Figuring out how to get benefits for your employees without breaking the bank as a small business can be a stressful and challenging task. Done right, however, it can be one of the most satisfying of running a small business. Providing employee benefits that make a difference means more than just finding the right benefits providers and buying into a cookie cutter plan. With a careful and intentional approach, you can provide meaningful benefits while actually reducing your overall costs.
For many small businesses employee benefits cost more than they are willing to pay. So some small businesses are tempted to reduce employee benefits or avoid providing them in the first place to help their bottom line. While this may seem like the right play at first, it can do a number on a business’ ability to attract and retain the talent it needs to grow and succeed.
That’s because employee benefits are one of the most powerful tools in a company’s arsenal for employee engagement as well as talent acquisition and retention. Many employees value benefits even more highly than salary and are extremely likely to jump ship if you are not offering competitive benefits.
And benefits aren’t just a necessary evil. Your employees fuel your business’ success and you want them to be invested in the company’s well-being. In order for that to happen and for you to assemble a productive team from the top talent in your field, you need to genuinely care about their success in turn. Plus, investing strategically in your employee benefits often has an extremely high ROI and is a cost-effective way to boost your company’s growth. Don’t forget, engaged employees mean satisfied customers and a healthy business.
But how do you put together an efficient and valuable employee benefits package? Let’s take a look at each building block of a company’s benefits.
Small Business Employee Health Insurance
Employee healthcare is the biggest benefit category for companies and their team members. It is usually the most important benefit to employees, but the most expensive for employers. And in a volatile insurance marketplace, premiums keep rising. This makes it increasingly difficult for small businesses to provide the same level of care without going bankrupt. As a result, finding the right health insurance solutions is one of the hardest parts of figuring out how to get benefits for your employees.
So, the challenge that faces small businesses is offering the best employee health benefits possible at the lowest possible cost. Luckily, there are several strategies you can use to reduce your cost while maintaining or even increasing care.
Employee Insurance Plan Structure
In order to reduce their expenses, many small businesses are turning to low-premium, high-deductible plans backed by a health savings account or HSA. This strategy allows employees to take on more responsibility and control over their healthcare expenses while reducing the cost to the employer.
But there are several problems with this approach. First off, you run the risk of seeming like you are reducing or skimping on employee health benefits. Secondly, these plans only provide employees with the ability to take control of their healthcare costs. They don’t actually enable employees to reduce those costs effectively and without harming their health.
So how do you structure your employee health insurance to reduce costs while providing your employees with the highest standard of care and power over their expenses?
The first step is to identify employee needs and risks to create a targeted insurance package that meets actual employee needs while keeping your costs down. Health Risk Assessments and employee surveys can equip you with the knowledge you need to reduce wasteful spending and invest where the employees need it the most.
The second step is to implement a tiered insurance structure. This allows young or healthy employees to choose the high-deductible, low-premium plans to reduce their upfront costs as well as the costs to the company. But it also allows employees with higher expected healthcare expenses to opt-in to more comprehensive plans at a greater cost to themselves. Your costs should stay about the same, but employee satisfaction will skyrocket.
Reducing Small Business Health Insurance Costs Per Employee
There are plenty of little ways to reduce employee healthcare costs without reducing coverage. We won’t cover them all, but let’s take a look at two particularly useful areas where you can minimize your costs when determining how to get benefits for your employees without breaking the bank.
The first thing to look at is the cost of prescription drugs. Filling prescriptions is one of the biggest drivers of employee healthcare expenses, so tackling your costs there will go a long way towards making your benefits package more affordable.
One particularly useful strategy is to work with a pharmacy benefits manager, or PBM, to create drug formularies of preapproved low-cost drugs that are easier and cheaper for employees to get. More extreme measures include requiring employees to try generic drugs first before moving onto name-brand options and only allowing employees to fill prescriptions by mail delivery
If those tactics seem a bit harsh, one option that costs nothing, saves money, and will be seen as an added benefit is providing your employees with a prescription savings card. These cards reduce the cost of buying drugs out of pocket, often allowing users to save money by circumventing insurance entirely.
The next area to look at is employee education. It can be more than worth your while to take the time to ensure that employees understand plan structure and costs, approved or preferred providers, and best practices such as choosing lower cost pharmacies and generic drugs. Educated employees are empowered to be smarter consumers, allowing them to save themselves – and by extension the company – money.
Employee Benefits: Time Off
Paid time off is one of those benefits that you are more or less required to offer, and in many states are legally required to provide. These days very few people would stick around in a job that didn’t offer any PTO and the amount vacation time is becoming increasingly important, especially to Millennial talent. So when deciding how to get benefits for your employees that make you competitive, time off has to be part of the discussion.
At a bare minimum, you should be providing the average vacation time for your industry and market category. But more time off can be a good investment since it results in more engaged and productive employees. If you have the team size to support it, you may even want to consider offering unlimited vacation time. Not only will it seriously boost your ability to attract and retain talent, but companies that have implemented the policy have found that employees take the same number of days or fewer off than when they had preset time off.
Another consideration regarding vacation time is that you actually do want your employees to take advantage of it. Burnout is real, and it doesn’t make your employees like their job anymore either. Time away from the office will boost employee retention and productivity. But you also don’t want employees disappearing without notice. So it’s a good idea to create a centralized system that makes it easy for employees to submit PTO requests and managers to approve them.
Currently, you are required to provide 12 weeks of unpaid leave for new mothers if you have over 50 employees. It’s worth considering offering this even if you are too small to be required to do so or even providing paid parental leave if you can afford it. Only 40% of employers offer any kind of paid parental leave despite the fact that 60% of employees want paid parental leave. That leaves lots of opportunities for you to distinguish yourself and attract top talent.
Another popular option is to allow employees to work fewer hours in the weeks before and after parental leave. This policy can ease the transition to and from parental leave without significantly decreasing productivity. For organizations on a budget, it can be a good alternative to offering longer full-time leave.
Other Time Off
Benefits related to time in the office aren’t limited to vacation and family leave anymore, either. Flexible workdays that allow employees to have more control over their schedule while working the same hours can boost productivity and retention, as can the option to work remotely periodically. Some companies are also offering half-days on Fridays during the summer or allowing their long-term employees to take months-long sabbaticals. We won’t go into any of these options in too much detail, but they can be worth exploring.
Creative Employee Benefits
Employee wellness programs often cost very little and can lead to significant savings down the road. That’s because 70% of healthcare costs come from behavioral and lifestyle choices, which wellness programs directly address. Wellness benefits have proven effective in combating lifestyle issues such as smoking and obesity, and their associated chronic diseases such as diabetes, heart disease, and cancer. As a result, they have an average ROI of three to one. Best of all, even though they are a cost-saving measure, they are generally seen as added benefits by employees.
Employee Assistance Programs
Think of employee assistance programs, or EAPs, as general life support for employees. They offer confidential counseling and guidance on a wide range of issues that employees may face, including mental health and substance issues. Essentially, they serve as a third-party support network, provide basic guidance, and refer employees to resources and specialists for further assistance or care. They can be an effective way to connect employees to a wide variety of services for a reduced and centralized cost compared to providing each service directly.
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