When it comes to employee benefits, the human resource department has to walk the thin line between taking care of company employees and not costing the employer too much money. Walking that line can be difficult in today’s labor environment with its fierce competition for top talent and ever-growing healthcare costs. But HR departments everywhere can improve their chances of striking the right balance if they avoid these six mistakes.
Mistake #1: 100 Percent Coverage
Covering 100 percent of your employees’ premiums might seem like a great way to attract top talent since surveys of employees across multiple industries show that health benefits are one of their top considerations when taking a job. However, doing this can lead to over-coverage and increased costs for the company.
Why? Think about this: if something is “free,” meaning someone else is picking up the cost, and you have a choice between the nicest (i.e. the most expensive) of that something or the cheapest, you’re more likely to choose the nicest even if it comes with a bunch of features, or in the case of healthcare, coverage that you don’t need. Why wouldn’t you?
But, if employees also bear some financial responsibility, they’re more likely to weigh options, choose the coverage that’s the most appropriate and that they can afford, and offers the treatment that they need.
As an employer, you can still attract top talent by covering a high percentage of your employees’ health insurance premiums. By asking for your employees to have a little skin in the game, they’re more likely to choose the plan that best suits them, which might not be the most expensive option. If it isn’t the most expensive option, you, as the employer have just saved money on that employee’s health plan.
Mistake #2: Skimping on Dental, Vision and Life Insurance
There’s no way around it—offering benefits for your employees is an expensive endeavor. So much so, you might consider offering just medical insurance and asking your employees to purchase dental, vision and life insurance on their own. The problem with this approach is that current job seekers consider these benefits as part of basic coverage and not offering said coverage could hamper your recruitment efforts. With approximately 53.4 percent of US consumers between the ages of 18 and 34 needing some kind of visual aid, it would be detrimental to NOT cover those people for something that they need every day.
At the end of the day, dental, vision and life insurance cost employers relatively little in compared to medical insurance. So don’t skimp on these “extras”. Your recruiters will be glad you didn’t.
Mistake #3: Not Offering a High Deductible Health Plan (HDHP)
Healthcare and health insurance costs are rising every year and it can be hard for employers to keep up. By offering your employees an HDHP option, you can better contain your overall benefits’ cost since these plans are typically less expensive for employers than other traditional forms of coverage. You can even sweeten the deal for your employees by offering contributions to their HSA.
Mistake #4: Only Considering One Insurance Carrier
You might have worked with a certain health insurance provider for years. Your HR team knows the plans like the back of their hands and your employees are comfortable with the provider network. But what if switching to a different provider could get your employees more comprehensive (and cheaper) coverage? Unless your current insurance provider is an HMO, the doctors to which your employees go are most likely in other insurance networks. This means the switch in carriers could mean no disruption in their medical care.
Mistake #5: Poor Communication Regarding Changes within Health Insurance Plans
Any time the insurer makes a material change to their health plans, legally speaking, you must notify plan participants. A material change could be an increase in copays, deductibles, or coinsurance; it could be a change to which procedures covered, regardless, the HR department must distribute a summary of these changes along with the effective dates so that employees are prepared.
Mistake #6: Misunderstanding Disability Insurance Plans
Unfortunately, disability insurance plans are often complex and it can sound like a procedure or particular claim would be covered when it isn’t. An employee benefits consultant can help you make heads or tails of the disability plan choices in front of you so you can make a more informed decision.
Offering health benefits doesn’t have to be a headache for the HR department. As long as you follow the legal guidelines and avoid these six mistakes, you can get through benefits season without needing medical attention yourself.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.