How to Set Up Employee Benefits in a Mental Health Practice

Hiring your first W-2 employee—or your fifth—is a huge milestone for any mental health practice owner. Once you move from “solo clinician” to “employer,” the idea of offering benefits becomes top-of-mind. 

For many owners who are starting a mental health business, this phase often overlaps with early financial planning for mental health practices and long-term growth considerations. A wave of questions, like:

• Do I need to offer employee benefits?
• And if I don’t legally need to, should I anyway?
• What should I offer? When should I offer it? How much will this cost?

A lot of practice owners assume certain benefits are legally required—but in most cases, they’re not. And while that may be a relief, it raises a better question:

What benefits actually make sense for your practice, your team, and your budget?

The good news: setting up benefits doesn’t have to be complicated. You don’t need a big corporate-style package on day one. With the right structure—and an understanding of the fundamentals of financial planning—you can start small, stay compliant, attract strong clinicians, and build a practice people want to join—and stay in.

Below is a simple, nationwide-friendly guide to help you understand what to offer and how to set it up.

Are Employee Benefits Legally Required?

In most cases, no.

When we talk about employee benefits—health insurance, disability insurance, retirement plans, commuter benefits, etc.—most of these are not federally mandated for small employers, particularly those in small business mental health settings..

However, a few exceptions matter:

• Health insurance is required once you reach 50 full-time employees (under the ACA).
• Some states require paid family leave, state disability insurance, or paid sick leave.
• Several states now require employers to offer a retirement program or enroll employees in a state-run option.

For most small or growing mental health practices, there is typically no requirement to offer benefits like retirement or health insurance—giving you flexibility to design a package that aligns with your goals and budget.

Why Employee Benefits Matter in a Mental Health Practice

Once you understand the legal landscape, the next question becomes: Why offer benefits at all?

I’ve worked with countless therapists who came from agencies or group practices with zero benefits—not even basic health insurance or a retirement plan.

It often leads to:

• High turnover
• Difficulty hiring
• Burnout and low morale
• Unstable caseloads and revenue

On the other hand, employee benefits help both you and your team:

• Stand out in a crowded, competitive hiring environment
• Reduce turnover and increase retention
• Show your clinicians that you genuinely care about their well-being
• Build a more stable practice with predictable revenue
• Provide tax deductions for your business
• Strengthen long-term financial planning for mental health practices

Most clinicians aren’t seeking extravagant perks—they want stability, financial protection, and support. Even a modest benefits package can go a long way.

What to Offer: A Starter List of Smart (and Affordable) Benefits

You don’t need to roll out a full suite of benefits right away. Start with the essentials and layer on more as your practice grows.

Here are the most impactful benefits for mental health practices:

Health Insurance

This is typically the #1 priority for employees. You can structure it in multiple ways:

• Practice pays the full premium
• Practice and employee split the premium (not necessarily 50/50—it can be any percentage)
• Employee pays the full premium but gains access to your group plan

Even if the employee pays the full premium, access to a group plan is still valuable. Group plans are often less expensive, have better coverage, and allow employees to pay premiums with pre-tax dollars—which can save them money every month.

More health insurance options are covered in the next section.

Retirement Benefits

Common options for small mental health practices include:

• SIMPLE IRA
• SEP IRA
• 401(k)

When selecting a retirement plan, practice owners should keep in mind key compliance items such as 401k contribution deadlines and 401k deadline contribution requirements, both of which factor into annual tax planning and the fundamentals of financial planning.

These differ in cost, flexibility, and contribution limits. We’ll break them down shortly.

PTO (Paid Time Off)

A simple structure works well:

• ~10 PTO days
• 2–3 mental health days
• Standard holidays

(Some states require certain PTO or sick leave—always check your state’s guidelines.)

CEU Reimbursements

Even $300–$500 per year is meaningful. You can also bring in CEU trainers for your whole team, which doubles as a professional development opportunity.

