A small employer's benefits problem is not choosing from a long list, it is working out the shortest list that keeps it in the running for the people it needs. Two things make that different from a large employer's problem: per-head pricing has floors and minimums that bite hardest at small headcounts, and there is no benefits function, so administration time comes out of somebody who has another job. This page sets out an order to buy in, and looks at group life specifically because it is the cheapest thing most small employers have not bought.
First, establish what is actually required of you
Some obligations depend on employer size and some on the states you employ in, and both thresholds matter more to a small employer than to a large one because you may be either side of them. Work out which federal obligations apply at your headcount, which state programs you contribute to, and which of the things you think are required are actually market convention. That list is not a benefits decision, it is the floor, and it should be established before anything is chosen.
Then buy in this order
Retirement with a contribution, because it vests and is therefore the one thing on the list that helps retention. Health cover to the level your market expects, because being visibly below it removes you from consideration and being above it wins little. Then one differentiator your own people asked for. Stopping after three is a legitimate and defensible position for a small employer, and it is better than four things bought thinly.
Group life is the cheapest thing you probably have not bought
Group life cover at a modest multiple of salary is among the least expensive per-head benefits available, because the risk being insured is low-probability at typical working ages. It is also the benefit whose absence is most noticed at the worst possible moment. For a small employer it is usually worth getting a quote on before anything more fashionable, and the quote is quick because there is little to configure beyond the multiple and whether cover continues during leave.
Count the administration, because it is your real constraint
Every benefit is an enrollment, a monthly reconciliation, a leaver process and a renewal conversation, and at small headcount all of it lands on somebody with another job. Price that time at its loaded hourly cost and add it to each benefit's cost. That single adjustment is why three benefits administered properly beat six administered badly, and it is the calculation most small employers never do.
Questions people ask about employee benefits for small business
What benefits should a small business offer first?
After establishing what is actually required of you: retirement with a contribution, because it vests and helps retention; health cover to the level your market expects; then one differentiator your own people asked for. Three, administered properly, is a defensible position.
Is group life insurance for small business worth it?
Usually worth a quote before anything more fashionable. Cover at a modest multiple of salary is among the cheapest per-head benefits there is, because the insured risk is low-probability at working ages, and its absence is noticed at the worst possible moment.
Why do per-head prices hurt small employers more?
Because most benefits administration is priced per employee per month with a monthly minimum, and below a certain headcount the minimum is the real price. Always work the cost per actual participant at your own numbers rather than at the headcount in the proposal's example.
What is the constraint nobody prices?
Administration time. Every benefit is an enrollment, a reconciliation, a leaver process and a renewal, and at small headcount that lands on somebody with another job. Price it at its loaded hourly cost and the case for fewer benefits done properly becomes arithmetic.