How to build an international employee benefits package

In the modern global economy, it's common to have employees located in multiple countries. Major U.S. businesses such as Coca-Cola, Johnson & Johnson, and GE employ more international workers¹ than domestic employees.

As companies expand worldwide, the need to craft effective international employee benefits packages becomes increasingly important. These packages not only impact employee satisfaction and retention but also play a significant role in shaping corporate culture and employer branding.

In this article, we'll explain how you can build an international employee benefits package by offering personalized benefits that match your diverse workforce.

Takeaways from this blog post:

• Our survey found that 81% of employees say that the benefits package an employer offers is an important factor in whether or not they accept a job.
• Personalized benefits allow employees to customize their benefits to suit their individual needs and preferences.
• Careful consideration of local laws, regulations, and cultural norms is essential when designing an international benefits package to ensure it's a good fit for all employees.

How important are international employee benefits?

According to our 2024 Employee Benefits Survey, 81% of U.S. employees say that the benefits package an employer offers is an important factor in whether or not they accept a job.

With so many businesses hiring international talent, you'll want to offer a wide range of competitive benefits to attract your ideal employees. Each country has its own set of benefits that are considered standard, which is different from the U.S.

In some countries, like the United Arab Emirates, health insurance is a required benefit for employees, much like it is for applicable large employers (ALEs) in the U.S.

Offering international employee benefits helps you satisfy legal requirements and meet your team's benefits expectations so they don't leave for other opportunities.

However, even if it isn't customary to offer as many benefits in a particular country as your company might in the U.S., you'll still want to provide your international employees with at least the same benefits as your domestic employees.

Be sure to offer benefits and perks to your international employees that promote your company culture and the health and well-being of your employees.

What are personalized benefits?

Instead of using traditional standardized benefits for all of your employees, you can use personalized benefits. Personalized employee benefits allow your employees to use their benefits the way they want to rather than getting lumped into a one-size-fits-all option. Employers accomplish this by giving employees a monthly or yearly allowance to cover costs associated with healthcare, personal activities, and work-related expenses such as remote work costs.

How to offer your international workforce a health benefit

Health benefits alone play a key factor in recruitment and retention. According to our survey, 92% of employees rated health benefits as important, making it the most sought-after employee benefit. However, it's not easy to provide medical insurance coverage to domestic and international workers using a traditional group health plan.

International workers will have different needs than domestic workers. Plus, many insurance companies don't offer coverage outside of the U.S. or may have limited network availability. While some international health insurance plans exist, most plans are limited in international coverage, if they offer any.

Additionally, some countries cover healthcare costs for all citizens through taxes. For example, the United Kingdom offers free healthcare to all permanent residents, all paid for through taxes. U.K. citizens don't have to pay for hospital stays or visits to their general practitioner. Residents still have to pay for dental and vision care and prescriptions.

Offering group health insurance to employees in one of these countries wouldn't be necessary. However, these employees can still use a health benefit for their out-of-pocket dental, vision, and prescription costs.

If group health insurance is largely unavailable, how can you offer an international health benefit that works for both foreign and domestic workers?

A health reimbursement arrangement (HRA) is a great option for your workforce. You can also use health stipends to help your employees afford their medical care. We'll explore both of these options in more detail below.

Offering an HRA to your domestic workforce

HRAs are a great health benefits option for domestic employees. With an HRA, you provide your employees with a monthly or annual allowance for their health expenses. Employees request reimbursement for qualifying health expenses, which the employer usually pays out on their next paycheck.

In the U.S., HRAs are tax-free for employers and employees. If the employer allows it, employees can use their allowance for individual health insurance premiums, prescriptions, and out-of-pocket expenses.

With an individual coverage HRA (ICHRA), you can offer the benefit to your domestic employees only through employee classes. That way, you aren't required to offer the benefit to international workers as you might with group health insurance.

If you offer a qualified small employer HRA (QSEHRA), you must offer it to all domestic full-time W-2 employees on the same terms. It’s possible to use a QSEHRA as a taxable stipend in other countries unless social benefits are tax-advantaged in the country you're looking to hire in. However, if you administer an HRA with PeopleKeep, all employees receiving the benefit must be U.S.-based W-2 employees.

How does this help your global workforce if you can only offer an HRA domestically? Since you're offering your domestic workers a tax-advantaged ICHRA, you're now free to offer your international workers a health stipend, which we'll cover in the next section.

Offering a health stipend to your global workforce

Health stipends work similarly to an HRA in that employers give their employees a defined contribution for healthcare expenses. While an HRA is tax-free, health stipends count as taxable income on a domestic employee's W-2. This means your employees will have to pay income taxes on these stipends.

