Evaluating benefits is something that many clients take as a hurdle in their business. While it can feel and be this way at times, there is usually a time crunch in place, as there are additional aspects that the benefits can impact for a business.
Benefit offerings and options are typically evaluated and reviewed during the month of October for a first-of-the-year renewal. Many of these benefit offerings include medical (or health) insurance along with potential dental and vision coverage.
However, ‘benefits’ can include a wider range of items or ancillary solutions that businesses might consider offering to fit their business mission, budgets, or employees’ needs and wants. These can provide a more competitive hiring position and aid in workforce retention.
Erica Roelike, founder of Elevate Results Consulting, recently worked with a client to evaluate their current benefits plan offering (medical, dental, and vision) and utilize her partnerships with brokers to discover possible ways for the business to save on its operational budgets due to large increases in insurance benefit premiums.
Client Challenge
A successfully growing Twin Cities-based company faced a harsh reality this year— with a significant financial burden due to insurance rate hikes. Their current benefits package was set to increase by over 40% for the upcoming year.
Their employee benefits package included medical, dental, and vision plans. The solution was also bundled to include workers’ compensation and 401(k) products through a single provider.
This particular bundle limited the company’s flexibility in offerings and potentially increased costs unnecessarily, necessitating a comprehensive reevaluation of its benefits structure and offerings.
Elevate Results Consulting’s Approach
Initial Assessment — Elevate Results Consulting recognized the need for immediate action and began by conducting a thorough evaluation of the client’s current benefits plan and renewal options. This included analyzing the existing structure, costs, and employee needs. The team also considered the company’s financial position and long-term goals to ensure a holistic approach to benefits restructuring.
Comprehensive Analysis — We leveraged our extensive network to engage multiple benefit brokers, discussing the organization’s immediate needs and exploring potential pricing scenarios for various benefit structures. This approach allowed for a broader perspective on available options and potential cost savings.
Our Strategic Approach — We took a targeted approach to solve this client’s financial challenge using the following measures:
- We interviewed and evaluated different insurance brokers to find the best fit for the client’s needs
- We simultaneously assessed employee requirements and the company’s financial status to tailor benefit offerings
- We explored unbundling available options to potentially separate medical, dental, vision, workers’ compensation, and 401(k) plans through different brokers
- We developed a phased approach which included implementing immediate changes while planning for future adjustments
- And we emphasized the importance of broker education and support for employees during the transition phase
The Outcome — We discovered the company wasn’t providing a “Total Cost of Employee” analysis which would show the employees what the company actually paid out of pocket for each employee monthly and annually. The employee doesn’t see the full financial figure in their paycheck for benefits that the company is paying, but only the cost of their portion of benefits. This allows the organization to truly share the fully burdened employee costs based on each individual employee’s situation.
After running the Total Cost of Employee analysis, we were able to demonstrate the cost the company is covering for health benefits for each employee. We also had the option to show employees what the costs might be if we increased an individual’s salary or hourly rate in place of better health coverage or payments by the company.
These analyses can be helpful to business leaders in making these decisions, but they are also important in explaining to employees why a business has made the decision it has.
Then we worked with the company to devise a communication strategy to educate each employee of the different options.
The Takeaway — There is analysis involved whenever it comes to deciding on the best direction for balancing employee salary and benefits and understanding the employees’ needs at different levels within the organization. Without the analysis, it’s more difficult for a business to understand the total cost to the company if changes were made or how those changes might affect their workforce. Those effects may have their own ramifications that should also be considered.
Additionally, businesses must decide what to communicate and how to best communicate this information related to an employee’s overall cost in a way that is most effective and easy for employees to understand.
Understand that benefits are one piece of an overall employee’s cost.
If more of an employee’s health benefits need to be covered, then maybe an evaluation needs to take place around other ancillary benefits the company is offering—for example, if a company does not offer long-term disability, instead only short-term disability.
That doesn’t mean an employee still might not have access to these benefits; it only means that the company may not be financially committed to providing them through its benefits package. What the company is covering can be different from what the organization can offer employees to purchase and pay for out of their checks through their personal financial choices.
Different percentages and strategies apply to what the company pays for and what employees pay for. This can change from year to year, and the company reserves the right to make changes.
Periodically shopping benefits solutions is a sound practice.
According to a trusted local leader in company benefits, shopping employer-sponsored benefits packages periodically can yield significant benefits for both business owners and their employees.
Taras Karkoc, an independent advisor with Northeast Insurance Advisors, said there are four good reasons to implement periodic but routine audits of your company benefits.
- Cost Savings Healthcare costs can be significant for both businesses and employees. Insurance rates can fluctuate annually depending on the type of benefits you have, from 5% to 15% or more, and your current provider may not always offer the most cost-effective or up-to-date options.
By periodically shopping for alternate quotes, you can identify opportunities to save money on premiums, deductibles, and co-pays, allowing you to allocate savings to other essential aspects of your business.
- Better Coverage Options The benefits landscape is constantly evolving, and new insurance products and coverage options become available regularly. Sticking with the same insurance provider and or benefit plan year after year may mean missing out on more comprehensive coverage or benefits that better suit your employees’ needs.
Shopping for alternate quotes allows you to explore a broader range of coverage options tailored to your workforce.
- Increased Employee Satisfaction A well-structured benefits plan is a valuable employee retention tool. Offering competitive benefits that your employees can utilize can boost morale, increase job satisfaction, and reduce turnover rates.
By shopping for alternate quotes, you can ensure that you provide the best possible coverage for your employees, demonstrating your commitment to their well-being and financial security.
- Access to Expertise Insurance can be complex, and understanding all the options available can be overwhelming. Make sure you are using a benefits broker that has access to all the insurance carriers, has expertise in working with employers and employees, and understands your business and employee’s needs.
Periodically shopping for employer-sponsored health ensures cost savings, better coverage options, increased employee satisfaction, compliance with regulations, and access to expertise.
Another piece of the puzzle involves finding out what an employee actually wants.
Businesses often make the costly mistake of assuming what clients want and need from their employers to stay satisfied with their positions with the company.
Find a good HR partner or consultant who can support your business in this discovery and action strategy — someone who knows the right questions to ask and then helps you dissect the feedback and data you’re receiving.
The team at Elevate Results Consulting can help business owners and their HR teams make sound decisions for their company. While we cannot and would not make any final decisions for a business, as a trusted external partner, we can help businesses initiate a research plan, sort through the details, help evaluate available options, and then provide thoughtful and strategic guidance in the final decision-making process.