April 1, 2009 / 6:39 PM / 11 years ago

Pro and Cons: Offering Employee Benefits

Employee benefits just add to employer costs, right? So why should an employer offer them? Below are some considerations to weigh when deciding if providing employee benefits will also benefit your business.


* A benefits package, especially one that offers good health insurance, helps attract and retain quality employees.

* Businesses get the tax advantage of deducting plan contributions.

* Employees often will accept better benefits in lieu of a higher salary, which can be a savings to the business.

* Offering benefits to employees also can be advantageous to a business owner, who may be able to get personal benefits for less money than if he or she purchased them privately.

* Offering health insurance has been shown to decrease absenteeism and improve employee health and morale.


* Providing benefits costs more for small employers than for large ones, both in terms of higher prices because of lesser buying power, and due to relatively higher costs of administration.

* Small businesses have less choice in designing a retirement plan because of administrative costs.

* The more benefits a business offers, the more it must pay for administrative overhead.

* The cost of health insurance has steadily risen, making it less and less affordable to employers, and making financial planning difficult from year to year.

* Offering benefits creates concerns regarding legal compliance, which in turn causes a company to incur legal fees.

* Mistakes made in benefit plans can lead to costly lawsuits, or to regulatory fines.

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