Why Employer-Sponsored Benefits Matter to Your Business

Setting up employee benefits does not have to be a head ache for small business owners. In this blog, we’ll cover the “Big 4”. The 4 most powerful employee benefits to offer that will dramatically increase retention and attraction of talented employees.

Before we go into the details it is important to realize that employee benefits are essential to your company. Ponder these facts…

78% of employees say that employee benefits packages are extremely important in their decision to accept or reject jobs.

62% of all employees look to their employers for help in achieving financial security through employee benefits.

50% cite benefits as an important reason to remain with an employer.

Wow, employees are more loyal and attracted to companies that provide quality benefits. There are 3 pieces to the puzzle of employee retention and attraction.

The 1^st piece is how employees are treated. Treating an employee with respect will go a long way.

The 2^nd piece of the puzzle are employee wages. Studies show when you pay your employees the wages they deserve it keeps them satisfied and engaged.

The 3rd piece of the puzzle which is often overlooked are in fact employee benefits. The benefits that you offer your employees are very crucial.

Keep in mind that you must have all three pieces of the puzzle in place in order to master the art of employee attraction and retention. In this blog, we’ll focus on the benefits piece. So, if you’re an Owner, CEO, President, HR Executive, or any other type of executive this knowledge is key to your company’s success.

Let’s get started.

Here are the 4 types of employee benefits that we’ll cover in this blog.

1. Health
2. Dental and Vision
3. Life
4. Retirement

 

1. Health Benefits

This is best place to start when entering the employee benefits set up. When an employee comes into a company the benefits that they are most likely looking for are Health Benefits. Here are some key points to pay attention to on health benefits.

 

• If you have 50 or more full time employees the ACA REQUIRES you to offer employees health benefit, If you don’t you are at risk for a pretty hefty fine.
• When providing health benefits to employees the employer is required to contribute at least 50% of the premium.

 

Types of Plans:

When searching for health care the two types of plans that you’ll most likely be presented with are a HMO and a PPO. Many people get confused on this but the differences between them are simple. HMO’s require a primary care physician and referrals to see specialists and they also have “in-network” providers that you can see and receive good discounts from. PPO’s on the other hand will commonly have a larger range of doctors in their “network” and do not require referrals. This is a nice added benefit, but keep in mind PPO’s can end up being a lot more expensive than HMO’s.

 

How much do they cost?

You must first decide how much you want to contribute as an employer. Remember 50% of the total premium is the minimum.

The carrier that you choose is VERY, VERY important! (A carrier is the insurance company that provides the benefits)

This is crucial in today’s market because the carrier that you buy from can make a difference of THOUSANDS or even HUNDRED OF THOUSANDS of dollars in annual premium. The larger carriers have extremely inflated rates right now because of the tough regulations of Obama Care. Fortunately, there are financially strong alternative carriers that have emerged outside of the web of Obama Care regulations that can be up to 50% cheaper while offering essentially the same benefits (I know, it’s ridiculous). Last week a company came to us with extremely high rates from one of the major carriers and after shopping our connections we came came back with rates 40% cheaper by staying away from the majors.

 

How to get them.

There’s really 2 choices you have when buying employee health benefits for your company

 

1. Go directly to the company

This is something I wouldn’t recommend because you will receive “cookie cutter rates” with inflated pricing. Also, you always want to shop multiple carries and this can be really time consuming going at it by yourself.

 

2. Go with a broker

 

This is usually the best way to buy employee health benefits because the broker is essentially the middle man between you and the carrier. If you choose the right broker they can make this entire process go smoothly. Also, the broker will greatly influence the rates you pay because what a broker can offer is based on different relationships they’ve made with carriers.

2. Dental and Health Benefits

 

Dental and Vision insurance are a very nice, low-cost benefits for employees. Here of some key points on Dental and vision:

 

• You are not required to offer them.
• If you do decide to offer them, you do not have to pay for the premium although it’s recommended to pay at least 50%
• They are separate from group health insurance.

 

Types of coverage:

Group Vision insurance offers a broad range of coverage for eye examinations, contact lenses, glasses, and even discounts on laser vision correction.

Group Dental insurance offers employees access to generous dental plans rich in benefits at relatively low rates. Generally, dental plans provide broad coverage for all types of dental services, including preventative services, basic services such fillings, and some plans group dental will cover major service.

How much Do they cost?

Just like health insurance, this again depends a lot on the carrier that you go with. The bigger guys are a lot more expensive right now. But relatively dental and vision premiums tend to be quite small (dental from $14-40/ month, vision can go as low at $9-30 per month)

How to get them.

It is recommended that you work with the same broker that you worked with on group health benefits because they are usually familiar with your company and already know your needs.

3. Life

Life insurance policies are important for protecting family’s in case the primary earner was to pass away while leaving financial burdens such as debts that need to be paid. The U.S. Bureau of Labor Statistics reports that three-quarters of full-time civilian workers are offered life insurance by their employers. The overwhelming majority of them take advantage of the benefit. Here are some points on life insurance.

 

• Shows employee you care about their outside life.
• Employer does not have to pay for the premium.

Types of coverage:

Group Term Life Insurance

This the most common type of life insurance offered, and frankly the only type that we recommend offering. The typical amount covered is $50,000. Group term life is low priced, and easily administrated. There are also policies such as universal life and whole life but these policies are more geared for individuals to purchase on their own due to the legal terms and high prices.

 

 How to get them.

Start with your health benefits broker because they are likely licensed to sell life insurance as well. If you sense they are not well educated in Life insurance policies, then look to brokers who specialize in life insurance.

 

4. Retirement planning

In businesses, retirement planning is an extremely powerful employee benefit because it shows that you are thinking about the future of an employee. The retirement planning benefit will influence employees to think long term about your company.

Types of coverage:

The simple 401(K)

The traditional 401(K) is the most universal plan used by employers. It simply lets employees make consistent, tax differed contributions during the length of their careers. The 401(k) offers some versatility as well because the employer can choose if they want to match an employee’s contributions. Also, withdrawing funds from the 401(K) is tax free when retirement time comes around. The less the taxes the better, right?

SEP IRAs

This plan is different from the 401(K) in the sense that all the funds are contributed by the employer (no employee contributions allowed).

The simple IRA

This retirement plan is great because it’s the best of both worlds. This plan is a mixture of employee contributions that are then matched by the employer and It also doesn’t have the IRS tests and reporting requirements of a 401(K).

How much do they cost?

The cost really depends on 2 things.

1. The size of your company.
2. How much you decide to contribute.

Simple IRAs, and Simple 401(K)s are very price comprehensive. You can usually expect a cost of $350 plus $25 per participant.

How do I get them?

There are financial institutions like credit unions and banks that can set this up for you. Also, many health insurance brokers are licensed to set up retirement plans as well.

The Bottom Line

An employer doesn’t have to give their employees a nap time or have pet friendly polices (yes that is a thing now) to keep them happy and loyal. Keep it simple, these 4 powerful benefits will greatly increase talent acquisition and retention in your company.

For any questions about how to implement these benefits into your company shoot me an email at drake.bigley@excelbenefits.com.

Also follow us on social media where we’ll further explore the art of attracting and retaining employees.