Over the last couple of years, employers have been offering more comprehensive and varied benefits packages, which has emerged as a stiff area of competition among companies competing for the same talent in the white hot labor market that emerged as hiring rebounded following the initial economic turmoil at the onset of the pandemic.
As more and more offerings have become available, however, employees have become more likely to overlook some of the potential perks and benefits package components that could be providing significant value if properly utilized. According to research from The Hartford, 70% of employers believe that employees are not effectively taking advantage of the benefits package offerings and perks that the employers are making available.
And how much value are employees leaving on the table with so many benefits flying under their radar? Estimates from the Bureau of Labor Statistics predict that employees could effectively increase their salaries by 30% if they were optimizing the benefits that are already available to them.
With so much additional compensation to be mined, employees would be wise to take another glance at their employer’s benefits offerings with a particular eye toward some of the more commonly overlooked sources of value and/or savings, including childcare and dependent care benefits, fertility benefits, commute/transit compensation, tuition contribution programs, and employee assistance programs (EAPs).
According to one study, about 1 out of every 5 workers is currently managing some kind of significant caregiving responsibility between child care, senior care, special needs care, or some other kind of substantial care giving relationship. While 61% of employers offer flexible scheduling that can ease some of the pressure of juggling work and caring for a dependent, fewer than 1 in 4 companies currently offer childcare support.
In the current benefits boom, however, the number of employers offering these kinds of caregiving benefits is expected to climb to more than 50% in just the next few years, so supply appears to be in the process of catching up with demand.
Some of the ways that employers are stepping in to meet these needs are by reimbursing employee expenses related to childcare, paying third–party childcare providers directly through group enrollment, or even providing in-house childcare for employees on site.
Workers who are paying for childcare - whether out of their own pockets or indirectly through their employers - may also qualify for exemptions from federal taxes up to $5,000 per year.
Fertility assistance and support is another often overlooked benefit that is resulting in employees leaving substantial value on the table unclaimed. Of course, like caregiving benefits, the circumstances particular to each employee will dictate whether or not fertility benefits like IVF, surrogacy, egg freezing, and/or adoption are applicable, but employers are certainly increasing access with 8% to 10% of employers adding fertility benefits to their employee benefits packages each of the last few years, with 40% of employers now making these benefits available as of the latest data.
Commuter perks also offer employers an opportunity to provide tax-free benefits to employees, with the IRS enabling up to $300 per year per employee to cover transportation expenses. These kinds of perks are actually mandatory in many cities and states, and employees can even expand upon the base offerings in many cases by devising their own customized arrangements that include fuel and/or maintenance expenses.
Tuition reimbursement offers a similar tax-free opportunity by allowing employees to claim a maximum of $5,250 per year in educational benefits before educational receipts begin to affect federal income taxes, though workers can still qualify for further financial assistance for education expenses beyond the employer contribution.
Lastly, employee assistance programs, or EAPs, are another great avenue for saving on mental health care expenses. Most programs offer a set amount of counseling sessions that are fully tax-deductible for employers and can save the employees utilizing these services the hundreds of dollars per appointment that each session would have cost out-of-pocket had the EAP not been in place.
Clearly, the underutilization of benefits is causing a lot of employees to essentially forego considerable compensation that they have rightly earned through their work. While not every benefit is going to be equally relevant or available to every employee, that of course is the case with most other employee benefits too. The most important takeaway may be that each employee would be well served to thoroughly survey the available offerings and perks to ensure that they are maximizing their usage of their benefits package in light of their own personal circumstances and needs. Further, employers would be well served to encourage their employees to do so, as the positive effects from offering well-thought and comprehensive employee benefits will be curbed at least if the employees aren’t maximizing that value and fully appreciating what’s being provided.
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