Rapid technological advancements and shifting employee expectations have added another layer to successfully recruiting and retaining top talent, which means the world of employee benefits must evolve to meet the changing needs of the workforce.

Traditional benefits like health insurance, retirement plans and paid time off serve as “hygiene factors," or factors that help prevent employee dissatisfaction. On the other hand, creative and non-traditional benefits can serve as “motivational factors," positioning employers as going above and beyond to increase employee satisfaction.

A combination of benefits that meet both types of employee needs is necessary to maintain a productive workforce. Here are some traditional and creative benefits trends.

Traditional Benefits 

Traditional benefits typically satisfy essential employee expectations and will continue to be a cornerstone of a competitive benefits package. Here are three examples:

1) Insurance. Insurance remains a cornerstone of employee benefits, with a growing emphasis on expanding coverage and reducing costs. About 86% of private-sector employers offer employer-sponsored health insurance, according to an Insurance Component of the Medical Expenditure Panel Survey (MEPS-IC) data analysis.

Employees value a variety of health benefits, including comprehensive health plans with vision and dental coverage. The average coinsurance rates for employer-sponsored health insurance plans are 19% for primary care, 20% for specialty care, and 20% for hospital admissions, according to the “2023 Employer Health Benefits Survey" from the Kaiser Family Foundation.

More organizations are offering customized health benefits options or cafeteria plans to enhance their benefits packages. Health savings accounts (HSAs) enable employees with high-deductible health plans to save pre-tax funds for medical expenses, with the advantage of rolling over unused funds from year to year.

Flexible spending accounts (FSAs) also contribute to a robust benefits plan. Unlike HSAs, FSAs do not require enrollment in a high-deductible plan and provide similar pre-tax benefits for medical expenses, although funds do not roll over and contribution limits are lower. Additionally, HSAs are portable from employer to employer but FSAs are not.

2) Paid time off. Paid time off (PTO) is crucial for maintaining work-life balance and employee well-being. In 2024, companies increasingly offer flexible PTO policies, a move away from separate vacation, sick leave and personal time banks.

While PTO on an accrual basis remains common and serves as an employee motivator, the added flexibility in PTO and holidays helps employees manage their time effectively, reducing burnout and promoting overall well-being. This, in turn, enhances job satisfaction and performance.

Additionally, organizations in 2024 are more frequently offering summer hours, shortened workweeks, such as four-day schedules, and sabbatical leave programs to support personal and professional development.

On average, private-sector employees receive 11 days of vacation after one year, 15 days after five years, 18 days after 10 years, and 20 days after 25 years, according to the U.S. Bureau of Labor Statistics. These averages show the evolving standards in PTO offerings and can be a helpful benchmarking tool.

However, more than 2 in 3 (68%) of U.S. and Canadian employees report working while on PTO, according to an ELVTR survey, indicating a need for better boundaries and support during time off.

Crucially, employers must encourage the use of PTO. Otherwise, employees may feel unsatisfied and the investment in these benefits could be squandered.

3) Retirement plans. Retirement plans are paramount for the long-term financial security of employees. Companies are strengthening their retirement benefits by modifying employer contributions or offering matching programs to help employees save for the future.

In addition to traditional offerings, some organizations are revisiting retirement options to give employees more flexibility and multiple retirement options are now being offered by some organizations.

Additionally, an upcoming regulatory change will make automatic enrollment obligatory for all 401(k) and 403(b) plans established after Dec. 29, 2022. This change was part of the Secure Act 2.0 and will go into effect January 2025. Plans established before this date will be “grandfathered in" and exempt from the automatic enrollment obligation. In theory, this change should incentivize employee financial wellness, simplify access to retirement savings, and encourage higher participation rates.

Creative Benefits

A creative benefits package can be a competitive advantage, improving employee satisfaction, well-being and performance. Here are three examples:

1) Flexible work arrangements. Flexible work arrangements have become popular since the COVID-19 pandemic and continue to be valued. Employees increasingly seek autonomy over their schedules as a way to find work-life balance, favoring flexible work hours (94%) and flexible locations (90%) as key benefits, even over annual compensation increases (88%), according to Businessolver's “2024 State of Workplace Empathy" study.

Companies are expanding their remote work policies and hybrid work models to accommodate employee needs. Innovative organizations are limiting burnout and improving performance by moving to a four-day work week or making other adjustments to work arrangements.

2) Family benefits and work-life balance. In addition to statutory benefits like maternity and paternity leave, many companies are prioritizing work-life balance and family-related benefits. Offerings may include extended parental leave and childcare assistance programs.

Organizations also recognize the need for elder care support, helping employees care for aging parents or relatives. Some companies go above and beyond with pet care, pet insurance and other subsidies for employees' four-legged friends.

3) Mental health and well-being. The focus on mental health and well-being has intensified, driven by the recognition of its significant impact on employee productivity and satisfaction. In addition to traditional employee assistance programs (EAPs), companies are implementing comprehensive mental health initiatives, with some even staffing mental health providers to offer more extensive support than typical health insurance covers.

These programs are designed to provide multiple levels of support, including access to therapists and counselors both in person and through telehealth services. Promoting physical health and wellness remains a priority, with companies incentivizing healthy behaviors through various health and fitness programs, such as subsidies for gym memberships and encouraging employees to prioritize their physical well-being.

Nicholas Ritchie is recruiting coordinator at The Workplace Advisors. The Workplace Advisors is the endorsed HR partner of Big “I" Hires, the Independent Insurance Agents of Virginia, Big I New York, Big I New Jersey and Big I Connecticut.