What are Flexible Benefits?

Flexible benefits enable workers to access a wider benefits choice from the employer’s package. The employer will often decide the benefits levels and types they would like to offer their workers.

According to the U.S. Bureau of Labor Statistics, in 2021, 31% of state and local government employees had access to flexible benefits. For education employees, it was 35%, 36 for hospital employees, and only 11% for private industry workers.

However, the term flexible implies that the workers can choose from various benefits. This article will discuss what you should know about flexible benefits plans and how they impact your workplace.

How do Flexible Benefits Work?

People have different desires, needs, and preferences. Therefore, a particular benefit can be excellent for one worker but cannot work for others. This statement explains why allowing them to choose from a list is crucial.

Nevertheless, flexible plans are rare, and they are often not adjustable. Employers find it somewhat to design gifts that suit all workers. Besides, most employee benefits programs feature essential benefits, such as health insurance, that most workers cannot ignore.

Yet, increasing the number of benefits can allow workers to enjoy flexibility and lower retention. It would be best to mention that employees will feel valued if they access benefits plans tailored to their lifestyle.

employee benefits

Most times, the flexible compensation option reduces the employer’s contribution since the workers ought to contribute to the cost to attain compensation plans that suits their needs.

Thus, some employers may opt for this option since it lowers their expenses by deducting their salary to provide the best gifts, which can look like an incentive. Besides, the two parties share the costs.

In such a case, the employee must choose what works best for them, but the employer decides on a fixed compensation plan. Thus, workers can decrease or increase their wages in line with a decrease or increase in their compensation plan.

If you want to master employee management so that both sides get what they want, check out our certified HR courses.

Human Resources Certifications

What Does a Flexible Benefit Include?

A flexible benefits plan can include workplace nurseries, cycle-to-work programs, bicycle loans, travel concessions, gym memberships, retirement plans, and health plans. These plans vary among companies.

In simple terms, the human resources department must research what offers their workers value most. This step is vital since preferences may vary between demographics and groups. Checking what competitors provide can be a strategic approach to selecting the industry standard options.

Process to Implement Flexible benefitsIt would be best to mention that most companies feature company-paid offers. In other words, the company offers core benefits at minimum levels, and the workers cannot deselect to get money instead.

The key takeaway is that creating a flexible benefits plan makes your staff feel more valued and listened to.

Offering your workers the benefits they prefer translates to motivation since it makes them feel that you value their services. Also, when employees feel that personal lives improve due to their work efforts, they become more optimistic about the workplace.

For instance, if workers can access their GP information, they think more about their work results. Thinking more about their work enables them to formulate more problem-solving ideas, making them work harder to perform even better.

Flexible Benefit Types

Several types of flexible benefits apply depending on the company’s setup. The most popular benefit plan is the cafeteria plan. This benefits plan includes various benefits covering eligible expenses, provided they match the IRS criteria in Section 125.

Pros and Cons of Flexible BenefitsThis option may include various benefits options ranging from 401 (k), HSA (Health Savings Account), dental, vision, critical care, medical opt-out, premium conversions, life insurance, and cash value.

It is crucial to note that flexible benefits often come with ancillary features. Thus, the obligations and rights of the employers and workers may differ from region to region and state to state.


The bottom line is that all benefits, including flexible benefits, pertain to workers’ future planning, home life, and workplace requirements. HR university is a reliable platform offering tips to help workers and employers choose the best benefits options. The platform provides tips about crucial benefits aspects always to consider.

Besides, HR university provides online courses to help you skyrocket your human resources knowledge. It would be best to check out the platform today before you decide about workplace benefits.

They can be your best financial advisors regarding flexible benefits, reimbursement accounts, health insurance, child care, and additional benefits. Check out for more information.


Here you can find the most frequently asked questions and answers about flexible employee benefits.

Why are flexible employee benefits crucial?

The reason to opt for flexible benefits is that the alternative seldom works for everyone. Different workers have different job requirements and expectations since they are different lead lifestyles. For instance, one worker might be looking for an employer offering commute compensation, while another might be interested in childcare.

The drawback for the employer is that they might miss impressing a top talent looking for a missing benefits option. Also, they might be wasting money on benefits options that do not motivate workers.

How Does a flexible benefits plan improve motivation?

They can be an excellent deal-breaker in attracting workers to join your company since they might provide an option that suits their needs. If it allows adding value to their business lives, the chances are that they will also intend to serve you better. It would be best to survey and research what competitors offer. Most importantly, ensure that you opt for a benefits plan your works like and options that add value to their quality of life.

How does a flexible benefits program work?

The flexible benefit comprises workplace nurseries, lunch budget, long-term disability insurance, gym memberships, retirement plans, and private health plans. In any case, the company shares the benefits plan costs with their workers. Workers often contribute to the benefits plan costs through deductions before-tax income, lowering their taxable income.

If you are new to Human Resources and are looking to use flexible benefits, we recommend taking our HR Certification Courses. You will learn how to build your skillset in human resources, build your human resources network, and create a successful job search strategy that helps you create professional teams who will be happy to work for you.

Josh Fechter
Josh Fechter is the founder of HR.University. He's a certified HR professional and has managed global teams across 5 different continents including their benefits and payroll. You can connect with him on LinkedIn here.