Small Business Employee Benefits -

Benefits 101: What Every Small Business Needs to Offer (and What’s Optional)

When you’re running a small business, employee benefits might seem like a “nice to have.” But offering the right mix of required and optional benefits isn’t just smart—it’s a powerful tool for attracting and retaining top talent.

In this guide, we’ll break down which employee benefits are legally required, which ones are optional (but valuable), and how you can build a cost-effective package that works for your business.

✅ Legally Required Benefits for Small Businesses

Even if you only have a few employees, there are certain benefits you may be required by law to offer depending on your state and employee count:

1. Social Security and Medicare (FICA)

All employers must contribute to Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA).

2. Unemployment Insurance

Employers are required to pay federal and state unemployment taxes (FUTA and SUTA) to fund unemployment benefits.

3. Workers’ Compensation Insurance

Nearly every state mandates workers’ comp, even for businesses with just one employee.

4. Disability Insurance (Certain States)

States like California, New York, New Jersey, Hawaii, and Rhode Island require temporary disability insurance.

5. Family and Medical Leave (FMLA)

If you have 50+ employees, you must provide up to 12 weeks of unpaid, job-protected leave for qualifying family or medical reasons.

6. Health Insurance (Under the ACA)

If you have 50 or more full-time equivalent employees, you’re required to provide health coverage or face penalties.

💡 Optional—but Highly Valuable—Employee Benefits

While not required by law, offering these voluntary benefits can give your business a major edge when hiring and retaining talent:

1. Group Health Insurance (under 50 employees)

You’re not required to offer it, but many small businesses do—and often qualify for tax credits via the Small Business Health Options Program (SHOP).

2. Dental and Vision Insurance

Affordable add-ons that employees value and often pay into themselves.

3. Life and Disability Insurance

Offers peace of mind for your team—especially if you offer basic life at no cost and let employees buy up more.

4. Retirement Plans (401(k), SIMPLE IRA)

A growing number of states now require employers to provide access to a retirement plan or state-facilitated IRA.

5. Paid Time Off (PTO), Vacation & Sick Leave

Not federally mandated, but offering generous PTO policies is a must in today’s labor market.

6. Wellness Programs & EAPs

Employee Assistance Programs (EAPs) and wellness tools can boost productivity and morale for a relatively low cost.

📊 Why Optional Benefits Are Worth It

🔒 Boost employee retention
🧲 Attract stronger candidates
💬 Improve morale and productivity
💰 Access potential tax benefits or credits

Many benefits—especially voluntary ones—can be employee-paid or cost-shared, making them a low-cost, high-impact strategy.

🧠 How to Build the Right Benefits Strategy for Your Business

Every business is different. The right mix depends on:

Your industry and risk exposure
Budget and growth stage
Talent goals and employee needs

That’s where a Risk & Benefits Advisor comes in—someone who understands both compliance and cost-effective solutions.

📞 Let’s Build a Smarter Benefits Plan

At McElroy Insurance Services, we help small businesses like yours build benefit programs that protect, attract, and retain—without draining your budget.

💬 Contact us today for a free benefits review or to explore your options.
📧 benefits@mcelroyinsurance.com | 📞 1 (800) 840-1185
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