Disability Insurance

One of the most overlooked but valuable benefits. Short-term or long-term disability protects income if someone becomes unable to work. Group rates are typically cheaper than individual plans.

Navigating Health Insurance

Typically, you need 1–2 W-2 employees to qualify for a small-group health plan (varies by state and insurer). Group plans can be expensive, but they’re one of your strongest hiring and retention tools—and you can decide how much to subsidize.

If a full plan is not in the budget yet, here are excellent alternatives:

• QSEHRA – Reimburse employees tax-free for individual health insurance.
• ICHRA – More flexible and scalable for growing teams.
• Health stipends – Taxable, but simple and appreciated.

Even offering something small is a good step for those starting a mental health business and helps reinforce the stability clinicians seek—it shows your clinicians you care.

How to Structure Retirement Benefits for a Small Team

Here’s a simple breakdown of the main retirement options:

SIMPLE IRA

• Easy and inexpensive
• Requires a small employer match (typically 2–3%)
• Employees can contribute from their salary
• Ideal for practices under ~10 employees

SEP IRA

• Only the employer contributes
• Must give the same percentage to all eligible employees
• Contributions are discretionary each year (helpful for fluctuating revenue)
• Great for early-stage practices

401(k)

• Highest contribution limits
• Allows Roth contributions, profit-sharing, and vesting schedules
• Very customizable and competitive for hiring
• Higher administration costs and compliance requirements

Most small practices start with a SIMPLE IRA or SEP IRA, then transition to a 401(k) as revenue and team size grow.

These plans allow you to scale your benefits as your team expands and can integrate seamlessly with your broader financial planning for mental health practices strategy. Many practice owners also incorporate these decisions into subscription-based financial planning models to smooth out year-round cost forecasting.

Understanding deadlines like 401k contribution deadlines helps you stay compliant and avoid tax penalties.

Other Valuable (Non-Financial) Benefits

Some of the most appreciated benefits cost little or nothing:

• Supervision or consultation hours
• Leadership training
• Professional development funds
• EAP access
• Wellness stipends
• Flexible scheduling

These help create a culture clinicians want to be part of.

When to Bring in a Pro (and Who You Actually Need)

As your practice grows, you may want support with benefits and compliance—and the right professionals can save you from expensive mistakes.

Financial Advisor (like Marrone Wealth Management)

This is where we come in.

We help you:

• Understand which retirement plan fits your goals
• Model the cost of benefits before you commit
• Build a financially sustainable benefits package
• Apply the fundamentals of financial planning to your practice
• Create a structure that supports small business mental health owners
• Access our network of vetted benefits brokers, insurance specialists, and payroll/HR professionals who work extensively with mental health practices

You don’t have to track down these people—we already work with experts who can help you compare costs and get the best plans in place.

Benefits Broker

Helps you:

• Compare group health insurance plans
• Review networks and premiums
• Set up QSEHRA or ICHRA
• Understand what similar practices are offering

Most brokers don’t charge you—they’re paid by the insurance carriers.

Payroll/HR Support

Helps you:

• Stay compliant with payroll rules
• Set up benefit deductions
• Handle onboarding and offboarding
• Manage required filings

You don’t need all three professionals on day one—start with what you need, and build your support team as you grow.

Final Thoughts

Employee benefits don’t have to be overwhelming or expensive. Start with the basics, stay aligned with your budget, and choose benefits that support your clinicians and your long-term business strategy—especially as you continue starting a mental health business or scaling it.

A thoughtful benefits package helps you hire better clinicians, reduce turnover, and create a sustainable practice where people feel valued—including you.

A thoughtful benefits package forms a cornerstone of effective financial planning for mental health practices, enabling you to build a stable, sustainable organization: hire better clinicians, reduce turnover, and create a practice where people feel valued—including you.

If you want help determining which benefits make sense for your practice, Marrone Wealth Management is here to guide you through every step.