spending accounts (FSAs) are two other options you can offer employers to help offset health insurance costs.6,7

An HSA allows you to set aside pretax money to pay for out-of-pocket health care costs. HSAs are offered along with a high-deductible insurance plan. For example, if you offer employees a health plan with a $2,500 deductible, they'll have to pay $2,500 of their own money before their health insurance kicks in. But with an HSA, they can use the money they've saved before taxes have been taken out of their paycheck to pay for health care costs. HSAs lower employees' taxable income, which also reduces payroll taxes. Employers can contribute to their employees' HSA, but the rules for this vary.

Portability is another benefit of an HSA. Employees can take their HSA with them when they leave your company. Offering this option could give employees added flexibility and access to more cash while also reducing their tax burden when covering necessary expenses such as health care.

An FSA allows employees to set aside pretax dollars to help pay for medical and childcare expenses. An FSA can also reduce taxes, but unlike with an HSA, individuals must use the money they've saved in an FSA within the plan year or they lose it. However, employers can either give employees two and a half extra months to use the money or allow them to carryover up to $610 (as of 2023) to the next year. As an employer, you can choose to make contributions to an FSA.

Another option is to consider a supplementary insurance product that allows employees to deduct their health insurance premiums directly from their paychecks. Some of these products also enable employees to get life insurance if they wouldn't otherwise qualify. Plus, they can keep their policy even when they retire or leave the company. This may be another way to help make your small business benefit packages more attractive.

5. Offer Voluntary Benefits

Attractive small business benefit packages don't have to be cost-prohibitive. As a small business owner, you can expand your benefits offering at no cost to you by offering voluntary benefits.8

Talk to your current benefits provider to see if they offer this option. Voluntary benefits are insurance products such as disability, accident, long-term care and critical illness insurance, which employees pay for themselves through payroll deferrals. Depending on the package offered, employees also may be able to access services like identity theft protection and financial counseling. The cost for voluntary benefits is usually lower than what employees could get on their own because a benefits provider will offer a group rate.

Voluntary benefits give your business an easy way to offer employees more choice and options, which could help you retain talent.

6. Support Working Parents

Paid maternity and paternity leave are also attractive benefits you can offer. The Family Medical Leave Act (FMLA) generally requires employers to provide 12 weeks of unpaid leave a year to certain employees.9 During this time, their employment is also protected. It's important to note that a business falls under the FMLA if it employs 50 or more employees in 20 or more workweeks in the current or previous calendar year.

As a small business, if you aren't covered under the FMLA, you likely can't afford to cover the full 12 weeks. But you may be able to partially cover parental or medical leave — even if it's just for two weeks — or offer new parents the option of working part-time from home as a way to extend their leave.

While paid time off comes at a price, the trade-off could be worth it. Employees may be more productive and more loyal to the company if you give them an opportunity to have a greater work-life balance.

Keeping Good Employees

Employee turnover can be costly. It often costs more to replace an employee than to retain a good one. Small businesses generally function like families, meaning every team member is critical. It takes time to train and build relationships with employees. So as an employer, it's in your interest to do everything possible to secure that investment of time (and money).

You can start with the options we've outlined, but also ask employees what they'd like. Retirement plans are a popular choice as are long-term care insurance and disability income insurance. You may discover some unmet needs you can fulfill while also allowing employees to keep more of the income they've earned.

Ultimately, attractive small business benefit packages can help you retain the best talent and increase loyalty among the people who work for you. That's something that doesn't come with a price tag.


  1. Smith TJ. More workers quit in February as job openings stayed high. The New York Times. Published March 29, 2022. Accessed April 15, 2022.
  2. Saad L, Wigert B. Remote work persisting and trending permanent. Gallup. Published October 13, 2021. Accessed April 15, 2022.
  3. Workplace health coverage benefits: Facts and figures. Employee Benefit Research Institute. Accessed April 15, 2022.
  4. Health reimbursement arrangements (HRAs) for small employers. HealthCare.gov. Accessed April 15, 2022.

  5. Employee benefits in the United States — March 2021. Bureau of Labor Statistics. Published September 23, 2021. Accessed April 15, 2022.
  6. Health savings account (HSA). HealthCare.gov. Accessed April 15, 2022.
  7. Using a flexible spending account (FSA). HealthCare.gov. Accessed April 15, 2022.
  8. Gonzalez E. A guide to voluntary benefits for your small business. The Blueprint/The Motley Fool. Last updated August 10, 2020. Accessed April 15, 2022.
  9. Family and Medical Leave (FMLA). U.S. Department of Labor. Accessed April 15, 2022.

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