Every year around this time millions of American businesses are shocked by the same thing, increases to employee benefit premiums. “Low double-digit increases” seem to be something to celebrate. Many companies see rate increases upwards of 20%. Wouldn’t it be great if you could raise your prices by 20% every year? That would make it easier to cover the increased costs. Unfortunately, most businesses can’t pass those benefit cost increases on to clients. There are. however, things that you can do to keep those costs in check while keeping your employees happy. Here are 5 tips to help control benefit costs in 2021.
1. Conduct a Benefits Evaluation
It’s a fact, benefits have become central to the value proposition that employers offer employees. Businesses must have a comprehensive employee benefit offering that is at least as good as what competitors offer in order to attract and retain top talent. To be effective, that offeing must speak to the demographic of the employees the business is trying to motivate and retain. To ensure that your company’s benefits meet the mark, you should evaluate the competition’s offering. You can conduct an informal evaluation and compare your findings with the benefits you offer. That however, can be ineffective and end up costing you time, money and talent. You may consider engaging a Benefits Consultant who has access to the data that can help ensure your offerings are in line with what is available in the marketplace.
2. Analyze your Current Coverages
HMO? PPO? POS? HDHP? HRA? HSA? FSA? It’s like alphabet soup! But you have to dig in because the individual coverages beneath the headlines really matter. Think about things like deductibles for individual coverages. Most employers don’t know that you can modify those. And those modifications can have major impacts on your premium expense. The insurance company is there to supplement risk. If the insured takes on a bit of extra risk (a higher co-pay or deductible) the monthly premium will come down. So increasing what the insured will pay for a specific procedure or incident (like an ER visit or a specialist visit) could decrease the overall monthly premium. And it doesn’t have to be a dramatic change. Increasing a Co-Pay from $20 to $30 can have a major impact on the monthly premium and could save your business thousands of dollars.
3. Add or Delete Plans
Many employers don’t realize that that can offer more than one plan to their employees. In many instances, doing so can increase participation and even decrease costs. On the other hand, some employers offer too many plan options to employees which can actually increase costs. Balancing costs and offerings is not an easy task. Large companies employ entire departments whose sole function is to manage benefits offerings, ensure they match employee expectations and stay within a certain budget. So what do you do if you don’t have a benefits department in the budget for 2021. Your broker is there to help you decide the plan options that are available to you and which ones will be the most impactful for your organzation.
4. Add Alternative Offerings
Employers offer benefits in order to attract and retain top talent for the role they are trying to fill and keep filled. All top talent, though, is not created equal and value is in the eye of the beholder, Isn’t it? You may have one 35-year-old male who needs family coverage while another may only need single coverage. You may also have a 24-year-old who is still covered by their parents while another is not and may be married and looking to start a family. It’s impossible to build an offering that checks every box for every employee.
By adding additional, alternative benefits, you might be able to attarct employees that you were not able to attract in the past while decreasing costs. You don’t have to think about benefits in the traditional way. And you shouldn’t. What about Pet Insurance or a Day Care Stipend? How about modifying your vacation policy to make it more interesting to a wider group of potential employees? What about helping employees with Student Loans? The point is it doesn’t have to be HMO versus PPO or 401(k) versus IRA, there are additional options that you can leverage that will help you decrease costs while increasing employee satisfaction.
5. Investigate Alternative Coverage Options
Businesses have more options available today than ever before. Two very popular ones are Professional Employer Organizations (PEO) and Self Funded Insurance Plans. Though completely different concepts, both the PEO and the Self Funded option can be great for some businesses while disastrous for others. The PEO works best for companies with employees in multiple states or smaller companies that would like multiple coverage options that they would not other wise qualify for with a specific carrier. Self-funding works for established businesses with fairly consistent revenues, employee demographics and a longer term horizon. It may pay to work with a consultant to see if one of these options will benefit your business.
You are busy running your company and you probably have “benefits” on the back burner right now. Investing in a thorough analysis and modeling with an independent firm can save your business tens of thousands of dollars, help you attract the key players that can take your business to the next level and keep the top performers you have in place right now. The good news is, you don’t have to do it alone. PuzzleHR has the people, processes and programs that can help you decrease your benefit spend while increasing the effectiveness of your benefits offering. Puzzle’s specialists are not brokers. We are your fractional HR department dedicated to helping you decrease costs and drive business results.
You might also be interested in:
FREE ZOOM WEBINAR:
Open Enrollment is right around the corner and if you’re like most businesses, you’ve received your annual benefits renewal and price increase. Are you prepared to minimize those increases while still providing your employees with the support they need?
Join us in our upcoming webinar where industry experts Chris Timol and Marion Hawkins discuss the strategies to help you spend less, get more and drive real value to your most valuable asset, your employees.
PuzzleHR Webinar: Preparing for Employee Benefits in 2021
Date: September, 3 2020 at 3:00 PM Eastern Time (ET)
Register for Free Here: https://puzzlehr.zoom.us/webinar/register/3715984022709/WN_LiQUYSl4SEae9wyKvBFkvg