In Silicon Valley, High Salaries and Free Food Aren't Enough Any More Tech giants and startups take the benefits 'arms race' to health care.

High salaries and free food aren't enough any more in Silicon Valley, where maturing companies are competing for talent with creative health care and "wellness" programs that use gadgets to promote good behavior.

Standard benefits at the largest technology companies, including Google Inc and Apple Inc, range from fertility treatments to deluxe on-site medical clinics, to new technology treats like health-tracking bracelets.

The health largesse separates Silicon Valley's raging economy from many other sectors in the United States, but tech companies' experiments with perks show signs of spreading, benefits managers say.

Keeping employees healthy pays off in ways from increased productivity to lower health costs. Cutting obesity decreases risks of diabetes and other costly chronic diseases, for instance.

Silicon Valley employers see themselves fighting for good engineers.

"It's absolutely a key way to recruit talent," said Joe Gracy, global benefits head at Yahoo, which offers the Valley standard slew of fertility and other benefits as well as 16 weeks of paid leave for new mothers and 8 weeks for new fathers.

Computer science students like James Mishra, who will graduate from the University of Minnesota in 2015, are among the most in demand by tech employers. Mishra will be booted off his parents' insurance at 26, he said, so he considers health benefits to be a "deciding factor."

Though young entrepreneurs still start businesses in garages, the tech sector's average age is in line with industry as a whole, according to benefits companies.

John Adams, the thirteenth employee at Twitter, said healthcare had become a prime concern. When he was younger, he looked for jobs that offered stock, the chance of an initial public offering, and a big salary. "That works when you're in your 20s and 30s," he said. "[It] doesn't work as you age."

Benefits consultant Towers Watson found technology and telecoms firms will pay an average $10,450 per employee in 2014, close to the top of the range, based on a survey of expected expenses. Healthcare and energy both offer slightly more, while wholesale and retail employees will get $8,162.

Dan Bernstein, a principal at benefits consultant Mercer in San Francisco, describes a "perks arms race" that includes health. "Infertility is huge," he said, adding that Silicon Valley appeared to offer even better benefits that tech overall.

"Tech companies are an outlier," said Jennifer Benz, chief executive of Benz Consulting, which works on benefits with employers like Salesforce, Intuit Inc and Adobe. "We see a lot of experimenting going on."

Silicon Valley is spending "big on babies," including premature infants, said Lauren Vela, executive director of the Silicon Valley Employers Forum.

Some 103 tech firms surveyed by Mercer in 2013 covered health benefits for same-sex partners more frequently than the national average, and were more likely to offer coverage for part-time employees, acupuncture, and health management programs, such as nurse advice lines and behavior modification programs.

"Second opinion" services like Grand Rounds Health are also popular.

Apple said its full health benefits, including fertility treatment up to $15,000, are offered to all Apple employees, up to and including part-time employees at the Apple retail stores.

Many marquis benefits have spread. Google says it was among the first to first to cover "transitioning and necessary gender reassignment surgical procedures". Now 17 percent of surveyed high-tech companies now cover gender reassignment surgery, compared with 5 percent among large companies overall, Mercer said.

Wellness

Silicon Valley firms are enthusiastic creators and investors in tech services and gadgets, as well.

Tax and accounting software maker Intuit recently signed a deal with MDLive, a startup funded by former Apple chief executive John Sculley, to provide secure video chats with doctors.

Intuit's benefits program manager Sarah Lecuna said she receives at least one new pitch from a new "wellness program" every day and is evaluating a concierge medical service and a diabetes management tool, among others.

Whether wellness programs can cut costs is an open question.

But about 50 percent of Intuit employees sport a wearable device which tracks their activity, such as the Max, from Virgin Group's Virgin Pulse. Intuit give employees cash for increasing their activity, for instance.

Last year, shortly after Yahoo CEO Marissa Mayer joined Jawbone's board, Yahoo provided free branded Jawbone UP activity trackers for a program called the "100 mile challenge." Apple uses wearables, as well.

Benefits managers say they only look at data in "aggregate," meaning they won't penalize and do not track individual employees who do not engage in these wellness programs.

Silicon Valley is not alone in focusing on wellness. The percent of companies offering rewards and penalties for goals like weight loss and cholesterol management is expected to more than double in 2015 to 46 percent, according to Towers Watson.

The researcher found that tech already is ahead in some measures of health, with low smoking rates. Moreover, only 23 percent of tech workers are obese, significantly lower than every other sector.

Google, for one, is using low tech to help avoid sweets. Although it offers free food, it doesn't want employees to eat too much dessert or drink too much soda. The low-tech answer? Sweets are put on a shelf that's harder to see.

(Reporting By Christina Farr, editing by Peter Henderson)