Can't Afford To Offer Benefits? Maybe You Just Need A Better Broker

June 2019

Small business owners, especially those under 50 employees really struggle when it comes to employee benefits. Sometimes a business is fortunate that all their employees can be covered under a spouses plan or elsewhere, but for most small businesses that isn’t the case and to attract and maintain a high quality workforce, providing benefits is necessary.

Let me just say before I get into how to contain costs and maximize your benefits budget, you have to have a benefits strategy or you are wasting money and other resources. So many times I see new clients who have absolutely no strategy for what benefits they offer. A broker or insurance agent happened to come along at the right time and based on his or her preference (which may have been driven by potential commission), a benefits plan was created.

Being in HR and insurance for over 25 years, I know a few things about employee benefits. Many years ago I worked for an employer who thought 5 and 10 cent raises were to be something for employees to be happy about. The company president who was earning well over six figures, could not understand why someone making $10 an hour wouldn’t be happy with a 10 cent raise. Granted this was the early 90’s but 5 cents an hour still wasn’t something to get excited over. Exiting employees gave me the same feedback. The 10 cent an hour raise was more of a slap in the face than a pat on the back. So this well meaning gesture actually was contributing to this employer’s high turn over. The same can happen when offering benefits. If you do not have a strategy, if you do not have a partner who truly knows the benefits landscape, trends, and opportunities for cost containment, you are just throwing something together and hoping it will be appreciated. When benefits are under utilized its a sure bet that employees don’t value the benefit. It is critical to not only offer affordable benefits, but to offer benefits of value.

I know what some small business owners and non-profit execs are saying right now. “That’s great, but I can’t afford to offer any benefits, especially not insurance.” Not all insurance products are created equal. Obviously, providing group medical insurance is not cheap. It is a major expense, but there are very creative plan designs that can take the sting out monthly premiums while affording quality coverage. Employers also can get creative. For groups who do not have to meet ACA requirements, there are quality medical sharing arrangements that can be found in every state. These plans are not insurance, but rather a large pool of employers and their employees who share in the payment of medical expenses via set monthly rates.

Level funding, which is hybrid of a fully insured medical plan and a self funded plan can also be a win. These plans are available in some areas for groups as small as five, so if you have a healthy group it can be well worth the leg work to put in place a level funded plan.

And then there’s voluntary benefits. Voluntary benefits can be either fully funded by the employer or employee or combination of both. These plans typically include life insurance, disability, accident, critical illness, hospital indemnity, dental and vision. It is important to ensure your voluntary carrier has an excellent claims paying history, that premium costs do not outweigh potential benefits…again you want to offer true benefits, not a turd disguised as a gourmet sandwich. When offered as a strategic part of your benefits plan, voluntary benefits can eliminate the sting of high deductible medical plans, and provide a financial safety net in times of a health crisis for a very affordable premium.

It is important you work with a broker or agent you trust. Ask questions about how your insurance professional is being compensated. Ask how they will help educate your employees. Will they handle enrollments for you? What enrollment services do they provide? How will they assist you as the employer with payroll deductions. Can they automatically feed information to a payroll service? How often will they communicate with your employees? A good broker will not hesitate to answer these questions. A great broker will provide you with options that address your specific workforce issues and demographics, he or she will provide one on one benefits counseling to your employees, and be willing to have a regular communication schedule with the employer and employees…not just show up to drop off enrollment materials. A great broker will also encourage employees to call him or her with questions regarding benefits programs. As a small business owner wearing many hats, the last thing you should have to deal with is being your employee benefits program customer service arm.