What Are Four Major Types of Employee Benefits?

One major employee benefit is medical or health insurance.
One major employee benefit is medical or health insurance. (Image: Jupiterimages/BananaStock/Getty Images)

Most employers offer four major types of employee benefits. However, the percentages that companies contribute to various employee benefits may vary considerably. Larger companies may offer more benefits because of larger profits. Companies that specialize in certain types of benefits may also more appealing benefits in their specialized areas. Whatever the case, major benefits are an important consideration for employees with respect to career choices.

Medical Insurance

Medical or health insurance is one of the most important benefits that employers offer, as health insurance can be extremely expensive. Medical insurance continues to grow significantly each year with health premiums increasing 131 percent from 2000 to 2009. Medical insurance typically includes hospital visits, surgeon fees, doctor visits and prescriptions. Some companies also offer dental insurance and eye-care reimbursements. In the private sector, 71 percent of employees received medical insurance from their employers, according to the 2010 data from the U.S. Bureau of Labor Statistics; 88 percent of local and state government employees did as well. The private sector includes people who work in corporations, hospitals or other non-government employers.

Life Insurance

Another one of the four major benefits is life insurance. The purpose of life insurance is to provide family members with financial benefits in the event of the insured's death. Life insurance can pay the decedent's funeral and burial expenses and provide family members with cash. It also allows family members to maintain their current living standards. Additionally, life insurance can help families pay off debt. The employer's children can also receive money to attend college.

Disability Insurance

Disability insurance is another major benefit employers pay. Disability insurance is paid to people who become injured, sick or permanently disabled, whether the accident or illness occurs at work or at home. There are two major types of disability insurance: short- and long-term. Short-term disability insurance payments are for employees who become temporarily sick or unable to perform their jobs. For example, an employee may receive disability insurance while out with a hernia. Long-term disability payments cover longer or more permanent illnesses or injuries. Companies usually pay a percentage of employees' salaries when they are disabled. That percentage may be 55 or 60 percent, for example.

Retirement Benefits

Companies also pay retirement benefits for employees. In the private sector, 65 percent of employees receive retirement benefits versus the 85 percent of local and state government employees. One of the most common types of retirement benefits is the 401(k). Retirement benefits typically deduct automatically from an employee's paycheck. Employees usually determine in advance how much of their paychecks go toward retirement. For example, one employee may contribute six percent of his gross salary toward his retirement, while another may contribute 10 percent. Most companies have maximum amounts that employees can pay into retirement accounts.

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