How to Choose Your First Employee Benefits Plan
You’ve given it some thought. You’ve done some research. You’ve made the decision – you’re going to provide (“sponsor” in employee benefits jargon) an employee benefits plan. Now, what’s next?
One of the reasons you’ve decided to provide an employee benefits plan is because you want to round out the compensation package you already provide your employees. You want to support your employees and compete with other companies for the best talent.
To begin with, most companies select benefits from the following categories:
- Extended Health and Dental
- Life insurance and Critical Illness
Now that you’ve got the basics, let’s reiterate why employee benefits are so important.
Employee Benefits are Important
There’s a reason many of the most successful companies offer employer benefits (sometimes called “group benefits”, or “group health insurance”).
Your employees are the backbone of your company. Supporting your employees with employee benefits is one way to keep that backbone strong. It makes good business sense, and it also feels good to know you are supporting your workers.
Employee benefits also help maintain a healthy workforce. For example, employee benefits: many employees do not fill their prescriptions; skip routine dental visits and choose not to have much needed paramedical services. Doing so can lead to bigger health problems, which ultimately means more absences, and lower productivity.
Another reason employee benefits are important is that they can be a great way to attract talent. If employees are the backbone of your company, you want good ones! They can also be a great way to retain talent; employees like having an increasingly expect to have, employee benefits as part of their compensation package.
Lastly, from a financial perspective, employee benefits are a tax-deductible business expense. Who doesn’t like a tax write off?
Things to Consider
When choosing your first employee benefits plan, there are a number of things to think about. The types of benefits you will offer and how they will be offered should depend on demographics, employee needs/wants budget and sustainability.
What is the average age of your employees? Is there a big age span? What other common characteristics do they share? The reason these questions are important is that employees of different ages and circumstances want and need different things. Older employees may place more value on life insurance as a benefit. Younger employees may place more value in paramedical services like massage therapists or chiropractors as a benefit. An experienced Advisor Partner will know which benefits work best for which demographics.
2. Employee Needs/Wants
Perhaps part of the reason you’ve decided to sponsor employee benefits is that your employees have been asking. So, it makes sense to take their needs and wants into consideration when designing the plan. Asking your employees to complete an anonymous survey is a great way to get in tune with what they value.
Accurate budgeting is of utmost importance for any organization. Knowing how much you can afford to spend in providing employee benefits is vital when choosing your first benefits plan. Do you have some wiggle room in how much you will spend, or do you have a hard and fast line that you cannot cross? There are many different options to fit many different budgets.
Introducing employee benefits for the first time is a big step. However, you also need to think about the next step, and the next, and the next. Are you going to be able to continue to offer employee benefits if costs rise? What if your company doesn’t do as well financially next year? Choosing the right employee benefits plan is critical so that you can continue to offer it as different variables change. Having to take benefits away after you’ve given them is not a good thing for your employees or your company.
Choices Choices Choices
Now that you’ve examined things to consider when choosing your first plan, you’ll have to make some choices.
What Should You Cover?
- Extended Health and Dental
Extended health and dental are one of the most common components of an employee benefits plan. It can include coverage for such things as: prescription drugs, paramedical practitioners like massage therapists and physiotherapists, ambulance rides, hearing aids, vision and dental (both preventative and major treatments). You can choose which elements of extended health and dental you want to cover. GroupHEALTH has several unique options too, such as Smart Rx Prescription drug plans and hospital cash.
- Disability Benefits
This coverage ensures your employees receive some of their salaries when disabled. You can choose to provide short term or long term disability coverage. GroupHEALTH also offers a unique hybrid disability coverage called mid-term disability. This is a more flexible option that is meant to help tailor your coverage for your organization’s needs.
- Life and Critical Illness Coverage
Fairly self-explanatory, life insurance pays a lump sum to your employee’s beneficiary in the event of their death. The other component typically offered Accidental Death and Dismemberment (AD&D) coverage. This is another lump sum payment if an employee has a life-altering or life-ending accident. A better choice is GroupHEALTH’s Accident and Serious Illness (ASI) coverage. It includes AD&D coverage, but also provides coverage if an employee is diagnosed with a covered serious illness. Unfortunately, serious illness occurs far too often, so employees will appreciate this more comprehensive coverage.
What was once considered a “nice to have”, wellness as part of an employee benefits plan is now considered a “must-have”. The reason for its increased popularity? Wellness programs are relatively inexpensive and surprisingly effective. Wellness services, like counselling, help employees deal with the mental aspect of a challenging situation. This enables employees to focus on doing their work well, providing tools for coping and overcoming difficult life circumstances. Coverage for physical wellness services (like gym memberships) can help employees to be physically healthy. This can prevent the need for them to use more expensive paramedical services and prescription medications. GroupHEALTH plans include access to an Employee and Family Assistance Plan (EFAP), as well as communication pieces to help encourage and educate employees on living a healthy life.
How You Will Cover It
There are several different ways of delivering employee benefits to your workforce. Your budget and ability to sustain the plan both play into this. The main choices for how you will provide employee benefits are:
- The plan cost is fully paid by the employer
- The plan cost is shared between the employer and the employee (with various options on how the cost is shared)
The other option is to offer a Health Spending Account (HSA), which is a set amount of money that employees can choose to spend however they like (on eligible health expenses). This is also fully paid by the employer, but it has a defined limit. With an HSA, the employer always knows what they will spend on the plan. HSAs can be offered on their own, or as an add-on to a traditional plan.
Good Advice is Key
Are you looking for help or advice to choose your first employee benefits plan? Review your options with one of our licensed advisors on the phone or in-person or contact us for a comparison quote.