Owning a small business comes with a wide range of priorities and responsibilities — made more challenging with the small budgets and limited resources often available. Setting up an employee benefits program requires owners to simultaneously juggle total costs, employee needs, and compliance requirements with the limited resources of a small business.

As the global pandemic is at its tail end, employers are looking for more ways to support their employees and their financial well-being. 63% of employees agree that popular benefits such as health insurance contribute a lot to making them feel financially secure — up from 55% in 2018. 

There's also using benefits packages to address employee preferences to retain them long term. 78% of workers say their benefits packages are just as essential as their salaries for keeping them with their employer, and 33% would even quit their job if it weren't for health insurance. 

While much pressure dwells on selecting and administering excellent benefits plans, there's no need to become overwhelmed or discouraged by the initial to-do list required to get started. In this article, we simplify the steps it takes to set up a small business employee benefits program. 

Streamline payroll, HR, and benefits 

Before diving into the steps, it's important to address how an integrated human resources (HR) platform is vital to removing some of the daunting tasks involved in the entire process. A robust payroll solution integrated with a holistic HR solution enhances operational efficiency by enabling business leaders and administrators to keep their people operations streamlined. By expediting these detailed yet essential processes, organizations can focus on more crucial objectives such as scaling the business or developing a people-oriented culture.  

  1. Set a budget 

As you begin this endeavor, you'll need to have an idea of your resource allocation restrictions — the amount of money your business is able to spend on the benefits program annually. This will determine the types of benefits you can consider within a comprehensive compensation package.

On average, employers spend 29% to 31% of an employee's total compensation costs on benefits packages. This includes health insurance, retirement plans, paid leave, and supplemental pay. For example, if an individual worker's annual salary is $70,000, the value of their total compensation package may include an additional $28,500 to $31,500 in benefits costs. 

The total compensation that an organization will end up spending on a new hire largely depends on the benefits that the employee elects to enroll in. For example, some employees may opt to use their spouse’s plan or purchase health insurance via the health insurance marketplace, while others will select employer-provided health insurance, where the employer will pay a percentage of the annual premium. By allocating an average of an additional 30% for employee total compensation costs, employers can keep their budgets on track while still giving their employees the flexibility to choose the benefits that are right for them. 

  1. Choose what plans you'd like to offer

Once you know your spending capacity, figure out which plans you might want to provide. Remember that employee benefits can include a wide range of offerings, including health insurance (or savings plans), retirement savings plans, disability coverage, college savings accounts, life insurance, and employee assistance programs (EAP) that offer helpful resources like gym memberships, mental counseling, or partially subsidized legal services.  

Because this is strictly about satisfying and retaining your employees, ask them about benefits they would find useful. It's safe to say that health insurance and 401k retirement plans will be almost an assumed benefit that employees expect, so figure out other things you can offer beyond that.

Also, try to offer choices and customization rather than a one-size-fits-all option for all personnel. For instance, higher deductibles with lower premiums on health coverage might be better suited for certain employees compared to others and should be an option for employees. Tailorable benefits can also come in the form of cafeteria plans which use a pick-and-choose system of how employees wish to distribute their gross income.   

  1. Determine contributions

Once you've selected all the benefits to include in your small business program, decide how much you as an employer wish to contribute. The budget you set will dictate the exact contribution amount. 

Companies commonly offer to match a percentage of what an employee puts towards their 401k retirement account — but that percentage can vary widely between employers and sway applicants who are considering multiple job offers. There's also cost-sharing, typically percentage-based, in health, dental, vision, and life insurance coverages, as well as flat reimbursement payments of things like commute expenses or savings accounts.  

  1. Invite employees 

Now that you've created a menu of employee benefits options and established the company's financial responsibility toward them, you are ready to bring your employees in to choose. During this time, make sure an expert, either within your HR department or from the health insurance provider, is present to address any questions or concerns. 

  1. Finalize applications 

After your employees have become educated on their new benefits, send out any online application links needed to collect their information, determine coverage or plan start dates, and forward it to the benefits administrator. Once their applications are finalized, notify them that they can officially take advantage of the new program. Then, offer information on where they can go to get additional questions answered moving forward.   

“Benefiting” from automated data transfer with an integrated HR system 

Because much of the benefits administration process collects and processes employee information, a centralized platform that can streamline those tasks is extremely valuable. An integrated HR system lets you shorten the entire benefits process by automatically pulling critical information needed to underwrite and distribute the benefits efficiently after just one entry.  

Administer benefits plans with confidence 

Small business employee benefits programs are vital to recruiting and retaining a solid workforce in today's competitive labor market. However, developing and administering a solid plan can seem stressful due to small businesses' resource restrictions and the complexities of navigating the benefits space.     

Finding a partner who specializes in helping small businesses make the right benefits decisions, seamlessly enroll employees, and administer your benefit program is key to ensuring a smooth process for you and your employees. 

PrimePay at your service 

PrimePay can partner with you to offer support throughout the entire employee lifecycle. Learn more about how PrimePay is better supporting clients from hire to retire. Click here to contact one of our experts today.

Are you an organization with 150 or more employees? 

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