Employee Benefit Packages
How many of us are working towards a healthy work life balance as an achievement in our lives? Are we setting ourselves up for failure with this goal in mind? Is it possible to have a healthy balance in today’s world with the technological advances making business more accessible? The trend in new product innovations in health and wellness are a way you can support your employees in creating balance. Total compensation packages are becoming more complex as we discover new ways to add value to our employee’s lives.
How to choose the right employee benefits package for your business
What are the types of employee benefit packages?
Employee benefits are a non-wage compensation provided to employees in addition to their normal earnings. A well-executed benefits package can reduce health care costs, increase productivity, and increase employee retention. There is a direct correlation between personal health and job satisfaction. The best employee benefits take a holistic approach by supporting employees and their families with mental, physical, emotional, and financial health.
For example, a great benefits package may include:
- Wage loss replacement insurance
- Affordable health insurance and reduced prescription drug costs
- Mental health services
- Dental coverage
- Life insurance
- Health spending accounts (HSA)
- Wellness spending accounts (WSA).
According to Workable, the numbers speak for themselves about the importance of employee benefits. Extensive research by the Society of Human Resource Management (SHRM) indicates that 92% of employees consider employment benefits as important for their overall job satisfaction (in itself, a great element of retention and productivity).
Customization is important, as not all employee groups are created equal. Understanding what benefits will offer the most value to your employee group during the various stages of their career and family life is the first step to designing a package for your company.
Factors to take into consideration when choosing a package (company size, demographic, cost, etc.)
Since understanding what benefits will offer the most value to your employee group is an important first step, let’s look at the factors that determine your group’s insurance need. The size of your group can have a large impact on your options, as the volume of premium can dictate the flexibility of the package you can design. Additionally, some insurance providers have limitations with regards to underwriting groups under a minimum size in terms of employees and premium. Larger companies with hundreds of employees will have more options for flexibility within the package you design, whereas at a smaller size the offering is more of a structured, pre-built range of package options with certain requirements such as a minimum amount of Life Insurance. Additionally, the coverage needs will change based on your group’s demographics. An older average aged group will typically have older families and less likely to need coverage such as orthodontics, however, may need more prescription drug coverage. A younger group with young families is typically using paramedical coverage more than prescription drug coverage and would typically value benefits such as dental/orthodontic.
Prioritizing once you’ve discovered your starting point
Your independent licensed insurance broker will act as an intermediary between you and the insurance providers. A licensed broker will lighten the administrative burden and help navigate the complex insurance industry and policy jargon with your group’s insurance needs in mind. Your licensed insurance broker will make recommendations upon surveying the insurance market for the right product and price to fit your group, and will be responsible for ongoing pricing sustainability and annual renewal negotiations.
What are the costs?
Costs will vary greatly depending on many factors such as the size of your group, the average age weighted volume, and the amount of coverage you implement. Generally, companies spend 15%-30% of payroll on employee benefits, and typically the premium payments are shared between employer and employees and optimized in order to minimize the tax impact for employees.
When designing the benefits program, employers can use strategies to limit or contain costs long term. These may include building deductibles or co-insurance into the coverage, or ensuring there are maximums in place to manage ongoing claims experience. Year over year, your rates will be renewed on an annual basis. Depending on the package you design, some of the benefits will be claims experience rated at renewal, and some benefits will be fully pooled.
Are you ready to find a great employee benefit package?
Need help with customizing your employee benefits? The licensed employee benefits specialists at Prizm Financial Inc. can help you find the best employee benefit package for your unique group of employees.