For small organizations, offering employee health benefits can be a challenge. But being a smaller company doesn’t mean a benefits plan is out of reach. Fortunately, there are simple ways for employers to create the plan that’s best for their organization without breaking the bank.
Getting the most out of a small or medium-sized group benefits plan
Every day, according to Statistics Canada, 14.5 million people go to work at a small or medium-sized place of employment. It is no wonder these employers are often and accurately referred to as the backbone of the Canadian economy.
A key to the success of these employers is the quality and contributions of their employees and their ability to attract and retain the right talent. One important tool for recruiting and retaining key hires is the employee group benefits plan. Three quarters of employers with between 20 and 100 employees offer some type of health benefits and that number rises to 93 percent for employers of between 100 and 500 employees.
Making group benefits available to employees can be seen as a challenging task for small and medium-sized employers who do not have the resources or economies of scale that larger organizations do. That is why insurance carriers, third-party insurance administrators and advisors have developed products, services and administration tools that can help employers offer competitive group benefits that any sized employer can tailor to their unique needs.
The importance of meeting the health needs of employees of small and medium sized organizations in a cost effective way becomes even more important as the Canadian workforce diversifies and ages with so many baby boomers nearing retirement age.
Like any important business decision facing small and medium-sized employers, the provision and selection of group benefits should be approached with sound business practices and reasoning. Through understanding and identifying employee needs; asking the right questions, developing a group benefits strategy and forming/maintaining the right partnerships, small and medium-sized employers can successfully meet the challenge of balancing the requirements and expectations of employees with the overall cost of providing benefits.
Understanding and identifying employee needs
Small and medium-sized employers would never launch a new product or expand their business without first understanding the marketplace and current business environment. Similarly, employers need to understand what their employees and organizations are looking for before making any decisions about their benefits plans. As with general market research, there are several simple steps that employers can take to determine what type of benefits might be best for them and their employees:
- Conduct a benchmarking exercise to determine what benefits other employers in the same/similar sector are offering. General information is often available from Chambers of Commerce and the Conference Board of Canada;
- Conduct an employee survey to determine the health needs, preferences and expectations of their workforce; and
- Review the demographic profile of their employees and previous claims experience (if available) to identify the needs of the workforce and to determine options that will meet the requirements and expectations of the largest number of employees.
These steps are something an advisor or insurance carrier can help an employer do.
Asking the right questions
After establishing a benchmark for employee expectations, employers need to understand the role and cost of providing or changing the benefit coverage they provide. Answering a few basic questions can help provide this understanding:
- What is the reason they offer/plan to offer a benefits plan?
- What will the program’s primary goal be? (Competitiveness, retention/recruitment, increased productivity, provide protection to employee)
- Will/does coverage meet the needs of the current workforce?
- Will coverage meet the emerging and changing needs of future employees? (Demographics, health needs, age, diversity, expectations)
- What should the annual budget be for providing coverage?
- Do/will employees understand their benefits and what is being offered to them?
- How often should plan design/cost be reviewed to ensure that it meets the needs of a changing work force and rising health care costs?
While some of the answers to these questions may require the assistance of an advisor, the exercise of working through these questions will allow employers to start to develop a group benefits strategy.
Develop a group benefits strategy
Once they have asked themselves the right questions and understand what role the group benefits plan plays/will play within the organization, small and medium-sized employers can develop a strategy for establishing their group benefits plan. During this process, employers will find that it is their view of benefits, not their size, that will dictate their strategy and what type of group benefits they offer.
Forming/maintaining the right partnerships
A key component to offering the right benefits plan is developing or maintaining a relationship with an advisor. It is the role of these professionals to find the right insurance carrier that can provide the right coverage that will work within the employer’s overall group benefits strategy.
An advisor can also help employers by making them aware of legislative changes and how they may impact the benefits plan, new technology that would benefit the employer and employee as well as new products and services and opportunities to effectively manage the cost of the group benefits plan.
Employers should consult with their advisor to regularly review the plan design to make sure that it continues to meet the expectations of employees and fits in with any change t to the overall group benefits strategy.
Advisors can be found through reference (references from within a related sector may be a good way to secure an appropriate advisor); the yellow pages or through various government or financial agencies. It is always important to secure credible references before starting a relationship with a particular advisor.
A key to developing or maintaining a productive partnership with an advisor is to ask them the questions that will ensure that they are able to meet specific needs:
- What services do they provide?
- Based on benefit goals and annual budget what plan design do they recommend?
- What are the most effective ways to communicate the plan to employees?
- How can they help to ensure that the benefits plan continues to meet goals given the changing demographics of the workplace and the ever growing competitiveness of the market?
- How can they assist in ensuring a benefits plan remains competitive in a specific industry? And at the same time help effectively manage the rising costs of benefits plans?
The right advisor can help identify which insurance carrier is the best fit for the employer’s group benefits strategy. Insurance carriers offer a number of cost containment tools and services that can be highlighted and recommended by an advisor to meet an employer’s unique situation, examples of these include:
- Health care spending accounts (HCSAs): These ‘health accounts’ allow an employer to meet the diverse needs of the workplace by allowing employees to have more control in how they spend their health benefit coverage.
- Cost containment: Insurers can provide plan design features to keep cost under control, including cost sharing with employees through deductibles and co-payments).
- Education: Insurers can provide information and resources for employees on the cost of the plan and how they can help alleviate costs through coordination of benefits and becoming a smart consumer in regards to such expenses as pharmacy dispensing fees. Insurers can often host on-site sessions that can help employees understand their benefits and the costs associated with them.
- Self service: Insurers may offer a call centre and/or employee self serve web site that can reduce the employer costs and administration efforts in regards to the group benefits plan.
By understanding and identifying their employee needs, asking the right questions, developing a group benefits strategy and through the right partnerships, small and medium-sized employers can ensure that they are able to offer a group benefits plans that will help keep them competitive and attract and retain talent.