Employee benefits represent a significant expenditure for businesses, ranging from 15-20 percent of an employee’s salary, and they are also a strong factor in recruitment and retention. According to a study commissioned by Aflac, 16 percent of employees left a job or declined an employment offer over the last year due to dissatisfaction with their benefits package, while 42 percent of respondents cited improved benefits as a driver for company loyalty.
However, recent research points to a knowledge gap when it comes to employees’ understanding of their benefits, creating a missed opportunity for businesses to convey value to their workers and putting employees at risk for unanticipated costs. In fact, data from the ADP Research Institute found that 81 percent of HR decision makers believe it’s important for employees to have a complete understanding of their benefits packages, yet they estimate 58 percent of their employees actually meet this threshold.
These findings dovetail with the recently released results of Guardian’s 4th Annual Workplace Benefits Study, which tested knowledge of employee benefits across medical, long-term disability, accident, critical illness and hospital indemnity insurance products, along with terminology such as LTD elimination periods, guaranteed issue, voluntary benefits, portability and deductibles. Looking broadly across all employees surveyed, the average competency grade was 72 percent, with 51 percent of employees falling at or below this level. Millennials, who now represent the largest demographic in the U.S. workforce, fared the worst with 25 percent earning a failing grade.
To help remedy this situation, an employee benefits broker can – and should – proactively work with insurance carriers and companies to design efficient benefits programs that are custom-tailored to the unique needs of their workers and the organization’s overall business objectives. It is also the broker’s responsibility to ensure that business owners, CFOs and HR professionals understand that a benefits program should have a long-term strategy. Equally important, an effective communications strategy is key to guaranteeing employees recognize the true value of their benefits and that they feel empowered to seek advice from their benefits broker when they do have a question.
Below are three important steps for implementing a successful employee benefits program:
As a critical first step, an employee benefits broker should embark on a comprehensive audit of the company’s existing benefits program, examining the value of each offering with a keen focus on how to keep costs low while maximizing the impact. In parallel, a discovery process including face-to-face meetings with employees and surveys will ensure buy-in and that the final program best meets their needs and the financial goals of the employer.
Once the assessment is complete, the insights gleaned will inform the selection of medical insurance solutions, benefits plan administration, wellness plans, employee advocacy options and much more.
A robust employee benefits program is a strong differentiator when it comes to recruitment, and as the data cited above revealed, it’s often underutilized due to lack of consistent and effective communication. With advancements in technology, preparing Total Compensation Statements, once a time-consuming endeavor, can now be an automated process that allows employers to easily convey the total amount they are investing in personnel beyond their base salary.
This ensures employees understand the full value of their benefits package and fosters a natural forum for engaging with HR to clarify any outstanding items.
Another important aspect of designing a smart, strategic benefits strategy involves encouraging leaders within the organization to teach their employees how to become smart consumers. Through empowering employees to utilize price transparency tools, the organization can curb healthcare spending by promoting educated decision-making. Additionally, employee benefits brokers should collaborate with the company to ensure employees are not only comparing general medical costs, but taking an active role in researching other ways to save – specifically when it comes to prescription medications. With Money reporting prescription drug prices increased nearly 10 percent or more for three years in a row, it’s important that employers have the ability to inform employees of the most cost-effective medication, such as purchasing a generic or over-the-counter brand. This will save money for both the employer and the employee, while driving greater value out of the benefits offerings.
A True Partner
Far too often, employee benefits brokers take a short-term and reactionary viewpoint when providing benefits packages to customers, focusing on making a quick transaction rather than being a true advocate in this important business decision. Instead, a skilled broker should help HR professionals proactively examine their long-term strategies and goals in order to properly vet the best options, rather than examining benefit packages on a year-by-year basis. A broker should never be a simple go-between for companies and insurance carriers. All businesses need a broker that is a strategic partner, offering in-depth analysis, full-service support and guidance, and the latest technology needed to make managing the complexities of healthcare as easy as possible.
Philadelphia, PA, 19102