Because employers add health stipends to an employee's paycheck, you can offer them to both your domestic and international employees. This is a simple option for businesses because you can provide the same monthly allowance to all employees or change the amount based on their employment type or location.

If you decide to offer your domestic workforce an ICHRA, you can still offer your international employees a health stipend. That way, they can still receive a similar benefit to your domestic workers without any additional benefits management headaches.

Remember that you'll have to provide foreign workers with benefits similar to your domestic workers to avoid anti-discrimination laws in some places. Stipends are a great way to prevent this by giving all your employees the same health benefits.

With a health stipend, your employees can use their money on the following expenses:

• Health insurance premiums
• Dental insurance premiums
• Vision insurance premiums
• Chiropractic care
• Direct primary care network membership fees
• Health-sharing membership fees
• Medical services such as doctor's office visits and co-pays
• Prescriptions
• Other out-of-pocket medical expenses

The taxability of your stipend in other countries is subject to local laws and regulations. We recommend speaking with a tax professional about the taxability of your international benefits package.

How to offer employee perks to international employees

To create an attractive benefits package, you may also want to offer additional perks to your global workforce. Some of the most popular employee benefits, also known as fringe benefits or lifestyle benefits, include reimbursement for wellness, professional development, transportation, and remote work costs.

Wellness benefits for international workers

According to SHRM's Employee Benefits Survey², 64% of U.S. employers provided wellness resources, while 58% offered wellness programs such as gym memberships and stress reduction programs.

Don't forget—if you're offering benefits to your domestic employees, you should also be offering similar perks to international employees. This will help you remain competitive in the international job market while helping foreign workers feel appreciated. This way, they'll know that they're as equally appreciated as your domestic workers.

How do you offer wellness benefits to global employees, especially when you aren't familiar with their area or culture?

Offering a wellness stipend is a great way to provide flexibility to your employees no matter where they live. Like with a health stipend, these benefits are taxable income you can offer to anyone. The best part is employees can choose how they spend their allowance, so you don't have to anticipate their unique needs.

With a wellness stipend, your employees can use their contribution on the following expenses:

• Gym memberships
• Fitness classes
• Mental health counseling
• Home exercise equipment
• Wearables and devices
• Wellness and meditation apps

Remote work benefits

You can also offer your remote employees or those with flexible work arrangements a remote work stipend in the same manner. With this type of stipend, you can give your remote workers money for their home office set-up, internet access, coworking space memberships, or cell phone bills.

Professional development benefits

Helping employees grow benefits everyone. You can support your employees’ career growth by offering a mentorship program or career coaching. You can also offer them a professional development stipend. They can use this stipend on conferences, professional memberships, or online learning platforms such as Coursera or Skillshare.

What to consider when deciding which benefits to offer

When looking to hire employees in other countries, you'll need to be aware of any local employment laws that require employers to provide certain benefits. You'll also want to consider what benefits are already offered by the government.

For example, paid time off (PTO) is a common benefit in the U.S. But, the Fair Labor Standards Act (FLSA) doesn't require employers to pay employees for time not worked. Some countries require employees to offer a certain number of paid days off per year.

Some countries may also require you to provide your employees with the same benefits required under U.S. and local employment laws.

Another thing to keep in mind is that collective bargaining agreements (CBAs) cover 60% of employees in the European Union³. CBAs are contracts between an employer and a union that outline wages, hours, and benefits for employees. Once a CBA is established, employers and union workers must abide by the agreement.

Additional benefits to offer your international employees

Once you've taken where your employees live into consideration, there are several additional benefits you can offer them.

Some popular perks include:

• Housing benefits
• Commuter benefits
• Retirement benefits
• Life insurance
• Disability insurance

Whatever benefits you decide to offer in your international employee benefits package, be sure to check local laws, regulations, and cultural norms to be sure that they'll be a good fit for your employees.

Conclusion

Creating a successful international benefits package requires careful planning, consideration of local laws and customs, and a deep understanding of the needs and expectations of a diverse workforce. By implementing a well-rounded benefits strategy, you can position your multinational company as a sought-after employer in the global marketplace. With expense reimbursements such as HRAs, you can easily manage affordable employee benefit options for your domestic workforce.

This blog article was originally published on November 8, 2018. It was last updated on July 30, 2024.

1. https://www.aei.org/carpe-diem/many-large-us-firms-sell-hire-and-invest-more-overseas-than-in-the-us-and-have-to-think-globally-to-survive/
2. https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/designingandmanagingwellnessprograms.aspx#:~:text=Recent%20studies%20illustrate%20the%20current,offer%20wellness%20programs%20in%20general
3. https://www.eurofound.europa.eu/topic/collective-bargaining