You’re a brand new human resources director and you’ve been reviewing the benefits your company offers its employees. You’re immediately curious about several points: “Why is there no PPO (preferred provider organization) option to offer out-of-network benefits? Why aren’t we offering a vision plan? Should we be outsourcing our benefits administration?” These are great questions that aren’t asked nearly asked enough.
The best review often comes from an outsider looking in, so how can those who aren’t new or don’t have that vantage point take a fresh look when re-evaluating current benefits plans? Whether you’re a new employer looking to offer benefits or a rapidly growing one looking to start over to attract a new type of employee, ask these questions to tailor a benefits package perfect for your firm.
What objectives do you and your employees have in establishing benefits? Before proceeding with anything else, looking at your employees’ needs. This isn’t the same as giving them decision-making power, but the reality is, an employee benefit isn’t a benefit at all if it doesn’t meet a need.
Is your staff young and healthy? Is your industry one in-which long-term disability insurance provides financial security? Is dependent care assistance needed? What are the retirement needs? Is the goal for the employer to attract talent? Is it to prevent turnover? How do other competitors in the same industry compare? Think about these different benefit aspects and what may best suit your firm and its population.
What should you offer? Does your benefit package start and stop at medical insurance? For each type of benefit you decide to offer, have a clear understanding as to why it’s being offered and what objective it accomplishes.
Who should be eligible? Some companies opt to cover only those working 30 or more hours each week (full-time), while others may want to go down to 20 weekly hours (part-time). What about dependents (spouses, children, retirees or surviving spouses)? Some employers may want to offer certain management-only benefits to retain top talent. Companies with lots of part-time employees, high turnover and/or a tighter budget may choose a longer waiting period before eligibility begins.
How should each benefit be financed? Should a plan be noncontributory (financed entirely by you) or feature cost sharing between you and the employee? If cost sharing, what percentage should employees pay? What about offering a voluntary option, adding no additional cost to the employer?
An employer may choose to take a defined benefit approach or opt for a defined contribution approach, where a specific amount is contributed but not tied to a specific benefit. Taking the time to review your budget and doing an analysis of different contribution methods may be worthwhile. The answers to these questions depend on your client size, cash flow and company objectives. I realize it seems like a lot of details to consider, but your benefits advisor can offer you support when contemplating a switch in strategy.
How should each benefit be communicated to employees? It’s often said that a miscommunicated benefits package is no benefit at all. A poorly communicated benefit plan will waste your company’s investment. By looking closely at your audience you can craft the best delivery and communicate your benefits offerings effectively. For example, you should address a tech-savvy population differently than an older demographic, and a web portal or streamlined online enrollment system could be an effective tool for out-of-state employees.
Re-evaluate often. While most employers traditionally review their benefit offerings annually in anticipatioin of open enrollment, a savvy employer keeps a close eye on changing employee needs, as well as regulatory requirements that arise throughout the year. Look at how changes in the law affect your benefit plan offering, and what new technology exists that could streamline your communication, offerings and administration.
Some companies don’t have the luxury of an HR department, let alone expertise on keeping up with the industry changes and rising compliance issues. Asking all of the above questions on an ongoing basis helps identify where gaps and overlaps may exist in a benefits package, and keeping a steady perspective on the needs of employees. Don’t wait for open enrollment to think of these items; once each year is no longer enough.
Born and raised in Petaluma, Stephen McNeil has been a principal and North Bay insurance broker at Arrow Benefits Group for more than five years. He earned his group benefits associate designation in early 2016 and is passionate about employee benefits and how it relates to his community. He can be reached at StephenM@arrowbenefitsgroup.com or (707) 992-3787.
