The 5 Hottest Employee Benefits for 2023

Want to attract and retain the best people in this very tight labor market? Then you’re going to need to offer the most competitive employee benefits. I’m not an HR consultant or a labor expert. But I write about this stuff all the time. I interview hundreds of small business owners and experts and talk to hundreds of my own accounting firm’s clients. I see what’s hot. From a flexible work environment to mental health benefits, for 2023, these are the five hottest employee benefits you need to be offering.

Healthcare

Today’s employee doesn’t just desire healthcare benefits. They expect it. So, you have to provide some sort of healthcare benefit if you even want to step up to the plate. In 2023, there are some hot healthcare benefits you need to consider.

For starters, make sure you’ve got a Health Savings Account (HSA) plan tied to your high deductible insurance plan. Employees can put away pre-tax money to reimburse themselves for expenses like glasses, acupuncture and certain pharmaceuticals that your healthcare plan doesn’t cover.

Consider an Independent Coverage Health Reimbursement Account (ICHRA). Instead of offering a group plan you can contribute pre-tax money that gives your employees the option to purchase their own healthcare plan of their choosing from the health exchanges or a broker.

Think about self-insuring with a Level-Funded plan where you can pay for costs at the low-end and still get a group insurance plan to cover anything catastrophic. All of these moves are popular options this year and depending on your business, can provide great benefits at an affordable price for your workforce.

Retirement

Thanks to 2019’s SECURE Act you’ve got all the incentive in the world to setup a 401(k) retirement plan. You can get reimbursed through tax credits for the costs of setting up this plan. You get even more tax credits if you choose to make enrollment automatic. The Act also now allows Pooled Employer Plans so you can further reduce your costs by pooling your assets with other companies and reducing both your fiduciary and financial responsibilities. Retirement plans are another must-have benefit.

Flexibility

Oh, and speaking of must-haves. You must offer a flexible work environment. Period. Many employers are grappling with work-from-home policies and how to maintain security policies but really the best is to allow some sort of hybrid arrangements that are up to individual managers to approve. Maybe one or two days out of the office. For some workers, a flexible work environment is the number one must-have on their list of competitive employee benefits.

Seriously consider offering a 4-day work week too by expanding schedules — maybe 10-hour shifts. You should also start rethinking evaluations to match deliverables, not just hours worked. Finally, I’m seeing more of my clients adopting unlimited paid time off plans because, 1) they can make it available to certain employees that have been with the company awhile and 2) they can require that paid time off can only be taken with a supervisor’s approval. Employees want flexibility. They want more work-life balance. They want to be more independent and mobile. Smart companies are providing these options to attract the best people and that’s why it’s considered one of the hottest employee benefits.

Mental Health

Mental health issues used to be a stigma. Not anymore. Today’s Millennials and GenZ-ers – who make up half of our country’s workforce – are more open about their mental health issues. And the pandemic made everything a lot worse. This is why many smart employers are responding with more mental health benefits. That means you. Because you’re going to be asked by a prospective (or maybe even a current) employee what kind of mental health benefits your company provides. So, what’s your answer?

Talk to your health insurance provider and make sure you’re fully up to speed on the benefits they offer so you can explain that to your workers. Also, consider signing up for a platform like BetterUp.com or Fringe.us which offer mental health services. I’ve had a few clients enjoy BetterUp because – for an annual fee – their employees can take advantage of counselors, psychologists, psychiatrists and other professionals to provide confidential online counseling whenever they need it.

Dependent Care

So many workers today have family pressures. It’s not uncommon for both members of a household to be holding down jobs. There are kids. And older parents or relatives. Everyone needs care. And the more your workers are pulled to do this, the less productive they are. Dependent care benefits pay back both employees and employers alike. Every employer should have a plan.

And the plan can be a simple Flex Savings plan. Tax rules allow a company to contribute up to $5,000 per year per employee to reimburse for qualified dependent care expenses. The plan must be made available for all and you don’t have to reimburse that full amount. It’s up to you. But whatever you do reimburse you get a tax deduction and the employee doesn’t get taxed. Combine this benefit with some paid-for financial counseling as to how to best take advantage of the Dependent and Childcare tax credit (it’s not an easy calculation) and you’re really providing a valuable service to your employees. One that won’t be forgotten easily

So, where do you start?

There are plenty of other benefits you can be offering to your workforce but these are the hottest employee benefits I’m seeing. And remember, you don’t have to do it all. You can pick and choose and provide up to an amount that you can afford. But providing something is what’s important. Because you’re competing against big companies and governments for talent, you must be offering the kinds of competitive employee benefits that will most help you attract and keep the best talent to grow your company.